Archive: 16th October 2025

HMRC notices

Deduction of tax on yearly interest

Oct 16, 2025 by Terry Harris 0 Comments

The tax legislation requires the deduction of tax from yearly interest that arises in the UK. This typically refers to interest that is subject to Income Tax or Corporation Tax.

The legislation requires the deduction of tax from yearly interest, if:

  • paid by a company, a local authority, a firm in which a company is a partner, or
  • paid by any person to another person whose usual ‘place of abode’ is outside the UK.

The tax must be deducted by the person or entity making the payment at the savings rate in force for the tax year in which the payment is made. In practice, the main circumstances where tax is deducted are where a company makes a payment of interest to an individual or other non-corporate person, or where interest is paid by a person (individual, trustee or corporate) to another person whose usual place of abode is outside the UK.

However, some exclusions apply. For example, interest paid by deposit takers, interest paid to a bank or building society, interest paid from UK public revenues or under the former Mortgage Interest Relief At Source (MIRAS) scheme. Companies, local authorities and ‘qualifying firms’ (a firm which includes a company or local authority as a partner) are also exempt from the requirement to deduct tax from interest paid to certain recipients.

It is important to note that statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998, is not classified as yearly interest and does not fall under these rules.

Source:HM Revenue & Customs | 12-10-2025
Capital Gains Tax

Business Asset Disposal Relief changes

Oct 16, 2025 by Terry Harris 0 Comments

Business Asset Disposal Relief (BADR) offers a significant tax benefit by reducing the rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.

On 6 April 2025, the BADR CGT rate increased from 10% to 14% for disposals made in the 2025–26 tax year. However, the rate is set to rise again from 6 April 2026, to 18%. This means that qualifying disposals made after April 2026 will be subject to a higher CGT rate once again.

The lifetime limit for claiming BADR remains at £1 million, allowing individuals to claim the relief multiple times as long as the total gains from all qualifying disposals do not exceed this threshold.

In addition to changes to BADR, there were also changes to Investors’ Relief. Since 30 October 2024, the lifetime limit for Investors' Relief has been reduced from £10 million to £1 million. The CGT rates for Investors' Relief also align with those for BADR, currently set at 14% and also rising to 18% from April 2026.

These increases in CGT rates are significant and will impact tax planning strategies for business owners and investors. It is also important to note that further changes may be announced in the forthcoming Budget that could further chip away to the benefits of this relief.

Source:HM Treasury | 12-10-2025
HMRC notices

Claiming 4-years Foreign Income and Gains relief

Oct 16, 2025 by Terry Harris 0 Comments

The remittance basis of taxation for non-UK domiciled individuals (non-doms) was replaced with the new Foreign Income and Gains (FIG) regime from April 2025. This new regime is based on tax residence rather than domicile. Under the new rules, nearly all UK-resident individuals must report their foreign income and gains to HMRC, regardless of whether they had previously claimed remittance basis or are claiming relief under the FIG regime.

Former remittance basis users not eligible for the new FIG relief are now taxed on newly arising foreign income and gains in the same way as other UK residents. However, they will still be taxed on any pre-6 April 2025 FIG that is remitted to the UK.

A key feature of the new regime is the 4-year FIG relief. This is available to new UK residents who have not been UK tax resident in any of the 10 preceding tax years. These individuals can opt in to receive full tax relief on their FIG for up to four years. Claims must be made via a self-assessment return, with deadlines falling on 31 January in the second tax year after the relevant claim year. The FUG relief lasts for a maximum of 4 consecutive years starting from when a person first became a UK tax resident. Claims can be made selectively in any of the four years, but any unused years cannot be rolled over.

The types of foreign income which are eligible for relief includes:

  • profits of a trade carried on wholly outside the UK
  • profits of an overseas property business
  • dividends from non-UK resident companies
  • interest, such as interest paid on a foreign bank account

An individual’s ability to qualify for the 4-year FIG regime will be determined by whether they are UK resident under the Statutory Residence Test (SRT).

Source:HM Revenue & Customs | 12-10-2025
Value Added Tax

VAT on goods you export

Oct 16, 2025 by Terry Harris 0 Comments

Exports from Great Britain or Northern Ireland can be zero-rated for VAT, provided businesses obtain valid export evidence within three months of sale and meet all HMRC documentation rules; accuracy and record-keeping are key to keeping the 0% rate.

Businesses are required to charge VAT on most goods that are sold within the UK. However, there are VAT exemptions in place on goods that you export outside of the UK.

Under the VAT rules, businesses can "zero rate" the sale of qualifying goods that are exported. Where this is the case this would mean that no VAT is charged on the goods.

