All posts by Terry Harris

Pension

Pension tax-free lump sums

May 22, 2025 by Terry Harris 0 Comments

Turning 55 soon? From April 2028, the minimum pension access age rises to 57. If you are planning to draw your pension, you could take up to 25% tax-free. Make informed choices about your remaining pot, as the rest will usually be taxed as income. Get advice before you act.

Most personal pensions have a minimum age for access, currently set at 55 (this will increase to 57 from 6 April 2028). When you reach this age, you can begin withdrawing from your pension, and some of the benefits can be taken tax-free.

In most cases, you’re entitled to take 25% of your pension pot as a tax-free lump sum, up to a maximum of £268,275. If you have protected allowances, you may be able to take a larger tax-free amount.

In specific circumstances, such as serious illness or where certain lump sum death benefits are paid to your beneficiaries, you or your beneficiaries may be eligible to take up to £1,073,100 tax-free. This is referred to as the Lump Sum and Death Benefit Allowance.

Once you’ve taken your tax-free lump sum, you generally have up to six months to decide how to access the remaining 75%, which is usually taxable. Your options include taking further cash withdrawals, buying an annuity for guaranteed income for life and using flexi-access drawdown to invest and withdraw flexibly.

It’s important to remember that pension income (beyond any tax-free amounts) is treated as earned income and taxed under standard Income Tax rules. This includes income from your personal pension, State Pension, employment, or other taxable sources.

Source:HM Revenue & Customs | 19-05-2025
Capital Gains Tax

Deferring gains using Incorporation Relief

May 22, 2025 by Terry Harris 0 Comments

Thinking of transferring your sole trader or partnership business into a limited company? Incorporation Relief can help defer any capital gains tax on assets like goodwill. If the entire business is transferred in exchange for shares, the relief applies automatically, no claim needed. Make sure you understand the rules and deadlines, especially if you plan to opt out.

When a sole trader or partnership transfers their business into a company, a capital gain may arise. The gain is based on the market value of the business assets (including goodwill) at the time of incorporation, compared to their original cost.

However, businesses incorporated in this way may qualify for Incorporation Relief. To benefit from this relief, the entire business, along with all its assets (excluding cash, if applicable), must be transferred as a going concern in exchange, wholly or partly, for shares in the new company.

Incorporation Relief is automatic if the conditions are met. There is no need to submit a claim. The relief defers the capital gain by reducing the base cost of the new shares by the amount of the deferred gain, effectively postponing any tax until the shares are sold.

Although the relief applies automatically, a taxpayer can elect for it not to apply. This must be done in writing, and the election must be submitted by 31 January, two years after the end of the tax year in which the incorporation occurred. For example, for a transfer in the current 2025–26 tax year, the election deadline is 31 January 2029. The election deadline is reduced by one year if the shares are disposed of in the year following that in which the business was incorporated.

Source:HM Revenue & Customs | 19-05-2025
Overseas personal tax issues

Changes to tax status of non-UK domiciles

May 22, 2025 by Terry Harris 0 Comments

From 6 April 2025, the remittance basis for non-doms is abolished. A new UK tax regime now applies to non-domiciled individuals, focused solely on residence. New arrivals can benefit from a 4-year exemption on foreign income and gains, but action is needed. CGT rebasing, Overseas Workday Relief, and a limited-time 12%–15% repatriation facility could all offer planning opportunities. Review your position now.

Since 6 April 2025, significant changes to the UK tax status for non-UK domiciled individuals have come into force. The remittance basis of taxation has been abolished, and a simplified, residence-based regime is now in place. This marks a fundamental shift in how foreign income and gains (FIG) are taxed for individuals living in the UK.

Under the new system, a 4-year FIG regime has been introduced. Individuals newly arriving in the UK, who have not been UK tax residents in the previous ten consecutive years, can claim 100% tax relief on their foreign income and gains for their first four years of UK residence.

To ease the transition, Capital Gains Tax (CGT) rebasing is available. Those who previously used the remittance basis may rebase personally held foreign assets to their 5 April 2017 value, subject to conditions.

Overseas Workday Relief has also been extended to a four-year term, matching the FIG regime. From now on, this relief no longer requires employment income to remain offshore.

A Temporary Repatriation Facility (TRF) has also been launched. Running for three years from April 2025, it allows individuals taxed under the old remittance rules to bring in pre-reform foreign income and gains at reduced tax rates—12% for the first two years and 15% in the final year. This includes income and gains held in trust structures that were previously untaxed.

Source:HM Revenue & Customs | 19-05-2025
Inheritance Tax

Changes to IHT from April 2025

May 22, 2025 by Terry Harris 0 Comments

From April 2025, Agricultural Property Relief from Inheritance Tax now extends to land under qualifying environmental agreements. This means landowners entering long-term stewardship schemes will not lose IHT relief. From April 2026, a new £1 million limit will apply to combined APR and BPR claims—making timely planning more important than ever.

Agricultural Property Relief (APR) is a relief from Inheritance Tax (IHT) that reduces the taxable value of agricultural land and property when it is passed on, either during a person’s lifetime or after death. It allows up to 100% relief on qualifying agricultural land used for farming.

