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Electric company cars – Do they still make sense with the upcoming changes? 

Electric vehicles have become an increasingly popular choice for people who have access to a company car.

Low tax charges, predictable running costs and environmental benefits have made EVs an appealing option, particularly for directors, employees and business owners who drive a company-provided vehicle.

Over the next few tax years, the rules around electric company cars are changing. There is nothing sudden or drastic, but there are adjustments worth understanding if you already drive an electric company car or are considering one.

EVs remain tax-efficient, but the savings are slowly reducing.

Why electric company cars have been so attractive

Company cars are taxed through Benefit in Kind, which determines how much personal tax you pay for the use of the vehicle.

Electric vehicles have benefited from very low BIK rates, which has meant:

  • Lower personal tax bills compared with petrol or diesel cars
  • Reduced employer National Insurance costs
  • A more affordable way to drive a new or higher-specification vehicle

For many people, EVs have been one of the few company car options that genuinely make financial sense.

What is changing for electric company cars?

The main change is a gradual increase in BIK rates for electric vehicles over the coming years.

Incentives are not being removed overnight. Instead, the tax advantage is being scaled back gradually as electric vehicles become more common.

In practical terms:

  • Electric cars will still be taxed more favourably than petrol or diesel models
  • The amount of tax you pay will increase slightly year by year
  • Planning ahead becomes more important

If you already have an electric company car, the impact is likely to be modest. You may notice:

  • A small increase in your personal tax over time
  • Slightly higher overall costs linked to the vehicle

Even with these changes, EVs are still expected to be the most tax-efficient company car option available.

Choosing a company car

If you are thinking about changing your company car or joining a scheme for the first time, it is worth looking beyond the headline tax figure for the first year.

Things to consider include:

  • How BIK costs will change over the time you expect to keep the car
  • Whether leasing or purchasing works better for your situation
  • The impact of salary sacrifice, if it is offered
  • Running costs such as charging, insurance and maintenance

Electric vehicles remain appealing, but the decision now benefits from a more rounded view.

New road-use charges for EVs from 2028

Looking a little further ahead, drivers of electric vehicles should be aware of new mileage-based charges planned from April 2028.

Current proposals suggest:

  • Battery electric vehicles will be charged at around three pence per mile
  • Plug-in hybrids at around one point five pence per mile
  • These charges will apply alongside existing Vehicle Excise Duty

For someone driving around eight to nine thousand miles a year, this could add roughly £250 to annual motoring costs. While this is still likely to be cheaper than fuel duty on petrol or diesel cars, it is another cost to factor in.

Expensive Car Supplement changes may help

From April 2026, the threshold for the Expensive Car Supplement for electric vehicles will increase from £40,000 to £50,000.

This means many mid-range and higher-spec electric vehicles will avoid the surcharge, making them a more realistic option if you are considering a better-equipped model.

What should you do now?

These changes are about gradual adjustment rather than removing incentives entirely. Electric vehicles continue to offer meaningful tax advantages for many people.

It may be a good time to:

  • Review the tax cost of your current company car
  • Look at how future BIK increases will affect you
  • Revisit your options before committing to a new vehicle
  • Seek advice to ensure the numbers still stack up for your circumstances

With the right planning, electric company cars can remain a cost-effective and practical choice. Speak to our team for advice on choosing the most tax-efficient vehicle.

HMRC to move to digital-by-default communications from 2026

HMRC is pressing ahead with plans to make digital communication the norm, with most paper correspondence set to be phased out from spring 2026.

The move is part of a broader effort to modernise how HMRC interacts with taxpayers, streamline internal processes and reduce costs, with savings of around fifty million pounds a year anticipated.

Over time, the expectation is that the majority of routine contact between taxpayers and HMRC will take place online or through the HMRC app.

What will change in practice?

From 2026, taxpayers who already use HMRC’s online services or mobile app will no longer routinely receive letters through the post.

Instead, they will be sent an email or notification prompting them to log in to their personal tax account to view new messages or documents.

Paper correspondence will not disappear altogether. Taxpayers who opt out of digital communications or who are classed as digitally excluded, will still be able to receive letters in the traditional way.

HMRC has stressed that choice will remain, but for anyone already engaged digitally, electronic contact will become the default.

To support this shift, new powers expected to be introduced through the latest Finance Bill will allow HMRC to request digital contact details, such as an email address or mobile number, at key points including annual submissions.

This is intended to ensure HMRC can issue alerts consistently across different tax services.

A gradual transition rather than an overnight change

The move to digital communication will not happen all at once. HMRC systems are being updated in stages and some areas are not yet fully capable of operating online.

Inheritance Tax is one example where paper forms and correspondence remain essential for now.

HMRC has also acknowledged that improvements are still needed to ensure digital guidance and messaging are as clear and user-friendly as traditional letters.

