Hello everyone,

This month we will cover a few points from the Spring statement, tax return timings and prize draw and a reminder of some recent changes to consider for the coming year. As ever, if there are any questions please do get in touch.

Kind regards
Simon

Spring statement – There was little in the statement on tax measure as it concentrated on spending matters. Points to note are:

• Making Tax Digital (MTD) for sole traders and landlords is now being rolled out in April 2028 for anyone with qualifying annual income over £20,000. It was also confirmed that HMRC will not be providing free software for MTD submissions so commercial software will have to be used.
• Late payment penalties for VAT taxpayers and income taxpayers joining MTD will increase from April 2025 onwards. The new penalty structure includes charges at 15 days and 30 days overdue, as well as a per annum charge for tax overdue by 31 days or more.
• HMRC is continuing to build up its enquiry capabilities to reduce the tax gap, so we can expect to see increased activity over the coming years.
• It is expected that the high-income child benefit charge will start to be collected via PAYE later this year so that it will no longer be necessary to complete a tax return just for this.
• No changes to the ISA regime were made but this is being reviewed and may be in the Autumn Budget..

We can expect more significant changes to the tax system in the Autumn Budget depending on the state of government finances.

Tax returns – a vital part of tax compliance and planning. Every year, we have over a 100 tax returns to complete and they cannot all be done in the last 3 months of the year! We would ask that you send in your tax return and accounts details as soon as they are available and by no later than 15 September 2025. To encourage early submission, everyone who has sent in all their tax year information by 15 July 2025 will be entered in a prize draw for a £50 gift voucher.
Reasons to file early include:

1. Obtain tax refunds more quickly.
2. To enable July payments on account to be reviewed.
3. Know your tax liability to have more time to save to pay it.
4. Avoid last minute stress and potential late filing penalties.
5. Reduces the risk of error and allows time to resolve issues properly.
6. Assist with preparing for MTD next year by getting up to date earlier.
7. Enjoy Christmas without the thought of tax returns hanging over you!

We will be sending out our usual tax return information requests over the next few weeks but there is no need to wait for it to arrive! Start gathering the information now as it becomes available and send it when you have it ready.

We are aiming to complete all tax returns by 30 November 2025 this year so help us to achieve this target by sending in your papers once they are ready. Finally, a big thank you to those who have already brought in their papers it is much appreciated

Key changes for the coming year to be aware of:

Business owners should be aware the  National Minimum Wage went up in April from £11.44 to £12.21 per hour for 21 year olds and over see here for full details

Employer National Insurance Contributions increased this month to 15% – up from 13.8%, the threshold that businesses start paying NIC for employees has dropped to £5,000 from £9,100. – the drop in threshold alone increases NIC by £615 for every employee earning £9,100 or more. For small businesses this is offset by Employment allowance increasing to £10,500.

However, if you are a single director/shareholder company with no other employees, you are not eligible for Employment Allowance. This means that if you take a salary of £12,570 per month, your Employers’ NI contributions will go up by £656 a year.

Capital Gains Tax Increases – rates for Business Asset Disposal Relief, i.e. selling your business, and Investors’ Relief, i.e. investing in other businesses increased to 14% from 6 April 2025 and again to match the main lower rate of 18% from 6 April 2026.

Inheritance tax – The current thresholds are to be frozen until April 2030.

Unspent pensions will be subject to inheritance tax from April 2027.

IHT agricultural property relief and business property relief will reduce from April 2026. The 100% rate of relief will be restricted to the first £1 million of combined agricultural and business assets to help protect family farms and businesses and will be 50% thereafter. The rate of business property relief for AIM shares is reduced to 50% in all circumstances.

Immediate changes to stamp duty
Stamp duty surcharge increased from 3% to 5%for those buying second homes, buy-to-let residential properties and companies purchasing residential properties. However, if the property is worth over £500,000 and being bought by a company then stamp duty will rise to 17% from 15%.

The new tax year means that a new set of annual allowances and exemptions become available e.g. ISA allowance, annual CGT exemption etc. There is no need to wait until later in the tax year to make ISA investments. If you have assets outside of a tax efficient wrapper, investing at the start of the tax year will enable the benefits to start earlier and shelter income and capital gains from tax

Pension contributions – annual allowance is £60,000 and the lifetime allowance is now removed. Consider making use of your allowances now as reductions in annual allowance cannot be ruled out with government looking to make savings later in the year.

Dividend tax free allowance is just £500 now, so those with dividend income over £500 need to keep track of dividends to report on their tax return.

Capital gains tax exemption remains at £3,000 for gains and in addition where disposal proceeds exceed £50,000, disposals need to be reported regardless of whether the gains exceed £3,000 (you may also want to report losses anyway as they have to be claimed within 4 years and can be carried forward indefinitely). People should keep track of capital gains and consider the need to report their gains and losses annually.