Making tax digital threshold reduced to £20,000
Many more sole traders and landlords will be required to comply with making tax digital (MTD) for income tax when the qualifying income threshold is reduced from £30,000 to £20,000. The Budget confirmed that taxpayers with qualifying income of £50,000 or more will be required to join MTD in April
EIS and VCT sunset clause extended
The sunset clause which was set to end the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme on 5 April 2025 has been extended for a further ten years. The schemes, which offer tax relief for individuals investing in qualifying small and medium-sized companies including start-ups, will now
Festive period RTI easement
It is common for some employers to pay their workers earlier than usual in December, for example if the business will be closed during the festive period. While this may make sense for the business, being paid early can have an unwanted impact on an employee’s current and future entitlements
National minimum wage and salary sacrifice
As announced in the Autumn Budget, the national minimum wage (NMW) and the national living wage (NLW) are set to increase from April 2025. The hourly rate will depend on the worker’s age and whether they are an apprentice. Age of worker Hourly rate from 1 April 2025 Hourly rate
CGT anti-forestalling rules
The changes to capital gains tax (CGT) announced in the Autumn Budget are subject to anti-forestalling rules designed to prevent taxpayers from circumventing the new rates and rules. In the Autumn Budget the Chancellor announced an immediate increase to the main rates of capital gains tax (CGT). From 30.10.24, ‘Budget
Evidence needed to claim employment expenses
HMRC has tightened up the process for claiming tax deductible employment expenses following a series of high-profile scandals. If you incur job-related expenses of up to £2,500 which are not fully reimbursed by your employer you may be able to claim tax relief. For expenses to be eligible for relief
Mind the NIC gap!
When was the last time you checked your national insurance (NI) record for unexpected gaps or viewed your state pension forecast? Missing qualifying years in your NI record, or ‘gaps’, can reduce the amount of contributory benefits you are entitled to. This includes maternity pay, employment allowance, the state pension
Pensions to lose IHT exemption
At the Autumn Budget the Chancellor announced plans to remove the exemption which allows unused pension funds to be inherited tax free. Currently, if a pension holder dies before the age of 75 their beneficiaries can generally inherit the remaining funds tax-free, whether as a lump sum or as income.
Student loans and basis period reform
New guidance from HMRC confirms that profits used to assess student loan repayments and entitlement to student finance will include transitional profits from basis period reform. Student loan repayments for self-employed taxpayers are based on the profits reported in each tax year. For the tax years 2023-24 to 2027-28 this
Crypto investors urged to declare gains
HMRC has reminded investors in cryptoassets that they should declare any income or gains above the tax-free allowance on a tax return. If you hold cryptoassets such as Bitcoin you need to pay tax on any income or gains you have made. Most individuals investing in cryptoassets will be subject
Mandatory payrolling of benefits
The reporting and paying of income tax and Class 1A national insurance contributions on benefits in kind is to be made mandatory via payroll software from April 2026. Most employers who have not entered into a PAYE settlement agreement currently report benefits in kind (BIKs) provided to employees on the
Making Tax Digital: quarterly update returns
HMRC has confirmed the mandation dates for making tax digital for income tax self assessment (MTD SA) as announced in the Autumn Statement 2023. From April 2026, taxpayers subject to income tax on their trade, profession, property income or business and who have income above £50,000 will be required to
Subpostmasters’ compensation
There are currently three forms of compensation being awarded to subpostmasters following the Horizon scandal and each will have different tax implications. Money paid to subpostmasters under the Group Litigation Order (GLO) and overturned convictions schemes is not taxable. These payments are awarded in recognition of the unfair and unequal
Advisory fuel rates
HMRC has updated the recommended reimbursement rates for employees reclaiming business travel in company vehicles. If you pay for the fuel in your company car your employer can reimburse you for the cost of business journeys in that car at the following mileage rates tax free from 1 March 2024:
RTI reporting changes delayed
HMRC has delayed planned changes to real-time information (RTI) reporting requirements for employee hours worked. Draft legislation was published in May aimed at improving the range of data collected by HMRC. The proposed changes will require businesses to provide more detailed information to HMRC via self assessment (SA) and PAYE
Furnished Holiday Lettings regime abolished
HMRC has published draft legislation explaining how the abolition of the special tax rules for furnished holiday lettings (FHLs) will work. From 6 April 2025 for sole traders and partnerships, or 1 April 2025 for companies, properties currently classed as FHLs will no longer benefit from tax reliefs not available
Making Tax Digital: jointly-owned property
From April 2026, sole traders and landlords with qualifying income over £50,000 will have to comply with the Making Tax Digital (MTD) for Income Tax requirements. Quarterly updates Mandated taxpayers will need to use third party MTD-compliant software to keep digital records and file quarterly summaries of their income and
Corporation Tax small profits rate
Certain types of company are not eligible to apply the small profits rate for corporation tax, regardless of their profit levels. On 1 April 2023, the main Corporation Tax (CT) rate was increased from 19% to 25%. A small profits rate of 19% was introduced for companies with profits below £50,000