Security is another key focus, particularly following last year’s incident involving personal tax accounts.

Importantly, HMRC has confirmed that paper-based support will continue for those who cannot access digital services, including older taxpayers and individuals with disabilities.

What does this mean for taxpayers?

For most people already using online services, the biggest change from 2026 onwards will simply be fewer brown envelopes arriving through the letterbox.

Instead, communication will be driven by email prompts and app notifications directing taxpayers to their online account.

While this may feel like a small operational change, it does place greater responsibility on taxpayers to regularly check their HMRC account and keep their contact details up to date.

If you would like help understanding how these changes may affect you or need support transitioning to HMRC’s digital services, please get in touch.

Property tax shakeup – What changes are coming for landlords and property investors

A series of tax reforms announced by the Government will reshape the property landscape over the coming years.

While the stated aim is to strengthen public finances and support long-term economic stability, the changes will have real and immediate consequences for landlords, developers and residential property investors.

Against a backdrop of flat house prices and cautious buyers, understanding how these reforms affect investment decisions, affordability and returns has never been more important.

A new annual charge on higher-value homes

One of the most eye-catching announcements is the introduction of a new annual surcharge on higher-value residential properties, commonly referred to as the “mansion tax”.

Under the new rules, annual charges will apply as follows:

  • £2,500 for properties valued above £2 million
  • £7,500 for properties valued above £5 million

This marks a shift away from one-off transactional taxes towards ongoing annual liabilities tied to ownership.

The likely impact is a softening of demand in the prime residential market, particularly in London and the South East, as buyers reassess affordability and long-term ownership costs.

Developers operating in the high-value space may experience slower sales rates and may need to review pricing strategies to avoid pushing units over the surcharge thresholds.

Conversely, properties in the £1 million to £2 million range could see increased demand from buyers keen to remain below the levy, potentially reshaping buyer behaviour in this bracket.

Higher taxes on property and investment income

The Government has also confirmed a two per cent increase in tax rates applied to property income, dividend income and savings income across all bands.

For landlords, this represents a further squeeze on net rental yields at a time when mortgage costs, maintenance expenses and regulatory compliance costs are already elevated. Many individual landlords may find that certain properties no longer deliver viable returns.

As a result, some investors may consider:

  • Incorporating their property portfolios
  • Selling underperforming assets
  • Restructuring ownership to improve tax efficiency

Developers may also see reduced appetite from individual buy-to-let investors, with increased interest in build-to-rent models that can offer more efficient structures and long-term scale.

The impact of frozen Income Tax and National Insurance thresholds

The extension of the freeze on Income Tax and National Insurance thresholds until 2030/2031 is expected to have one of the most significant knock-on effects on the housing market.

As wages rise without corresponding threshold increases, fiscal drag will pull more people into higher tax bands, reducing real disposable income.

This is likely to affect:

  • Housing affordability, making it harder for buyers to save for deposits
  • Mortgage approvals, as affordability assessments tighten
  • Demand in the prime and upper-mid markets, where higher earners face reduced take-home pay
  • Rental demand, as more households delay purchasing and remain in the private rental sector

While increased rental demand may appear positive for landlords, it does not necessarily offset the impact of higher taxation and operating costs.

What this means for developers and residential investors

These reforms signal a need for reassessment across the property sector.

Developers and investors should expect longer sales and letting timelines as buyers and tenants become more cautious.

Pricing strategies will need to be carefully managed, particularly to avoid properties sitting empty due to affordability pressures or being inadvertently pushed above surcharge thresholds.

It is also essential to review how property assets are held. The right ownership structure can make a significant difference to long-term tax exposure and flexibility.

For some, this may prompt a shift towards alternative models such as build-to-rent or mixed-use developments, which may offer more resilience under the new rules.

Preparing for a changing property landscape

While the scale of reform may feel daunting, early planning can make a meaningful difference.

Understanding how the changes interact, rather than viewing them in isolation, allows landlords and investors to make informed decisions about acquisitions, disposals and restructuring.

Professional advice can help you assess whether your property portfolio remains fit for purpose and identify opportunities to adapt in an evolving market.

If you would like support reviewing your property position or planning for the changes ahead, our expert team is here to help.

Autumn Budget 2025

The Government faced a difficult job going into the Autumn Budget, as they navigate a growing national deficit, a seemingly never-ending cost-of-living crisis and political challenges.

From the outset, the Chancellor Rachel Reeves made it clear that this would be an Autumn Budget that focused on fairness, with everyone playing their part in reducing national debt and funding spending on the people in society who need help the most.

Unsurprisingly, this means an increase in taxation across a number of areas, not least the substantial decision to freeze personal tax rates for a further three years.

Against a wide backdrop of inflation above the Bank of England’s two per cent target and rising interest payments for the public purse, the Chancellor also made it clear that higher earners and those with more wealth would be expected to pay more.

