As the end of the tax year on 5 April 2025 approaches, now is the perfect time to review your financial position, maximise tax efficiency, and ensure you’re fully prepared for the changes ahead.

Whether you’re a business owner, landlord or managing personal finances, proactive planning can help you reduce tax liabilities and avoid last-minute stress.

Here are five key considerations to help you get ready for the new financial year:

Business Asset Disposal Relief (BADR) – act now to secure a lower tax rate

If you’re planning to sell your business, timing is crucial. While BADR remains in place, tax rates on qualifying gains are increasing:

• Currently, the tax rate is 10 per cent on the first £1 million of gains.
• From 6 April 2025, this rises to 14 per cent.
• By April 2026, it will increase again to 18 per cent.

For business owners selling assets worth £1 million or more, this could mean paying up to £40,000 more in tax after April 2025.

What to do now:

• If you’re considering selling your business, accelerating the transaction before the tax year-end could save you money.
• Explore options such as restructuring ownership, transferring shares to a spouse, or selling to an Employee Ownership Trust (EOT) to minimise tax exposure.
• Speak to an expert to understand how anti-forestalling rules could impact the tax treatment of your sale.

Maximise tax reliefs on Agricultural Property Relief (APR) and Business Property Relief (BPR)

Changes to APR and BPR take effect from April 2026, placing a £1 million cap per individual on 100 per cent tax relief, with 50 per cent relief available on anything above this threshold.

For business owners and farming families, these changes could significantly affect estate planning and inheritance tax (IHT) liabilities.

What to do now:

• Review how your assets are structured to minimise the potential tax impact.
• Consider moving assets to family members or restructuring ownership ahead of the changes.
• Check whether your estate is sufficiently liquid to cover any potential IHT bills and explore gradual asset disposal if necessary.

Get ready for Making Tax Digital (MTD) for Income Tax

By April 2026, sole trader businesses and landlords with qualifying income over £50,000 will need to comply with MTD for Income Tax Self-Assessment (ITSA), and by April 2027, this will extend to those with qualifying income over £30,000.

This means taxpayers must keep digital records and submit tax updates quarterly rather than annually.

What to do now:

• Ensure your accounting software is MTD-compliant and start keeping digital records now to avoid a rushed transition.
• Speak to an accountant about what quarterly reporting will mean for your tax payments.
• If you’re close to the £50,000 threshold, review how your income is structured to determine whether you’ll need to comply.

Prepare for higher tax bills when buying your next home

From 31 March 2025, Stamp Duty Land Tax (SDLT) thresholds will revert to pre-September 2022 levels, increasing tax liabilities for many buyers.

The nil-rate threshold will halve from £250,000 to £125,000, and first-time buyers will see their relief cap drop from £425,000 to £300,000, with the maximum purchase price for relief falling from £625,000 to £500,000.

For buyers of average-priced homes, these changes could mean paying up to £2,500 more in Stamp Duty. Given that property transactions can take 12 to 16 weeks or longer, buyers looking to avoid higher tax bills should act well in advance of the deadline.

The impact will be most significant for first-time buyers, who may find it harder to get onto the property ladder. If you’re considering buying, now may be the time to bring your plans forward to maximise savings before the new rates take effect.

Use up your personal tax allowances before 5 April

The tax year-end is your last chance to maximise allowances and reliefs before they reset.

What to do now:

• Maximise pension contributions – Contributions up to £60,000 per year qualify for tax relief (subject to earnings and prior years’ allowances).
• Use your Capital Gains Tax (CGT) exemption – The annual exemption is just £3,000 in 2024/25, so consider selling assets before the tax year-end to make use of it.
• Claim tax-deductible expenses – Ensure all eligible business expenses are recorded and claimed to reduce taxable profits.
• Make tax-efficient gifts – Transfers within Inheritance Tax (IHT) allowances (e.g., gifting up to £3,000 per year) can reduce your taxable estate.

Plan now to save later

With significant tax changes on the horizon, now is the time to take action. Planning will help you stay compliant, optimise your tax position, and avoid unexpected costs.

If you’d like tailored advice on any of the above areas, our expert team is here to help. Get in touch today to make the most of the 2024/25 tax year.

Inheritance Tax (IHT) is a growing concern for families, homeowners, and business owners looking to pass on their wealth efficiently.

With new changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) taking effect in April 2026, and further changes to IHT and unspent pensions in 2027, estate planning is becoming more important. 

However, IHT planning is about more than just APR and BPR – understanding nil-rate bands, gifting rules, and trust structures can help you reduce or even eliminate unnecessary tax liabilities.

How does inheritance tax work?

