Category: Income Tax

Claiming Child Benefits online

Over one million parents have now claimed Child Benefit online or via the HMRC app, with 87% of new claims using this speedy service. If you've recently had a baby or a child joins your family, applying online ensures you get support quickly—right when you need it most.

HMRC’s Director General for Customer Services, said:

"Having a baby is a busy and expensive time but claiming Child Benefit online or via the app means you’ll get cash in your bank account as soon as possible. Claim now and you could get your first payment in time for your baby’s first Christmas. Download the HMRC app today."

You can apply for Child Benefit starting the day after you register your child’s birth or when a child comes to live with you. Claims can be backdated up to 12 weeks. Applying online is usually the fastest way to complete your claim.

If you are unable to claim online, you can complete the Child Benefit form CH2 and send it to the Child Benefit Office. The address can be found on the form. If you are claiming for more than two children, you will need to complete the additional child form CH2(CS) and send it with your CH2 form. Alternatively, you can contact HMRC by phone if online or postal methods are not suitable.

Child Benefit is typically available for children who move to the UK. However, there are certain requirements that must be met to claim. If a child receiving Child Benefit moves permanently abroad, HMRC must be notified as soon as possible.

The child benefit rates for the only or eldest child in a family is currently £25.60 a week and the weekly rate for all other children is £16.95. The rates are set to increase to £26.05 and £17.25 respectively from April 2025.

Spreading tax payments by using Time to Pay

Can’t pay your tax bill in full by 31 January 2025? HMRC’s online Time to Pay system lets self-assessment taxpayers spread the cost over monthly instalments. With plans available for tax bills up to £30,000, this flexible option can help you avoid late payment penalties.

 Those eligible for the self-serve option can arrange payments online without needing to contact an HMRC adviser. HMRC has revealed that more than 15,000 taxpayers have already set up a Time to Pay payment plan for the 2023-24 tax year.

To qualify for the online Time to Pay option, taxpayers must meet these conditions:

• No outstanding tax returns
• No other tax debts
• No existing HMRC payment plans

For taxpayers who do not meet these requirements or owe more than £30,000, other payment arrangements may be available. These are typically agreed on a case-by-case basis, tailored to individual circumstances and liabilities, allowing businesses and individuals to pay off their debt over time.

HMRC’s Director General for Customer Services, said:

We’re here to help customers get their tax right and if you are worried about how to pay your self-assessment bill, help and support is available. Customers can set up their online payment plan to suit their own financial circumstances and can spread those payments across a maximum of 12 months. It is a valuable option for someone needing extra flexibility in meeting their tax obligations.

Scottish Budget Statement 2025-26

Scotland’s 2024 Budget delivers on public priorities with investments in services, poverty reduction, and economic growth. Tax rates stay frozen, but bands shift to protect low incomes. A hopeful step forward for Scotland’s future!

Scotland’s Deputy First Minister and Finance Secretary, Shona Robison delivered her second Budget statement to the Scottish parliament on 4 December 2024.

The Finance Secretary said the following:

‘I am proud to present a budget that delivers on the priorities of the people of Scotland. Parliament can show that we understand the pressures people are facing. We can choose to come together to bring hope to people, to renew our public services, and deliver a wealth of new opportunities in our economy.

This Budget invests in public services, lifts children out of poverty, acts in the face of the climate emergency, and supports jobs and economic growth.

It is a budget filled with hope for Scotland’s future, and I look forward to working with all parties in Parliament to secure agreement around its provisions.’

The measures announced for next year are expected to raise an additional £1.7 billion in Income Tax revenue compared to if the Scottish Government had followed UK Government policy.

There were no changes announced to the Scottish Income Tax rates, which will be frozen until at least the end of the current Parliament. The Starter rate band is set to increase by 22.6% and the Basic rate band by 6.6% in 2025-26. This means that a larger portion of people's income will be taxed at the starter and basic rates helping to protect lower income households.

The proposed Scottish rates and bands for 2025-26 are as follows:

The standard personal allowance remains frozen at £12,570.

The Additional Dwelling Supplement (ADS) for the land and buildings transaction tax (LBTT) increased from 6% to 8% with effect from 5 December 2024. The ADS is an extra charge added to any LBTT that may be due when purchasing an additional residential property in Scotland. No other changes to LBTT were announced.

The standard rate of Scottish landfill tax will rise to £126.15 per tonne and the lower rate to £4.05 per tonne from April 2025 maintaining alignment with the corresponding taxes in the rest of the UK.

The Budget measures are subject to final approval by the Scottish parliament.

No tax changes for online sellers

Selling online? From 2024, digital platforms must report your information to HMRC if sales exceed £1,700 or 30 goods a year. Casual sellers are exempt, but regular traders may need to register for Self-Assessment.

New rules, which became effective from 1 January 2024, require digital platform operators in the UK to collect and verify information about sellers on their platforms. The first reports due under these new rules must be submitted by 31 January 2025. HMRC has released a press release to make it clear that the tax rules for sellers have not changed despite rumours to the contrary.

These new rules mean that if you are using online platforms to sell goods or services, any pertinent information collected about you between 1 January 2024 to 31 December 2024 will be reported to HMRC by 31 January 2025. The information will only be shared with HMRC if you sell 30 or more goods or earn approximately £1,700 (equivalent to €2,000) or more in a calendar year. The online sellers are also required to give you a copy of the reported information. This can help if you have to make tax returns.

HMRC’s Second Permanent Secretary and Deputy Chief Executive Officer, said:

We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due. As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for self-assessment.

You may need to register for self-assessment and pay tax if you:

• buy goods for resale or make goods with the intention of selling them for a profit;
• offer a service through a digital platform – such as being a delivery driver or letting out a holiday home through a website;
• AND generate a total income from trading or providing services online of more than £1,000 before deducting expenses in any tax year.

Are you eligible to claim the Marriage Allowance?

Could you save up to £1,260 in tax this year? If one of you earns less than £12,570, the Marriage Allowance lets couples transfer unused personal allowances. Don't miss out on this easy tax break!

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 2024-25).

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 the 2023-24 tax year. 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).

If you meet the eligibility criteria and have not yet claimed the allowance, you can backdate your claim to qualifying tax years for up to four years starting from 6 April 2020. This could provide a total tax saving of up to £1,260 for the tax years 2020-21, 2021-22, 2022-23, 2023-24, and the current 2024-25 tax year. If you apply now, you can backdate your claim, as well as for the current year. Applications for the allowance can be submitted online at GOV.UK.

How to interpret your tax code

The letters in your tax code indicate whether you are entitled to the annual tax-free personal allowance. These codes are updated each year and help employers calculate how much tax should be deducted from your salary.

For the current and upcoming tax year, the basic personal allowance is £12,570. The tax code corresponding to this amount is 1257L, which is the most common tax code used for those with a single job, no untaxed income, and no unpaid tax or taxable benefits (such as a company car).

Your tax code might include various other letters and numbers. For instance, letters like "M" indicate that an employee is claiming the marriage allowance, or "S" shows that Scottish income tax rates apply. If your tax code numbers change, it often means your personal allowance has been reduced.

There are also emergency tax codes (W1 or M1), which are used when a new employee does not have a P45. These codes calculate tax based on the current pay period.

If your tax code starts with a 'K', this means deductions for company benefits, state pension, or previous tax owed, exceed your personal allowance. However, the tax deduction for any pay period cannot exceed half of your pre-tax salary or pension.

It is essential to verify your tax code to ensure the correct information is being applied. If you have any questions, we are here to help.