Author: Zapier

Could taxes go up in the Autumn Budget? How to be ready

Budget impact

At the last general election, the Labour party pledged to not raise taxes for ‘working people’,with assurances that there will be no changes to income tax, national insurance (NI) and VAT.

While this pledge may appeal to UK workers, it does limit what the Chancellor, Rachel Reeves, can do when it comes to raising taxes and reducing the UK’s current economic deficit.

With individual taxes protected, some commentators have argued that it’s UK businesses that will bear the brunt of any hikes in taxation.

But what tax changes are most likely? And could any changes impact you and your business?

Possible changes that could be announced in the Autumn Budget

Let’s take a look at some of the potential changes we could see being announced by Rachel Reeves on the 26th November.

Remember, these are speculative outcomes from the Budget and nothing has yet been confirmed by the Chancellor or the Labour party.

Here are the areas most likely to see amendments

Personal taxes

Capital Gains Tax:

Capital gains tax (CGT) is widely tipped for changes. The government may raise the rates of CGT or reduce the annual tax-free allowance, which has already been significantly cut in recent years. There’s also speculation about extending CGT to high-value homes as an easy way to raise more tax revenue when property owners sell more expensive properties.

Inheritance Tax (IHT):

Reforms to IHT are being considered. This could include lowering the current tax-free threshold of £325,000, which has been frozen since 2009, or tightening rules around gifting to prevent large estates from avoiding tax.

Income Tax Thresholds:

While the government has pledged not to raise the rate of income tax, a common ‘stealth tax’ is to freeze tax thresholds. It’s possible the current freeze on income tax thresholds could be extended. This would pull more people into higher tax brackets as wages rise, generating more tax revenue for HMRC.

Pensions:

Changes to pensions are possible, with a focus on areas like the tax-free lump sum that can be taken from a pension, or restricting the tax efficiency of salary sacrifice schemes.

Business taxes

VAT changes:

It’s possible that widening the scope of VAT could raise significant tax revenue. There’s also speculation that the Chancellor may reduce the VAT registration threshold, currently set at £90,000 p.a. This would require many more businesses to register for VAT and charge the tax on goods and services.

Business rates:

Although not part of the Autumn Budget, changes to business rates could have a major impact for some businesses. Businesses are already facing new business rate burdens, but some commentators are warning of an ‘unavoidable double hit’ that could push UK business rates bills up by £2.5bn.

Business Asset Disposal Relief (BADR):

For business owners who plan to sell their company, changes to CGT on these sales have already been announced. The rate for BADR rose from 10% to 14% in April 2025, and there’s a further increase to 18% planned for April 2026. Changes to the rate, or the period of availability of BADR are additional possibilities.

Property Taxes: A Likely Target Area

Stamp Duty Land Tax (SDLT) Reform

The Chancellor is considering replacing SDLT with a national property tax or sale-based levy on homes worth over £500,000.
This could reduce costs for first-time buyers but increase tax for luxury properties.

Council Tax Reform

Council tax may finally be revalued after more than 30 years, with proposals to:

Link bills to current market values

Shift liability to property owners rather than occupants

Give local councils rate-setting powers

CGT on High-Value Homes

Homes worth over £1.5 million may lose full CGT exemption — a move aimed at capturing untaxed gains from the wealthiest property owners.

Landlords and Rental Income

The government could extend National Insurance Contributions to rental income and revisit mortgage interest and loss relief rules, increasing costs for private landlords.

We’ll be summarising the key points of the Autumn Budget once the Chancellor delivers her speech.

Getting ready for MTD for Income Tax and Self Assessment

HM Revenue & Customs’ (HMRC) Making Tax Digital initiative has been gradually evolving for several years now. But did you know that it will soon be mandatory for landlords and small businesses that pay tax through self-assessment to use HMRC’s digital tax system.

Under MTD ITSA, taxpayers are required to submit five returns per tax year: four quarterly updates and a final declaration. The deadlines for the quarterly submissions are 5 August, 5 November, 5 February, and 5 May, with the final declaration due by 31 January following the tax year. While the final declaration effectively replaces the traditional Self Assessment return, taxpayers must still use it to report additional information and finalise their tax liability. Ensuring compliance with these obligations will require the use of compatible software and adherence to the prescribed deadlines.

Making Tax Digital for Income Tax & Self Assessment (or MTD for ITSA, as it’s more commonly known) is likely to be a major change for some taxpayers.

So, are you ready for the upcoming MTD for ITSA rules?

What is MTD for ITSA?

Making Tax Digital (MTD) aims to bring tax into the digital age, moving from annual paper and online tax submissions to quarterly digital uploads of your tax information.

Having to keep detailed digital records sits at the heart of MTD. Taxpayers will need to record all incoming and outgoing transactions using compatible accounting software, and then share this information in an approved digital format with HMRC.

