Archive: 13th March 2025

Corporation Tax

Group relief for trading losses

Mar 13, 2025 by Terry Harris 0 Comments

Group relief helps reduce the overall Corporation Tax of a group of companies by allowing them to share losses. For example, if a parent company has profits of £1,000 and its subsidiary has losses of £100, the group is treated as making £900 in total profits for tax purposes, instead of paying tax on the full £1,000. The group would then pay tax on the £900.

Group relief lets one company transfer its losses to another company within the same group, but it doesn’t treat the group as a single entity for tax purposes. Each company remains a separate legal entity. The surrendering company must actively consent to the claimant company utilising its losses.

Key points of group relief:

  • Losses and certain other amounts can be transferred between companies in the same group.
  • The amount that can be claimed is the lower of the surrendering company’s available losses and the claimant company’s total profits.

There are special rules that apply:

  • to UK permanent establishments of companies resident outside the UK and overseas permanent establishments of UK resident companies, if there is the possibility of relief being given in a jurisdiction other than the UK,
  • if there are arrangements that could affect the group relationship, or
  • if the loss arises to a 75% subsidiary resident in an European Economic Area territory.
Source:HM Revenue & Customs | 10-03-2025
National Insurance

Self-Employed National Insurance Contributions

Mar 13, 2025 by Terry Harris 0 Comments

Self-employed individuals earning £12,570 or more annually must pay Class 4 National Insurance Contributions (NICs). For 2024-25, rates are 6% on profits up to £50,270 and 2% above this. Certain groups are exempt, and voluntary Class 2 NICs may be beneficial.

Class 4 NIC rates for the tax year 2024-25 are 6% for chargeable profits between £12,570 and £50,270 plus 2% on any profits over £50,270. There are no changes to these rates for 2025-26.

A number of categories of people are exempt from paying Class 4 NICs, these include:

  • People under the age of 16 at the beginning of the year of assessment.
  • People over State pension age at the beginning of the year of assessment. A person who attains State pension age during the course of the year of assessment remains liable for Class 4 NICs for the whole of that year.
  • People receiving profits in their capacity as a trustee, executor or administrator of a person liable to tax under ITTOIA2005/S8.

The mandatory payment of Class 2 National Insurance Contributions (NICs) for the self-employed was abolished effective from 6 April 2024. It can be beneficial for some self-employed people who do not pay NICs through self-assessment to make voluntarily Class 2 NICs. This can help them to access certain contributory benefits including the State Pension. It is important to confirm that this would be beneficial before making any voluntary payment. The current weekly rate for making voluntary Class 2 NICs is £3.45 and is increasing to £3.50 in 2025-26.

Most self-employed individuals pay Class 2 and Class 4 NICs through self-assessment. Certain self-employed roles, such as examiners, moderators, invigilators, and ministers of religion without a salary do not pay National Insurance through self-assessment but may want to pay voluntary contributions.

Source:HM Revenue & Customs | 10-03-2025
Income Tax

Tax and Maintenance Payments

Mar 13, 2025 by Terry Harris 0 Comments

Maintenance Payments Relief reduces Income Tax for those making court-ordered payments to an ex-spouse or civil partner. To qualify, one party must have been born before 6 April 1935. The relief is 10% of payments, up to £428 per year.

To qualify for this relief, all of the following conditions must apply:

  • Either you or your ex-spouse/civil partner must have been born before 6 April 1935.
  • You must be paying maintenance under a court order after the relationship has ended.
  • The payments must be for the maintenance of your ex-spouse or former civil partner, provided they are not remarried or in a new civil partnership, or for children under 21.
  • This relief offers a 10% reduction in the maintenance you pay, up to a maximum of £428 per year (10% of £4,280).

To claim, you must contact HMRC. The process involves providing necessary documentation, such as proof of the court order and payment records.

This benefit is designed to reduce the overall tax burden, helping someone manage their financial responsibilities after a separation.

However, it's important to note that this tax relief is limited due to the age condition — it only applies if either party was born before 6 April 1935, which significantly restricts its usage.

Source:HM Revenue & Customs | 10-03-2025
Value Added Tax

How VAT Payments on Account Work

Mar 13, 2025 by Terry Harris 0 Comments

Businesses owing over £2.3 million in VAT annually must make advance payments on account. These are based on the previous year’s VAT liability and paid in instalments. Late payments incur penalties, but adjustments may be possible for fluctuating liabilities.

The payments are usually based on the previous year’s VAT liability, and businesses are required to pay 1/24th of their estimated annual liability to HMRC by the last working day of the second and third months of the VAT quarter.

For example, if your VAT quarter ends on 31 March, your payments on account for that quarter will be due by the last working day in February and March. Businesses that fail to make these payments on time will be subject to interest and penalties.

The payments on account and the balancing payments must be made electronically and cleared funds must be in HMRC's bank account by close of business on the due date. Businesses making POA do not benefit from the seven extra calendar days allowed to other VAT registered businesses for paying electronically.