The scope of APR was extended from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or relevant approved responsible bodies. This expansion of the relief helps to better support environmental land management without penalising landowners for switching from farming to environmental use.

The new rules will benefit individuals, estates, and personal representatives where agricultural land is shifted to long-term environmental use under formal agreements. Previously, land removed from active farming for environmental schemes could have lost eligibility for APR.

From 6 April 2026, broader reforms to Agricultural Property Relief and Business Property Relief are set to take effect. While relief of up to 100% will still be available, it will apply only to the first £1 million of combined agricultural and business property. Beyond that threshold, the relief will be reduced to 50%.

Source:HM Revenue & Customs | 19-05-2025
Business

How should multiple self-employed incomes be treated

May 22, 2025 by Terry Harris 0 Comments

Running more than one self-employed business? HMRC will not always treat them as separate. Whether they are taxed as one combined trade or multiple depends on how your activities relate to each other. It is not a matter of choice, it is about how your business is run in practice. Get it right to avoid costly mistakes.

When someone has more than one self-employed income, one of the key issues to consider is whether to combine all profits under a single business activity or treat each separately. This depends on the nature and relationship of the activities. HMRC’s manuals set out three possible scenarios:

1. Separate Trades

If the new activity is run independently, with different staff, stock, or customers, it is treated as a separate trade. This means each business is taxed individually, and the commencement rules apply to the new one. No merging takes place unless operations later combine in substance.

2. A New Single Trade

If the new activity transforms the original business significantly, so much so that the old trade effectively ends, then both are treated as forming a new trade. The cessation rules apply to the original trade, and commencement rules apply to the new, combined business.

3. Continuation of Existing Trade

If the new activity merely expands the existing business without fundamentally changing its nature, it is treated as a continuation. Profits are combined and taxed as one ongoing trade, with no change in basis.

Understanding whether activities form one trade or multiple is crucial for correct tax treatment. It’s not just a matter of choice. It also depends on the facts and how the businesses operate and interact.

We would be happy to help you review the structure of your business to ensure compliance with HMRC guidance and avoid unexpected tax consequences.

Source:HM Revenue & Customs | 19-05-2025
Income Tax

Could you extend Child Benefit claim?

May 22, 2025 by Terry Harris 0 Comments

Parents of 16–19-year-olds: confirm your child’s continued education or training by 31 August 2025 to keep Child Benefit payments going. Last year, over 870,000 families updated HMRC, most online. It only takes a few minutes and helps avoid missed payments. If your child is still in approved education, act now to stay on track.

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, in order to continue receiving Child Benefit. No child benefit is payable after a young person reaches the age of 20 years.

Child Benefit is paid at a weekly rate of £26.05 for the only or eldest child, and £17.25 for each additional child. However, families where either parent earns over £60,000 a year may be affected by the High Income Child Benefit Charge (HICBC). This means they may have to pay back some or all of the benefit through their income tax return. If income exceeds £80,000, the full amount of Child Benefit must be repaid. Families can still choose to receive the benefit and pay the charge or opt out of receiving payments to avoid the charge altogether.

Source:HM Revenue & Customs | 19-05-2025
Business Support

The legal responsibilities of directors

May 19, 2025 by Terry Harris 0 Comments

When someone agrees to become a director of a UK limited company, they take on a set of legal responsibilities defined under the Companies Act 2006 and other relevant legislation. These duties are not just symbolic – directors have a legal obligation to act in the best interests of the company, its shareholders, and, in certain cases, its creditors.

Statutory duties under the Companies Act

The core legal duties are set out in sections 171 to 177 of the Companies Act 2006. These include:

  • Duty to act within powers – Directors must follow the rules set out in the company’s Articles of Association and only use their powers for proper purposes.
  • Duty to promote the success of the company – Directors must act in good faith to promote the company’s success for the benefit of its members. This includes considering long-term consequences, employees' interests, the company’s reputation, and its impact on the environment.
  • Duty to exercise independent judgement – Directors must make their own decisions and not be unduly influenced by others.
  • Duty to exercise reasonable care, skill and diligence – This duty combines objective and subjective standards. A director must show the care, skill and diligence that would be expected from a reasonably diligent person with their knowledge and experience.
  • Duty to avoid conflicts of interest – Directors must avoid situations where they have or could have a conflict of interest with the company’s affairs.
  • Duty not to accept benefits from third parties – They must not accept benefits that arise from their role as director if it could lead to a conflict of interest.
  • Duty to declare interest in a proposed transaction – Directors must declare any personal interest in a transaction or arrangement the company is considering.

Other legal obligations

In addition to the Companies Act duties, directors must ensure that the company complies with its legal responsibilities. This includes filing annual accounts and confirmation statements with Companies House, ensuring tax compliance with HMRC, operating PAYE schemes where appropriate, and observing health and safety laws.

Personal risk and accountability

Directors can be held personally liable for breaches of their duties, particularly if the company becomes insolvent and they have failed to act properly. Disqualification, fines, or even criminal penalties can follow in serious cases.

