Archive: 4th September 2025

Inheritance Tax

Gifts with reservation of benefit

Sep 4, 2025 by Terry Harris 0 Comments

Gifting assets can cut inheritance tax, but traps like “gifts with reservation of benefit” may undo the plan.

The majority of gifts made during a person's lifetime are not subject to tax at the time they are made. These lifetime transfers are known as "potentially exempt transfers" (PETs). A PET becomes fully exempt from Inheritance Tax if the individual making the gift survives for more than seven years after the transfer.

If the donor dies between three and seven years after making the gift, taper relief may apply, which reduces the amount of tax payable. The effective rates of tax on the excess over the nil-rate band for PETs are as follows:

  • 0 to 3 years before death: 40%
  • 3 to 4 years before death: 32%
  • 4 to 5 years before death: 24%
  • 5 to 6 years before death: 16%
  • 6 to 7 years before death: 8%

However, different rules apply if the person making the gift retains some benefit or enjoyment of the asset. This typically occurs when the donor does not relinquish full control over the asset, and the transfer is made with a reservation of benefit. These are referred to as ‘gifts with reservation of benefit’ (GWROBs).

A common example is when a person gifts their home to their children but continues to live in it rent-free. In this case, HMRC is likely to argue that the donor’s position has not changed in substance, and that the arrangement constitutes a GWROB. If this is the case, HMRC will not treat it as a valid gift for inheritance tax purposes, and the property would remain part of the donor’s estate, even if they live for more than seven years after making the transfer.

A GWROB can usually be avoided in these situations if the donor pays full market rent for their continued use of the asset.

Source:HM Revenue & Customs | 01-09-2025
Capital Gains Tax

Holding over gains on gifts

Sep 4, 2025 by Terry Harris 0 Comments

Gift Hold-Over Relief is a form of Capital Gains Tax (CGT) relief that allows you to defer paying CGT when certain assets, such as qualifying shares, are given away or sold for less than their market value, typically to benefit the recipient.

Instead of paying tax at the time of the gift, the gain is "held over" and passed on to the person receiving the asset. This reduces their base cost for CGT purposes, meaning the tax is only due when they eventually sell or dispose of the asset.

The individual making the gift will not usually have to pay CGT, as long as the transfer qualifies. However, CGT may still apply if the asset is sold at an undervalue rather than gifted outright. Transfers between spouses or civil partners are generally exempt from CGT.

A joint claim for the relief must be submitted by the giver and the recipient of the business asset gift.

To claim Gift Hold-Over Relief on business assets, you must meet all of the following:

  • Be a sole trader, a business partner, or hold at least five percent of the voting rights in a company (your personal company).
  • The assets must have been actively used in your business or in your personal company.

If the asset was only partly used for business purposes, partial relief may still be available.

To qualify for the relief when giving away shares, the shares must be in a company that is either:

  • Not listed on any recognised stock exchange, or
  • Your personal company.

In addition, the company must be primarily involved in trading activities, such as supplying goods or services. Companies that are mainly engaged in non-trading activities, such as investment, will generally not qualify.

Source:HM Revenue & Customs | 01-09-2025
Payroll

What counts as working time for minimum wage purposes

Sep 4, 2025 by Terry Harris 0 Comments

Employers must ensure they are paying staff at least the National Minimum Wage (NMW) or National Living Wage (NLW). The NMW and the NLW are the minimum legal amounts that employers must pay their workers. The latest NMW and NLW rates took effect on 1 April 2025. The current hourly rate for the NLW is £12.21. For those aged 18 to 20, the NMW is £10.00 per hour. Workers aged 16 to 17 and apprentices are entitled to £7.55 per hour.

The minimum wage is calculated as an hourly rate, but it applies to all eligible workers however they are paid. This means that even if someone is paid an annual salary, and it is paid by the piece or in other ways, they must still calculate their equivalent hourly rate to check whether they are receiving at least the minimum wage.

To do this correctly, it is also important to understand what counts as working time under NMW rules.

According to HMRC guidance, for all types of work, this includes time spent:

  • at work and required to be working, or on standby near the workplace (but do not include rest breaks that are taken);
  • not working because of machine breakdown, but kept at the workplace;
  • waiting to collect goods, meet someone for work or start a job;
  • travelling in connection with work, including travelling from one work assignment to another;
  • training or travelling to training;
  • at work and under certain work-related responsibilities even when workers are allowed to sleep (whether or not a place to sleep is provided).

