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Author: Femi Ogunshakin

Growing confidence in managing tax digitally

Written by Femi Ogunshakin on . Posted in Income Tax, Advice, Self Assessment. No Comments on Growing confidence in managing tax digitally

More individuals are taking control of their tax affairs as the use of HMRC’s app surges. Some seven million taxpayers used the app in 2025, which is a 40% increase on the previous year.

Key areas

There are three key areas of the app which users are finding increasingly useful:

  • State Pension forecast: This service shows how much State Pension you could get, the exact date when you will be entitled to your pension, whether you can increase your entitlement, and how much the increase will be if contribution gaps are filled.
  • Child Benefit: You can apply for child benefit using the app, and thereafter view your payment history, update bank details, and let HMRC know if a child is staying in full-time education past the age of 16. If liable for the high income child benefit charge, the app can be used to arrange for the charge to be collected through your PAYE tax code.
  • National Insurance (NI): The app can store your NI number in a digital wallet, so it is conveniently available when needed. This feature is particularly useful for employees, because obtaining a confirmation letter from HMRC can take at least two weeks.

A helpful new feature allows a taxpayer to tell HMRC that they no longer need to submit a self assessment tax return.

Set up

The HMRC app can be downloaded from either the App Store (Apple devices) or the Google Play Store (Android devices). It is then just a matter of using your Government Gateway user ID and password to sign in for the first time. Thereafter, the app can be accessed with a 6-digit PIN, fingerprint or facial recognition.

The HMRC app currently seems to work much better on Apple devices (4.8 rating) than on Android devices (3.9 rating). Many Android users are encountering access issues.

The HMRC app can be found here and here.

Photo by Fotis Fotopoulos on Unsplash

Provisional Liquidation Trumps TUPE Reg 8(7)

Written by Femi Ogunshakin on . Posted in Employment Law, Insolvency, Redundancy, Restructuring & Insolvency. No Comments on Provisional Liquidation Trumps TUPE Reg 8(7)

The Employment Appeal Tribunal (EAT) has clarified that the appointment of a provisional liquidator can constitute the commencement of terminal insolvency proceedings for the purposes of Regulation 8(7) of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

This means that, in certain circumstances, employee rights do not transfer to a purchaser when a business is sold out of insolvency.

Case Summary

The case: Secretary of State for Business and Trade v Sahonta & ors EAT 166, Lady Poole; 10 November 2025, covers a number of key facts:

  • Morton’s Rolls Ltd, a bakery business, became insolvent and entered compulsory liquidation.
  • On 3 March 2023, Morton ceased trading and entered into a conditional business transfer agreement with Phoenix Volt Ltd.
  • A provisional liquidator was appointed on 7 March 2023 following a winding-up petition by HMRC.
  • The provisional liquidator informed employees that their employment may have transferred to Phoenix, but if not, it was terminated as of 7 March.
  • Phoenix began reopening the business and hiring staff from 14 March.
  • A winding-up order was made on 31 March 2023.
  • Around 140 employees sought payments from the National Insurance Fund, claiming improper dismissal. The Secretary of State argued Phoenix was responsible for the employees under TUPE.
  • The Employment Tribunal found a TUPE transfer occurred on 21 March but fell within the reg 8(7) exception because the provisional liquidator was in office, so employee rights did not transfer to Phoenix.

The Decision

The EAT upheld the Tribunal’s decision, confirming that insolvency proceedings “instituted with a view to liquidation” can begin with the appointment of a provisional liquidator—not just upon a final winding-up order. The EAT took a purposive approach, focusing on the intent behind TUPE: balancing employee protection with facilitating genuine insolvency-driven business transfers.

The EAT disagreed with previous commentary suggesting only a final winding-up order triggers reg 8(7). Since the provisional liquidator was appointed to safeguard assets for creditors and had powers related to liquidation, reg 8(7) applied from 7 March. As a result, employee rights did not transfer to Phoenix, and claims against the National Insurance Fund could proceed.

Important Points for Readers

  • Provisional Liquidation as Terminal Insolvency: The appointment of a provisional liquidator can trigger the reg 8(7) TUPE exception, meaning employee rights may not transfer in a business sale during such proceedings.
  • Purposive Interpretation: The EAT emphasised interpreting TUPE in line with its objectives—protecting employees while recognising genuine insolvency scenarios.
  • Divergence from EU Law: The case highlights potential post-Brexit divergence between UK and EU approaches to employment protection in insolvency. While EU law may be considered as an aid to interpretation, UK courts are not bound by CJEU decisions.
  • Practical Impact: Purchasers of businesses from provisional liquidation should be aware that TUPE protections for employees may not apply if reg 8(7) is engaged.

This decision provides important clarity for insolvency practitioners, employers, and employees regarding when TUPE protections will—and will not—apply in insolvency-driven business transfers.

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Breaking the (tax) code

Written by Femi Ogunshakin on . Posted in Advice. No Comments on Breaking the (tax) code

More than 5.6 million employees were issued the wrong tax code last year, resulting in £3.5 billion in tax overpaid to HMRC. Reclaiming overpayments, however, can be a slow and frustrating process.

Typical problems

Often, problems arise because HMRC has made a best estimate of someone’s income:

  • Taxable benefits: Benefits such as a company car, healthcare or gym membership may no longer be received, but HMRC will be unaware of such changes.
  • Additional income: HMRC will base their estimate of additional income on what an employee made the previous year, but the income – such as property letting, dividends, or freelance work – may be less or have ceased altogether. Again, HMRC will be unaware of this change.
  • Multiple employments: Holding several jobs, especially where a job only lasts for a few months, will invariably lead to incorrect tax coding.
  • Allowances: The tax code could suggest an incorrect level of income when it comes to the amount of available personal allowance.
  • Allowable expenses: Deductions for subscriptions and professional fees will be based on what was previously claimed, yet these will invariably increase each year.

Check tax codes

The responsibility to report an incorrect tax code lies with the employee. Correcting mistakes immediately avoids having to reclaim overpaid tax. This can mean a long wait, with HMRC providing a poor telephone service and often ignoring written requests:

  • The fact that paper tax code notices are no longer routinely issued means that a bit more effort is required to check HMRC’s coding assumptions.
  • Employees should update details on the HMRC app or their online personal tax account.

Once details are updated, HMRC will amend the tax code and inform the employer within 15 working days. Unless changes are made towards the end of the tax year, any tax refund should automatically be made by the employer.

The government’s guide to tax codes can be found here.

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Solicitors acting for clients in insolvency matters should be aware of the recent clarification in McGann v Eldonian Community Trust Ltd EWHC 66 (Ch) that the insolvency courts have authority to make a pro bono costs order.