At the head of these taxes on wealth is the decision to introduce a ‘mansion tax’, a higher rate of tax on income from dividends, property and savings and a new cap on tax relief to salary sacrifice pension schemes.

Whilst personal tax focused heavily within the Autumn Budget, businesses didn’t entirely escape the net, as Reeves introduced reductions to the writing down capital allowance and a cut to the Capital Gains Tax relief on Employee Ownership Trusts.

However, the biggest sting in the tail for many businesses was the additional burden of higher employment costs, as the Government increases the National Living and National Minimum Wage once again.

Having faced endless jibes from the opposition, Reeves closed her latest speech with a focus on helping those in society and delivering support that would boost growth, reduce inflation and assist with the cost of living.

Economy and deficit

A key promise in Labour’s manifesto was to bring stability to the UK economy and reduce the national debt over the course of the current parliament.

Despite a rocky start to her role as Chancellor and the discovery of a larger than expected black hole in the public finances, Reeves rose proudly to announce that her fiscal rules were working, even if it meant additional personal and business tax hikes – the “necessary choices” she announced in her pre-Budget speech.

According to the OBR, UK GDP will grow by 1.5 per cent in 2025, which is 0.5 per cent above the forecast from earlier this year.

However, in future years, the outlook is less positive. In 2026 the economy is expected to continue to grow by 1.4 per cent, but this is below the previous forecast of 1.9 per cent.

Similarly in 2027, growth will only reach 1.6 per cent, which is 0.2 per cent behind the previous estimate. This trend of slower growth continues through to the end of the current forecast period in 2029.

Despite this slowdown, the Government will reduce its deficit over the next two years and will eventually enter surplus by the 2027/28 tax year. This surplus will continue to grow to £24.6 billion by 2030/31.

The Chancellor was pleased that her decision to increase taxes has more than doubled her headroom to keep within her fiscal rule to balance the budget, from £9.9 billion to around £22 billion.

However, before the Government gets to this point, tough decisions need to be made including a variety of tax hikes in the years ahead.

Personal tax freeze

The biggest and possibly furthest reaching announcement in the Autumn Budget is the Government’s decision to freeze personal tax thresholds until April 2031 – extending the current freeze for another three years.

Whilst politically this means that Labour avoids breaking its manifesto pledge to not raise personal tax rates, the reality is that this change is a tax rise in all but name.

This change will affect income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals. Digging deeper into the Chancellor’s red book, it will also extend the freeze on Inheritance Tax (IHT) rates for a further year, April 2030 to April 2031.

Deciding to freeze the income tax thresholds is expected to bring in around £8 billion to the treasury, but it will also drag nearly one million more people into paying tax and force hundreds of thousands of taxpayers into higher tax bands due to fiscal drag.

If there was some consolation it was to those already worried about the upcoming reform to Agricultural Property Relief (APR) and Business Property Relief (BPR) from April 2026.

During her speech, the Chancellor confirmed that any unused £1 million allowance for the 100 per cent rate of APR and BPR will be transferable between spouses and civil partners. This includes if the first death was before 6 April 2026.

Acknowledging the costs that this would add to the lives of working people, Reeves did commit to driving energy bills down by axing the ECO scheme. This will cut average household bills by £150 each year.

Business tax

Following on from substantial changes in the previous Budget to business tax, the Chancellor made very few changes to the way organisations will be taxed.

However, she did confirm that from April 2026, the main rate of writing down allowance would be reduced by four percentage points to 14 per cent.

To ensure that businesses weren’t too disadvantaged, a new first-year allowance of 40 per cent for main‑rate assets will be introduced to maintain the Government’s commitment to help businesses invest.

For those looking to exit their company there was another blow, however, as the Government will restrict Capital Gains Tax relief on Employee Ownership Trusts from 100 per cent to 50 per cent.

Although not a tax per se, the biggest change for many businesses will be increases to the National Minimum and National Living Wage.

From 1 April 2026, the rates will increase as follows:

  • National Living Wage – £12.71 per hour (up 4.1 per cent)
  • National Minimum Wage for 18-20 year olds – £10.85 (up 8.5 per cent)
  • National Minimum Wage for 16-17 year olds and apprentices – £8.00 per hour (up 6 per cent)

Tax on wealth

Many expected the Government to tax wealth heavily and whilst there were certainly a number of measures intended to do this and a lot of rhetoric from Reeves and the front benches, the reality fell short of the expectations.

One of the key changes was an increase to income tax against dividends, property and savings.

From April 2026, the ordinary and upper rates of tax on dividend income will increase by 2 percentage points. The additional rate will remain unchanged.

A year later in April 2027, new separate tax rates for property income will be introduced as follows:

  • The property basic rate – 22 per cent
  • The property higher rate – 42 per cent
  • The property additional rate – 47 per cent

The Government will also increase the tax rate on savings across all bands by 2 percentage points in the same year.