Working time does not include time spent:

  • travelling between home and work;
  • away from work on rest breaks, holidays, sick leave or maternity leave;
  • on industrial action; and
  • not working but at the workplace or available for work at or near the workplace during a time when workers are allowed to sleep (and you provide a place to sleep).
Source:HM Revenue & Customs | 01-09-2025
Income Tax

Why your tax code might change

Sep 4, 2025 by Terry Harris 0 Comments

The letters in your tax code indicate whether you are entitled to the annual tax-free personal allowance. These codes are updated each year and help employers calculate how much tax should be deducted from your salary.

For the current tax year, the basic personal allowance is £12,570. The tax code corresponding to this amount is 1257L, which is the most common tax code used for those with a single job, no untaxed income, and no unpaid tax or taxable benefits (such as a company car).

HMRC updates your tax code when your circumstances change, and your taxable income is affected. Some common reasons why your tax code may change include:

  • Starting a new job. If you begin working for a new employer, HMRC may issue a new tax code based on your earnings, especially if they haven’t yet received your full income details.
  • Receiving taxable state benefits. Certain state benefits are taxable. If you start receiving them, HMRC may adjust your tax code to account for the additional income.
  • Taking on an additional job or receiving a pension. If you begin earning from another job or start drawing a pension, your tax code may be updated to reflect this extra income.
  • A change to your weekly State Pension amount. If your weekly State Pension payments change, HMRC may revise your tax code to ensure the right amount of tax is collected.
  • Changes to job-related benefits. If your employer informs HMRC that you have started or stopped receiving benefits like a company car or private healthcare, your tax code will likely change to reflect this.
  • Claiming Marriage Allowance. If you transfer part of your Personal Allowance to your spouse or civil partner, or they transfer it to you, HMRC will adjust your code to reflect the change in allowances.
  • Claiming tax-deductible expenses. If you claim tax relief on work-related expenses (like uniforms, tools, or mileage), your code might change to reduce the tax you pay during the year.

It is important to check your tax code is correct. If you have any questions, we would be happy to help.

Source:HM Revenue & Customs | 01-09-2025
Income Tax

Are you selling goods or services on a digital platform?

Sep 4, 2025 by Terry Harris 0 Comments

From 2024, platforms like eBay, Vinted and Airbnb must report seller data to HMRC, so check your tax responsibilities.

If you sell goods or services on a digital platform it is important to understand your tax responsibilities. This can apply whether your sales are a part-time income source or your main income. Even casual selling online may mean you need to report earnings and potentially pay tax.

You may need to pay tax if you engage in activities on digital platforms like:

  • Buying and reselling items online or making things to sell (even as a hobby).
  • Providing services online, such as tutoring, repairs, food delivery, dog walking, or equipment hire.
  • Creating digital content, like podcasts, YouTube videos, or social media influencing.
  • Earning income by renting out property or land, like letting a holiday home, running a bed and breakfast, or renting out a parking space on your driveway.

Since 1 January 2024, digital platforms (such as eBay, Vinted, Etsy and Airbnb) have been required to collect and report seller data to HMRC. The first reports covered the period from 1 January to 31 December 2024, with information submitted to HMRC by 31 January 2025.

The same rules apply in 2025, meaning income earned this calendar year (January to December 2025) will be reported by 31 January 2026.

Platforms must report your information if either of the following applies:

  • You made 30 or more sales in the year.
  • You earned over €2,000 (about £1,700).

The digital platforms will also give you a copy of the data they send to HMRC, which can help when completing your self-assessment return.

If you are earning money online you should ensure you check your tax responsibilities. The rules are clear, and platforms are now required to report many types of earnings directly to HMRC.

Source:HM Revenue & Customs | 01-09-2025
Employment Law

Balancing access to justice and abuse of process

Sep 2, 2025 by Terry Harris 0 Comments

An extended civil restraint order (ECRO) was issued against a prolific Employment Tribunal (ET) litigant for presenting repeated and baseless claims.

