All posts by Terry Harris

Employment Law

Beware of rushing to judgement before terminating employment.

Mar 12, 2025 by Terry Harris 0 Comments

A Tribunal has ruled that a deputy security manager was unfairly dismissed, despite performing “no prescribed tasks” while ‘working from home’, many hundreds of miles from his place of work. Mr. Kitaruth travelled from London to Cornwall to visit with his parents for four days, during which the hearing found no evidence that he did any work.

When his line manager, Mr. Stride of OCS Security Ltd., summoned him to a mid-week meeting in the office he learned of Mr. Kitaruth's location leading to his subsequent dismissal for "gross misconduct". However, Mr. Kitaruth won his case for unfair dismissal after the Tribunal found that the company had failed to interview the line manager during their investigation.

Mr. Kitaruth told the Tribunal that he had an informal arrangement in which he verbally agreed with Mr. Stride on the dates that he would ‘work from home’, as August was a quiet month at the conference centre. The Tribunal found that Mr. Kitaruth “genuinely believed he had been given permission” although there was possibly of a misunderstanding arising between himself and his line manager, as evidenced by the message train on WhatsApp. Despite the pretext of 'working from home' there was no evidence that he had performed any tasks and, although he responded to "calendar invites, phone calls, liaising with the officers and emails,” he did not do so in a timely manner.

Judge Tamara Lewis noted that it was “extremely poor practice” for the company to take just six weeks to investigate and dismiss Mr. Kitaruth, and then to take a further seven and a half months to hear and reject his appeal. Moreover, the Judge found that "no reasonable employer would have failed to interview Mr. Stride formally before reaching a decision to dismiss the claimant," and hence, "For this reason, the dismissal was unfair.”

Employers should always publish, adopt, and follow to the letter any formal disciplinary procedures before terminating the employment of any contracted employee.

Source:Other | 11-03-2025
Business

Changes to online filing of accounts at Companies House

Mar 10, 2025 by Terry Harris 0 Comments

The Online Accounts and Company Tax Return (CATO) service is scheduled to close on 31 March 2026. ​

This service has enabled businesses to file their company accounts and tax returns simultaneously with both Companies House and HMRC. However, due to its outdated nature and misalignment with modern digital standards and recent changes in UK company law under the Economic Crime and Corporate Transparency Act (ECCT Act), the decision has been made to discontinue it.​

Key Actions for Businesses:

  • Download Past Filings: It's advisable to download and save at least three years of your company's account filings before 31 March 2026, as access to previous submissions will not be available after this date.​
  • Explore Software Options: Begin researching and selecting suitable commercial accounting software that meets the filing requirements for both Companies House and HMRC. Transitioning to software-based filing can offer enhanced features, improved accuracy, and better integration with your financial records.​

This shift aligns with the broader Making Tax Digital (MTD) initiative, aiming to streamline tax compliance through digital tools. While adapting to new software may present challenges, the benefits include increased efficiency and reduced errors in tax filings.​

For detailed guidance and updates, visit the official GOV.UK website.​

By proactively preparing for this transition, businesses can ensure continued compliance and take advantage of the efficiencies offered by modern digital filing systems.

Source:Other | 09-03-2025
Business

Why flexible planning is advisable

Mar 10, 2025 by Terry Harris 0 Comments

Flexible planning is essential for adapting to uncertainty, responding to challenges, and seizing new opportunities. The world is unpredictable, and rigid plans can quickly become outdated. Whether in business or personal life, flexibility ensures resilience and long-term success.

Unexpected events such as economic shifts, technological advancements, or personal changes can derail strict plans. A flexible approach allows for quick adjustments without having to start over. Businesses, for instance, benefit from adapting to market trends or supply chain disruptions, ensuring they remain competitive.

Opportunities often arise unexpectedly. A business that initially planned to operate solely in physical stores but later noticed a surge in online shopping must be able to pivot. Those who rigidly stick to their original plans may miss out on growth.

Managing risks is another advantage of flexible planning. If a strategy is not working, adjustments can be made rather than continuing down an unproductive path. This is particularly important in business, where adapting marketing tactics or reallocating resources can make a significant difference.

Innovation thrives in flexible environments. Companies that allow for iterative development and experimentation can improve products and services based on real-time feedback rather than relying on outdated assumptions.

Employee morale and productivity also improve when people are empowered to adapt. A rigid plan can create stress, while flexibility fosters a more dynamic, responsive workplace.

Customer satisfaction depends on adaptability. Consumer preferences change, and businesses that adjust their offerings accordingly are more likely to retain loyal customers.

Ultimately, flexible planning ensures better resource allocation, the ability to respond to competitive pressures, and the freedom to evolve with changing circumstances. Rather than being a sign of weakness, flexibility is a strategic advantage that helps individuals and organisations thrive in an ever-changing world.