In addition to this change, a new High Value Council Tax Surcharge – already dubbed a ‘mansion tax’ – will be introduced for homes worth more than £2 million.

This will equate to an annual charge for properties worth more than £2 million starting at £2,500, rising to £7,500 for properties worth more than £5 million.

Electric cars and transport

The number of electric vehicles on the road has risen rapidly thanks to various incentives, but the Autumn Budget contained considerable changes for this group of road users.

The Chancellor’s speech and accompanying red book sets a clearer long-term framework for electric vehicles, balancing new charges with wider financial support and incentives.

From April 2028, a new Electric Vehicle Excise Duty will introduce a per-mile charge for electric and plug-in hybrid cars, to be paid alongside existing Vehicle Excise Duty.

Electric cars will pay half the fuel duty equivalent (around 3p per mile), while plug-in hybrids will pay half of that rate again. The detailed design is now out for consultation until March 2026.

Alongside this new charge, the Government is expanding support for the sector. An extra £200 million is being invested in charging infrastructure, split between a new local authority fund for residential and workplace chargepoints and a further allocation for home and business charging.

A 10-year business rates exemption will also apply to eligible charging points and electric-only forecourts, reducing costs for operators.

In a significant move for buyers, the threshold for the Vehicle Excise Duty Expensive Car Supplement will rise to £50,000 for zero-emission vehicles.

This will apply to cars registered from April 2025 and will come into effect from April 2026.

The Electric Car Grant is also being strengthened, with an additional £1.3 billion of funding and an extension to 2029-30.

There are updates to company car taxation too. Plans to bring employee car ownership schemes into the Benefit in Kind rules have been delayed until April 2030, with transitional arrangements running until 2031. First-year capital allowances for zero-emission vehicles and charging equipment have been extended to 2027.

Plug-in hybrids will also benefit from a temporary Benefit in Kind tax easement until April 2028, preventing sharp increases as new emissions standards come into force.

For those not ready or able to make the move to zero-emission vehicles, the Government confirmed that the current 5p cut to fuel duty will remain in place up until the beginning of September 2026.

Spending and investment

The tax hikes were offset by spending elsewhere, with the Government committing to an additional £12 billion in the Chancellor’s measures.

One key commitment, as part of its mission to end child poverty, was the removal of the two-child limit in the Universal Credit Child Element from April 2026.

However, its spending focus wasn’t just on social schemes as the Government provided investment to a wide range of schemes.

The Autumn Budget outlines a broad programme of investment aimed at strengthening regional economies, improving infrastructure and accelerating growth across the UK. A series of new funds sits at the heart of this approach.

These include the £30 million Kernow Industrial Growth Fund, designed to back Cornwall’s strengths in critical minerals, renewable energy and marine innovation and a £500 million Mayoral Revolving Growth Fund

This will allow Mayors in key city regions to co-invest with central Government to unlock stalled developments and overcome finance barriers.

A new Local Growth Fund will also provide just over £900 million over four years to a wide group of Mayoral Strategic Authorities, giving each the flexibility to support local infrastructure, business investment, employment initiatives and skills programmes.

Targeted support continues through the Growth Mission Fund, which has already committed funding for projects ranging from a sports quarter in Peterborough to a STEM centre in Darlington.

Investment zones and freeports continue to form part of the wider industrial strategy.

Business cases have now been approved for the Flintshire and Wrexham Investment Zone, Anglesey Freeport and the Forth Green Freeport, with details also confirmed for the Northern Ireland Enhanced Investment Zone.

The Budget also commits record levels of local road maintenance funding, rising to more than £2 billion a year by 2029–30, enabling the Government to exceed its commitment to fix an additional one million potholes annually.

In energy and industrial development, the North Sea Future Plan sets out how the UK will continue supporting investment in domestic oil and gas, while up to £14.5 million will be channelled into industrial projects in Grangemouth to help create jobs.

Other major transport and infrastructure commitments include long-term support for the Docklands Light Railway extension to Thamesmead, funding for the next stage of the Lower Thames Crossing and brownfield remediation in Port Talbot to unlock development linked to the Celtic Freeport.

Savings and Pensions

Long awaited reforms to ISAs were finally delivered by the Chancellor in this Budget.

From 6 April 2027, the annual ISA cash limit will fall to just £12,000, but an overall annual ISA limit of £20,000 will be retained.

This means that the remaining £8,000 allowance will need to be invested in stocks and shares ISA to benefit from the tax-free amount.

In a big mix up to both pensions and tax planning, the Chancellor announced that employer and employee National Insurance contributions will be charged on pension contributions above £2,000 per annum made via salary sacrifice.

This change will take effect from 6 April 2029, closing a window that many high earners have used to minimise their Income Tax liabilities, whilst increasing their lifetime pension savings.

