Terry Harris

The marginal Corporation Tax rates

Apr 2, 2026 by Terry Harris 0 Comments

The rate of Corporation Tax payable depends on the level of a company’s taxable profits. The main rate is 25% and applies where profits exceed £250,000. At the other end of the scale, companies with profits of £50,000 or less benefit from the Small Profits Rate, which remains at 19%.

For businesses with profits between these thresholds, marginal relief applies. Rather than facing a sharp increase in tax, companies experience a gradual rise in the effective rate as profits move from £50,000 towards £250,000. This ensures a smoother transition between the lower and higher rates.

It is important to note that the £50,000 and £250,000 thresholds are not always fixed. They are reduced where a company has associated companies or where the accounting period is shorter than 12 months, which can bring more businesses into the marginal relief band.

In practice, Corporation Tax is initially calculated at the main rate of 25%, with marginal relief then deducted to arrive at the final liability. The relief is calculated using a standard fraction of 3/200.

The marginal rates help smaller companies to pay less Corporation Tax based on their profit level and circumstances.

Source:HM Revenue & Customs | 30-03-2026

Capital Gains Tax

Business Asset Disposal Relief – tax increase from April 2026

Apr 2, 2026 by Terry Harris 0 Comments

The tax rate for Business Asset Disposal Relief (BADR) will increase to 18% (from 14%) on 6 April 2026. BADR offers a reduced Capital Gains Tax (CGT) rate on qualifying disposals such as the sale of a business, shares in a trading company or an individual’s stake in a trading partnership.

These rate increases are accompanied by new anti-forestalling rules designed to prevent individuals from securing the lower BADR rate by using early contracts. Where an unconditional contract is entered into during the 2025-26 tax year but completes on or after 6 April 2026, the disposal will normally be treated as occurring at completion, meaning the higher 18% rate applies.

However, the legislation allows for “excluded contracts” where the contract was not entered into to secure a tax advantage and, where parties are connected, was entered into wholly for commercial reasons. Where total gains under excluded contracts do not exceed £100,000, the anti-forestalling does not apply.

The lifetime BADR limit remains £1 million meaning individuals can use the relief multiple times, provided their total gains from qualifying disposals do not exceed this threshold. However, the higher CGT rates obviously reduce the tax advantage available. Investors’ Relief CGT rates are currently in line with those for BADR and will also increase to 18% in April 2026.

Source:HM Revenue & Customs | 30-03-2026

General

Action to reduce cost of living pressures

Apr 2, 2026 by Terry Harris 0 Comments

The Chancellor has set out a package of measures aimed at reducing cost of living pressures for households and at the same time strengthening the UK’s longer-term economic resilience. The announcement focuses on tackling rising prices, improving energy security and ensuring markets work fairly for consumers.

A key element is the introduction of an anti-profiteering framework, giving regulators such as the Competition and Markets Authority enhanced scope to act against unjustified price increases. The government has indicated it will not hesitate to introduce targeted, time-limited powers where necessary to clamp down on price gouging and protect working people.

Alongside this, there is a renewed push on energy security. Planned legislation will help secure the delivery of nuclear projects, reduce delays in the planning process and limit the impact of legal challenges on critical infrastructure. The intention is to accelerate domestic energy production and reduce the UK’s exposure to volatile international gas prices.

The Chancellor has also confirmed that options for targeted reductions in agri-food import tariffs will be explored, with the aim of lowering food prices at the point of sale.

These steps build on existing support, including extended fuel duty relief, capped energy bills and targeted assistance for vulnerable households.

Source:HM Treasury | 30-03-2026

Business Support

Income from spare capacity

Mar 30, 2026 by Terry Harris 0 Comments

Many businesses have spare capacity that could generate additional income with relatively little additional cost. Spare capacity may arise where premises, staff time, equipment or intellectual property are not fully utilised throughout the working week or year. Identifying and using this capacity can improve profitability without significantly increasing overheads.

One common example is unused space. Offices, workshops or storage areas can often be rented to other businesses, particularly where flexible arrangements are attractive to start ups or remote workers. Even occasional or short term use can create incremental income that contributes towards fixed costs such as rent, heating and insurance.

