Archive: 2nd January 2025

Employee Benefits

Advising HMRC of employees’ company car details

Jan 2, 2025 by Terry Harris 0 Comments

Ensure compliance with HMRC rules when providing company cars. From P46(Car) submissions to benefit reporting, learn what steps to take for private use and specific exemptions.

Here are the steps you need to follow to inform HMRC if you make any cars available for private use by company directors or employees. Private use of a car includes employees’ journeys between home and work, unless they are traveling to a temporary work location.

You must submit a P46 (Car) form to HMRC if you:

  • Provide company cars to employees
  • Stop providing a company car
  • Provide an additional car to someone

You can submit the form in the following ways:

  • Complete it online and send a printed copy to the address listed on the form.
  • Use HMRC’s PAYE Online service for employers.
  • Use your payroll software.

Additionally, you must report the car benefit on your end-of-year forms and pay Class 1A National Insurance on its value. You must also notify HMRC if a company car is replaced.

You do not need to notify HMRC if you provide:

  • 'Pool' cars, which are used by multiple employees for business purposes and usually kept on your premises.
  • Cars adapted for employees with disabilities, if the only private use is for commuting.
  • Emergency vehicles used exclusively by on-call employees in police, fire and rescue, ambulance, or paramedic services.
Source:HM Revenue & Customs | 01-01-2025
Capital Gains Tax

Capital Gains Tax – the new rates

Jan 2, 2025 by Terry Harris 0 Comments

Capital Gains Tax rates have increased for disposals from 30 October 2024, with further changes ahead. Stay informed on the updated rates for assets, property, and reliefs to optimise your tax planning.

We would like to remind our readers of the updated Capital Gains Tax (CGT) rates that apply to gains realised on or after 30 October 2024. The main CGT rates for assets other than residential property and carried interest has increased to 18% (from 10%) for Income Tax basic rate payers, and to 24% (from 20%) for Income Tax higher rate payers.

For trustees and personal representatives, the CGT rate will has also increased to 24% (from 20%) for disposals made on or after 30 October 2024. The CGT rates for residential property disposals (18% and 24%) remain unchanged.

The CGT rate for Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% for disposals made on or after 6 April 2025. A further increase to 18% will apply for disposals made on or after 6 April 2026. The lifetime limit for Business Asset Disposal Relief remains unchanged at £1 million, but the lifetime limit for Investors’ Relief will be reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. Special provisions apply to certain contracts entered into before 30 October 2024.

Additionally, the normal and higher rates of CGT on carried interest (currently 18% and 28%, respectively) will rise to a single unified rate of 32% from 6 April 2025. From April 2026, carried interest will be subject to a broader package of policy changes, which will be announced at a later date.

Source:HM Treasury | 01-01-2025
Income Tax

Cash-basis default position for self-employed

Jan 2, 2025 by Terry Harris 0 Comments

The cash basis is now the default for self-employed income reporting. Learn about the key updates, opt-out options, and how this simplified method can ease your self-assessment obligations with HMRC.

The cash basis is used by sole traders and other unincorporated businesses to determine their income and expenses for self-assessment. This simplified method can ease record-keeping and income reporting to HMRC, whilst still providing a suitable measure of profits for many businesses.

Since 6 April 2024, the cash basis has become the default method for calculating income and expenses for self-employed individuals and partnerships when filing their Income Tax self-assessment return.

Businesses that prefer traditional accruals accounting or who are ineligible for the cash basis, must opt out of the cash basis when submitting their self-assessment return. The first return requiring this decision will be the 2024-25 return, due by 31 January 2026.

There have also been a number of other changes to the cash basis that took effect for the current 2024-25 tax year. This includes the following:

  • The removal of the turnover thresholds for businesses to use the cash basis.
  • The removal of the restrictions on using relief for losses made in the cash basis, aligning the rules with accruals.
  • Interest restrictions have been removed so both cash basis and accruals accounting are subject to the same tax rules.
  • People with more than one business will be able to choose whether they use the cash basis or accruals accounting for each business they have, rather than having to pick one method for all their businesses.

The cash basis is not available to limited companies and limited liability partnerships.

Source:HM Revenue & Customs | 01-01-2025