Written by Femi Ogunshakin on . Posted in Insolvency, Litigation & Dispute Resolution, Litigation costs, Restructuring & Insolvency. No Comments on Solicitors acting for clients in insolvency matters should be aware of the recent clarification in McGann v Eldonian Community Trust Ltd EWHC 66 (Ch) that the insolvency courts have authority to make a pro bono costs order.

Ordinarily, CPR 46.7, governs costs orders in respect of pro bono representation, however, the court in McGann has applied this to insolvency proceedings through rule 12.1 of the Insolvency (England and Wales) Rules 2016 (IR 2016).

What is a Pro Bono Costs Order?

A pro bono costs order requires a party to pay an amount equivalent to legal costs to the pro bono party and, in the case of McGann, an additional payment to the Access to Justice Foundation. The court’s premise on this occasion was to ensure that parties facing pro bono representation are exposed to similar costs risks as if the opponent had paid for legal representation.

Practice Points for Solicitors

The decision in McGann highlights a number of key considerations for solicitors involved in insolvency proceedings where one party is represented on a pro bono basis. I will summarise these as follows and welcome the thoughts of practitioners in this space.

Do Not Assume No Costs Liability:

If your client’s opponent is represented on a pro bono basis, your client may still be ordered to pay costs which in recent cases have been significant i.e. £85,000 and £117,000. In the McGann case; £20,325.

Statutory Powers Apply in Insolvency:

The court’s power arises under section 194 of the Legal Services Act 2007 and applies to civil proceedings, including insolvency proceedings.

Relevant Rules and Procedures:

  • CPR 46.7 and Practice Direction 46 set out the procedure for pro bono costs order; and
  • the party with pro bono representation must file a written statement of the costs that would have been claimed if representation had not been free.

Assessment of Costs

The court may make a summary assessment or order a detailed assessment of the sum paid to the party providing pro bono representation.

No need for Retainer Evidence

The court does not require evidence of a written retainer for pro bono counsel; confirmation that the services were provided ‘free of charge’ is sufficient.

Practical Implications

Advising clients that opposing pro bono representation does not shield them from adverse costs orders.

Preparing for Hearings

Be ready to challenge or respond to pro bono costs statements and advise clients on potential exposure.

For a more detailed reading of the facts of McGann click here

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Property income tax rates going up

Written by Femi Ogunshakin on . Posted in Income Tax, Landlord, Property. No Comments on Property income tax rates going up

Landlords have had one piece of bad news after another of late. With the Renters’ Rights Act 2025 recently added to the statute books, landlords are now facing an across-the-board two percentage point increase for property income tax rates from 6 April 2027.

The rate increase will be achieved by the creation of a separate set of income tax rates for property income. The property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%.

The new property income tax rates will only apply for English, Welsh and Northern Irish landlords. However, the devolved Scottish government will be given the power to also increase rates.

Uneven impact

Relief for residential finance costs is going to increase in line with the new property basic rate, which means it will be set at 22% from 6 April 2027.

Therefore, highly geared landlords will be less impacted from the changes than landlords who have no, or very little, borrowing:

  • For example, a higher rate taxpayer with property income of £20,000 and no finance costs, will be looking at an annual tax increase of £400.
  • However, if finance costs are £15,000, the tax increase will only be £100.

The changes are more serious for those with a larger portfolio of properties, so someone with, say, ten to twelve rentals, and only moderate financing, could be facing a tax increase of around £1,500 to £2,000. With landlords already being hit by various other costs, they are probably going to have to pass on some or all of the extra tax by raising rents.

Incorporation

Incorporating an existing property portfolio may be too expensive from a tax perspective, but landlords may decide to acquire new properties through a company. A limited company structure means full relief for finance costs, but will often not be beneficial taxwise when it comes to extracting the property income from the company.

Be warned that the basic and higher tax rates on dividend income are also being increased by two percentage points.

The government’s guide to renting out property can be found here.

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Don’t fall into the communication gap on Making Tax Digital

Written by Femi Ogunshakin on . Posted in Income Tax, Making Tax Digital, MTD, Self Assessment. No Comments on Don’t fall into the communication gap on Making Tax Digital

Many potentially affected taxpayers have not yet engaged with a major change in tax reporting.

Communication is arguably not one of HMRC’s strongest points. While its requests for tax returns are made within the start of the tax year, it is not so prompt in other areas. The latest HMRC performance statistics, issued in January 2026, reveal that between January to November 2025:

  • More than one-in-five pieces of correspondence had not received a reply within 15 working days, and one-in-eight was still languishing unanswered after 40 working days.
  • The average speed of answering a telephone call exceeded 13 minutes, with over one-in-ten calls being abandoned.

Poor communication created problems when the high income child benefit charge (HICBC) was introduced in 2013. It was not until September 2025 that HMRC finally launched an online service allowing those affected to pay the charge via pay as you earn (PAYE), rather than completing an income tax self assessment return.

Now, another reform to the tax system is due to start from April and threatens to meet a similar I-didn’t-know-about-that response to the one that dogged the HICBC for years. The new change is the requirement to report certain income under the Making Tax Digital (MTD) rules.

Initially, MTD will affect those who:

  • are personally registered for self assessment,
  • receive income from self-employment or property (or both), and
  • had qualifying income (basically gross income from self-employment and property) of more than £50,000 in 2024/25.

If you meet those three criteria, then you must:

  • Sign up for MTD – HMRC will not automatically register you, although it will send chase-up letters,
  • Acquire HMRC-recognised software or, if you stick with spreadsheets or your existing software, obtain ‘bridging software’ that works with HMRC systems,
  • Send quarterly updates of your income and expenses to HMRC, and
  • Send an end-of-year return by 31 January following the end of the tax year.

It is perhaps indicative of HMRC’s expectations that in the Autumn 2025 Budget it was announced that taxpayers will not receive penalty points for late submission of quarterly updates for 2026/27.

If you are thinking, “Phew, I am under the £50,000 threshold”, the bad news is that it falls to £30,000 for 2027/28 and £20,000 thereafter.

Find out if you need to make your tax digital on the government website here.

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Increased cost for copies of grant of probate

Written by Femi Ogunshakin on . Posted in Probate, Inheritance Tax. No Comments on Increased cost for copies of grant of probate

Many individuals will administer the estate of a deceased relative themselves, especially if the estate is uncomplicated. However, due to a recent change, while the cost of obtaining probate in England and Wales remains the same, the cost for each official copy of the grant has increased significantly.

Ordering extra copies of the grant of probate has risen from just £1.50 to £16 per copy. Extra copies may be needed to send probate to different institutions at the same time.

If the deceased did not leave a will (died intestate), then the closest living relative will have to apply for letters of administration rather than a grant of probate.

How many copies?