Who will be affected by the MTD for ITSA rules?

MTD for ITSA is already at the beta testing stage and some self-assessment taxpayers have opted in to the system already.

But if you’re a landlord or sole trader who falls into the following categories, MTD for ITSA will soon become a mandatory requirement:

  • From April 2026, for those with qualifying income over £50,000
  • From April 2027, for those with qualifying income over £30,000

How do you get ready for MTD for ITSA?

If you’re already using cloud accounting software to manage your finances, MTD for ITSA won’t be a major challenge. You’re already recording your numbers in a digital format and most of the popular accounting platforms will have MTD for ITSA templates you can fill out.But if you’ve not embraced the latest in accounting tech, it’s important to upgrade ASAP.

To stay compliant, you’ll need to:

  • Keep your records in a digital format
  • Provide digital quarterly updates to HMRC
  • Be able to provide your ITSA return information to HMRC through MTD-compatible software.
  • Talk to us about preparing for MTD for ITSA

If you’re concerned about how MTD for ITSA may affect your finances, come and talk to us

We’ll advise you on the best accounting software and give you guidance on upgrading and preparing your bookkeeping, accounting and tax procedures for MTD for ITSA.

steve@bicknells.net

Can directors and employees receive gifts from the company tax free?

Giving gifts to your employees can be a great way to increase engagement and raise the overall morale of your team. But how much can you give before there are tax implications? And how do the rules differ if you’re giving gifts to your directors?

The good news is that you can give gifts that don’t exceed £50 in value to your employees without any tax or National Insurance (NI) charges arising – as long as you follow HMRC’s rules. The cost of this is also tax-deductible by the company.

Making use of the Trivial Benefits scheme

As part of HM Revenue & Customs’ (HMRC’s) Trivial Benefits scheme, you can give gifts to your employees to mark birthdays, weddings or just ‘because’, all without attracting any tax charges. Owners can also benefit from the same Trivial Benefits scheme.

  • Trivial benefits can be provided to employees without any adverse tax or NI implications, and with no need to report them on a P11D form – the HMRC form used to report any ‘benefits in kind’ that you’ve provided to an employee.
  • To qualify, gifts can’t be a reward for services, can’t be cash or a cash voucher, can’t be contractual, and the cost mustn’t exceed £50 per gift.
  • For directors of close companies, the total can’t exceed £300 in any year. Although not limited for other employees, if it was a regular gift then it’s likely to be treated as a reward for services – which would then have tax implications.
  • If over the course of a year, a director awarded themselves 6 x £50 gift cards (maxing out the £300 cap) as a higher-rate taxpayer they could save around £126 in tax and NI compared with a £300 salary. The company would also save about £41 in NI.
  • Gift cards are fine as long as they aren’t pre-loaded debit cards that can be used to withdraw cash – remember you can’t give cash as a gift.

Let’s look at an example of these rules in practice:

If an employee is given a bottle of wine for hitting a sales target, that would be taxable. If they were given the wine because it’s their birthday, as long as it was below £50 it would be within the exemption. It could also be given just because you’re in a good mood and feeling generous – it just can’t be anything related to company or individual performance.

Talk to us about meeting the rules around employee gifts

It’s important that you stick to HMRC’s rules around employee gifts and don’t end up unintentionally creating a negative tax impact for people on your team, or for the business.

As your adviser, we’ll help you draw up clear, well-explained internal guidance to make sure any gifts don’t unintentionally fall outside of the rules.

Does your business have a CSR strategy?

woman with dreadlocks and man in yellow t shirt sorting clothes standing next to each other

Having a ‘corporate social responsibility (CSR)’ strategy was something that used to be the sole preserve of giant corporations.

But with the social and environmental impacts of business evermore transparent, it’s good practice for every business – both large and small – to have a CSR policy that reflects your core values and goals as an organisation.

1. What is a corporate social responsibility (CSR) strategy?

CSR is a form of self regulation. Your CSR strategy measures the impact your business has on the local community and environment, and will help you focus your efforts on providing charitable support, community interactions and other ways of improving your positive impact.

2. How do you improve your social and environmental impact as a business?

Your CSR strategy helps you proactively improve your company’s social and environmental impacts – so you carry out positive work and make your business into a good global citizen.

This could mean cutting your emissions and carbon footprint as a business. It could mean hiring more local people to boost the economy. Or it could mean working with nearby charities, not-for-profit organisations or social enterprises to support good work in your community.

3. Why should your CSR strategy mirror your organisation’s core values?

As a business, you almost certainly have a set of core values that define how you do business. Your CSR strategy should reflect those core values. This helps you demonstrate the ways that your values, beliefs and long-term goals are ingrained in your long-term business plan.