The payment amount is calculated by HMRC based on the previous year’s VAT liability. If your liability changes and fluctuates by more than 20%, you may be able to request an adjustment to reduce your payments. This request must be approved by HMRC, and any adjustments will only be applied once HMRC has confirmed that the changes are valid. If the amount of VAT payable is higher than anticipated, the payment on account may increase, but it cannot exceed your total VAT liability from the previous year.

Source:HM Revenue & Customs | 10-03-2025
Personal

Child Benefits for over 16s

Mar 13, 2025 by Terry Harris 0 Comments

From April 2025, Child Benefit increases to £26.05 for the eldest child and £17.25 for others. Payments stop after a child turns 16 unless they continue in approved education or training. Parents must update HMRC by 31 August to avoid disruptions.

Taxpayers entitled to the child benefit should be aware that HMRC usually stop paying child benefit on the 31 August following a child’s 16th Birthday. Under qualifying circumstances, the child benefit payment can continue until a child reaches their 20th birthday if they stay in approved education or training. This must be confirmed to HMRC, or payments will stop.

Approved education must be full-time, with more than 12 hours per week of supervised study or course-related work experience. Approved education includes A levels, T levels, Scottish Highers, NVQs up to Level 3, home education (if started before 16 or after 16 with special educational needs), study programmes in England, and pre-apprenticeships. The course must be started before the child turns 19.

Child Benefit cannot be claimed if your child is:

  • Studying for a university degree or BTEC Higher National Certificate (advanced course)
  • On an apprenticeship (unless it’s a Foundation Apprenticeship in Wales)
  • Undertaking a course with an employer’s agreement (e.g., to secure a job or gain skills for an existing job)

Approved training should be unpaid and can include:

  • Wales: Foundation Apprenticeships, Traineeships, or the Jobs Growth Wales+ scheme
  • Scotland: The No One Left Behind programme
  • Northern Ireland: PEACEPLUS Youth Programme 3.2, Training for Success, or Skills for Life and Work

Courses that are part of a job contract are not approved.

HMRC sends a letter in your child’s last year at school asking you to confirm their plans. The letters include a QR code which, when scanned, directs them straight to GOV.UK to update their claim quickly and easily online. This can also be done on the HMRC app.

Parents have until 31 August 2025 to tell HMRC that their 16-year-old is continuing their education or training, and to continue receiving Child Benefit. No child benefit is payable after a young person reaches the age of 20 years.

Source:HM Revenue & Customs | 10-03-2025
Business Support

Government backed Start-Up Loans

Mar 13, 2025 by Terry Harris 0 Comments

The Government-backed Start-Up Loans scheme offers unsecured loans of £500 to £25,000 per person (up to £100,000 per business) to help entrepreneurs grow. With a fixed 6% interest rate and mentoring support, it's a great funding option for new businesses.

Securing financing to start or grow a business is one of the most vital steps in ensuring success. Finding funding can often feel challenging, especially when traditional options like mainstream bank loans may not be available or come with strict conditions, such as requiring personal guarantees or offering security. Fortunately, the Government-backed Start-Up Loans scheme offers a great alternative.

This scheme provides personal loans to individuals looking to develop their business offering a range of benefits to support new entrepreneurs. Not only can applicants receive an unsecured loan (meaning no assets or guarantors are required), but they will also be paired with a business mentor for up to 12 months to guide them through the early stages of their business journey.

Business owners or partners in a business can individually apply for loans ranging from £500 to £25,000 each. A maximum loan amount of £100,000 is available per business if multiple business partners are involved. The average loan amount is around £7,200, with a fixed interest rate of 6% per annum. Loan repayment terms range from 1 to 5 years, and there are no application or early repayment fees.

To be eligible for the Start-Up Loan, applicants must meet the following criteria:

  • You live in the UK
  • You are 18 years of age or older
  • You own (or plan to start) a UK-based business that has been trading for less than 36 months.
Source:Other | 10-03-2025
Employment Law

Beware of rushing to judgement before terminating employment.

Mar 12, 2025 by Terry Harris 0 Comments

A Tribunal has ruled that a deputy security manager was unfairly dismissed, despite performing “no prescribed tasks” while ‘working from home’, many hundreds of miles from his place of work. Mr. Kitaruth travelled from London to Cornwall to visit with his parents for four days, during which the hearing found no evidence that he did any work.

When his line manager, Mr. Stride of OCS Security Ltd., summoned him to a mid-week meeting in the office he learned of Mr. Kitaruth's location leading to his subsequent dismissal for "gross misconduct". However, Mr. Kitaruth won his case for unfair dismissal after the Tribunal found that the company had failed to interview the line manager during their investigation.