Source:Other | 09-03-2025
Tax Diary

Tax Diary April/May 2025

Mar 7, 2025 by Terry Harris 0 Comments

1 April 2025 – Due date for corporation tax due for the year ended 30 June 2024.

19 April 2025 – PAYE and NIC deductions due for month ended 5 April 2025. (If you pay your tax electronically the due date is 22 April 2025).

19 April 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2025.

19 April 2025 – CIS tax deducted for the month ended 5 April 2025 is payable by today.

30 April 2025 – 2023-24 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

1 May 2025 – Due date for corporation tax due for the year ended 30 July 2024.

19 May 2025 – PAYE and NIC deductions due for month ended 5 May 2025. (If you pay your tax electronically the due date is 22 May 2025).

19 May 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2025.

19 May 2025 – CIS tax deducted for the month ended 5 May 2025 is payable by today.

31 May 2025 – Ensure all employees have been given their P60s for the 2024/25 tax year.

Source:HM Revenue & Customs | 06-03-2025
Employee Benefits

What is a salary sacrifice?

Mar 6, 2025 by Terry Harris 0 Comments

A salary sacrifice scheme lets employees swap cash salary for non-cash benefits, saving tax and National Insurance. But earnings must not fall below the National Minimum Wage, and life events may impact eligibility. Learn how to navigate these rules.

If an employee wants to join or leave a salary sacrifice arrangement, the employer must update their contract to clearly reflect the changes in cash and non-cash entitlements. Additionally, significant life events—such as marriage, divorce, a partner's redundancy, or pregnancy—may require adjustments to the arrangement, providing employees the option to opt in or out.

Certain benefits are currently exempt from Income Tax or National Insurance contributions and do not need to be reported to HMRC. These include:

  • Contributions to pension schemes
  • Employer-provided pension advice
  • Workplace nurseries
  • Childcare vouchers and employer-provided childcare contracted before 4 October 2018
  • Bicycles and cycling safety equipment (including cycle to work schemes)

In some cases, for example, when a salary is exchanged for an employer contribution to a pension scheme, the reduction in salary may also reduce the employer's National Insurance contributions liability.

Source:HM Revenue & Customs | 03-03-2025
Value Added Tax

VAT and the goods you use in your own business

Mar 6, 2025 by Terry Harris 0 Comments

Using business goods instead of selling them is usually VAT-free, but some cases require VAT payments. These "taxable self-supplies" include cars taken from stock and certain buildings. Read on to see how to stay compliant.

If your business makes products or buys and sells them, you might end up using some goods in your own business instead of selling them.

Usually, you do not have to pay VAT on goods used this way, because you are not actually making a VAT taxable supply. However, there are some exceptions. These exceptions are called “taxable self-supplies.” You will need to keep track of these goods you use in your business for VAT purposes.

Self-Supply of Cars

If you are a motor manufacturer or dealer and take a car from your stock for your own use, that is a taxable self-supply. In this case, you will need to pay VAT on the car.

Other Taxable Self-Supplies

There are some other situations where goods you use in your business are treated as taxable self-supplies. These include:

  • Certain non-domestic buildings you build or extend using your own labour.
  • Cars on which you reclaimed VAT because they were meant for use as a taxi, hire car, or driving school car, but you actually used them for a non-qualifying purpose.

Selling Goods Bought for Your Business

If you buy something for the business but later sell it to a customer (even if it’s to one of your employees), you will need to charge VAT on the sale price.

Source:HM Revenue & Customs | 03-03-2025
Pension

Inheriting spouse’s State Pension

Mar 6, 2025 by Terry Harris 0 Comments

If your spouse or civil partner has passed away, you may inherit part of their State Pension, depending on when you reached pension age. Find out what you could claim, from basic pension boosts to deferred benefits and top-ups.

If you reached State Pension age before 6 April 2016, you might be able to inherit some of your spouse or civil partner’s State Pension when they pass away.

To find out what you are entitled to, contact the Pension Service.

If you are not already receiving the full State Pension of £169.50 a week (increasing to £176.45 from 6 April 2025), you may be able to boost your basic State Pension by using their qualifying years.

You might also be able to inherit part of their Additional State Pension or Graduated Retirement Benefit.

If You Reached State Pension Age After 6 April 2016

If you reached State Pension age on or after 6 April 2016, different rules apply to you. You can check what you could inherit based on your spouse’s or civil partner’s National Insurance contributions.

If Your Spouse or Civil Partner Deferred Their State Pension

If your spouse or civil partner deferred their State Pension and built up extra benefits, you could claim this additional amount or receive a lump sum—provided you have not remarried or entered into a new civil partnership.

If they deferred for less than 12 months, you could only receive the extra State Pension, not a lump sum.

You can only claim this extra amount once you have reached your State Pension age.