There is no hard and fast rule about how many copies are required, because each financial institution sets its own threshold for when a copy of the grant of probate is required. The institutions that might require a copy include:

  • Banks, building societies and NS&I;
  • Pension and insurance providers;
  • Share registrars;
  • Local councils to settle council tax; and
  • A management company for a leasehold property.

Having spare copies also makes sense. It might be that ten copies are required, so the fee will now be £160. This is in addition to the £300 application fee for the grant of probate, although no fee is payable for very small estates of £5,000 or less.

When to get help

Specialist help with probate can be expensive, but in many circumstances will be required.

  • Inheritance tax: This can be difficult to calculate, especially if there are hard-to-value assets, or complex reliefs available.
  • The terms of the will are unclear: This could be the case if the deceased drew up the will themselves. The executor or administrator can be held personally financially liable if the deceased’s estate is not correctly distributed.
  • The will is likely to be challenged: Current/former spouses and civil partners, along with children, could make a claim if they feel they have not been sufficiently provided for.

Other situations include where money or property has been left to a trust, assets are left to children under 18, or where the deceased owned a business.

If you are involved in a probate application, the government’s guide is a good starting point. This can be found here.

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Inheritance tax business relief – where are we now?

Written by Femi Ogunshakin on . Posted in Inheritance Tax, Budget. No Comments on Inheritance tax business relief – where are we now?

The inheritance tax (IHT) agricultural relief U-turns have been well publicised, but the changes apply equally to business relief.

Currently, qualifying business property included in a deceased’s estate qualifies for 100% relief regardless of the value of the business property. The relief means that an unincorporated business or a shareholding in an unlisted company can be left to the next generation without any IHT implications.

There are various conditions for business relief to be available, but the most important point is that the property must have been owned for two years.

Timeline of changes

October 2024 Budget: The initial proposals would have restricted 100% business relief to a maximum of £1 million from 6 April 2026. For qualifying business property in excess of £1 million, relief would have been at the rate of 50%. Therefore, on a business valued at £5 million, IHT would have increased from zero to £800,000, assuming nil rate bands are used against other assets.

November 2025 Budget: The £1 million allowance was initially not going to be transferable between spouses or civil partners. The first U-turn saw the allowance made transferable to a surviving spouse or civil partner (even if first death occurred before 6 April 2026). Therefore, the amount of IHT on a business valued at £5 million could potentially be cut from the original £800,000 to £600,000.

December 2025 U-turn: In an announcement made just before Christmas, the government said that the 100% allowance will now be capped at £2.5 million (and will stay at this level until at least 5 April 2031). This means the £5 million business property will again be fully exempt if a surviving spouse or civil partner’s allowance is available.

Cohabiting partners

Unlike married couples and civil partners, the £2.5 million 100% allowance is not transferable to a surviving partner where the couple are unmarried or not in a civil partnership. The potential IHT cost is £500,000. Nil rate bands of up to £500,000 are also not transferable, which is another potential IHT loss of £200,000.

Although a long-term unmarried couple may be content as they are, the IHT implications of remaining unmarried could merit a rethink.

Some examples of how the £2.5 million 100% allowance will work can be found here (note that the examples are based on agricultural property, but the principle is the same).

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And now for the next New Year

Written by Femi Ogunshakin on . Posted in Advice, Budget. No Comments on And now for the next New Year

With the festivities firmly behind us, it is time to turn our thoughts to 5 April.

Last year’s Budget revised the Chancellor’s fiscal calendar. From now on, the Office for Budget Responsibility (OBR) will make only one full assessment a year of the UK’s finances, alongside the Autumn Budget, leaving the Spring Statement due in March as little more than a minor update.

The tax year will still end on 5 April (Easter Sunday in 2026). Normally, many changes announced in the Budget would take effect on the following day, but that is not the case in 2026. Indeed, some of the measures of the Budget 2025 are not due to take effect until 2028 or later. Even so, there is plenty to consider now in terms of year-end tax planning. For example:

  • Threshold planning: The Budget did nothing to remove the anomalies in the income tax system created by arbitrary thresholds. The most significant of these are:
  • The high income child benefit charge threshold starting at £60,000 (and ending at £80,000)
  • The £100,000 threshold at which the personal allowance begins to be tapered (ending at £125,140) and tax-free childcare is lost (falls off the cliff, with no tapering).
  • As the year end nears, and estimating your 2025/26 income becomes easier, there can be opportunities to either sidestep the thresholds or take advantage of gaining tax relief at the high rates they create.
  • Inheritance tax (IHT): In the Budget, the IHT nil rate band (£325,000) was frozen for another year (to April 2031), having last been increased in April 2009. That makes it even more important that you do not waste your yearly gift exemptions – the £3,000 annual exemption, £250 small gifts exemption, and the least understood, but potentially most valuable exemption, for normal expenditure gifts.
  • Marriage Allowances: If you or your spouse/civil partner had income below the personal allowance in 2021/22 (£12,570, as it now will be until April 2031), you have until 5 April 2026 to claim the marriage allowance for that year (£1,260), which could produce a tax saving of up to £252. A claim can only be made if the other partner was a basic rate taxpayer (starter, basic or intermediate rate in Scotland) in 2021/22. The principle applies (with an allowance of £1,260) for all subsequent years, so you might be able to reclaim over £1,250.

There are many other points to consider but do take advice before taking action. The Autumn Budget 2025 is available to read here. 

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Insolvency Litigation Funding:  Non-party costs judgment

Written by Femi Ogunshakin on . Posted in Insolvency, Litigation & Dispute Resolution, Restructuring & Insolvency. No Comments on Insolvency Litigation Funding:  Non-party costs judgment

The following is a quick review of the non-party costs judgment in Thomas Barnes & Sons PLC v Blackburn With Darwen Borough Council  together with a summary of the key message that litigators should communicate to their clients regarding funding and control of litigation, and the risk of non-party costs orders.

Litigators should clearly advise clients who are considering funding or controlling litigation—especially where the client is not a formal party to the proceedings—of the following key points arising from the non-party costs order judgment:

  • Risk of Non-Party Costs Orders: Individuals or entities who fund litigation and stand to benefit from its outcome, and/or exercise real control over the proceedings, may be made liable for the other side’s costs if the claim is unsuccessful. This liability can be substantial and is not limited to sums provided as security for costs.
  • Careful Cost-Benefit Analysis Required: Funders should not assume that providing security for costs or funding the claimant’s legal fees will shield them from further liability. They must carefully weigh the potential costs against the likely recovery, as costs orders can far exceed any anticipated benefit.
  • No Automatic Protection for Officeholders or Creditors: The judgment makes clear that non-party costs orders can be made even where funders are officeholders or creditors, unless their personal interest and control over the litigation are minimal.
  • Transparency and Evidence: Courts will scrutinise the actual involvement and control exercised by funders. Lack of detailed evidence or attempts to minimise involvement may not protect against a costs order.
  • No Chilling Effect on Justified Claims: The judgment does not accept that the risk of a non-party costs order should deter justified claims, but it does mean funders must be fully aware of the risks before proceeding.