Final thoughts

The Autumn Budget delivered on the expected tax hikes, but the axe didn’t fall in all of the places that had been speculated about.

This was a Budget that focused more on personal taxation, rather than corporate taxation, but many of the measures will affect the employees and leadership of SMEs across the UK.

Labour’s focus is clearly on reducing its deficit, whilst increasing spending in areas that reduce the impact of the cost of living. Whether it will achieve this careful balancing act is yet to be seen, but in the meantime for many of us it will mean paying more across a wide range of taxes.

Those people whose future plans have been affected as a result of this Budget must seek professional advice as soon as they can.

To read the full Autumn Budget document, please click here.

Should you save more into a pension? What the changes to IHT mean for you

Historically, saving into a pension has been seen as a smart investment strategy to reduce your tax liabilities.

Due to pensions being exempt from Inheritance Tax (IHT), they were seen as a viable way of ensuring that you or your family could benefit from them with little risk of being taxed.

In many instances, people would forgo pay rises and instead opt for bigger pension contributions that they could make use of later in life.

However, IHT is changing, and from April 2027, unspent pension pots will be considered part of your estate for IHT.

As this may confuse your tax planning, we are going to examine the impact of these changes and consider what you can do about it.

Why am I now at risk of Inheritance Tax?

The IHT threshold (known as the nil-rate band) is £325,000 per individual, but the threshold increases to £500,000 if you leave your home to a direct descendant, thanks to the additional £175,000 residence nil-rate band.

This allowance can be passed on to your spouse to create a potential £1,000,000 threshold before IHT is paid at a rate of 40 per cent on the estate.

Given that your property is likely to make up a sizeable portion of your wealth, and your assets may also be substantial, the addition of an unspent pension pot could tip your estate over the edge.

This will be especially true if you have been using your pension pot to reap greater financial reward from working while keeping your tax bill low, thanks to the tax benefits of saving into a pension fund from your regular income.

Does this mean I shouldn’t save for a pension?

A pension is still likely to serve as a decent wrapper for paying reduced tax on your earnings compared to receiving funds as a salary.

However, it impacts the considerations you must make regarding your estate as you approach the end of your life.

While your pension might be challenging to move, other assets could be offset as gifts, provided these are given seven years prior to your death.

Any gifts given seven years prior to your death are not considered for IHT, whereas those given closer to your death will be.

Valuing your assets and prioritising gifting the ones with higher value could be a smart way to reduce your overall estate and thus reduce your risk of IHT.

What is the best strategy going forward?

It is worth remembering that these changes do not come into force until April 2027.

Even then, there is little guarantee of what the future might hold and how rules and regulations might change going forward.

Successive Governments may redefine an estate in terms of IHT, so nothing is ever truly set in stone.

What is important is that you get ahead of the changes by considering smart tax planning as soon as possible.

Seeking advice from a trusted professional is the best way to stay ahead of the changes and ensure that your retirement strategy is kept up to date with evolving tax rules.

If you are concerned about how this change to the IHT rules may affect your retirement planning and estate, speak to our team today.

Tax-efficient investing – Are you making the most of the £41.2 billion on offer?

The beginning of the new tax year is a great opportunity to ensure that you are making the most of tax-efficient investments.

In the 2024 to 2025 tax year, it was estimated that £41.2 billion of tax breaks existed for smart investors to utilise.

As this figure was seven per cent higher than the previous year, it is worth unpacking how it came about and considering what benefits may exist in this new tax year.

Individual Saving Accounts

Individual Savings Accounts (ISAs) were a large part of the tax relief that exists for those who are smart with their money.

Knowing how to effectively utilise ISAs means that you can get the most out of your money.

You can invest £20,000 a year in an ISA without it falling into consideration of tax.

If you were to utilise this and invest before 5 April, you can enjoy the benefit of a full tax year with your tax-free growth that can then be utilised either later in the year or in the future as you require it.

Do not forget to invest more at the start of the next year to further optimise the utility of your ISA.

Pension contributions

While pensions may soon become more challenging given the changes to Inheritance Tax, smartly investing in pensions is still an effective way to offset Income Tax and prepare for the future.

Whether by using a salary sacrifice pension scheme or saving into a self-invested personal pension (SIPP), you can prevent yourself from entering higher Income Tax brackets and move the finances into your pension pot instead.

As the access to your pension is still not as culpable for tax as a salary, this remains a smart investment strategy.

Be mindful that your unspent pension pot will be considered part of your estate for Inheritance Tax purposes as of April 2027, exposing your entire inheritance to taxation.

Changes to Capital Gains Tax

Capital Gains Tax (CGT) underwent notable changes to reduce its tax efficiency.

Where once the tax-free threshold was £6,000, it was reduced to £3,000.

While disappointing for those seeking it as a viable way to offset tax payments, the fact remains that some relief is better than none.