Staff capacity can also be reviewed. Where employees have quieter periods, their skills may be used to deliver additional services. For example, a manufacturing business might offer repair or maintenance services, while a professional firm may provide training, consultancy or support services to a wider audience.

Equipment that is not used continuously can also generate revenue. Specialist machinery, vehicles or technical equipment may be hired out when not required for core operations. This can help recover capital costs more quickly and improve return on investment.

Digital assets provide further opportunities. Businesses may be able to licence training materials, templates, software tools or data insights developed internally. Once created, these resources can often be sold multiple times with minimal additional cost.

The key is to identify underutilised resources and consider how they might provide value to others. Generating income from spare capacity can improve resilience, support cash flow and help offset rising operating costs without the risks associated with major expansion.

Source:Other | 29-03-2026

Business Support

Managing stock turnover

Mar 30, 2026 by Terry Harris 0 Comments

Stock turnover management is one of the most important drivers of business profitability, cash flow strength and resilience during periods of rising costs. Stock represents cash that has been converted into goods, and if those goods are not sold promptly the business can experience avoidable financial pressure.

Slow moving stock ties up working capital that could otherwise be used to meet rising expenses such as energy, wages or borrowing costs. In times of inflation, the risk increases that stock purchased at higher prices may need to be discounted in order to generate sales. This can reduce profit margins and weaken financial stability.

A high stock turnover ratio generally indicates that a business is purchasing efficiently, pricing competitively and managing customer demand effectively. By contrast, low turnover may suggest over purchasing, obsolete product lines or ineffective sales processes. All of these can increase storage costs and insurance exposure and may lead to write downs that directly reduce taxable profit.

Regular review of stock levels can help identify trends in customer demand and allow purchasing decisions to be adjusted accordingly. Improved forecasting can reduce the risk of shortages while avoiding excess inventory. Businesses that monitor turnover closely are often better able to negotiate favourable supplier terms because ordering patterns become more predictable.

In an environment of increasing operating costs, efficient stock turnover management can improve liquidity, reduce waste and strengthen the ability of a business to respond quickly to changing market conditions.

Source:Other | 29-03-2026

Employment & Payroll

Employing young people in your business

Mar 26, 2026 by Terry Harris 0 Comments

When a new employee joins your payroll, it is the employer’s responsibility to ensure they are aware of their rights and that the correct tax is deducted from their salary. This responsibility also applies when employing young people in your business.

You can employ young people from the age of 13, but special rules govern how long they can work and the types of work they can perform. Once someone turns 18, they are classed as an adult worker, and different employment rules then apply. Young workers and apprentices also have different National Minimum Wage rates compared to adult employees.

Before taking on young workers, employers must carry out a risk assessment to ensure a safe working environment. Young people may also be entitled to certain employment rights, including statutory maternity pay and ordinary statutory paternity pay if they qualify through continuous employment, paid time off for study or training and redundancy pay.

It is important to note that different rules apply if you engage volunteers or voluntary staff. Regardless, employers are responsible for health and safety, providing proper inductions, and ensuring employees are adequately trained for the tasks they are going to do.

Source:HM Revenue & Customs | 23-03-2026

Inheritance Tax

The 7-year gift rule is still available

Mar 26, 2026 by Terry Harris 0 Comments

The 7-year gift rule is still an available option for those making lifetime gifts, offering a way to potentially reduce Inheritance Tax (IHT) liability. Most gifts made during a person’s lifetime are not immediately subject to tax. These transfers, known as ‘potentially exempt transfers’ (PETs), become fully exempt if the donor survives for more than seven years after making the gift.

If the donor dies within three years of the gift, the transfer is treated for IHT purposes as if it were made on death. A tapered relief applies if death occurs between three and seven years after the gift.

The effective tax rates on the amount exceeding the nil-rate band are:

0–3 years before death: 40%
3–4 years: 32%
4–5 years: 24%
5–6 years: 16%
6–7 years: 8%
7 or more years: 0%

Tapered relief cannot reduce tax on lifetime chargeable transfers below the amount initially chargeable, so it does not benefit transfers within the nil-rate band.