A Mr. Khan has been described as a prolific litigant, having issued no fewer than 42 largely unsuccessful tribunal claims since 2017. These various failed claims have typically involved allegations of disability discrimination and a failure to make reasonable adjustments in recruitment processes. Many claims were struck out for having no reasonable prospect of success or simply as an abuse of process. Only two claims, levelled against solicitors' firms, were settled for "nuisance value payments" of £700 and £1,000. Mr. Khan has also made many unsuccessful applications to adjourn hearings, often on medical grounds, alongside numerous failed attempts to challenge ET decisions.

The High Court granted the claimants’ application for an ECRO, restraining the defendant from issuing or presenting claims or appeals related to job applications in the tribunal system without prior court permission for a period of three years. 

This decision strengthens the mechanisms available to safeguard judicial processes from abuse. It reaffirms that higher courts can step in to protect tribunals from those individuals who repeatedly file baseless claims or appeals without legal merit. This is crucial for preventing the system from being overwhelmed by vexatious litigation, ensuring that resources are available for legitimate disputes.

For individuals who represent themselves in court, while the judiciary strives to ensure fairness and assist unrepresented parties, the case firmly reiterates that procedural rules and the fundamental principles of legal merit still apply. It demonstrates that courts will not tolerate the deliberate misuse of legal processes. Thus, employers and their legal counsel should be wary of disgruntled employees with histories of spurious claims and seek to have baseless claims struck out on such grounds.  

Source:Tribunal | 01-09-2025
Business Support

Keeping your best people with flexible working

Sep 1, 2025 by Terry Harris 0 Comments

For many small business owners, finding and keeping good staff is one of the biggest headaches. Recruitment is costly, time-consuming and uncertain. That is why focusing on staff retention is one of the smartest moves you can make.

People stay where they feel valued. Pay matters, of course, but many small businesses cannot simply compete with bigger firms on salary. The good news is that today’s workforce values other things just as highly, such as flexibility, wellbeing and opportunities to grow.

Flexible working is top of the list. Offering staff the chance to adjust hours, work some days from home or fit work around family life can make your business stand out as an attractive employer. It costs very little to implement but makes a huge difference to loyalty and morale.

Wellbeing is another area where small firms can excel. Simple steps such as promoting regular breaks, encouraging a healthy work-life balance or creating a supportive team culture go a long way. Staff who feel cared for are more likely to give their best and stay longer.

Training is also key. Investing in low-cost learning opportunities, whether through online courses, mentoring, or in-house skill sharing, shows employees that you are committed to their development. People who see a future in your business are less likely to look elsewhere.

Remember, retaining staff is not just about avoiding the cost of hiring replacements, it is about protecting relationships with customers and maintaining business know-how. Every time you lose a team member, you also lose some of the experience and trust they have built.

At a time when skilled workers are in short supply, small businesses that look after their people will gain a real competitive edge. A little flexibility, support and encouragement can turn staff into long-term partners in your success.

Source:Other | 31-08-2025
Business Support

Cash flow resilience and access to funding

Sep 1, 2025 by Terry Harris 0 Comments

Running a small business often feels like walking a financial tightrope. Cash can be flowing in nicely one month, only to dry up the next. With interest rates higher than they were for years and lenders tightening their checks, access to money has become a bigger challenge. That is why focusing on cash flow resilience is so important right now.

Cash flow is not just about survival; it is about giving your business room to grow. If you are waiting too long for customers to pay, your money is tied up when you need it most. A simple review of credit terms, clearer payment reminders, or offering small discounts for early settlement can make a real difference. On the other side, talking to suppliers about extending your payment period may also ease the pressure.

When it comes to funding, traditional bank loans are no longer the only option. Small firms are making use of alternative routes such as peer-to-peer lending, invoice financing, and short-term credit lines. These options can be quicker to arrange, but you need to check the costs carefully so that repayments do not become a burden.

One tip is to keep your financial information in good order. Banks and alternative lenders want to see clear, accurate figures before approving funds. Regular management accounts, cash flow forecasts, and evidence of good record keeping all build confidence. In practice, a well-presented finance pack can be the difference between a “yes” and a “no.”

The message is clear: do not wait until cash is tight to act. Regularly review your inflows and outflows and know what funding options are open to you. A resilient approach to cash flow can protect your business in tough times and put you in a strong position to seize opportunities when they come along.

Source:Other | 31-08-2025