State Pension Top-Up

If your spouse or civil partner topped up their State Pension between 12 October 2015 and 5 April 2017, you might be able to inherit some or all of the top-up.

Source:Department for Work & Pensions | 03-03-2025
Capital Gains Tax

Letting out part of your home – claiming lettings relief

Mar 6, 2025 by Terry Harris 0 Comments

Renting out part of your home may affect Capital Gains Tax when you sell. While Private Residence Relief applies, Letting Relief can reduce taxable gains. Learn how PRR, Letting Relief, and exemptions impact your tax liability.

If you have tenants in your home, it is essential to understand the Capital Gains Tax (CGT) implications. Typically, there is no CGT on the sale of a property used as your main residence due to Private Residence Relief (PRR). However, if part of your home has been let out, your entitlement to PRR may be affected.

Homeowners who let out part of their property may not qualify for the full PRR, but they could be eligible for letting relief. Letting relief is available to homeowners who live in their property while renting out a portion of it.

The maximum letting relief you can claim is the lesser of the following:

  • £40,000
  • The amount of PRR due
  • The chargeable gain made on the part of the property let out

Example:

  • You rent out a large bedroom to a tenant, making up 10% of your home.
  • You sell the property and make a gain of £75,000.
  • You qualify for PRR on 90% of the property (£67,500).
  • The remaining gain of £7,500 relates to the portion of the home that’s been let.

In this case, the maximum letting relief due is £7,500, which is the lower of:

  • £40,000
  • £67,500 (the PRR due)
  • £7,500 (the gain on the part of the property that’s been let)

As a result, you would not owe any CGT—the £75,000 gain is fully covered by £67,500 in PRR and £7,500 in letting relief.

Note that if you have a lodger who shares living space with you or if your children or parents live with you and pay rent or contribute to housekeeping, you are not considered to be letting out part of your home for tax purposes.

Source:HM Revenue & Customs | 03-03-2025
Capital Gains Tax

More tax on business disposals from April 25

Mar 6, 2025 by Terry Harris 0 Comments

From April 2025, the Capital Gains Tax rate on Business Asset Disposal Relief rises from 10% to 14%, increasing to 18% in 2026. Business owners planning to sell may benefit from acting before these changes take effect.

Currently, Business Asset Disposal Relief (BADR) provides a reduced Capital Gains Tax (CGT) rate of 10% on the sale of a business, shares in a trading company, or an individual's interest in a trading partnership. This relief can lead to significant tax savings for those selling their business.

However, as part of the Autumn Budget 2024 measures, the CGT rate for BADR gains will from 6 April 2025, rise to 14% for disposals made on or after that date. Furthermore, the rate is set to increase again to 18% for disposals made on or after 6 April 2026.

Currently, the lifetime limit for claiming BADR is £1 million, allowing business owners to qualify for the relief multiple times. There have been no changes to this limit in the recent Budget, although the lifetime limit may have been higher for assets sold before 11 March 2020.

In contrast, Investors’ Relief has already undergone changes: the lifetime limit has been reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. The CGT rates for Investors' Relief align with those of BADR.

Given these planned increases, business owners considering an exit strategy may wish to act sooner rather than later, as selling before April 2025 could help lock in the current 10% CGT rate.

Source:HM Treasury | 03-03-2025
Capital Gains Tax

Making a negligible value claim with HMRC

Mar 6, 2025 by Terry Harris 0 Comments

A negligible value claim lets taxpayers declare an asset worthless for tax purposes, realising a capital loss without selling. This can be backdated up to two years, offering flexibility in managing tax liabilities.

A negligible value claim is a claim made by a taxpayer when an asset they own has significantly decreased in value, essentially becoming worthless or worth next to nothing.

In such a situation, the taxpayer may treat the asset as if it were disposed of even though the retain ownership. For a negligible value claim to be valid, the asset must still be owned by the individual making the claim, and it must have become of negligible value while under their ownership.

The primary benefit of making a negligible value claim is that it allows the taxpayer to realise a capital loss on the asset without the need for an actual sale or disposal. This is particularly advantageous for assets that could, in theory, regain value at some point in the future. By retaining ownership of the asset, the taxpayer maintains the potential for any future recovery in value, even if the likelihood of this occurring is remote.

HMRC provides a negligible value list, which includes shares or securities that were previously quoted on the London Stock Exchange and have been officially declared of negligible value for the purpose of making such claims. For assets not on this list, a formal application must be submitted to HMRC to agree upon a valuation, enabling the taxpayer to establish the asset’s negligible value.

Additionally, a negligible value claim is not restricted to the current tax year. It can be backdated to cover up to two preceding tax years, provided all other qualifying conditions are met. This feature allows taxpayers greater flexibility in managing their capital losses over a longer period.

Source:HM Revenue & Customs | 03-03-2025