This applies to:

  • Goods exported from Great Britain to a destination outside the UK.
  • Goods exported from Northern Ireland to a destination outside the UK and EU.

To qualify for VAT zero-rating, businesses must ensure they have sufficient evidence that the goods were exported. This evidence should be obtained within three months of the ‘time of sale’. A longer period may apply in cases where goods need to be processed before export or for thoroughbred racehorses.

The ‘time of sale’ for VAT purposes is the earlier of when the goods are dispatched to the customer or when full payment is received.

It is important to note that businesses cannot zero-rate sales if a customer requests delivery to a UK address. If a customer arranges for collection from the seller (an indirect export), VAT zero rating may still be possible if certain conditions are met.

Maintaining accurate records and ensuring compliance with export requirements is essential to benefit from the VAT zero-rate provisions. Businesses must ensure that they hold proper export documentation and follow the guidelines carefully to avoid penalties and ensure the correct VAT rate is charged.

Source:HM Revenue & Customs | 12-10-2025
Business Support

Winning new contracts without offering punitive credit terms

Oct 13, 2025 by Terry Harris 0 Comments

In today’s competitive market, many businesses feel pressured to extend generous payment terms to win new contracts. However, offering long or risky credit arrangements can strain cash flow and expose you to unnecessary financial risk. The good news is that there are other, more sustainable ways to attract and retain valuable clients.

One effective strategy is to focus on value rather than price. You should emphasise the quality, reliability and consistency of your service. Clients are often willing to pay on standard terms if they see that your business delivers dependable results and reduces their own risks. Highlight testimonials, case studies, and evidence of past performance to reinforce this message.

Second, improve transparency in your proposals. Set out clear timelines, deliverables and support arrangements. Buyers are more likely to accept normal payment terms when they feel confident about what they are getting and when they will get it.

Third, consider flexible but controlled options such as staged payments or deposits. These can balance client confidence with your need for steady cash flow. For example, 30% on order, 40% on delivery, and 30% on completion is often easier for clients to manage than a lump sum.

Finally, build strong relationships. Personal trust remains one of the most powerful negotiating tools. When clients view you as a partner rather than just a supplier, they are less likely to demand extended credit. The aim is not to win contracts at any cost, but to win them on fair, sustainable terms that support both sides.

Source:Other | 12-10-2025
Business Support

Business meetings – Face to face or online?

Oct 13, 2025 by Terry Harris 0 Comments

The way we meet has changed dramatically in recent years. Technology now makes it possible to discuss projects, close deals and hold team meetings without ever leaving our desks. Yet for many, there is still something powerful about sitting across the table from another person. Both formats have their place, and the right choice often depends on purpose, people and context.

Online meetings are efficient. They remove the need for travel, save time and allow busy people to meet at short notice. For businesses with remote staff or clients across the country, video calls make communication easy and inexpensive. Online platforms also allow for screen sharing, document collaboration, and recording, all of which can make discussions more productive.

However, virtual meetings can have drawbacks. Technical glitches, weak connections and background distractions can interrupt the flow. It can also be harder to read body language or sense engagement, especially in larger groups. Without informal conversation before or after a meeting, relationships can feel more functional than personal.

Meeting in person allows for a deeper level of connection. Subtle cues, tone, and eye contact help build trust and understanding, especially when sensitive or complex matters are involved. Negotiations, strategic planning and first introductions often benefit from a personal touch. The act of meeting physically can also signal commitment and importance.

The disadvantages are mainly practical. Face-to-face meetings take more time and often involve travel costs. Coordinating diaries can be difficult and the environmental impact of regular travel is increasingly questioned.

For most businesses, a mix works best. Routine updates and quick check-ins are well suited to online meetings, while major decisions, negotiations, or relationship-building sessions still benefit from being held in person. The key is to choose the setting that best supports the outcome you want to achieve.

Source:Other | 12-10-2025
Value Added Tax

Benefits of the VAT Cash Accounting Scheme

Oct 9, 2025 by Terry Harris 0 Comments

Waiting to be paid but still having to hand over VAT? The VAT Cash Accounting Scheme potentially lets you pay VAT only when your customer pays you, helping to ease cash flow pressures for small and medium-sized businesses.

This approach can offer significant benefits if your business offers extended credit terms to customers or regularly deals with bad debts. Rather than having to find the money to pay VAT on sales you have not yet been paid for, the scheme allows businesses to align VAT payments with actual cash received. For many small and medium-sized businesses, this can offer real breathing space and reduce the strain on working capital.