If you are considering funding or controlling litigation, you must be aware that you could be held personally liable for the other side’s legal costs if the claim fails—even if you are not a formal party. This liability can be significant and may go beyond any security for costs you provide. It is essential to undertake a thorough cost-benefit analysis and understand that courts will look at your actual involvement and interest in the case. Please discuss these risks with us in detail before making any commitment.

Further reading can be found at:

Thomas Barnes & Sons PLC v Blackburn With Darwen Borough Council [2026] EWHC 24 (TCC

Civil Litigation Brief – Cost Bites 326

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Venture Capital Trust changes

Written by Femi Ogunshakin on . Posted in Venture Capital, Income Tax. No Comments on Venture Capital Trust changes

The rate of income tax relief for individuals investing in venture capital trusts (VCTs) is to be cut. However, gross asset and investment limits for the scheme will become more beneficial.

VCTs invest in relatively young, unquoted companies. As such, the underlying investments carry considerably higher risk compared to listed companies, but VCT shareholders willing to take a risk are rewarded with generous tax breaks.

Tax relief

Individuals can currently obtain income tax relief of 30% by subscribing up to £200,000 for newly issued shares in VCTs. However, this rate of relief is to be cut to 20% from 6 April 2026:

  • The change is likely to see investors rushing to put money into VCTs by 5 April 2026 to benefit from 30% relief for 2025/26, so popular VCTs will fill up even faster than usual.
  • Anyone planning to invest this year should therefore do so as soon as possible.

An investment of £50,000 in VCTs by 5 April 2026 will mean a taxpayer can reduce their tax liability for 2025/26 by £15,000. However, a similar investment after this date will only provide tax relief of £10,000.

Although a VCT investment must be retained for five years to avoid losing the tax relief, any dividends received are tax-free. This means that they don’t need to be declared on the investor’s self assessment tax return. There is also no capital gains tax payable when the VCT shares are sold.

VCT limits

In partial mitigation, investing in a VCT should, in future, be a slightly less risky proposition because VCTs will be permitted to invest in more mature businesses. The companies invested in VCTs will be permitted gross assets up to £30 million, rather than the current £15 million.

The annual amount that a VCT can raise will also be increased from £5 million to £10 million.

HMRC’s guide to tax relief for investors using VCTs can be found here.

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Renters’ Rights Act to go ahead with reforms

Written by Femi Ogunshakin on . Posted in Advice. No Comments on Renters’ Rights Act to go ahead with reforms

The Renters Rights Act only recently received Royal Assent. While detailed guidance is yet to be published, the first phase of reforms will be introduced from 1 May 2026.

Tenancies

All existing assured shorthold tenancies in England will automatically convert to periodic tenancies, and only the new type of tenancy will be permitted for any new tenancies signed on or after 1 May 2026. To summarise:

  • Landlords will not need to change or re-issue existing written tenancy agreements but will instead only have to provide tenants with a copy of the government’s information sheet.
  • Landlords will no longer be able to remove tenants on a no-fault basis, although an eviction notice served before 1 May 2026 will remain valid.

Under a periodic tenancy, tenants can stay in the rented property for as long as they want and will be able to end the tenancy by giving two months’ notice.

In future, landlords may want to take out rent guarantee insurance to cover the risk of a tenant defaulting. The average rent lost when a tenant is evicted is estimated at more than £12,000 outside of London, rising to over £19,000 for a London property.

Rent

Only one rent increase will be permitted a year, with tenants notified at least two months in advance:

  • Tenants will be able to challenge rent increases where they consider the rent to be higher than the open market rate.
  • A term in a tenancy agreement that automatically raises the rent will no longer be effective from 1 May 2026.

Given the changes, landlords may prefer to increase rent annually, rather than trying to catch up after several years with no increase.

Discrimination

Landlords and letting agents will not be allowed to discourage a potential tenant who has children or receives benefits from renting a property.

For example, landlords will have to consider requests to keep a pet:

  • A valid reason must be provided if the tenant’s request is refused, such as the property is too small for a large pet or several pets.
  • Landlords will not be allowed to ask for pet insurance to cover property damage, so landlords might want to pay for this themselves and uplift rent accordingly.

The government’s roadmap for reforming the private rented sector can be found here.

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Nearly £50 billion missing in tax take

Written by Femi Ogunshakin on . Posted in Capital Gains Tax, Company Director, Cryptocurrency. No Comments on Nearly £50 billion missing in tax take

The latest estimate of the tax gap shows that missing taxes are approaching £46.8 billion, with some 5.3% of total taxes going unpaid.

These figures are for 2023/24. HMRC will be particularly concerned that small businesses account for 60% of the missing taxes. The tax gap for corporation tax has increased from 6.4% in 2011/12 to nearly 16%.

The tax gap for wealthy individuals remains fairly constant at just 5% of the total. There is, of course, a range of fully legitimate tax-planning strategies available for those in that income bracket.

Small companies

It shouldn’t come as a surprise that owners of small companies are taking measures to limit their tax exposure. Not only are companies now faced with higher rates of corporation tax, but it has become increasingly costly for owners to extract profits from their business:

  • Owners may exploit the expensing rules by claiming non-work expenditure. For example, a deduction could be claimed for purchases of laptops, phones and tablets despite minimal business use, if any at all.
  • Depending on the nature of the business, owners may avoid declaring income by accepting cash payments or using payment in kind.

HMRC has lacked resources to carry out extensive tax investigations, but this may change with substantial new funding being allocated by the Chancellor.

Cryptoassets

Non-compliance is estimated to be quite high when it comes to cryptoassets, with HMRC struggling to keep up with what is a rapidly evolving sector.

It is one thing for HMRC to identify when cryptoassets are converted back into cash, but it becomes more complicated when one type of token is exchanged for a different one (such as Bitcoin converted into Ethereum) or when tokens are used to pay for goods or services (possibly using a cryptocurrency debit card). Both types of transaction are disposals for capital gains tax purposes.

HMRC’s summary details of the latest tax gap figures can be found here.

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Companies House Identity Verification

Written by Femi Ogunshakin on . Posted in Company Director. No Comments on Companies House Identity Verification

Identity verification is being introduced for directors, people with significant control (PSC) and those who file at Companies House. Verification is currently voluntary, but will be made mandatory from this autumn. From autumn 2025, mandatory identity verification will be required:

  • When you file your company’s confirmation statement;
  • If you are appointed as a director; or
  • If you become a PSC.

