Client Spotlight: A Confident Start – How A&C Helped Rebecca Johnston Hair Get Set Up for Success

2024 marked the first year that digital platforms like Amazon, eBay, and Etsy were required to report seller information to HMRC. These reporting rules apply unless a seller made fewer than 30 sales in a year and earned less than €2,000 (approximately £1,700) from those sales.

Does This Mean You Owe Tax?

The new rules don’t introduce any new tax obligations, but they do increase HMRC’s ability to track undeclared income. If you’re selling online as a side hustle and haven’t been reporting your earnings, HMRC is now more likely to find out.

However, there has been a lot of misinformation circulating online, with some people mistakenly believing they now have to pay tax just for selling old clothes or unwanted items. That’s not necessarily true.

What Counts as Trading?

In a recent campaign, HMRC clarified:

• Selling unwanted personal belongings from time to time? You’re unlikely to need to pay tax.
• Regularly buying and selling with the aim of making a profit? That could count as trading, and tax may be due.

The £1,000 Trading Allowance

If your total sales income from trading is:

• £1,000 or less per tax year – No need to declare it.
• More than £1,000 per tax year – You must declare it on a Self Assessment tax return.

If you’re unsure whether you need to declare your sales, speak to our team today, and we’ll help you stay compliant while making the most of available allowances.

Changes to Capital Gains Tax (CGT) rates in 2024 mean that timing your disposals correctly is more important than ever.

From 30 October 2024, the main CGT rates increased to 18% and 24%. Additionally, the rate of CGT on Business Asset Disposal Relief (BADR) gains will rise:

• From 10% to 14% on 6 April 2025
• Then to 18% from 6 April 2026

Getting the timing wrong on BADR-qualifying disposals could mean paying significantly more tax.

Key Considerations

• Disposal Date Matters: For CGT purposes, the relevant date is when an unconditional contract is entered into, not when the sale completes.
• New Anti-Avoidance Rules: You can no longer use unconditional contracts to secure lower CGT rates artificially. Similarly, share exchanges and reorganisations can no longer use elections to lock in previous CGT rates.

If you’re planning a BADR-qualifying disposal, it’s crucial to get advice early. Speak to A&C Chartered Accountants today to ensure you’re making the most tax-efficient decisions.

Annual Tax on Enveloped Dwellings (ATED) – What You Need to Know

ATED applies to companies and other ‘non-natural persons’ that own UK residential properties valued at over £500,000. The tax is based on the property’s value unless an available relief is claimed.

Who Can Claim Relief?

One key relief applies to properties that are let to third parties on a commercial basis and are not occupied or available for occupation by anyone connected to the owner. If this relief applies, it must be claimed in an ATED return.

Filing and Payment Deadlines

ATED is payable for a chargeable period ending on 31 March each year, with returns due within 30 days of the new period starting. This means:
📌 For the 2025/26 period (1 April 2025 – 31 March 2026), returns must be filed between 1 April and 30 April 2025.

HMRC Compliance Checks

Over the coming months, HMRC will be contacting companies that:

• Own UK residential properties worth over £500,000
• Declared no profits in Corporation Tax returns between 2017 and 2020
• Either did not file an ATED return or claimed the commercial letting relief

HMRC is questioning whether these companies were truly operating on a commercial basis. If they believe a company was not run for profit, the ATED relief will not apply.

How to Respond

If your company receives one of these letters, you must review your ATED position and respond within 40 days. You may need to:
✔ Provide further information
✔ Make a disclosure
✔ File any outstanding returns

Failure to respond could result in a discovery assessment and potential penalties.

If you need guidance on your ATED obligations, speak to our property tax accountants today to ensure compliance and avoid unnecessary tax charges.

Claiming Tax Relief on Employment Expenses: What You Need to Know

If you’re an employee who incurs work-related expenses that haven’t been reimbursed by your employer, you could be eligible for Income Tax relief. Understanding what you can claim and how to do it correctly can help you reduce your tax bill and get back the money you’re entitled to.

How to Claim Employment Expenses Tax Relief

If you file a Self-Assessment tax return, employment expenses should be included on the employment pages of your return. However, for employees who do not file a Self-Assessment, the claim can be made using HMRC’s online P87 form.

HMRC had temporarily suspended the P87 online form due to a surge in ineligible claims, but it is now available again. When making a claim, you must provide evidence of the expenses incurred.

What Expenses Can You Claim Tax Relief On?

You can claim tax relief on the following work-related expenses:

• Working from home costs – If your employment contract requires you to work from home, you can claim for additional costs incurred. Read our guide to tax relief for working from home.
• Repairing or replacing a uniform or small tools – If you’re required to wear a uniform or use specific tools for work, the cost of maintaining or replacing them may be eligible for tax relief.
• Travel for business journeys – This applies to work-related travel but not commuting to and from your regular place of work.
• Professional fees and subscriptions – If you’re required to be a member of a professional body for work, the fees you pay could be tax-deductible.

How Much Can You Claim?

The amount of relief you can claim depends on the type of expense and your tax rate. You will typically receive tax relief at your marginal tax rate, meaning:

• Basic rate taxpayers (20%) get 20p back for every £1 spent on eligible expenses.
• Higher rate taxpayers (40%) get 40p back for every £1 spent.