Mr. Kitaruth told the Tribunal that he had an informal arrangement in which he verbally agreed with Mr. Stride on the dates that he would ‘work from home’, as August was a quiet month at the conference centre. The Tribunal found that Mr. Kitaruth “genuinely believed he had been given permission” although there was possibly of a misunderstanding arising between himself and his line manager, as evidenced by the message train on WhatsApp. Despite the pretext of 'working from home' there was no evidence that he had performed any tasks and, although he responded to "calendar invites, phone calls, liaising with the officers and emails,” he did not do so in a timely manner.

Judge Tamara Lewis noted that it was “extremely poor practice” for the company to take just six weeks to investigate and dismiss Mr. Kitaruth, and then to take a further seven and a half months to hear and reject his appeal. Moreover, the Judge found that "no reasonable employer would have failed to interview Mr. Stride formally before reaching a decision to dismiss the claimant," and hence, "For this reason, the dismissal was unfair.”

Employers should always publish, adopt, and follow to the letter any formal disciplinary procedures before terminating the employment of any contracted employee.

Source:Other | 11-03-2025
Business

Changes to online filing of accounts at Companies House

Mar 10, 2025 by Terry Harris 0 Comments

The Online Accounts and Company Tax Return (CATO) service is scheduled to close on 31 March 2026. ​

This service has enabled businesses to file their company accounts and tax returns simultaneously with both Companies House and HMRC. However, due to its outdated nature and misalignment with modern digital standards and recent changes in UK company law under the Economic Crime and Corporate Transparency Act (ECCT Act), the decision has been made to discontinue it.​

Key Actions for Businesses:

  • Download Past Filings: It's advisable to download and save at least three years of your company's account filings before 31 March 2026, as access to previous submissions will not be available after this date.​
  • Explore Software Options: Begin researching and selecting suitable commercial accounting software that meets the filing requirements for both Companies House and HMRC. Transitioning to software-based filing can offer enhanced features, improved accuracy, and better integration with your financial records.​

This shift aligns with the broader Making Tax Digital (MTD) initiative, aiming to streamline tax compliance through digital tools. While adapting to new software may present challenges, the benefits include increased efficiency and reduced errors in tax filings.​

For detailed guidance and updates, visit the official GOV.UK website.​

By proactively preparing for this transition, businesses can ensure continued compliance and take advantage of the efficiencies offered by modern digital filing systems.

Source:Other | 09-03-2025
Business

Why flexible planning is advisable

Mar 10, 2025 by Terry Harris 0 Comments

Flexible planning is essential for adapting to uncertainty, responding to challenges, and seizing new opportunities. The world is unpredictable, and rigid plans can quickly become outdated. Whether in business or personal life, flexibility ensures resilience and long-term success.

Unexpected events such as economic shifts, technological advancements, or personal changes can derail strict plans. A flexible approach allows for quick adjustments without having to start over. Businesses, for instance, benefit from adapting to market trends or supply chain disruptions, ensuring they remain competitive.

Opportunities often arise unexpectedly. A business that initially planned to operate solely in physical stores but later noticed a surge in online shopping must be able to pivot. Those who rigidly stick to their original plans may miss out on growth.

Managing risks is another advantage of flexible planning. If a strategy is not working, adjustments can be made rather than continuing down an unproductive path. This is particularly important in business, where adapting marketing tactics or reallocating resources can make a significant difference.

Innovation thrives in flexible environments. Companies that allow for iterative development and experimentation can improve products and services based on real-time feedback rather than relying on outdated assumptions.

Employee morale and productivity also improve when people are empowered to adapt. A rigid plan can create stress, while flexibility fosters a more dynamic, responsive workplace.

Customer satisfaction depends on adaptability. Consumer preferences change, and businesses that adjust their offerings accordingly are more likely to retain loyal customers.

Ultimately, flexible planning ensures better resource allocation, the ability to respond to competitive pressures, and the freedom to evolve with changing circumstances. Rather than being a sign of weakness, flexibility is a strategic advantage that helps individuals and organisations thrive in an ever-changing world.

Source:Other | 09-03-2025
Tax Diary

Tax Diary April/May 2025

Mar 7, 2025 by Terry Harris 0 Comments

1 April 2025 – Due date for corporation tax due for the year ended 30 June 2024.

19 April 2025 – PAYE and NIC deductions due for month ended 5 April 2025. (If you pay your tax electronically the due date is 22 April 2025).

19 April 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2025.

19 April 2025 – CIS tax deducted for the month ended 5 April 2025 is payable by today.

30 April 2025 – 2023-24 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

1 May 2025 – Due date for corporation tax due for the year ended 30 July 2024.

19 May 2025 – PAYE and NIC deductions due for month ended 5 May 2025. (If you pay your tax electronically the due date is 22 May 2025).

19 May 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2025.

19 May 2025 – CIS tax deducted for the month ended 5 May 2025 is payable by today.

31 May 2025 – Ensure all employees have been given their P60s for the 2024/25 tax year.

Source:HM Revenue & Customs | 06-03-2025