In the future, it will be a legal requirement for all directors and PSCs to verify their identity, and there may be financial penalties for not doing so. It is now possible for directors and PSCs to voluntarily verify their identity in advance of mandatory verification.

The online verification process should only take 10 to 15 minutes, so it is a good idea to do this ahead of the deadline in case of any problems that may arise.

Verification

There are three ways to verify your identity:

Online: This route uses GOV.UK One Login to verify your identity using a photo ID (such as a passport or driving licence) and is free of charge. Depending on your answers to certain questions, you will be guided to verify using the GOV.UK mobile phone app or in your web browser.

In person at a Post Office: This is again free of charge and can be done at any Post Office that offers in-branch verification. However, photo ID is still required, and you will need to enter details online to start.

Use an Authorised Corporate Service Provider: Accountants and lawyers may offer this service, but a fee will most likely be charged.

Once you have successfully verified, you’ll get a unique identifier known as a Companies House personal code. This code will be required when, for example, filing your company’s confirmation statement.

Verify your identity at Companies House, if you haven’t already, by starting here.

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HMRC suffers from too much interest

Written by Femi Ogunshakin on . Posted in Capital Gains Tax, Corporation Tax, Income Tax. No Comments on HMRC suffers from too much interest

Taxpayers relying on HMRC to sort out the tax due on interest are given a warning.

As had often been noted over the last few years, one of the strategies adopted by successive governments to increase tax revenue is the freezing of tax allowances and bands. As inflation increases income, the net result is generally to:

  • bring more people into the tax system; and
  • make existing taxpayers pay more tax, both in absolute terms and as a proportion of their income.

One frozen allowance causing growing problems is the personal savings allowance (PSA), unchanged since its introduction in 2016:

  • For basic rate taxpayers, the PSA is £1,000 per tax year, which means they have no tax to pay on their first £1,000 of interest income.
  • For higher rate taxpayers, their tax-free interest under the PSA is £500.
  • Additional rate taxpayers do not qualify for a PSA.

Until 2022, a sub-1% Bank of England Bank Rate meant that the PSA covered interest on a substantial five-figure deposit, meaning most savers had no tax to pay on their interest earnings. However, the effects of rising inflation dramatically changed the picture with higher interest rates. In the 2023/24 tax year, Bank Rate averaged about 5%. Consequently, savers earned much more interest to set against their frozen PSA.

HMRC is now struggling to collect all the income tax due on interest for 2023/24. To prevent a flood of tax returns, HMRC has previously told taxpayers that it would use the personal interest information sent directly by banks and building societies to calculate tax due on interest, and then issue a Simple Assessment or adjust their tax code. However, the volume of computations needed for 2023/24 was so great that HMRC did not complete the task of issuing assessments until March 2025. This was over a month after the normal online filing deadline for 2023/24 tax returns.

To make matters worse, HMRC was unable to match about one in five of the 130 million account reports it received to taxpayer records. HMRC is now reminding savers that the taxpayer is ultimately responsible for paying tax on interest received and that they should do so urgently if they have not heard from HMRC.

A similar problem seems certain to occur for the tax year just ended, but do not expect Rachel Reeves to increase the PSA in response. The current focus on potentially placing restrictions on cash ISAs could end up making things worse.

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New real time payment service for high income child benefit charge

Written by Femi Ogunshakin on . Posted in High Income Child Benefit Charge. No Comments on New real time payment service for high income child benefit charge

HMRC’s newly launched online service means that taxpayers can pay a high income child benefit charge (HICBC) in real time. It should reduce the number of individuals who have to register for self assessment only for HICBC.

The charge

The HICBC only applies when an individual – or their partner – receives child benefit and their annual income exceeds £60,000, with the charge removing 1% of the child benefit for every £200 of income over £60,000. Once income reaches £80,000, the charge is 100% so the amount of child benefit is essentially reduced to nil.

Online service

The new service allows employees to pay their HICBC via PAYE, provided they have no other reason to complete a self assessment tax return, such as having property income. Keep in mind:

  • The deadline for registering for the online service is 31 January after the tax year for which the HICBC is payable.
  • Anyone who has not already submitted their tax return for 2024/25 has the option of settling their HICBC liability via PAYE during the current 2025/26 tax year.
  • If a HICBC liability for 2025/26 is also collected, this will mean two HICBC amounts being recovered during 2025/26.

Thereafter, HICBC will just be collected in the tax year it relates to.

If an individual has already registered for self assessment to pay their HICBC, they must deregister from self assessment to use the online service.

Signing up

You might need to prove your identity using photo identification such as a passport or a driving licence.

In many cases that are straightforward, you will only need details of your income and national insurance (NI) number, along with your partner’s NI number, if they are the one who receives child benefit. In more complicated cases, you will also need the dates of relationship changes during the tax year. Once signed up, you will receive a confirmation email, with your PAYE coding notice updated within 48 hours.

For individuals who wish to pay their HICBC through PAYE, the start point for signing up can be found here.

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One Week On: The Autumn 2025 Budget – A Balancing Act?

Written by Femi Ogunshakin on . Posted in Budget. No Comments on One Week On: The Autumn 2025 Budget – A Balancing Act?

This year’s Budget risked becoming the winter budget, arriving as late as possible on 26 November after a long, rumour-filled run in.

The Chancellor’s first Budget last autumn, on 30 October 2024, came following the early announcements of a raft of revenue-saving measures to fill her infamous “£22 billion blackhole”. Rachel Reeves’s second Budget moved four weeks nearer to Christmas and was preceded by two significant summer U-turns – on the winter fuel payment and disability benefit reform – that implied about £6 billion of revenue-raising would be required.

The long lead time to the Budget this year meant almost three months of speculation after summer’s end. Thankfully, the Treasury’s constant drip of leaked policy ideas and subsequently generated media rumours finally ended, leaving the Budget as something of a 70-minute anti-climax.

The main measures of the Autumn Budget 2025 included:

  • A three-year extension to the freeze on income tax bands and the personal allowances. The Institute for Fiscal Studies (IFS) had earlier calculated that a two-year freeze would mean that by 2029/30, nearly one-in-four taxpayers would face a marginal tax rate of 40% or more.
  • A £2,000 cap from 2029/30 on the amount of salary that can be tax-efficiently sacrificed for pension contributions. Any excess will be liable to national insurance contributions for both employer (at 15%) and employee (at up to 8%).
  • A reduction to £12,000 in the maximum subscription to a cash Individual Savings Account (ISA) from 6 April 2027 for anyone aged under 65. The overall subscription limits for an adult ISA (£20,000) and a Junior ISA (£9,000) are unchanged. The Lifetime ISA stays at £4,000, while the government consults on a new first-time buyer’s ISA as its replacement.
  • The abolition of the two-child limit for universal credit and child tax credit, set to reduce child poverty by around 450,000 children in 2029/30.
  • A two percentage point increase in the rate of tax on dividends for basic rate and higher rate taxpayers to 10.75% and to 35.75%, respectively, effective from
    6 April 2026. The dividend tax rate is unchanged at 39.35% for additional rate taxpayers.
  • A two percentage point increase across all tax bands from 2027/28 for property and savings income.
  • The introduction of a three-pence per mile road charge for electric vehicles from April 2028.