Key Deadlines for Claims

You can backdate your claim up to four years, so if you’ve overlooked eligible expenses in previous tax years, you may still be able to claim relief.

Why You Should Act Now

With tax laws and HMRC’s processes constantly evolving, ensuring that you claim the right expenses correctly is crucial. Submitting accurate claims with supporting evidence helps avoid delays or rejections from HMRC.

Need Help With Your Tax Relief Claim?

Navigating employment expense claims can be complex, but A&C Chartered Accountants can help ensure you maximise your tax relief while staying compliant with HMRC rules. Contact us today for expert guidance on making your claim effectively.

The VAT classification of food and drink has long been a contentious issue, and legal cases continue to shape HMRC’s approach. In 2024, several cases examined VAT treatment, and this trend is set to continue into 2025. One significant case—Global By Nature Ltd v HMRC (TC09396)—marks the first time a tribunal has examined VAT law concerning sports drinks.

Understanding VAT on Food and Drink

Under VAT legislation, most food and drink items are zero-rated, except for specific products that are taxed at 20%. One of these exceptions includes:

• “Sports drinks that are advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise, or build bulk.”
• This also applies to powders or syrups used to make such drinks.

HMRC’s Position on Sports Drinks

In the tribunal, HMRC argued that the above legal wording provides a clear definition of sports drinks—i.e., drinks that are advertised or marketed to enhance performance, aid recovery, or build bulk. On this basis, HMRC contended that Global By Nature Ltd’s (GBN) drink powders qualified as sports drinks and should be standard-rated at 20% VAT.

The Tribunal’s Decision

GBN disputed HMRC’s classification, arguing:

• Their powders were not sports drinks.
• Even if they were, they were not advertised or marketed as such.

The Tribunal ruled in favour of GBN, introducing a two-part test to determine if a product falls under the VAT exception:

1. Is the product a sports drink?
2. If yes, is it marketed as enhancing performance, aiding recovery, or building bulk?

Since ‘sports drink’ is not legally defined, the tribunal relied on dictionary definitions and industry standards. They concluded that GBN’s powders did not contain enough carbohydrates to be classified as sports drinks. As a result, the tribunal zero-rated the product, meaning no VAT applied.

Why This Matters for Businesses

This ruling sets a new precedent for how HMRC determines VAT treatment on food and drink products. Businesses should review their products to ensure they are correctly classified. Key takeaways include:

• If a product is not clearly a sports drink, it may be zero-rated.
• Marketing claims matter—positioning a drink as performance-enhancing could push it into the VAT exception category.
• Future challenges—HMRC may appeal or adjust guidance, so staying updated is essential.

Get Expert VAT Guidance

Navigating VAT classifications can be complex, and getting it wrong could mean unexpected tax liabilities. At A&C Chartered Accountants, we help businesses ensure compliance and optimise tax efficiency. Contact us today for expert VAT advice tailored to your industry.

Scam attempts on the increase

HM Revenue and Customs (HMRC) have issued a reminder to be careful about scam attempts that target people filing Self Assessment tax returns. In the last year, nearly 150,000 scam attempts were referred to HMRC, a 16.7% increase on last year. With the 31 January 2025 filing deadline approaching, fraudsters are likely to step up their activities.

HMRC reports that around half of all scam reports in the last year were fake tax rebate claims. Fraudsters are usually aiming to get hold of personal information and banking details.

If you receive an email, text or phone call from someone claiming to be from HMRC that asks you for personal information or offers you a tax rebate, there is a useful checklist here that can help you identify a scam.

It is helpful to know that HMRC will never leave voicemails threatening legal action or arrest. Neither will they ask for personal or financial information over text message.

HMRC also will not contact you by email, text, or phone to announce a refund or ask you to request one.

If you have been contacted by someone claiming to be from HMRC and feel unsure whether it is a scam, or you would like to check whether you are due a tax refund, call us at any time and we would be happy to help you.

New changes come into effect from January 2025 where online platforms, such as eBay and Airbnb, will start sharing some user sales and personal data with HM Revenue and Customs (HMRC).

Although these reporting requirements have caused concern, HMRC have confirmed that there are no changes to the tax rules for someone selling unwanted possessions online.

Angie MacDonald, who is HMRC’s Second Permanent Secretary and Deputy Chief Executive Officer, said: “We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due.”

HMRC have advised that anyone who sold at least 30 items or earned roughly £1,700, or provided a paid-for service, on a website or app in 2024 will be contacted by the digital platform they used in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.

This does not mean that an individual automatically needs to complete a tax return. However, if the following applies then you would likely need to register for Self Assessment (if you are not already registered) and pay tax.

• Buying goods for resale or making goods with the intention of selling them at a profit.

• Offering a service through a digital platform – such as delivery driving or letting out a holiday home.

• And you generate a total income before deducting expenses of more than £1,000.

If you are concerned about whether you are likely to need to register for self-assessment or pay tax, give us a call and we will be happy to help you.