It is strongly recommended to keep a record of all PETs, exemptions used, and details of any regular gifts made out of surplus income, ensuring accurate tracking for future IHT planning.

Source:HM Revenue & Customs | 23-03-2026

Capital Gains Tax

Rolling over capital gains

Mar 26, 2026 by Terry Harris 0 Comments

Rolling over capital gains can be an effective way for business owners to defer Capital Gains Tax (CGT) when selling or disposing of certain business assets. This is done using Business Asset Rollover Relief which allows taxpayers to postpone the tax on gains if all or part of the proceeds are reinvested in new business assets. Essentially, the gain on the old asset is “rolled over” into the cost of the new asset, with any CGT liability deferred until the new asset is eventually sold.

If only a portion of the sale proceeds is used to purchase new assets, a partial rollover claim can be made. Provisional rollover relief is also available for cases where new assets are intended to be acquired but have not yet been purchased. Additionally, relief may apply when proceeds are used to improve existing business assets. The total relief depends on the amount reinvested.

To qualify, assets must generally be purchased within three years of selling the old ones (or up to one year prior), and both the old and new assets must be used in the business. The business must be trading at the time of sale and reinvestment. Claims must be submitted within four years of the end of the tax year in which the new asset was acquired (or the old asset sold, if later). HMRC may, in certain circumstances, allow extensions to these time limits.

Source:HM Revenue & Customs | 23-03-2026

Income Tax

Could you claim the Marriage Allowance

Mar 26, 2026 by Terry Harris 0 Comments

The Marriage Allowance applies to married couples and civil partners where one partner does not pay Income Tax, usually because their income is below the personal allowance. For the 2025–26 tax year, this means the lower-earning partner must earn less than £12,570. The figures remain the same for the upcoming 2026-27 tax year.

The allowance allows the lower-earning partner to transfer up to £1,260 of their unused personal allowance to their spouse or civil partner. This transfer is only permitted if the recipient is taxed at no more than the basic rate of Income Tax. This means the higher-earning partner must usually have an income between £12,571 and £50,270. For those living in Scotland, the figures are somewhat different.

By using the allowance, up to £1,260 of unused personal allowance can be transferred, resulting in a tax saving of up to £252 per year for the higher-earning partner, calculated at 20% of the amount transferred.

If you meet the eligibility criteria and have not yet claimed the Marriage Allowance, you can backdate your claim for up to four previous tax years as well as the current tax year. This could result in a total tax saving of up to £1,260 across all eligible years. Claims, including backdated ones and those for the current year, can be submitted online via GOV.UK.

At present, claims can be backdated to the 2021–22 tax year, meaning you may be able to claim for 2021–22, 2022–23, 2023–24, 2024–25 and the current 2025–26 tax year. This could result in a tax saving of up to £252 a year for up to five years. Claims, including backdated claims and applications for the current year, can be made online via GOV.UK.

Source:HM Revenue & Customs | 23-03-2026

Income Tax

MTD for Income Tax – are you affected?

Mar 26, 2026 by Terry Harris 0 Comments

If you have not yet checked whether you need to use Making Tax Digital (MTD) for Income Tax, now is the time to urgently see if you are affected. The Income Tax reporting requirements for some self-employed individuals and landlords will change significantly from 6 April 2026. MTD for Income Tax changes the traditional annual self-assessment process to a new digital record-keeping and quarterly updates process submitted through recognised software.

From April 2026, those with qualifying income over £50,000 will be required to maintain digital records and submit quarterly updates of trading or property income and expenses. From April 2027, the threshold will reduce to £30,000, and in April 2028 it will further reduce to £20,000.

A full tax return will still be required by the following 31 January after the tax year i.e. the first MTD for Income Tax return, covering the 2026-27 tax year, will be due by 31 January 2028.

MTD aims to reduce errors, improve efficiency, and support business productivity. HMRC estimates that around 860,000 taxpayers will join in 2026, with more joining in 2027.

The system also provides exemptions for those unable to go digital and offers accessible software solutions. Taxpayers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates for the first 12 months. This will allow them time to adapt to the new system.

Source:HM Revenue & Customs | 23-03-2026

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