Currently, IHT is charged at 40 per cent on estates valued above £325,000 (the standard nil-rate band).

However, there are various reliefs and exemptions available to help minimise the tax burden. These include:

Nil-rate bands – Everyone has a £325,000 tax-free allowance, with an additional £175,000 residence nil-rate band (RNRB) if passing on their main home to direct descendants. This means that each individual can pass on up to £500,000 or pass their threshold to their spouse so that couples can leave an inheritance of up to £1 million tax-free. These rates are currently frozen until 2030, so planning is essential as the costs of assets rise.
Gifting rules – Gifts made more than seven years before death are generally exempt from IHT. Gifts out of regular income, such as paying for the cost of private schooling for a grandchild are also exempt. 
Trusts – Trusts can help to control how assets are distributed while potentially reducing IHT liability.
Business and Agricultural Property Reliefs – From April 2026, full relief will be capped at £1 million per individual, with only 50 per cent relief available on excess value.

How to reduce your IHT liability

If your estate could exceed the tax-free thresholds, there are several strategies to mitigate the impact of IHT.

1. Make use of nil-rate bands

• Married couples and civil partners can pass assets tax-free to each other and transfer any unused nil-rate band to their spouse, potentially shielding up to £1 million from IHT.
• Ensure your residence nil-rate band is maximised by passing your home to children or grandchildren.

2. Use gifting allowances

• You can gift £3,000 tax-free each year (£6,000 if no gift was made in the previous tax year).
• Wedding gifts, small gifts, and regular gifts from excess income can also be exempt.
• Larger gifts may also be free from IHT if you survive for seven years, as they fall outside your estate for IHT purposes.

3. Consider trusts for wealth protection

• Trusts allow you to pass assets down generations while keeping control over how they are used.
• Certain trusts may reduce IHT liability if structured correctly.
• Trusts can be useful for protecting assets for children or vulnerable beneficiaries as well.

4. Review your estate’s liquidity

• From April 2026, IHT on assets not covered by APR or BPR will need to be paid in 10 equal instalments.
• Ensure that your estate has sufficient cash or liquid assets to cover potential tax bills.
• If necessary, gradual asset disposal may be an option to ease the financial burden on beneficiaries.

5. Update your will and succession plans

• Having an up-to-date will ensures your assets are distributed as intended while taking advantage of tax-efficient planning.
• If you own a family business or farm, a structured succession plan can help reduce tax exposure and ensure a smooth transition.

Take action now to protect your estate

With significant changes to IHT on the horizon, now is the ideal time to review your IHT planning strategy.

By managing your estate, you can ensure that more of your wealth goes to your loved ones. If you would like assistance reviewing your estate in light of the changes to IHT, please get in touch.

If you’re planning to sell investments, business assets, or property, recent changes to Capital Gains Tax (CGT) rates could significantly impact how much tax you owe.

With increases to the main CGT rates, as well as Business Asset Disposal Relief (BADR) and Investors’ Relief, understanding these changes is crucial to ensure you minimise tax liabilities and plan ahead effectively.

What’s changed

New CGT rates apply from 30 October 2024 for most disposals, with further changes from April 2025 and April 2026.

Increases from 30 October 2024:

• Main CGT rates (for assets other than residential property and carried interest) increase from 10 per cent to 18 per cent (basic rate taxpayers) and from 20 per cent to 24 per cent (higher and additional rate taxpayers).
• The CGT rate for trustees and personal representatives increases from 20 per cent to 24 per cent.
• Rates on residential property sales remain unchanged at 18 per cent and 24 per cent.

Increases to Business Asset Disposal Relief (BADR) and Investors’ Relief.

From 6 April 2025, the CGT rate for BADR and Investors’ Relief increases from 10 per cent to 14 per cent. It will then increase further to 18 per cent in April 2026.

Special provisions apply for contracts entered into before 30 October 2024 but completed after that date, as well as for share reorganisations and exchanges where an election is made.

How to reduce your CGT liability

With CGT increasing, tax-efficient planning is more important than ever. Consider these strategies to reduce your liability:

Sell assets before the rate increases

• If you’re planning to sell investments or business assets, consider doing so before 30 October 2024 to lock in the current lower rates.
• Business owners may wish to accelerate plans to sell before 6 April 2025 or 6 April 2026.

Make use of tax allowances

• The CGT annual exemption is just £3,000, so using this before making larger disposals can help reduce tax.
• Transferring assets between spouses (which is tax-free) can double your allowance.

Consider spreading disposals

• Selling assets over multiple tax years may help avoid higher tax brackets and maximise allowances.

