Archive: 19th March 2026

Income Tax

What are dividends and how are they taxed

Mar 19, 2026 by Terry Harris 0 Comments

A dividend is a distribution of a company’s profits to its shareholders. Companies may pay dividends in cash or additional shares, giving investors a share of the business’s earnings. Dividends are a common way for shareholders to earn income from their investments.

Dividends received within tax-advantaged accounts are completely tax-free. This includes dividends held in Individual Savings Accounts (ISAs) and in pensions, such as Self-Invested Personal Pensions (SIPPs) or other registered pension schemes. For investments outside these wrappers, dividends are subject to Income Tax, although all taxpayers benefit from a small £500 annual dividend allowance. This is in addition to the standard Personal Allowance of £12,570.

From April 2026, dividend tax rates will increase by 2%. The ordinary dividend rate will rise to 10.75%, while the upper dividend rate will increase to 35.75%. The dividend additional rate and the dividend trust rate will remain at 39.35%, and the dividend allowance will remain at £500.

Careful planning around dividend income is important in order to manage your overall tax liability.

Source:HM Revenue & Customs | 16-03-2026
Income Tax

The Rent a Room Scheme

Mar 19, 2026 by Terry Harris 0 Comments

The Rent a Room Scheme is a set of special rules designed to help homeowners who rent out a room in their home, creating a potentially valuable tax-free income stream. Under the scheme, rent received from lodgers during the tax year is tax-free up to £7,500. The exemption is automatic if your income from the scheme is below this threshold, and no specific tax reporting is required. Homeowners can also choose to opt out of the scheme and report property income and expenses in the usual way.

The relief applies only to the letting of furnished accommodation, typically a bedroom rented to a lodger by homeowners in their home. The scheme simplifies both the tax and administrative burden for those with income from renting a room for up to £7,500. If the property has joint owners, the limit is halved for each joint-owner sharing the rental income.

The Rent a Room limit includes not only rent but also amounts received for meals, goods, or services provided to the lodger, such as cleaning or laundry. If gross receipts exceed the £7,500 threshold, taxpayers can choose between:

  • Paying tax on the actual profit (gross rents minus allowable expenses and capital allowances), or
  • Paying tax on gross receipts minus the £7,500 allowance, with no deduction for expenses or capital allowances.
Source:HM Revenue & Customs | 16-03-2026
Capital Gains Tax

Tax if selling a second property

Mar 19, 2026 by Terry Harris 0 Comments

You may have to pay Capital Gains Tax (CGT) tax when you sell or dispose of a property that is not your main home. This includes buy-to-let properties, business premises, land and inherited property.

Your gain is broadly the difference between what you paid for the property and what you sell it for. In some cases such as where the property was gifted or sold below market price you must use market value instead. If your total gains exceed the annual exemption, CGT will be payable.

For UK residential property, CGT is charged at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. You can reduce your gain by deducting allowable costs, such as legal fees, estate agent fees and the cost of capital improvements (but not routine maintenance).

You do not usually pay CGT on transfers to a spouse or civil partner, or to a charity. Special rules also apply to jointly owned property, overseas property and disposals from estates. If CGT is due on the sale of UK residential property, you must report and pay it within 60 days of completion. Keeping accurate records and reviewing your position early can help avoid unexpected liabilities and ensure you claim all available reliefs.

Source:HM Revenue & Customs | 16-03-2026
Inheritance Tax

Tax on inherited property, money or shares

Mar 19, 2026 by Terry Harris 0 Comments

As a general rule, someone who inherits property, money or shares is not liable to pay tax on the inheritance itself. This is because any Inheritance Tax (IHT) due is normally paid out of the deceased’s estate before assets are distributed to beneficiaries. However, the recipient may be liable to Income Tax on any income generated after the inheritance (for example, dividends from shares) and to Capital Gains Tax on any increase in value of the assets from the date of inheritance.

An important exception applies to gifts made during a person’s lifetime. These are known as Potentially Exempt Transfers (PETs). Such gifts become exempt from IHT if the donor survives for more than seven years after making the gift. If the donor dies within three years, the gift is treated as part of the estate on death for IHT purposes.

Taper relief may apply where death occurs between three and seven years after the gift, reducing the amount of IHT payable. In some cases, individuals take out insurance policies, such as seven-year term assurance, to cover any potential IHT liability during this period.