Combining CGT relief with other forms of smart investment can be a vital part of a tax-efficient investment strategy.

Venture capital schemes

If you have the capacity, Venture Capital Schemes (VCTs) can be an extremely tax-efficient way to invest.

VCTs offer 30 per cent Income Tax relief on invested amounts up to £200,000, and these can also yield tax-free dividends with the added benefit of there being no CGT on gains.

If your investment budget stretches to it, an Enterprise Investment Scheme (EIS) offers 30 per cent relief on investments up to £1 million.

These can be combined with other forms of relief to provide a network of tax-efficient investment options.

Ultimately, knowing what options are available to you can ensure that your investments remain as tax efficient as possible.

Seeking professional advice is always wise, given the ever-changing economic landscape.

If you want to maximise your money, speak to our team today.

Making the most of work benefits to minimise your tax bill with salary sacrifice

Your hard work deserves to pay off, but after a while, the harder you work and the more you earn, the more you end up paying in tax.

In those situations, it could be worth considering some salary sacrifice options to ensure that you reap the full benefit of the work you do and minimise tax liabilities.

Alongside offsetting Income Tax, salary sacrifice sees you making smaller National Insurance contributions and thus, potentially, having a greater ability to use the money you have earned for your benefit.

What salary sacrifice options are there?

By far the most common form of salary sacrifice comes in the form of pension savings.

Rather than see your wage steadily increase, and thus your Income Tax and National Insurance payments increase too, there is an option to cap your salary and put the extra value into your pension plan.

This money will not be subject to National Insurance considerations and therefore will be of more value than if it were paid to you directly.

The drawbacks of this method are the length of time you must wait before you can access these funds.

If you are planning to retire early or have exciting plans for your twilight years, then this could be a viable investment in the long run.

Professional development

Although this is not universally applicable, some employer-funded training courses can qualify as a salary sacrifice.

These courses would serve to reduce your taxable income while also equipping you with the skills needed to keep growing professionally.

If retirement seems too far off to invest more income into a pension pot, then utilising professional development could be the route to take.

The course will need to be approved by HM Revenue and Customs for this purpose, so be mindful of this caveat before signing up for training courses.

Workplace benefits

Although it is not currently open to new applicants, a childcare voucher scheme did once exist and may return at some point in the future.

Until then, there are schemes to provide employees with bikes or electric vehicles that can qualify as a form of salary sacrifice.

Given that these tend to be valuable commodities, they are certainly avenues to explore, particularly if you are environmentally conscious.

There are always options available to those who want to be smart with their money, and seeking professional advice can aid in this endeavour.

Want to learn how you can make more from your work with the right salary sacrifice scheme? Speak to our team today.

Important tax reporting changes for 2025/26

As is customary for a new tax year, there have been sweeping changes to how the Government handles the reporting and recording of financial information.

This has involved the change to some proposals that have been set for implementation, as well as the introduction of some other measures.

We are examining two of the most notable changes that are likely to impact you in this coming tax year.

Employee hours reporting scrapped

The Government has abandoned its proposal to require the reporting of actual hours worked by employees through payroll.

Originally delayed to April 2026, the plan has now been dropped entirely due to concerns over the implementation cost, which was estimated at nearly £60 million.

This will come as a relief to those who were concerned about the increase in admin time that such a proposition would bring with it.

Monitoring and implementing compliant payroll techniques is already a challenge for many businesses, so it is good that the extra information is no longer being forced upon hard-working business owners.

Business owners are instead being left to manage their payroll information in much the same way as before, but payroll compliance checks are subject to change and seeking professional advice and support is a valuable way to stay ahead of any changes.

Compulsory questions are coming

The question about whether a taxpayer is a director of a close company will also become mandatory on the Self-Assessment return from 2025/26.

As a director, you will need to be prepared with accurate figures, particularly where shareholdings change during the year or where different share classes are involved.

These changes are an indication of a move towards increased transparency and more detailed individual reporting.

This is part of a wider movement by the Government to clamp down on noncompliance and fraud by ensuring that all financial information is consistent and accurate.

To stay ahead of these changes, keeping up-to-date records will be essential, as you do not wish to risk noncompliance.

What does this mean for the future?

Here we have examined a failed proposal and an implemented one to gauge where the Government’s priorities are.

With the global economy struggling, the Government need to ensure that they remain capable of meeting the needs of the country, and they have elected to clamp down on bad actors to facilitate this.

What it is likely to mean for honest businesses is more admin work and a greater need to stay abreast of changes as and when they happen.

Contact our team today to ensure that you remain compliant with the latest tax reporting requirements.

Change to dividend reporting to affect thousands of owner-managed businesses

From 6 April 2025, many directors will need to report dividend income in much more detail in their Self-Assessment tax return.

This change will affect an estimated 900,000 directors across the UK.