Tax refunds no longer automatic
HMRC is no longer automatically issuing cheques to refund PAYE overpayments. It is common for employed taxpayers to get to the end of the tax year and find that they have under- or over-paid income tax via PAYE. These discrepancies are calculated by HMRC at the end of the tax
Workplace nurseries
Providing a nursery can be a powerful way to attract and retain staff, with childcare costs in the UK among the highest in the world. Tax relief is available to employers providing workplace nurseries as long as certain criteria are met. These requirements are strict; many childcare provision schemes fall
Changes to bereavement forms
HMRC has completed a long-overdue overhaul of the forms and associated guidance used to report chargeable events on which inheritance tax (IHT) is due on a trust. Previously, if you needed to report IHT due on gifts or trusts you had to complete the ‘one-size-fits-all’ form IHT100 and submit this
Employer’s national insurance increased
The Chancellor has announced that the main rate of secondary Class 1 national insurance contributions (NIC) for employers will increase by 1.2 percentage points from 13.8% to 15% from April 2025. The Class 1A and Class 1B employer rates (relating to benefits) will also increase in line with this. As
Capital gains tax on investment disposals
The rates of capital gains tax (CGT) payable on gains arising from assets other than residential property have been increased with immediate effect. Rates Those taxpayers who decided to accelerate planned investment disposals before the Budget in anticipation of the predicted CGT hike will be pleased with their decision.
Bad news for hybrid vehicles
Showing renewed commitment to promoting electric vehicles over petrol, diesel and hybrid models, the Government has extended the 100% first year allowance for zero-emission cars. Businesses and individuals can continue to deduct the full cost of zero-emission vehicles and electric vehicle charge-points from their taxable profits until 31 March 2026
Another handbrake turn on double cab pick-ups
Reversing the previous Government’s u-turn on the tax treatment of double cab pick-ups, they will revert to being treated as cars for certain taxation purposes from April 2025. If you purchase a double cab pick-up with a payload of one tonne or more before 1 April 2025 for corporation tax,
Inheritance tax reform
The Chancellor has extended the current freeze on inheritance tax (IHT) thresholds until 2030 and announced changes to the treatment of inherited pensions and other IHT reliefs. The nil-rate band (NRB) is the amount of any estate that can be inherited tax free. It has remained at £325,000 since April
SDLT: Higher Rate for Additional Dwellings increased
The stamp duty land tax (SDLT) surcharge levied on purchases of second and subsequent homes has been increased from 3% to 5% with immediate effect The higher rate applies to purchases of second homes and buy-to-let residential properties. The change applies to purchases with an effective date on or after
VAT exemption removed from private schools
Private schools will need to register for VAT and charge output VAT on education and boarding services when the exemption that currently applies is removed from 1 January 2025. All education and boarding services provided by a private school or connected person will be subject to VAT at the standard
Non-doms regime abolished
As expected, the Chancellor has confirmed the abolition of the generous tax regime enjoyed by non-UK-domiciled individuals, or ‘non-doms’ Broadly, the current rules apply to a UK resident whose permanent home – or domicile – for tax purposes is outside the UK. These individuals do not pay UK tax on
Capital allowances for partnerships
HMRC has clarified the rules relating to capital allowances claims in mixed partnerships, confirming that all partners subject to corporation tax are eligible for enhanced capital allowances. Corporate taxpayers are entitled to certain accelerated capital allowances such as full-expensing and the super-deduction that are not available to individuals subject to
VAT on energy saving materials
The zero rate of VAT has been extended to include the installation of additional energy-saving materials (ESMs) from 1 February 2024. The installation of certain specified energy-saving materials (ESMs) in residential accommodation is zero rated for VAT. The more common ESMs include: controls for central heating; draught stripping; insulation; solar
Voluntary Class 2 NIC wrongly refunded
If you made voluntary Class 2 national insurance contributions (NIC) for the 2022-23 tax year, check whether this payment has been refunded in error by HMRC. Some self-employed taxpayers who made voluntary Class 2 payments by 31 January 2024 may have an unexpected gap in their national insurance (NI) record
New VAT compliance test for CIS
HMRC has issued guidance on various changes to the existing construction industry scheme (CIS) rules. If you are a sub-contractor, obtaining gross payment status (GPS) allows you to receive full payments from your customers without tax deducted. To achieve GPS you need to prove that you or your business: have
Reporting rules for digital platforms
From 1 January 2024 online platforms such as websites, online marketplaces and apps that allow individuals and businesses to sell items and services are required to collect and report seller information and income to HMRC. If you sell items through eBay, Etsy, Facebook or another online marketplace, or rent out
Cash basis by default
From 6 April 2024 the cash basis has replaced accruals as the default method for preparing sole trader and partnership accounts for tax purposes. Previously, only unincorporated businesses with total receipts below £150,000 were entitled to opt out of accruals and file their accounts with HMRC using the cash basis.