The position is more complex where the donor retains some benefit from the gifted asset. For example, gifting a house but continuing to live in it rent-free is treated as a ‘gift with reservation of benefit’. In such cases, the asset may still be subject to IHT, even if the donor survives for more than seven years. Additionally, IHT may arise if inherited assets are placed into a trust and the trust is unable to meet the tax liability.

Source:HM Revenue & Customs | 16-03-2026
Income Tax

How long should you keep your tax records

Mar 19, 2026 by Terry Harris 0 Comments

Following the deadline for submission of self-assessment tax returns for the 2024–25 tax year, it is a useful time to revisit the rules on how long you should keep your tax records. There are no strict requirements for how records must be kept, but they should be retained either on paper, digitally, or within appropriate software.

For personal (non-business self-assessment records, you are generally required to keep them for at least 22 months after the end of the relevant tax year. This means records for the year ended 5 April 2025 should be kept until at least 31 January 2027. If you file your tax return late, you must keep the records for at least 15 months from the date of filing.

The types of records you should keep include those relating to:

  • Income from employment e.g. P60, P45 or form P11D forms
  • Expense records if you’ve had to pay for things like tools, travel or specialist clothing for work
  • Documents relating to social security benefits, including Statutory Sick Pay, Statutory Maternity, Paternity or Adoption Pay and Jobseeker’s Allowance.
  • Income from employee share schemes or share-related benefits
  • Savings, investments and pensions e.g. statements of interest and income from your savings and investments
  • Pension income e.g. details of pensions (including State Pension) and the tax deducted from it
  • Rental income e.g. rent received and details of allowable expenses
  • Any income which is open to Capital Gains Tax
  • Foreign income

This is not an exhaustive list, and you should retain any additional records used in preparing your tax return.

Different rules apply for business records. Self-employed individuals must usually keep records for at least five years after the 31 January submission deadline. For the 2024–25 tax year, this means retaining records until at least 31 January 2031. Penalties may apply for failing to keep accurate and complete records.

Source:HM Revenue & Customs | 16-03-2026
Income Tax

Estimate your Income Tax for the current tax year

Mar 19, 2026 by Terry Harris 0 Comments

If you are concerned by the continuing pressures on your take-home pay and need some certainty on your Income Tax liability, the HMRC calculator available at https://www.gov.uk/estimate-income-tax can be helpful.  Alternatively, if you believe you may have overpaid tax, reviewing your position could help you claim a refund.

The 'Estimate your Income Tax' service allows employees to calculate how much Income Tax and National Insurance they are likely to pay for the current tax year (6 April 2025 to 5 April 2026). It is particularly useful for those paid through PAYE, giving a clear picture of expected take-home pay after tax, pension contributions and any student loan repayments.

The tool is straightforward to use, but there are a few important points to keep in mind. If you have more than one job, you will need to run the calculator separately for each source of income. It is also not suitable if your only income comes from state benefits, such as the State Pension.

While the calculator provides a helpful estimate, it does not account for every scenario. For example, certain repayments, such as the Winter Fuel Payment for higher earners are not available on the calculator.

Source:HM Revenue & Customs | 16-03-2026
Corporate Governance & Regulation

Companies House blunder

Mar 19, 2026 by Terry Harris 0 Comments

A Companies House blunder has raised concerns after a flaw in the WebFiling service briefly exposed sensitive company data. The issue, identified on 13 March 2026, meant that a logged-in user could potentially access and amend limited details of another company by carrying out a specific sequence of actions.

Companies House has stated that this system vulnerability was not available to the general public. Only users with authorised access codes who were already logged into the system could have exploited it. Nevertheless, the nature of the flaw meant that certain private information, such as dates of birth, residential addresses and company email addresses may have been visible. There was also a risk that unauthorised filings, including accounts and changes to director details, could have been submitted on another company’s record.

After identifying this issue, Companies House shut down the WebFiling service at 13:30 on 13 March to investigate. Following independent testing, the system was restored at 09:00 on 16 March. Companies House has said that passwords and identity verification data were not compromised, and that existing filed documents, such as accounts or confirmation statements, could not be altered.

The issue is believed to have arisen from a WebFiling systems update in October 2025. It has been reported to both the Information Commissioner’s Office and the National Cyber Security Centre.

Companies are now being urged to review their registered details and filing history carefully. While no confirmed misuse has been reported so far, Companies House is continuing to investigate. If a company has a concern, it should raise a complaint via the Companies House complaints page at www.gov.uk/government/organisations/companies-house/about/complaints-procedure and include evidence to describe the issue.