Use tax-efficient investments

• Gains made within ISAs and pensions are exempt from CGT, making them a useful shelter for investments.

How we can help manage your CGT liability

With higher CGT rates now in effect and further changes on the horizon, it’s essential to review your investment and business disposal plans.

Acting now could significantly reduce your tax bill, so speak to our team for advice.

With the Self Assessment deadline behind us, taxpayers should remain vigilant against late filing penalties and phishing scams.

HM Revenue & Customs (HMRC) has reported a record-breaking number of tax returns submitted before the 31 January deadline, with over 11.5 million people filing on time.

However, for many, this came as a last-minute rush, with nearly 780,000 submissions made on deadline day alone—including 33,000 taxpayers who filed in the final frantic hour between 11 pm and midnight.

The cost of missing the deadline

Despite the high number of timely submissions, 1.1 million taxpayers missed the cut-off and now face automatic fines.

Late filing penalties include:

• £100 fine for missing the deadline
• £10 per day after three months (up to £900)
• 5 per cent of the tax due or £300 (whichever is greater) after six months
• An additional 5 per cent of the tax due or £300 after 12 months

Separate late payment penalties and interest charges will also apply for unpaid tax bills. With HMRC expected to collect at least £110 million in fines, missing the deadline can quickly become costly.

Beware of tax scams

Every year, fraudsters target taxpayers following the 31 January deadline, exploiting those expecting tax refunds or worried about penalties.

Phishing scams have become increasingly sophisticated, making it crucial to spot the warning signs and protect yourself.

Scammers impersonate HMRC through emails, text messages, or phone calls, often:

• Promising tax refunds and asking for personal or bank details
• Demanding immediate payments for unpaid tax bills to avoid legal action
• Asking for HMRC login credentials to “verify” your details
• Providing fake links to HMRC websites designed to steal your information

HMRC will never ask for payment details or personal information via email or text.

If you receive a suspicious message, do not respond, click links, or share your details.

Stay safe and informed

Scammers are becoming more convincing, but by staying alert and following best practices, you can protect yourself from phishing scams.

If you’re ever unsure about a tax-related message, consult our team before taking any action.

The rise of online selling, freelancing, and side hustles has given many people an additional source of income.

Whether you’re selling on eBay, Etsy, Vinted, or providing services like tutoring, consulting, or social media management, it’s important to understand how HM Revenue & Customs (HMRC) views your earnings.

Without proper planning, you could face an unexpected tax bill, but by knowing the rules, you can stay compliant and avoid penalties.

Do I need to pay tax on my side hustle?

The good news is that HMRC provides a Trading Allowance, which means you can earn up to £1,000 per tax year from self-employment or casual sales without needing to report it or pay tax.

However, if your income from selling online or side work exceeds £1,000 in a tax year, you may need to:

• Register for Self-Assessment as self-employed
• Keep records of income and expenses
• Submit a tax return and pay tax on your profits

Online selling: Business or hobby?

HMRC differentiates between casual selling and trading as a business. If you occasionally sell second-hand items from your wardrobe or unwanted belongings, you don’t need to pay tax.

However, you may be seen as trading as a business if you:

• Make items to sell for profit
• Buy stock specifically to resell
• Regularly sell similar products or services
• Run a shop-style account on online platforms

If you fit any of these criteria, HMRC may classify you as a sole trader, meaning you could owe Income Tax and National Insurance.

How much tax will I pay?

If your total earnings (from employment and self-employment) exceed the personal allowance of £12,570, your side hustle profits will be taxed as follows:

• Basic rate (20 per cent) – on profits above £12,570
• Higher rate (40 per cent) – on profits above £50,270
• Additional rate (45 per cent) – on profits above £125,140

You may also need to pay Class 2 or Class 4 National Insurance if your profits exceed £12,570 per year.

What if I don’t declare my earnings?

HMRC is increasingly using digital tracking and data from online marketplaces to identify undeclared income. Failing to report taxable earnings could lead to:

• Backdated tax bills
• Late payment fines and penalties
• HMRC investigations into your finances

How to stay tax-compliant

To avoid unexpected tax bills, follow these steps:

• Keep records – Track income and expenses to calculate profits and factor in the money from your other employment, including your PAYE records.
• Set aside money for tax payments – If you owe tax, put aside 20 to 40 per cent of your earnings to cover your bill.
• File your return on time – The deadline for online Self-assessment is 31 January each year.

Need help managing your tax obligations?

If you’re unsure about how much tax you owe or whether your side hustle qualifies as a business, seeking professional tax advice can help you stay compliant and avoid penalties. For guidance and support, please speak to our team.

