Category: Business News

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.

With potential Capital Gains Tax (CGT) changes on the horizon, many investors are thinking about realising gains on their investments before the budget announcement on 30 October 2024. However, if you plan to repurchase the same investments afterwards, it’s crucial to understand the “bed and breakfast” anti-avoidance rules to ensure you’re acting within both the spirit and letter of the law.

These rules prevent individuals from realising a capital gain, selling shares, and then repurchasing the same shares within 30 days to create an artificial tax advantage. If this happens, the shares bought back will be matched with those sold, and the capital gain you’re trying to realise could be negated, as the base cost of the shares would remain the same.

For example, if you bought 1,000 shares in Company A for £2 per share several years ago and sell them on 29 October 2024 for £4.50 a share, you’d realise a gain of £2,500. This gain may be covered by your 2024/25 annual CGT exemption if it hasn’t been used yet. However, if you repurchase the same shares on 5 November 2024 for £4.45 per share, you’d instead generate a £50 capital loss, and the base cost of the shares would remain at £2 per share due to the 30-day rule. This eliminates any tax advantage that would have come from manipulating the timing of transactions.

To avoid any unintended consequences, and in keeping with ethical tax planning, it’s better to consider alternative strategies, such as purchasing different shares or using your ISA or pension fund, where CGT does not apply. For couples, another ethical option could be for your spouse to purchase the shares (“bed and spousing”) without exploiting loopholes.

We always encourage responsible and ethical financial strategies that comply fully with UK tax law. If you’re concerned about CGT changes or want to discuss ethical ways to manage your investments, get in touch with our team for expert guidance.

The current State Pension is £11,502 per year and is expected to rise to around £12,000 for the 2025/26 tax year. To put this into perspective, at today’s annuity rates, it would cost over £300,000 to purchase an index-linked annuity starting at £12,000 a year. This highlights the importance of maximising your State Pension entitlement.

To receive the full State Pension, you need 35 qualifying years of National Insurance (NI) contributions. If you have missing years, you may be wondering if it’s worth topping up voluntary Class 3 NI contributions. This decision is financial, but the breakeven period is relatively short—approximately three years for employees, and even less for self-employed individuals who can pay Class 2 contributions for missing years. Additionally, if you weren’t working due to raising children, you may be eligible for NI credits to help fill in those gaps.

For employees, making Class 3 contributions costs £824.20 or £907.40 per year for missing years, which can result in an extra £302.86 annually in State Pension. For the self-employed, Class 2 contributions cost just £179.40 per year for each missing year and provide the same £302.86 annual pension increase.

While normally you can only go back six years to make up missing contributions, there is a current opportunity to fill in gaps going back as far as 2006/07. The deadline for this extended carry-back is 5 April 2025, so if you’re looking to maximise your pension, now is a good time to review your records.

At A&C Chartered Accountants, we can help you navigate the complexities of your pension contributions and determine whether topping up your National Insurance is the right move for your financial future. Get in touch if you’d like to discuss your options.

Under the current pension rules, many people over the age of 55 can withdraw up to 25% of their pension savings tax-free. However, the Finance Act 2023 set a cap on the tax-free amount at £268,275, unless the individual has applied for protection at a higher threshold. Recently, there have been rumours that this tax-free limit may be reduced further, with a suggested new cap of £100,000. These rumours have led to a surge in pension withdrawals as individuals seek to take advantage of the current rules before any changes are made.

It’s important to remember that there are anti-avoidance rules in place to prevent pension lump sum “recycling.” These rules limit how much of the withdrawn lump sum can be reinvested into a pension fund within a 12-month period. If a lump sum of more than £7,500 is withdrawn in a single year and subsequent pension contributions increase by more than 30% of that lump sum, the amount will be treated as an unauthorised payment. This could result in a tax charge of 40%.

With potential changes looming, now may be the time to review your pension strategy. At A&C Chartered Accountants, we can help guide you through the complexities of pension withdrawals and tax implications to ensure you make the most of your retirement savings while avoiding unnecessary penalties.

With potential changes to Capital Gains Tax (CGT) on the horizon, many taxpayers are considering bringing forward their asset disposals to take advantage of the current rates. Although CGT changes typically take effect from 6 April, there have been instances of mid-year changes in the past, which is causing some concern.

It’s important to note that the disposal date for CGT purposes is the date when contracts are unconditionally exchanged. However, be aware that anti-forestalling legislation may be introduced to prevent artificially bringing forward disposal dates to sidestep any new rules.

There’s still time to sell listed investments before the budget announcement, but for assets such as businesses or property, the process generally takes longer unless a buyer is already lined up. If you’re considering selling assets ahead of any potential changes, we recommend acting sooner rather than later.

We can guide you through the implications of any upcoming CGT changes and help you make informed decisions regarding asset disposals. If you’d like to discuss your options, get in touch with us today.

With the October budget approaching, many are speculating about potential changes to Capital Gains Tax (CGT), which could have a significant impact on business owners, entrepreneurs, and investors alike. One of the most talked-about possibilities is the alignment of CGT rates with income tax rates – a move reminiscent of the regime under Gordon Brown when he served as chancellor. Given Rachel Reeves’ admiration for Gordon Brown’s approach, we might also see a return to taper relief, which could benefit long-term investments.

At A&C Chartered Accountants, we’re keeping a close eye on the possibility of the reintroduction of Business Asset Taper Relief. This could reduce the effective CGT rate to as low as 10% after 10 years of ownership, encouraging long-term investment and entrepreneurship. However, it’s crucial to remember that any relief could come with stricter conditions, especially if the government tightens eligibility criteria further. Many business owners are hoping that Business Asset Disposal Relief (BADR) – or something similar – is retained, to continue incentivising entrepreneurship and growth.

In addition to these potential changes, there may be further restrictions on Private Residence Relief or adjustments to Hold Over Relief for transfers into and out of trusts. Another controversial change to watch out for is the possible removal of the CGT-free uplift to probate value on death, as previously suggested by the now-defunct Office of Tax Simplification (OTS). This change could mean beneficiaries inherit the deceased’s original CGT base cost, rather than the current probate value – potentially leading to larger tax liabilities upon the sale of inherited assets.

As we await the budget announcement, our team at A&C Chartered Accountants will continue to monitor the situation closely, ensuring we provide up-to-date advice to help you navigate any changes. If you’re concerned about how these potential CGT reforms could affect you or your business, get in touch with us to discuss tailored strategies to mitigate your capital gains tax liabilities.