Source:Companies House | 16-03-2026
Employment Law

When is a “self-employed” contractor a de facto employee?

Mar 18, 2026 by Terry Harris 0 Comments

The employment status of a former bricklayer was recently called into question in establishing liability for asbestos exposure. The widow of the late Mr. Eric Alger, who died from mesothelioma, sought access to historical Employer’s Liability

Insurance. Mr. Alger had been contracted to work on a major refurbishment project in 1988. However, because the company had long since been wound up, it had to be restored to the register for this case to be heard. Mr. Alger had worked alongside demolition gangs on the site, although he claimed that he had never been provided with a mask or warned about the risks of asbestos.

The widow’s case was that, while Mr. Alger was self-employed for tax purposes, he was directly engaged by the company to work on the project. The High Court determined that, on the balance of probabilities, Mr. Alger was directly employed by the company and thus fell under the definition of an “employee” for the purposes of Employer’s Liability Insurance, allowing the widow to proceed with the claim for damages. As Mr. Alger had been moved between different areas of the site and performed general labour rather than just specialist bricklaying, the Judge concluded that he was effectively being managed directly by the main contractor and was effectively an employee.

While Mr. Alger was “self-employed” in the eyes of HMRC, if workers provide “labour only,” use the company’s tools, and are moved between tasks at the manager’s discretion, then they are classified as employees, allowing them access to compensation otherwise denied to truly independent businesses. This case further demonstrates that a company’s legal liability may persist long after it has been wound up.

This case has profound implications for any sector that provides equipment or infrastructure, yet declares its workers to be independent subcontractors. Moreover, this landmark ruling may not be confined to liability insurance and could also be extended to other areas of accountability. Employers should thus ensure that the roles of subcontractors are clearly specified.

Source:HM Revenue & Customs | 17-03-2026
Business Support

Business solvency, why it matters

Mar 17, 2026 by Terry Harris 0 Comments

Business solvency refers to a company’s ability to meet its financial obligations as they fall due and to maintain a healthy balance between its assets and liabilities. It is one of the key indicators of financial stability and is essential for the long term survival of any business.

A solvent business has sufficient resources to pay suppliers, employees, lenders and the tax authorities on time. Maintaining this position helps to build trust with stakeholders. Suppliers may be more willing to offer favourable credit terms, lenders may be more comfortable providing finance, and customers are more likely to have confidence in a business that appears financially stable.

Solvency is also important from a legal and governance perspective. Company directors have a duty to ensure that their business does not continue trading if it is unable to meet its obligations. If a company trades while insolvent, directors could face serious consequences, including potential personal liability for certain debts.

Regular financial monitoring plays an important role in protecting solvency. Reviewing management accounts, balance sheets and cash flow forecasts allows business owners to identify potential problems early. This may provide time to reduce costs, improve collections from customers, refinance borrowings or introduce additional capital.

Maintaining adequate reserves and controlling debt levels are also key elements of a strong solvency position. Businesses that rely too heavily on borrowing can become vulnerable if trading conditions deteriorate or interest rates rise.

For these reasons, solvency should be seen as a core measure of business health. Regular financial review and forward planning can help ensure that a business remains stable, resilient and able to meet its commitments.

Source:Other | 16-03-2026
Business Support

Exit planning, an essential step for business owners

Mar 17, 2026 by Terry Harris 0 Comments

Many business owners spend years building their companies but give far less attention to planning how they will eventually exit. In reality, a successful exit rarely happens by chance. It usually requires careful preparation several years in advance.

For most owners the business represents their largest financial asset. Without proper planning it can be difficult to realise its full value when the time comes to sell or transfer ownership. Potential buyers will expect to see reliable financial information, stable cash flow and well organised systems that allow the business to operate effectively without relying entirely on the owner.

Planning ahead also creates opportunities to manage the tax position more efficiently. The structure and timing of a sale, together with the availability of reliefs, can significantly affect the final amount of tax payable. Early planning allows these issues to be reviewed and structured properly.

Succession is another key consideration. Where a business is to be transferred to family members or senior employees, a gradual transition can help ensure the new leadership is fully prepared and that the business continues to operate smoothly.

An exit strategy also helps owners think about their own future plans and financial security. For these reasons, business exit planning should be treated as an important part of long term business strategy rather than a last minute decision.

Please call if you would like to consider your options.

Source:Other | 16-03-2026