HM Revenue & Customs (HMRC) will now require directors to disclose the name and registration number of the company, the highest percentage shareholding held during the tax year, and the amount of dividend income received from that company.

These figures must be listed separately from dividends received from other sources.

At present, directors simply report total dividend income.

HMRC has no visibility of how much comes from their own business versus other investments.

This change will allow HMRC to build a clearer picture of remuneration and target compliance activity more effectively.

How will these changes affect me?

As with many of the changes that are currently being introduced, the goal is to ensure that businesses remain compliant.

You may find yourself at risk of noncompliance if you fail to update how you process information considering these changes.

The most effective way to stay ahead of the new dividend reporting is by updating any payroll or accounting software you currently employ.

If you have not yet taken the leap to utilise technology to get greater control of your finances, now might be the time to do so.

If you use in-house finance teams, make sure they are equipped and ready to implement the changes and that they are educated in ways to advise you of how to proceed with Self-Assessment returns.

For those seeking professional advice, it is wise to do this sooner rather than later.

As the tax year progresses, advisors are likely to become overrun with concerned directors seeking advice at the last minute.

You did not build your business by leaving everything to the last minute, and your tax considerations are no different.

Seek professional advice early to ensure that you can effectively plan for the changes and preserve the operationality of your business.

HMRC are attempting to make the system more transparent and gain greater protection against those with bad intentions.

Need help preparing your self-assessment tax return to account for these changes? Speak to our team today.

Spring Statement 2025

Chancellor Rachel Reeves today delivered her Spring Statement, outlining the Labour Government’s economic priorities and reaffirming a commitment to fiscal discipline and long-term investment.

Billed as the start of a “decade of national renewal,” the Statement acknowledged global uncertainty but marked a clear shift towards stability and responsibility at home.

While less headline-grabbing than last year’s Autumn Budget, the absence of major announcements is telling.

“No further tax changes” may sound reassuring, but it also signals no new relief in sight for businesses and their owners.

Beneath the surface, the Statement includes several important developments worth noting:

“No further tax increases” – and no support for businesses!

Despite stating that “this Labour Government was elected to bring change to our country”, the Chancellor has declined this opportunity to alter tax policy.

When Reeves confirmed there would be “no further tax increases” beyond those introduced in the Autumn Budget, it was met with jeers in the Commons.

While a freeze on tax rises might sound like welcome news for individuals concerned about their personal liabilities, the reality for business owners is more disappointing.

In practice, no tax changes means no new support for businesses already feeling the pressure.

There are no fresh reliefs, no easing of existing burdens, and no incentives to spur investment, innovation, or growth.

Businesses that had hoped for reform to Corporation Tax, cuts to National Insurance, or enhanced allowances for capital expenditure and R&D will find no comfort in this Statement.

At a time when many enterprises are still recovering from rising employment costs, interest rates, and ongoing uncertainty, the absence of tax-based support could dampen confidence.

Stability is welcome – but stagnation is not. For businesses looking for signals of a pro-growth agenda, this silence may speak volumes.

The UK’s economic outlook in “a changing world”

The Chancellor repeatedly referred to “a changing world” in her speech, citing the war in Ukraine as a driving factor (though avoiding comment on President Trump’s tariff-heavy policy).

Due to economic uncertainty, the Labour Party’s priority will be on stability, national investment and defence spending (more on this below).

Despite this, Reeves announced that the OBR has upgraded its GDP growth forecasts for each year from 2026 to 2029, with the economy now expected to be larger by the end of the forecast period than previously predicted in the Autumn Budget.

The specific figures she outlined include GDP growth of:

  • 1.9 per cent in 2026
  • 1.8 per cent in 2027
  • 1.7 per cent in 2028
  • 1.8 per cent in 2029

The hope for many businesses upon hearing this news must be that of optimism.

Economic development could support stronger investment, hiring and growth before the end of the decade.

Therefore, regardless of Reeves’ consistent referrals to economic uncertainty, GDP is expected to outperform previous Budget predictions – a positive takeaway for all.

Labour’s tax evasion crackdown

The Chancellor announced a further crackdown on tax evasion, aiming to increase prosecutions of tax fraud by 20 per cent and take total revenue raised from reducing tax evasion to £7.5 billion.

She emphasised fairness, stating that it is wrong for some to avoid taxes while working people pay their share.

For businesses, stronger enforcement helps level the playing field, ensuring competitors are not gaining an unfair advantage by dodging their obligations.

For individuals, it reinforces trust in the tax system and ensures public services are funded without raising taxes.

The extra revenue could also reduce pressure for future tax increases, supporting broader economic stability.

Changes to MTD for ITSA: Quietly announced, massively important

One of the most significant updates in the wider Spring Statement document (but, interestingly, not included in Reeves’ speech), was the confirmation of the phased rollout of Making Tax Digital for Income Tax Self-Assessment (ITSA).