The outcome was a Budget that did not deliver a headline punch but opted to tread a path between spending requirements and funding those requirements through additional borrowing and increased tax pressures.

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Making Tax Digital – Exemptions

Written by Femi Ogunshakin on . Posted in Making Tax Digital, MTD, Property, Self-Employed. No Comments on Making Tax Digital – Exemptions

In less than six months, Making Tax Digital (MTD) will become mandatory for sole traders and landlords with an annual income of more than £50,000. However, some may be able to avoid the requirements.

HMRC has opened applications for an exemption from MTD for income tax for those who consider themselves to be digitally excluded. This may be where a person lives in an area without access to broadband, or cannot comply because of age, health or disability, or doesn’t use a computer for religious reasons.

Digitally excluded criteria

Internet access: This means no internet access at your home or business, because of the location, and where access is not available at a suitable alternative location.

Age, health or disability: You will need to show that your age, health condition or disability stops you from using a computer, tablet or smartphone to keep digital records or submit them to HMRC.

Religious reasons: This will apply to practising members of a religious society or order whose beliefs mean they do not use a computer, tablet or smartphone for business or personal use.

There may be other reasons that you are classed as digitally excluded, and HMRC will consider all applications on a case-by-case basis.

Anyone who is exempt from using MTD compatible software for VAT returns will also be exempt from MTD for income tax provided their circumstances have not changed.

Not digitally excluded

HMRC will not accept an application for exemption if the only reason for applying is that a person:

  • Has previously only submitted paper self assessment tax returns;
  • Is unfamiliar with accountancy software; or
  • Only has a small number of digital records to create each tax year.

The fact that additional costs will be incurred, or that extra time will be required for MTD, is also not a valid reason for HMRC to grant exemption.

HMRC guidance on applying for an exemption from MTD can be found here.

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Time to Talk About Director Loan Accounts

Written by Femi Ogunshakin on . Posted in Company Director, Company Insolvency, Director Disqualification, Insolvency. No Comments on Time to Talk About Director Loan Accounts

Used wisely, a company loan can be an attractive option for directors who need to access company funds, especially if the need is urgent. However, there can also be serious tax implications for the unwary.

Personal tax

As most directors are aware, taking a company loan could impact their personal tax due to possible taxable benefits. This will be the case if interest on the loan is less than HMRC’s official rate (currently 3.75%) and the director’s total beneficial loans exceed £10,000 at any point during the same tax year.

The beneficial loan tax charge is not particularly significant, with an interest-free loan of around £20,000 for six months only costing a higher tax rate-paying director around £150 in tax.

Company tax

This is where the tax situation becomes more complicated if the director is also a shareholder and the company is a close company. For owner-managed companies, this will generally be the case:

  • There is no tax charge if a loan is fully repaid by the time the company’s corporation tax is due; nine months and one day after the end of the company’s accounting period.
  • If not repaid by then, there is a company tax charge at the rate of 33.75% on the amount of loan still outstanding. This is in addition to the corporation tax payable.
  • However, this tax charge is refunded to the company if the loan is subsequently repaid by the director.

The punitive nature of the company tax charge means that larger, more unmanageable, loans taken by a director can end up being expensive if not repaid. Further, the loan will sit on the company’s balance sheet as a red flag should the business need to raise finance, and may deter new investors or even customers.

HMRC guidance on director’s loans can be found here.

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Untangling red tape on company reporting

Written by Femi Ogunshakin on . Posted in Companies House, Company Director. No Comments on Untangling red tape on company reporting

Government plans on company reporting appear somewhat contradictory. Some regulations are set to tighten from April 2027, but latest announcements suggest a move in the opposite direction.

The current intention is that from 1 April 2027:

  • Both micro-entities and small companies will have to file a profit and loss account.
  • Small companies will have to file a director’s report.
  • Companies will no longer be able to prepare and file abridged accounts.

However, the Chancellor, Rachel Reeves, has recently announced that red tape is to be cut for small- and medium-sized businesses.

Loosened up

The Chancellor has said that the requirement to submit a director’s report to Companies House will be removed for all companies. However, some aspects of the report will be reallocated elsewhere in a company’s financial statements.

In addition, medium-sized private companies will no longer need to produce a strategic report as part of their annual reporting.

While any reduction to the administrative burden is welcome, there are concerns that the latest plans do not go far enough.

Thresholds

The size thresholds for corporate reporting were increased by approximately 50% as recently as April this year, but the Chancellor has also announced further increases.

For a company to be classed as either a micro-entity or small company, it should be below two of three thresholds for turnover, balance sheet total and average number of employees. The thresholds for accounting periods commencing on or after 6 April 2025 are currently as follows:

 Micro-entitySmall companyMedium-sized company
Turnover£1 million£15 million£54 million
Balance sheet£500,000£7.5 million£27 million
Employees105050

Micro-entities benefit from reduced reporting requirements and small companies may qualify for audit exemption. Companies House accounts guidance can be found here.

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Cash ISAs twice as popular as stocks and shares ISAs

Written by Femi Ogunshakin on . Posted in ISA, Tax, Wealth. No Comments on Cash ISAs twice as popular as stocks and shares ISAs

HMRC figures for 2023/24 show cash ISA subscriptions have increased by almost 224% more than stocks and shares ISAs by the end of the decade.

The Chancellor’s plan to reform individual savings accounts (ISAs) to “improve returns for savers” has been considered for some time. Rachel Reeves’s scheme is widely believed to mean the current £ 20,000-a-tax-year subscription limit for ISAs would be reduced for cash ISAs. Unsurprisingly, the investment management industry has been in favour of such a move, while the big banks and the Building Societies Association have been strongly against it.

Statistics published by HMRC in September cast a new light on the ISA debate. The data show that in 2023/24, subscriptions to cash ISAs were £69.5 billion, while stocks and shares ISAs attracted just over £31 billion. That brought the total amount invested in cash ISAs to £360 billion as of April 2024. It would be reasonable to assume the total now is well above £400 billion.