Basis period reform: additional profits
From 6 April 2024 all unincorporated businesses (sole traders and partners in a partnership) are required to report profits or losses in line with the tax year. Businesses with an accounting period end other than 5 April or 31 March will need to report pro-rated results from two accounting periods
Major R&D scheme overhaul
A new merged research and development (R&D) scheme has come into effect for periods beginning on or after 1 April 2024. The new scheme unifies the old R&D expenditure credit (RDEC) for large companies and the small and medium entity (SME) relief schemes. In line with the RDEC, the merged
Consider restarting child benefit
The clawback threshold for the high-income child benefit charge (HICBC) was increased to £60,000 from 6 April 2024. If you are entitled to child benefit and your or your higher-earning partner’s adjusted net income (ANI) is above £60,000 it is possible that you will have chosen not to receive your
Commuting costs guidance updated
HMRC has updated its guidance to clarify the tax position of reimbursed travel costs for hybrid workers. As many employees are now working from home at least part of the time, some employers are offering to repay certain travel expenses. HMRC’s updated guidance includes new examples to illustrate when those
Pensions update – changes to income tax for beneficiaries
In Spring Budget 2023 the Chancellor announced a welcome change to the tax treatment of pensions – the scrapping of the Lifetime Allowance (LTA). The LTA stood at £1,073,100 when the process began on 5 April 2023 with the removal of the LTA charge. This means that withdrawals can now
Nationwide Building Society bonus
The Nationwide Building Society has paid what is described as a ‘fairer share’ of £100 each to around three million of its customers. To qualify for this payment the customer must have held a qualifying current account plus either a savings account (including ISAs) with a balance of at least
HMRC demands more data
HMRC has confirmed that requirements to report additional information will come into effect from the 2025-26 tax year or possibly a later period. HMRC has set out its intention to collect data relating to trade sectors; locations; occupations; hours worked; shareholdings and dividends paid; and self-employed trading dates. Draft legislation
Relaxation of rules on self assessment for child benefit
In families where child benefit is claimed, it is important that the individual or couple receiving the child benefit keeps a close eye on their income level. If the higher earner has income of more than £50,000 some or all of the child benefit received will need to be repaid.
Influencers subject to tax on non-cash gifts
There is currently no legislation specifically targeted at social media influencers, however the fast-growing industry is very much on HMRC’s radar. Earlier this year HMRC sent nudge letters to thousands of influencers as well as gamers and online traders on sites such as Etsy and Facebook Marketplace to remind them
Merged R&D relief scheme
If your company undertakes research and development (R&D) you will usually benefit from generous tax relief. HMRC has published draft legislation for a new merged R&D scheme which would unify the existing R&D expenditure credit (RDEC) which currently applies to large companies and the small or medium entity (SME) relief
Keeping a child benefit entitlement
Claiming child benefit is, after the initial claim, an incredibly straightforward process (subject to the issues raised above regarding higher earners). However after sixteen years of automatic claiming it is easy to forget to update HMRC on whether you will continue to be entitled for a further two years. This
Deadline extended for voluntary NIC payments
HMRC has given taxpayers an extra two years to plug any gaps in their NIC record from April 2006. The deadline for making voluntary contributions has been extended from 5 April 2023, as previously reported, until 5 April 2025. The deadline was first extended to 31 July 2023 and HMRC
Settle The Tax with a PSA
Occasionally you may reward your employees with something special such as a holiday or a hamper. If the value exceeds the tax-free amount permitted under the rules for say long service awards, trivial benefits or staff suggestions it will be taxable. To avoid your employees getting a nasty shock in
Excess Mileage Payments
Petrol and diesel pump prices are high but the tax-free mileage rates payable to employees who use their own vehicles for business have not been adjusted for over a decade. Many employees cannot afford to use their own car or motorbike for business journeys if they only get reimbursed at
Getting Ready To Retire
The changes to the pension rules announced in the Spring Budget were designed to dissuade higher earners from retiring early to avoid pension charges on high contributions but the new rules could have the opposite effect. Individuals can now contribute up to £60,000 per year into a pension scheme and