From April 2026, the scheme will apply to sole traders and landlords earning over £50,000 and for those earning over £30,000 in 2027. Now, this is expanding to those with income above £20,000 by 2028.

This gradual lowering of the threshold means around 900,000 sole traders will be brought into the MTD regime by 2028.

As part of this scheme, HMRC will be cracking down on late payments of both VAT and Self-Assessments.

Previously taxpayers would incur a penalty of two per cent of the tax owed if the outstanding tax was not paid within 15 days and four per cent if the tax was not repaid within 30 days.

Now, taxpayers within the MTD scheme will face a 3 per cent charge on any outstanding tax if it remains unpaid after 15 days, with a further 3 per cent added if the amount is still overdue at 30 days.

In addition, the annualised interest rate applied to late payments will more than double – rising from the current 4 per cent to 10 per cent.

Those who are yet to react to MTD for ITSA due to the small scale of their business operation will now need to act quickly to avoid being caught outside of the scheme in the years to come.

Reeves reminds us of changes made last year

One of the key aspects to note was the reminder of previous tax changes made by the Government in the Autumn Budget.

Whilst Reeves noted the fact that these changes provided a foundation of a stronger economy, it’s worth remembering exactly where this “strength” comes from.

  • An increase in the lower and higher rates of Capital Gains Tax to 18 per cent and 24 per cent respectively.
  • An increased Employers National Insurance rate to 15 per cent from 13.8 per cent and a reduction of the threshold from £9,100 to £5,000.
  • Abolishing the UK’s non-domicile regime and introducing policies to tax non-doms on their worldwide income.
  • An increase in Stamp Duty Land Tax from three per cent to five per cent and a reduction in thresholds for first-time buyers.
  • The introduction of VAT charges to private school fees.
  • Changes to Business Asset Disposal Relief (BADR) that will take effect in the coming years. The current 10 per cent rate will remain until 6 April 2025, after which it will increase to 14 per cent, and then to 18 per cent from 6 April 2026.

Reeves made no attempt to roll back the previous changes – confirming that these increases are still going ahead.

Her Statement should serve as a timely reminder for business owners and individuals to revisit their tax planning strategies.

Just because today’s announcements lacked major surprises does not mean it is time to be complacent.

Minor issues – still noteworthy!

Whilst seemingly unrelated to the broader impact on businesses that this Spring Statement holds, there were minor points raised in Reeves’ announcement that deserve your attention.

For example:

  • Individual households £500 better off: Reeves told the Commons that the OBR now expects real household disposable income to grow at nearly twice the rate forecast last autumn, with households set to be £500 better off on average under this Government. This could lead to increased consumer spending and boost demand for goods and services – which is good for businesses.
  • Labour sticks to housebuilding promise: The Chancellor stated that Labour policies would “lead to housebuilding reaching a 40-year high” which is good news for a construction sector already crumbling under pressure.
  • Taking aim at defence spending: Reeves confirmed a £2.2 billion boost in defence spending, with at least 10 per cent of the equipment budget going towards advanced technologies like drones and AI. The investment will support manufacturing hubs in areas such as Glasgow, Derby, Newport, and Barrow, creating thousands of skilled jobs and new business opportunities.
  • Chancellor insists that inflation targets are achievable: Reeves said inflation, which peaked at 11 per cent under the previous Government, is on track to reach the 2 per cent target by 2027. This should offer greater price stability, helping businesses plan, invest, and manage costs with more confidence.
  • Unexpected freeze to benefit claimants: Reeves confirmed a £4.8 billion cut to welfare, including a 50 per cent reduction and freeze of the Universal Credit health element for new claimants – an unexpected move not signalled last week.
  • ISA reform on the horizon: Though not mentioned in the Chancellor’s speech, the larger document released at the same time hints at potential reforms to Individual Savings Accounts (ISAs) to “get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission.” This could mean a decrease in the tax-free allowance currently offered by these savings vehicles.

While not the headline announcements, these points could still have meaningful implications for both individuals and businesses.

One might see these as hints at broader economic shifts – and opportunities – that are worth keeping an eye on.

The real impact of the Spring Statement

While this Spring Statement may have lacked headline-grabbing reforms, its message was clear: stability first, change later.

For individuals, there are small signs of progress – rising household incomes, a firmer grip on inflation, and continued investment in defence and infrastructure.

For businesses, however, the Statement brings more caution than comfort.

There is no rollback of last year’s tax rises, no fresh reliefs, and no new incentives to drive growth or innovation.

Yet amidst the silence, there are signals – economic forecasts are improving, consumer spending may rise, and targeted investment could support job creation and local economies.

If the Autumn Budget was about making bold moves, the Spring Statement is about holding the line.

Now is the time for business owners and individuals to assess their position and review their tax planning strategies with their accountant.

To read the full Spring Statement released by the Government, please click here.