Now, put yourself in the Chancellor’s shoes. If the Bank of England had £400 billion earnings and 4% Bank Rate, it would mean £16 billion of interest on which no income tax is being collected. The latest estimate from HMRC is that the cost of income tax and capital gains tax relief for ISAs was £9.4 billion in 2024/25, almost a fifth up on the previous year. Cutting back on the amount flowing into cash ISAs could reduce tax loss, even though the prospect of enhanced returns is a better story to present to the public.

To be fair to the Chancellor, there is some justification in her argument. As HMRC’s ISA Investment values and subscriptions graph illustrates, to a degree, the total value of stocks and shares ISAs grew more rapidly than cash ISAs over the ten years to April 2024. However, cash ISAs saw little net inflow for much of the period. It is easy to forget now that the Bank of England rate was no more than 1% between February 2009 and June 2022, assuring miserable returns for money held on deposit.

Before you rush to arrange a pre-Budget cash ISA, it is worth reflecting on what you are trying to achieve. If you just want to move a ready money deposit to a tax shelter, remember that unless you are an additional/top rate taxpayer, the personal savings allowance (PSA) covers up to £200 of tax on interest (20% for basic rate x £1,000 PSA or 40% higher rate x £500 PSA).

If you are setting aside money for long-term growth, then, as the Chancellor suggests, there could be better options.

Government guidance on how ISAs work is here.

Source: HMRC

Let Property Campaign nudges up revenues

Written by Femi Ogunshakin on . Posted in HMRC Investigations, Property, Self Assessment. No Comments on Let Property Campaign nudges up revenues

HMRC’s Let Property Campaign has been running for over twelve years. In 2024/25, it pulled in a record £107 million from landlords – more than a 60% increase on the previous year.

The number of taxpayers making voluntary disclosures has fallen from 11,000 to less than 8,000, despite the significant revenues. The larger sums being paid by those coming forward highlights the greater risk of ignoring a nudge letter by HMRC.

Typical errors

While there may be deliberate evasion, it is simple to misunderstand the rules of property letting. HMRC has highlighted the common tax errors, including:

  • Where a property has been inherited and then rented out. If only a single property is involved, there may not be any realisation that the property income needs to be declared to HMRC. A nudge letter may well have been sent because letting platforms are now providing data to HMRC.
  • A similar situation can arise if a person moves in with their partner and then rents out their previous property. While there may be no profit as such, because the rent barely covers the mortgage payments, for tax purposes, only the interest element of the mortgage payments qualifies for tax relief.
  • A property is purchased for a son or daughter to live in rent-free while they are at university. However, if the son or daughter then allows friends to move in who pay rent, this income should be declared to HMRC.

Capital expenditure can also trip up many landlords. For example, the installation of a new kitchen, which is a significant upgrade to the old one, is not a deductible expense, whereas expenditure on a like-for-like replacement would be.

The Let Property Campaign is open to all residential property landlords, but does not apply to companies or where commercial property is let. Voluntary disclosure will mean more lenient penalties.

Information on HMRC’s Let Property Campaign can be found here.

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Cryptocurrency conundrums

Written by Femi Ogunshakin on . Posted in Cryptocurrency. No Comments on Cryptocurrency conundrums

A Bank of England proposal to cap stablecoin holdings at a maximum of £10,000 or £20,000 for individuals has received fierce criticism; however, there are signs the Bank is softening its stance.

A stablecoin is a type of cryptocurrency that aims to maintain a stable value relative to a specified asset, such as the US dollar.

Many consider a £10,000/£20,000 restriction to be unworkable, and that it would leave the UK lagging behind the US and EU on digital asset regulation. For businesses, a £10 million maximum has been proposed. However, the governor of the Bank of England has recently backtracked by writing that it would be “wrong to be against stablecoins as a matter of principle”.

Why stablecoins?

Stablecoins are currently dominated by US dollar-based products, with stablecoins worth nearly $300 billion in circulation. They are very convenient for investors who wish to park their funds while buying and selling other more volatile cryptocurrencies.

While not yet mainstream, stablecoins are a good way to pay for goods and services, avoiding most of the costs associated with traditional payment methods, such as credit cards. This is especially the case with cross-border transactions.

Bitcoin on the balance sheet

Businesses are increasingly holding bitcoin as an asset, although stablecoins might also be an option. There are several drivers behind such holdings:

  • Bitcoin gives more diversification compared to traditional treasury assets such as cash and short-term gilts, and holding bitcoin can provide protection against inflation.
  • There are also reputational benefits because a business holding bitcoin will be seen as more digitally savvy.

Holding bitcoin does come with various risks. Apart from the price volatility, there will be the custodial challenges of a business holding cryptocurrency.

Under UK Generally Accepted Accounting Practice, bitcoin should be included on a company’s balance sheet at cost; being classified as an intangible fixed asset.

The Bank of England’s explainer on stablecoins can be found here, although it has not been updated since 2023.

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VAT return errors get an update

Written by Femi Ogunshakin on . Posted in VAT. No Comments on VAT return errors get an update

HMRC have withdrawn form VAT652. Companies with large VAT return errors must now submit corrections online or in writing. Larger VAT return errors are entered as method 2 type corrections, whereas method 1 is used when correcting smaller errors.

Method 1

Smaller VAT return errors can be corrected by making adjustments to the current VAT return. This is known as method 1, and it can be used where:

  • The net error (along with any errors in the previous four years) total less than £10,000. For example, if output VAT has been underpaid by £11,000, but input VAT has been underclaimed by £2,000, then the net error is £9,000 and can be corrected using method 1; or
  • The net error is between £10,000 and £50,000, and also less than 1% of the output figure for the current VAT return. So, if outputs are £2.5 million, a net error of up to £25,000 can be corrected using method 1. For most businesses, however, only the £10,000 limit will be relevant.

Late payment interest will not be charged, and, provided reasonable care has been taken, there will not be a penalty.

Method 2

With the withdrawal of form VAT652, errors that are too large for method 1 to be used must now be corrected online; although it is also possible to notify HMRC in writing. This is method 2, which will incur a late payment interest charge. Companies notifying HMRC of a large VAT return error must include information about how it happened and across which VAT period(s).

Penalties

 A penalty will be charged if an error has been made as a result of being careless, or where the error is due to deliberate behaviour. A careless error can still be corrected using method 1, although HMRC must also be informed of the error. A deliberate error must always be corrected using method 2.

HMRC’s guidance on correcting for VAT errors can be found here.

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Companies House identity verification begins rollout

Written by Femi Ogunshakin on . Posted in Companies House, Company Director, Incorporation. No Comments on Companies House identity verification begins rollout

Companies House identity verification starts on 18 November 2025. For individual directors, the date will vary when they will need to confirm they have verified their identity, depending on when their company’s next confirmation statement is due.

