Going into the latest Spring Statement, the Chancellor made it very clear that this would not be a full fiscal event and that any new policy changes would be off the table.

Rising to her feet in Parliament that is exactly what Rachel Reeves delivered, but it was against a back drop of rising economic uncertainty that she could not have predicted when she set the date for her forecast.

In her opening words to the MPs gathered, she made it very clear that the ongoing conflict in the Middle East was adding considerable obstacles to improvements in the global economic outlook.

Already, oil and gas prices have surged and many of the world’s leading trading floors have recorded significant downturns, but nevertheless Reeves painted a picture of a UK economy that would continue to grow.

Some businesses and individuals may be thankful for little or no change, but others are likely reviewing the Statement and wondering why Reeves didn’t do more to lay the ground for help with a new, looming cost crisis.

• Economic outlook
• Unemployment rising
• The impact of conflict
• The Government's plans
• Preparing for an uncertain future

Economic outlook

The Chancellor was keen to demonstrate that the Government’s existing plans would deliver “economic stability in an uncertain world.”

The Office for Budget Responsibility (OBR) report, delivered to The Treasury on 26 February, already painted a picture of slow growth prior to any knowledge of a growing global conflict.

The OBR’s report shows that the nation’s growth forecast has been reduced in 2026 to 1.1 per cent – down from the 1.4 per cent growth forecast in November’s Autumn Budget.

However, from 2027, growth is forecast to increase to 1.6 per cent (up from 1.5 per cent from last year’s forecast) and will grow at a similar rate in 2028, before slowing slightly to 1.5 per cent in 2029 and 2030.

Whilst the Government may be focused on this positive growth, the predictions are still far below GDP growth seen in the years ahead of the 2008 financial crisis – almost two decades ago.

Despite this weaker economic performance and the anticipated rising costs from global conflict, the OBR has forecast that inflation will actually drop to 2.3 per cent in 2026, down from the 2.5 per cent forecast in the Autumn Budget. It believes that the UK will still meet its target of 2 per cent inflation by 2027.

As many economic pundits have already pointed out, this forecast may have already been out of date at the time it was delivered due to the impact of global conflicts.

Combined, these events create a powder keg of economic uncertainty, which could restrict investment and decision-making within many businesses.

Unemployment rising

Unemployment is expected to rise at a far quicker rate this year – increasing from 4.75 per cent in 2025 to a peak of 5.3 per cent in 2026.

This is quite a significant rise, given that the last forecast in November had expected unemployment to only increase to 4.9 per cent this year.

The OBR has also raised its forecast for unemployment in 2027 to 4.9 per cent, from 4.6 per cent previously.

In its report, the fiscal watchdog said that “subdued hiring demand” meant that fewer jobs were available, with the Chancellor pointing out that more would be done to tackle unemployment, in particular, to help young workers into a career.

Long-term, the forecasts predict that the unemployment rate will fall gradually to 4.1 per cent by 2030/31.

The biggest barrier to this may remain the challenges businesses face when hiring. Experts, like the Bank of England, have suggested that the Government’s previous fiscal policies, including increases to the National Minimum Wage and the National Insurance hike, have caused employment costs to rise.

The impact of conflict

We can’t ignore the elephant in the room and neither did the Chancellor, but the current conflict in the Middle East is likely to have significant financial ramifications.

Rachel Reeves recognised that the actions of those involved, including the closure of one of the world’s most important waterways – The Straits of Hormuz – would have a knock-on effect on oil and gas prices.

The Chancellor promised no more austerity and confirmed that the public purse now had greater headroom to sustain spending, without having to borrow as much.

Whether this means fewer tax rises in future is not yet clear, but what is, is that the longer the current conflicts roll on, the greater the impact on global business.

This will have a trickle-down effect on many aspects of our lives, from energy costs to the price of transportation, all of which will add additional cost to the way we live.

The Government's plans

The fact that the Chancellor didn’t address the challenges ahead by creating any new fiscal policies, including support for SMEs, may be questioned by some.

She was trying to sell a picture of stability, by confirming that in future the single fiscal event – promised in the Labour manifesto – would mean longer periods without disruptive change.

However, given the events of recent days, some may query why the Chancellor didn’t use this opportunity to provide greater reassurance or outline proposals that might help businesses weather the economic storm ahead.

In two weeks’ time, Rachel Reeves will speak again as she delivers her next Mais Lecture. During her statement she confirmed that this speech would “set out three major choices that will determine the course of our economy into the future.”

Preparing for an uncertain future

Whilst many businesses will welcome the lack of change within the Spring Statement for the stability it brings, the wider world of finance is less certain and will be dependent on a number of factors outside the control of the UK Government.

That is why it is more important than ever for businesses and individuals to have a clear picture of their financial health, especially ahead of the fairly significant tax changes within the next few tax years outlined in the previous Autumn Budget.

To read the Chancellor’s full speech, please click here, or to read the OBR’s economic and fiscal outlook here.

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
• Personal tax freeze
• Business tax
• Tax on wealth
• Electric cars and transport
• Spending and investment
• Savings and pensions
• Final thoughts

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.

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!
• The UK’s economic outlook in “a changing world”
• Labour’s tax evasion crackdown
• Changes to MTD for ITSA: Quietly announced, massively important
• Reeves reminds us of changes made last year
• Minor issues – still noteworthy
• The real impact of the Spring Statement

“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.

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.

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.

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.

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.

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.

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.