The Government estimates that new obligations placed on employers under the Employment Rights Bill could result in substantial compliance costs – totalling around £5 billion.

The Bill will introduce a ban on many zero-hour contracts and extend day one employment rights across several areas, such as protection from unfair dismissal and parental leave.

For employers, this will represent a significant shift in their current practices. Sectors such as hospitality, care and retail will be disproportionately affected due to the widespread use of zero-hour contracts to manage fluctuating demand.

Breaking down the costs

Compliance costs are likely to be the biggest hit faced by businesses and their cash reserves.

These may include:

• Training on new legislation
• Administration
• Loss of flexibility afforded by zero-hours contracts
• The costs associated with leave, such as temporary recruitment

For example, it is estimated that enhanced sick pay alone could cost employers around £400 million per year, while workforce planning could represent a cost of around £200 million.

Staying ahead of the curve

To offset potential expenses, you might want to prioritise:

• Efficiency – New processes, while potentially costly, are an opportunity to make work more efficient and reduce the overall time and cost associated with employment admin.
• Delaying investment – Many costs associated with compliance will taper off over time, so businesses may need to delay investment to maintain a healthy cash flow.
• Planning the transition – Starting early and covering staffing requirements without paying for unneeded hours can help to keep costs to a minimum.

While certain expenses are inevitable, careful spending and budgeting can help you reduce the pressure on your cash reserves.

For advice on managing the cost of the new employment rights, please contact our team today.

In this year’s Autumn Budget, Chancellor Rachel Reeves announced that the majority of unspent pension funds will form part of an estate from April 2027

This move is expected to affect around eight per cent of estates each year.

In practice, this means when an individual dies, they will still be able to pass on their assets, but the remainder of their pension pot will be added to property and shares as part of a potentially chargeable estate.

For an individual affected by this change, this could mean that an unspent pension fund of £800,000 could be taxed at 40 per cent (depending on their circumstances and use of other allowances and reliefs) leading to an IHT bill on their pension alone of £320,000.

A significant cost for their beneficiaries if they were to pass away after 6 April 2027.

The good news is that if you plan to leave your pension to your spouse or civil partner, this inheritance will remain tax-free, but it will then be included in their estate when they pass away meaning other beneficiaries may still be affected.

However, if you do not have this option or prefer a different strategy, it may be wise to re-evaluate your retirement and estate plans in light of these changes.

Potential strategies to consider

To mitigate the IHT impact, you could:

• Consider using pension funds sooner for personal spending.
• Withdraw and gift a portion of your pension to loved ones at least seven years ahead of your passing.
• Explore alternative estate planning that may better suit your goals and avoid unnecessary tax liabilities.

If you are planning to gift from your pension, be cautious not to leave yourself short of funds for a comfortable retirement.

Taxpayers should also maintain their existing pension plans, and contributions to private and employer pension schemes still remain a tax-efficient means of reducing your Income Tax bill.

Who will be affected the most?

While this change predominantly affects wealthier individuals, many families may now find themselves liable for IHT.

Thousands more estates will exceed the current £325,000 threshold (£500,000 if you utilise the Residence Nil-Rate Band), adding financial strain to an already challenging time of grief.

Even where these allowances are passed to a spouse to offer up to £1 million of relief, many estates may find themselves subject to IHT as a result of this change.

Please be aware that within the Budget documents, it was also confirmed that the nil-rate bands would remain frozen beyond 2028 until 2030, which means extra care needs to be taken.

With the latest announcement, we advise you to revisit your retirement plan with your accountant to assess any necessary adjustments before 2027.

Early planning will help ensure you are prepared well in advance and minimise any unintended tax burdens.

If you are concerned about how this change may affect your estate, please contact our team for advice tailored to your unique situation.

Recent research by Three Business indicates that tech-enabled SMEs could add an impressive £79 billion to the UK economy over the next year.

Technology is clearly a key driver and enabler of growth for businesses.

Despite this, their research also revealed a notable 42 per cent of SMEs worry that the complexities of adopting new technologies could hold back their growth. A further 55 per cent express concerns about the costs involved.

The benefits of using technology

There are endless advantages to investing in technology, not least the time it frees up to focus on more strategic initiatives by automating repetitive tasks.

Additional benefits include:

• Enhanced productivity and employee morale.
• Improved customer service using customer relationship management (CRM) systems to help personalise interactions.
• Advanced analytics and data management tools that provide valuable insights into your business operations and market trends.
• Smoother growth experience as tech solutions are designed to adapt to your growing needs without significant changes to your infrastructure.
• Cost reductions in the long run, for instance, cloud computing can lower infrastructure costs, while automation can reduce labour expenses.