HMRC have developed an app that can help people prepare for their retirement.  Individuals can use the app to check their State Pension Forecast, allowing them to:

• see their State Pension age;
• view their forecast State Pension amounts based on potential contributions; and
• view how much their State Pension would currently be worth, based on National Insurance contributions to date.

The app can also be used to check National Insurance contribution (NIC) years, and view any gaps in your record, including how many weeks you have paid and how much you need to pay for it to become a full qualifying year.  If you have any NIC ‘gap years’, you may be able to make voluntary payments online or through the HMRC app.  Note that you have until 5 April 2025 to make up any gap years since 2006/07. Contributions made prior to 5 April 2025 will be at the Class 3 voluntary NI rate of £15.85 per week (£824.20 p.a.) which will provide an additional £342.86 a year State pension – a pretty good return! From 6 April 2025 it will only be possible to go back 6 years.

Extension of First-Year Allowances for Zero-Emission Cars and Electric Vehicle Charging Points

The UK government has announced the extension of first-year allowances (FYAs) for businesses investing in zero-emission cars and electric vehicle (EV) charging points. These allowances enable businesses to deduct 100% of the cost of qualifying investments from their taxable profits in the year of purchase.

Key Points:

1. Zero-Emission Cars
   Businesses can continue claiming the 100% FYA on zero-emission cars purchased for business use. To qualify, the vehicle must meet specific CO₂ emissions criteria and be brand new.
2. EV Charging Points
   The allowance also applies to investments in EV charging points, encouraging businesses to support the shift to electric vehicles by installing infrastructure.
3. Timeframe
   The extension applies to qualifying expenditures made until 31 March 2025 for companies and 5 April 2025 for individuals or unincorporated businesses.
4. Business Benefits
   This incentive supports environmentally friendly investments, reduces tax bills, and aligns with the government’s net-zero goals.

For more details on eligibility and how to claim, visit the UK Government website.

The UK government is changing the game for double cab pick-ups with new tax rules coming into force on 6 April 2025. Historically, these vehicles have been treated as vans if they could carry a payload of 1,000kg or more, giving businesses favourable tax benefits. But this approach is shifting, following a landmark court case.

What’s Changing?

• Up to 5 April 2025: Double cab pick-ups have been classified as vans based on payload weight, aligning with VAT definitions. This provided tax advantages for Benefits in Kind (BIK) and capital allowances. However, the Coca-Cola case (Payne & Ors v HMRC) exposed inconsistencies in how these vehicles were assessed.
• From 6 April 2025: Classification will depend on whether the vehicle is primarily built for carrying goods or passengers. This decision will be based on a detailed construction and suitability assessment, moving away from simple payload weight rules.

Transitional Relief

If your business purchases, leases, or orders a double cab pick-up before 6 April 2025, you can continue using the old tax treatment until 5 April 2029 or until the vehicle is sold or the lease expires, whichever comes first.

What This Means for Your Business

These changes aim to clarify vehicle classifications and align taxation more consistently. However, they could affect your tax liabilities, especially regarding BIK and capital allowances. It’s a good time to review your fleet and plan ahead.

Need help navigating the new rules? You can read more about it here. A&C Chartered Accountants is here to guide you through these changes and optimise your tax position. Get in touch with us today!

On 30th October 2024, Rachel Reeves made history as the first female Chancellor of the Exchequer to deliver a Budget speech. The occasion was significant on many levels, but as the speech concluded, it left mixed feelings among business owners. While the Budget had its silver linings for workers, many businesses will face new financial challenges.

Addressing the Public Finance Deficit

From the outset, the Chancellor addressed the difficult decisions ahead, pointing to the £22 billion deficit in public finances left by the previous government. Despite these challenges, the Budget perhaps didn’t feel as taxing as we may have feared. The main revenue-raising measure, an increase in Employers’ National Insurance (NI), was no surprise, having been signalled well in advance.

Stability for Workers, Challenges for Businesses

For employees, the Budget maintained the status quo, with no increases to income tax, national insurance, or VAT. The previous government’s freeze on personal allowances and tax rate bands remains, which means as wages rise, more income could be taxed at higher rates through ‘fiscal drag.’ However, from 2028-29, the Chancellor has pledged to index personal tax thresholds to inflation once more, a small win for taxpayers down the line.

Businesses, on the other hand, have been hit harder, mainly due to the rise in Employers’ NI contributions and an increase in minimum wage rates.

Retail, Hospitality, and Leisure – A Mixed Bag of Support

Retail, hospitality, and leisure (RHL) businesses saw some targeted relief, including a 40% discount on business rates, capped at £110,000 per business, alongside a freeze on the small business multiplier in 2025-26. Looking forward, the government plans to establish permanently reduced tax rates for RHL properties by 2026-27, which could provide long-term relief to these sectors.

New Opportunities for Contracts and Public Services

On a positive note, the Budget also announced investments in public services and home building, which could open doors for contracts and opportunities across various sectors.

How Will the Budget Impact Your Business?

If you’re wondering how these changes might affect your business, especially around payroll costs and tax planning, get in touch with A&C Chartered Accountants. We’re here to offer clear guidance and personalised advice, ensuring your business is well-prepared and equipped for the financial landscape ahead.