However, the scheme may not be as useful in all cases. If you are typically paid immediately at the point when you make a sale or if your business often reclaims more VAT than it pays out the scheme may offer little or no advantage. The same applies to businesses that make continuous supplies of services, where the VAT treatment might not align neatly with cash receipts.

If the scheme is not proving worthwhile, businesses can leave the scheme at the end of a VAT accounting period and return to the standard method of VAT accounting. However, for the right businesses the VAT Cash Accounting Scheme can offer significant benefits.

To join the scheme, a business must have a VAT taxable turnover of £1.35 million or less in the next 12 months. Once in the scheme, a business can continue using it until their turnover exceeds £1.6 million.

Source:HM Revenue & Customs | 05-10-2025
Income Tax

What is the High Income Child Benefit Charge?

Oct 9, 2025 by Terry Harris 0 Comments

If your income exceeds £60,000 and you or your partner receive Child Benefit, you can now choose to pay the High Income Child Benefit Charge through your PAYE code instead of filing a Self-Assessment return; a simpler way to stay compliant while keeping your Child Benefit claim active.

The High Income Child Benefit Charge (HICBC) is a charge that applies to parents whose income exceeds £60,000 in a tax year and whose family receive Child Benefit. The charge is calculated at a rate of 1% of the full Child Benefit amount for every £200 of income between £60,000 and £80,000. Once income exceeds £80,000, the charge equals the full amount of Child Benefit received effectively removing any financial gain from claiming it.

Taxpayers now have the option to report their Child Benefit payments and pay the HICBC directly through their PAYE tax code, rather than filing a Self-Assessment tax return. This change was announced in the Autumn Statement 2024 and has recently been made available to eligible taxpayers.

The tax charge can be collected through PAYE if:

  • the individual is not required to file a self-assessment tax return for any other reason (for example, if they are self-employed), and
  • the payment arrangement is made before 31 January following the end of the relevant tax year.

If these conditions are not met, the HICBC must be paid through self-assessment instead.

Taxpayers can choose whether to continue receiving Child Benefit and pay the charge or opt out of receiving it to avoid the charge altogether. It is usually beneficial to claim Child Benefit as doing so can safeguard certain benefits and ensure your child receives a National Insurance number at age 16.

Source:HM Revenue & Customs | 05-10-2025
Income Tax

The Marriage Allowance if circumstances change

Oct 9, 2025 by Terry Harris 0 Comments

Married couples and civil partners could save up to £252 a year by transferring part of one partner’s unused personal allowance to the other, but you may need to cancel the claim if your income or relationship status changes.

The Marriage Allowance applies to married couples and civil partners where one partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one partner must earn less than the £12,570 personal allowance for 2025-26).

The allowance allows the lower-earning partner to transfer up to £1,260 of their unused personal tax-free allowance to their spouse or civil partner. The transfer can only be made if the recipient (the higher-earning partner) is taxed at the basic 20% rate, which typically means they have an income between £12,571 and £50,270. For those living in Scotland, this would usually apply to an income between £12,571 and £43,662.

By using the allowance, the lower-earning partner can transfer up to £1,260 of their unused personal allowance, which could result in an annual tax saving of up to £252 for the recipient (20% of £1,260).

However, it is important to be aware you must cancel the Marriage Allowance if your circumstances change and any of the following apply:

  • your relationship ends – because you have divorced, ended (‘dissolved’) your civil partnership or legally separated;
  • your income changes and you are no longer eligible; or
  • you no longer want to claim.
Source:HM Revenue & Customs | 05-10-2025
General

Understanding the tax implications of divorce

Oct 9, 2025 by Terry Harris 0 Comments

When a couple is separating or undergoing divorce proceedings, tax issues are often not the first thing on their minds. However, alongside the emotional challenges, it is important to understand the tax implications of divorce can have a significant impact.

Changes to the Capital Gains Tax (CGT) rules for divorcing couples took effect on 6 April 2023. These changes extended the period during which spouses and civil partners can make transfers between each other without triggering CGT. The no gain/no loss rule now lasts up to three years after they stop living together. Additionally, if the couple has a formal divorce agreement, there is no time limit for these transfers. Before this change, the no gain/no loss treatment only applied to disposals in the tax year of the separation.

There are also specific rules for people who continue to have a financial interest in their former family home after separating. These rules allow them to claim private residence relief (PRR) when the home is eventually sold, provided certain conditions are met.

During divorce proceedings, it is crucial to reach a fair financial agreement, if possible, as this can help avoid further legal complications. If an agreement cannot be reached, the court may step in to issue a "financial order." Both parties and their advisers should also carefully consider the future of the family home, any family businesses, and the potential Inheritance Tax consequences of the separation or divorce.

Source:HM Revenue & Customs | 05-10-2025