Therefore, by effectively leveraging technology, you position yourself as a leader in innovation within your industry.

However, if you fail to utilise the tools at your disposal, you risk falling behind your competitors.

The good news is that there is a growing recognition of the need to invest in technology.

The Government’s recent Industrial Strategy highlights the importance of supporting businesses that can stimulate growth in the tech sector, as well as encouraging the adoption of technologies that enhance productivity.

Using tax reliefs to invest in technology

Investing in new technology does not have to put you in a vulnerable financial situation, as there are various Corporation Tax incentives available for businesses, including:

• Enhanced Capital Allowances (ECAs)
• Research and Development (R&D) tax credits
• Full Expensing
• Other Capital Allowances.

With ECAs, you can claim back 100 per cent of the investment in environmentally friendly technologies on your tax return.

If your business undertakes eligible R&D activities, you could receive a tax credit for your qualifying expenditure – check with your accountant to see if you are eligible.

All these allowances can further offset your taxable profits, reducing your Corporation Tax liabilities and leaving you with more cash to reinvest in your business.

Our expert accountants can help you identify the right technology to support your business goals, including cloud accounting tools that can streamline your financial processes, enhance collaboration, and provide real-time insights into your financial performance.

To make the best use of the tax reliefs related to the investment in technology and innovation, please get in touch.

As we approach the end of the year, one trend has become increasingly concerning for UK businesses – debts are on the rise.

According to a recent report, small to medium-sized enterprises (SMEs) have seen the value of bad debt surge by 127 per cent over the past six months.

This figure is alarmingly high, raising important questions about what is driving this increase and how you can take proactive steps to mitigate its impact.

Bad debts refer to money owed to a business that is deemed uncollectible, often resulting from customers’ inability or unwillingness to pay, which can negatively impact cash flow and profitability.

While many businesses and individuals have seemingly moved on from the pandemic, the economy is still suffering from its lasting effects.

Some SMEs are still struggling to recover, facing cash flow issues and fluctuating demand, all of which have been exacerbated by political instability and uncertainties surrounding the recent Budget.

Additionally, with the cost of living still so high, many individuals and companies are prioritising their essential expenses, leaving bills and invoices further down the list.

This situation poses significant challenges for SMEs, which typically do not have the same financial buffers as larger corporations.

Solutions to crack down on bad debts

If your business is facing bad debts and you are neglecting them, you are exposing yourself to cashflow issues, a poor credit rating and possible bankruptcy or liquidation.

To avoid such outcomes, there are a number of solutions you can utilise, including:

• Strengthening your credit policies – Regularly review credit policies to align with current market conditions. Conduct thorough credit checks on new clients and periodically reassess credit limits for existing ones.
• Setting clear payment expectations – Establish upfront payment terms to ensure clarity around due dates and any late fees. This proactive approach helps reduce misunderstandings and payment delays.
• Optimising invoicing processes – Adopt digital invoicing tools for efficient billing, ensuring prompt invoicing and automated reminders to improve timely payments.
• Fostering client relationships – Strong client relationships help manage payment issues. If a client faces financial difficulty, open discussions about payment plans can lead to better outcomes than escalation.

For businesses facing bad debt challenges, we strongly suggest you discuss the issue with an experienced accountant who can provide strategic solutions to you and your team.

With bad debts on the rise, you cannot afford to take a reactive approach – it is time to crack down.

For expert assistance and customised solutions for handling debt, contact our accounting team today.

In Chancellor Rachel Reeves’ 2024 Autumn Budget, she announced over £40 billion of tax increases, as the Government attempts to fill a £22 billion gap in public finances.

The headline measure was a rise in employer National Insurance Contributions (NICs), from 13.8 per cent (where applicable) to 15 per cent.

The Chancellor also reduced the threshold at which employers need to start paying NICs, from £9,100 to £5,000 per year. Both changes will apply from 6 April 2025.

An increase in Employment Allowance to £10,500, and the removal of the £100,000 threshold, offers support to around 865,000 of the smallest businesses – but other employers may be facing a perfect storm of rising costs.

The cost of employment

Alongside the rise in NICs for employers, the Chancellor announced a rise in the National Living Wage (NLW) from April 2025 to £12.21, a 6.7 per cent increase from the current rate of £11.44.

This equates to pay worth an additional £1,400 per year for a full-time worker over the age of 21.

Coupled with the cost of increased NICs, businesses are set to see a significant increase in employment costs.

Sectors with a high proportion of casual and flexible workers, such as hospitality, retail and leisure, will be disproportionately affected.

For advice on managing your business costs and planning around Budget measures, please contact our team.