Directors

All existing directors will have to verify their identity, although those holding multiple directorships only need to register once:

  • Once verified, directors will receive an 11-character personal code from Companies House. This code will be required when filing their company’s first confirmation statement on or after 18 November 2025.
  • If the confirmation statement is due early November, then verification will not be necessary until November 2026. So it might be worthwhile filing your company’s confirmation statement early, if the deadline is soon after 18 November 2025.

Directors who are appointed from 18 November 2025 onwards will need to provide their personal code as part of the appointment process. Identity verification for corporate directors will not be introduced until a later date.

Members of a limited liability partnership must comply with the identity verification requirements on the same basis as directors.

Persons with significant control (PSCs)

PSCs will likewise have to prove who they are.

Director and PSC of the same company: The personal code must be provided separately for each role. For the PSC role, the code will be submitted using a new service within 14 days of the company’s confirmation statement date.

PSC but not a director of the same company: The code must be provided within the first 14 days of the PSC’s birth month. For example, if born on 28 January, the 14-day submission period will run from 1 to 14 January 2026.

Individuals who become a PSC from 18 November 2025 onwards will need to provide their personal code within 14 days of being added to the Companies House register.

Companies House guidance on identity verification can be found here.

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The stamp duty tangle – a useful lesson

Written by Femi Ogunshakin on . Posted in Stamp Duty. No Comments on The stamp duty tangle – a useful lesson

The former Deputy Prime Minister Angela Rayner’s recent problems with stamp duty land tax (SDLT) offer a salutary lesson.

In early September, the Deputy Prime Minister (and Housing Secretary) resigned after discovering that she had underpaid SDLT by £40,000 on the purchase of a flat in Hove.

That Rayner missed the history of the additional tax liability was unfortunately ironic. The surcharge on stamp duty was introduced by Conservative Chancellor, George Osborne, in the Autumn Statement 2015, at a rate of 3%. It took effect from April 2016, and the rate was subsequently increased to 5% nine years later in the Autumn Budget presented by Angela Rayner’s then cabinet colleague, Rachel Reeves.

The tax aimed to discourage buy-to-let and second home purchasers, who were often shopping for similar properties to first-time buyers in a pressured housing market. The basis of the additional tax required the buyer to pay extra SDLT if they owned another residential property on the same day that another property was bought. That might sound simple enough, but the legislation to achieve it was not, involving the closure of potential loopholes, such as buying the second property through a company or using trusts to shift ownership.

It was the latter anti-avoidance measure which tripped up Angela Rayner. She had sold the 25% interest in her first home, in Ashton-under-Lyne, to a trust for the benefit of her disabled child before buying her Hove apartment. Paragraph 12 of Schedule 4ZA of the Finance Act 2003 deemed that such a sale meant that Rayner was still treated as owning the property for SDLT purposes.

While Rayner had sought guidance on her SDLT position, the advice she received was qualified by the acknowledgement that it did not constitute expert tax advice and was accompanied by a suggestion, or in one case a recommendation, that specific tax advice be obtained. Had Rayner paid heed to those warnings, she would not now be facing a potential tax penalty of up to £12,000 for ‘carelessness’, in addition to the £40,000 extra SDLT.

The lesson of the whole episode and one to keep in mind whenever advice – particularly in the financial area – is needed: make sure you are talking to an expert who stands behind their judgement.

The government guide to SLDT is here.

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Electric car charging rates change – home and away

Written by Femi Ogunshakin on . Posted in Advisory Fuel Rates, Company Car Tax. No Comments on Electric car charging rates change – home and away

Starting 1 September 2025, two separate advisory fuel rates apply to fully electric cars depending on whether charging is at home or using a public charger.

HMRC’s advisory fuel rates can be used to reimburse employees for business travel in their company cars, or where employees are required to repay the cost of fuel used for private travel.

Rates

The electric car rate was previously 7p per mile, regardless of where charging took place. Reimbursement at this rate meant company car drivers could be faced with a substantial shortfall if they made extensive use of public charging networks.

Advisory rates are now 8p for home charging, with 12p for public charging. Although the previous single rate can continue to be used until 30 September, from 1 October only the new rates can be applied. This means:

  • The change to two separate rates reflects the higher cost of using public charging locations.
  • However, the public charging rate is based on the typical cost of a slow or fast charge. It will, therefore, normally be less than what a driver would pay to use an ultra-fast charger.
  • If this is the case, reimbursement can reflect the higher, actual, cost provided the rate can be substantiated.

As long as business mileage is reimbursed at an acceptable rate – the advisory rate or a substantiated higher rate – employees will not face a taxable fuel benefit, and there are no national insurance contribution implications for either the employer or employees.

In addition, having rates for different charging locations means more complicated record-keeping requirements for employers.

Hybrids

The change only impacts on fully electric cars. Hybrids are treated as either petrol or diesel cars, so the advisory rates for these types are relevant. There are no changes to the petrol rate from 1 September, but two of the diesel rates have increased by 1p per mile.

HMRC guidance on its advisory fuel rates can be found here.

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Business Asset Disposal Relief on Selling your business

Written by Femi Ogunshakin on . Posted in Business Rates, Capital Gains Tax, Company Director. No Comments on Business Asset Disposal Relief on Selling your business

An important consideration when selling your business is whether business asset disposal relief (BADR) will be available to minimise the capital gains tax (CGT) cost. BADR will be less advantageous from April 2026, so company owners may be looking to sell sooner rather than later.

BADR is currently at a flat rate of 14%, which is 10% lower than the higher rate of CGT. The rate will go up to 18% from 6 April 2026.

Calculating the gain

In many cases, the gain will just be the difference between the selling price and the nominal value of the shares sold. However, establishing the base cost will be more problematic if shares were inherited or received as a gift. Any further amounts invested in the business as share capital will also increase the base cost.

Capital gains tax

There are various conditions attached to BADR, which are basically:

  • The company has to be a trading company;
  • A 5% shareholding test must be met; and
  • You must be a director (or employee) of the company being sold.

These conditions have to be met for a minimum of two years before the sale, so it may be worth postponing a sale where the two-year ownership condition is not met.

BADR has a lifetime limit of £1 million of qualifying gains. This will not be an issue for many company owners, but it might be a problem if relief has been claimed previously.

Other considerations

While it will suit most company owners to sell their shareholding in return for cash, the buyer might prefer to purchase the assets of the company instead; this complicates the tax situation.

Furthermore, rather than a straight cash sale, the buyer will often want the seller to accept shares or loan notes as part of the consideration. Such an arrangement will keep the outgoing owner involved once the business has been sold. To the same end, the buyer may propose a phased payment plan, with an initial amount upfront, followed by further payments linked to future business performance.

Professional advice is essential when selling a business, so please contact us well in advance of any planned disposal.

HMRC’s guide to BADR can be found here.

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