Accepting a directorship is a serious commitment. Directors must understand their obligations and, if unsure, seek professional advice to avoid legal pitfalls.

Source:Other | 18-05-2025
Business Support

The value of applying for trade marks

May 19, 2025 by Terry Harris 0 Comments

A trade mark is a vital tool for protecting the identity and reputation of your business. It can take the form of a name, logo, slogan, shape, or even a sound, and once registered, gives you exclusive rights to use that mark in connection with specific goods or services. In the UK, trademarks are registered through the Intellectual Property Office (IPO), providing legal protection across the country.

The main value of a trade mark lies in safeguarding your brand. A registered trade mark prevents others from using the same or a similar mark in ways that could confuse customers or damage your reputation. Without a trade mark, your business is more vulnerable to imitation or misuse, which can lead to costly disputes or the need to rebrand entirely.

Brand recognition is another key benefit. When customers see a trade mark, they associate it with certain standards of quality and service. This builds loyalty and trust, helping to secure repeat business. A strong trade mark becomes a shorthand for everything your business represents, giving you a competitive edge.

From a commercial perspective, trademarks are valuable assets. They can be sold, licensed, or used to attract investors. As your business grows, a trade mark can open up opportunities for franchising or partnerships. For businesses looking to scale, having brand protection in place adds credibility and can enhance the overall value of the company.

A registered trade mark also helps you avoid legal issues. Before registration, the IPO checks for conflicting marks, reducing the risk of infringement. And if someone does attempt to copy your brand, having a trade mark gives you strong legal grounds to enforce your rights and prevent further misuse.

In summary, applying for a trade mark is a practical and often overlooked step that can offer long-term protection and commercial benefits. It gives peace of mind, legal clarity, and helps to build a stronger, more trusted business. Whether you are starting out or looking to secure an existing brand, registering a trade mark is a sound investment in your business’s future.

Source:Other | 18-05-2025
Employment Law

The importance of discretion – don’t send inappropriate messages during working hours!

May 15, 2025 by Terry Harris 0 Comments

An Employment Tribunal confirmed that using an employer's preferred method of communicating with employees to send offensive messages can serve as a ground for dismissal. A claimant was employed from September 2017 as a graduate trainee and then as a software developer until April 2021, at which juncture he was dismissed for gross misconduct. He subsequently brought three grievances during his employment, all of which were dismissed. The issue surrounded ‘Slack’ messages between the claimant and two colleagues sent during working hours using the respondent's systems. The claimant was suspended on 8 January 2021 while still on sick leave, pending a disciplinary investigation.

In a letter dated 15 January 2021, the claimant was invited to a disciplinary hearing. Attached to the letter was a five-page summary of comments alleging inappropriate and offensive language. Despite not attending the disciplinary hearing, the claimant shared his mitigating circumstances on 24 February 2021 and refused to disclose a copy of the Occupational Psychologist's report outlining his disabilities.  The Tribunal concurred that Risby had been correctly applied and that the dismissal was a proportionate response to certain of the respondent's legitimate aims under Section 15(1)(b) of the Equality Act 2010, given the foul and abusive nature of the language directed towards colleagues. The claimant’s medical arguments had, however, not been originally submitted and could not then be produced on appeal to substantiate a direct link between the language itself and the disability.

This judgement is a clear warning that any abuse directed towards colleagues made during working hours using the employer’s preferred communication system can be considered misconduct and result in dismissal. All employees should be cautioned that any miscommunications on work messaging systems are thus potential grounds for dismissal and, while extreme disabilities or mental health conditions might serve as mitigating factors, any claimant will need robust medical evidence to support such a defence.

Source:Other | 14-05-2025
Value Added Tax

When can you deregister for VAT?

May 15, 2025 by Terry Harris 0 Comments

Considering VAT deregistration? Whether compulsory or voluntary, knowing the rules, deadlines and risks of delay can save your business from costly penalties.

The decision to deregister for VAT may be necessary or beneficial in a range of circumstances. Whether it's a legal requirement or a voluntary decision, it’s important for businesses to understand the rules and deadlines to avoid penalties and ensure proper compliance. The rules differ depending on whether the deregistration is compulsory or voluntary.

You must cancel your VAT registration if your business is no longer eligible. This typically applies when a business:

  • Stops making taxable supplies
  • Sells the business
  • Changes its legal structure (e.g., from sole trader to limited company)
  • Disbands a VAT group
  • Joins an existing VAT group
  • Joins the Agricultural Flat Rate Scheme

In these cases, deregistration must be completed within 30 days of the change. Failure to do so may result in penalties. In some situations, it may be possible to retain the same VAT number, particularly where the business continues in a different form.

A business may also apply for voluntary deregistration if it expects its taxable turnover to remain below the current threshold of £88,000. HMRC may request supporting evidence to confirm that the turnover will stay below this level. It's important to note that voluntary deregistration cannot be backdated—the cancellation will only take effect from the date the request is received or a future date agreed with HMRC.

Even after deregistering, a business can still make late input tax claims on services received while it was VAT registered, as long as the claims fall within the standard VAT time limits.

Source:HM Revenue & Customs | 12-05-2025