For example, if ‘thinking greener’ is one of your core values, you need evidence that your CSR strategy is focused on making your operations more sustainable. If ‘community minded’ is a core value, you must be able to show how you’re reaching out to your local community to offer charitable help, funding and support etc.

4. How do you measure your CSR performance?

The key to measuring your CSR performance is to set clear targets for each area of your CSR strategy. By setting clear goals and timelines, you can track the business against these aims and measure your performance over time.

Including your CSR aims and performance in your annual report is a great way to hold yourself to account, while also being transparent and public about your performance.

5. What’s the best way to promote your CSR strategy?

Talking about your CSR goals and performance is an important part of being transparent about the good work you’re doing. But be careful about your wording and resist the temptation to make this a case of self-promotion.

If you run an event with a local charity, blog about it, or post a video from the day, and make sure you give the charity plenty of space to talk. If you’re doing work to help cut your use of single-use plastics, include a short update in your next newsletter, or ask staff for their ideas on how to meet this goal more effectively.

Start thinking about your corporate social responsibility strategy

Having a transparent CSR strategy should be an important goal for any business. Consumers and business clients want to know what their favourite companies are doing to improve the company’s impacts on the outside world.

Plain English guide to VAT for businesses

Getting to grips with the basics of accounting, financial management and business strategy can be a challenge. To make things easier, we’re starting a new Plain English guide to business.

This time, we’ll be looking at Value-Added Tax, or VAT as it’s generally known.

What is Value-Added Tax (VAT)?

Value-added tax (VAT) is a consumption tax. VAT is imposed on the value added at each stage of the production and distribution of many goods and services. Registered businesses charge VAT on their sales and can reclaim VAT paid on their purchases.

The standard VAT rate in the UK is currently 20%, with different reduced rates for certain goods and services that fall outside the standard rate.

How does VAT affect your business?

You can choose to register for VAT at any point. But registration does become mandatory once you hit the relevant threshold (see below). As a VAT-registered business, you’ll add a few tasks to your to-do list but will also benefit from claiming back any VAT expenses.

Here are your main VAT responsibilities:

  • Become VAT-registered – it’s mandatory to register for VAT once your company’s taxable turnover exceeds the rolling 12-months threshold (currently £85,000 per year)
  • File your VAT return – your business must file a VAT return (normally quarterly) that shows all VAT you’ve collected from customers, and all VAT expenses you’ve incurred.
  • Pay the collected VAT to HMRC – also every quarter, you’ll pay the VAT funds you’ve collected from your customers to HM Revenue & Customs (HMRC) less any reclaimable VAT you’ve paid to your suppliers.
  • Claim back VAT expenses – If there’s a refund – where the reclaimable VAT on your outgoings exceeds the VAT on your sales – you can claim that back from HMRC. This can be a helpful boost to your cashflow).

How can our firm help you with VAT?

Becoming a VAT-registered business brings a certain amount of professional kudos to your company – and it needn’t add too much to your financial workload.

As your adviser, we’ll let you know when you’re close to hitting the registration threshold and will be there to help you get VAT-registered. We’ll also make sure your VAT processes are as simple and streamlined as possible, and that you maximise your VAT expense claims. We can also help you decide whether one of the special VAT schemes might benefit you.

If you’d like to know more about registering for and managing VAT, we’ll be happy to explain.

How humour can increase your bottom line

You want to be taken seriously as a business, right? But did you know that many customers and consumers actually want you to give them a laugh as well? 91% of people globally prefer brands to be funny, but 95% of business leaders fear using humour in consumer interactions.

So, how do you overcome the worry about using humour in your sales and marketing? And what are the benefits of a brand that uses humour in an effective way?

5 ways that humour improves your customer experience

Being funny in a business context might sound counterintuitive. But all the evidence points to customers wanting humorous, engaging ways for you to interact with them. Humour puts people at ease in a sales environment, and a good joke or funny meme in your marketing has the potential to win prospects over and make your customers enjoy your brand.

Using humour with your customers:

  1. Enhances customer engagement – humour in your sales and marketing really helps you connect with your audience. Funny interactions and campaigns increase your customers’ attention span and encourage them to participate, comment and engage.
  2. Builds emotional connection – when you incorporate humour, this creates positive associations for your customers. They’ll see your brand as more relatable and likeable, all of which leads to stronger connections and customer relationships.
  3. Differentiates your brand – smart and subtle use of humour sets your business apart from the the stuffy and staid competitors in your market. Being able to raise a laugh makes your brand more memorable and attractive in a crowded market.
  4. Increases message retention – humorous content can help to leave a lasting impact with consumers. This aids information recall and ensures your key messages, campaign taglines and promotional copy stay top of mind with your audience.
  5. Boosts brand perception – a well-executed, humorous approach creates a positive brand image, showcasing your company’s personality and approachability. As a ‘funny brand’, customers will feel good engaging with you and spending their money.

Talk to us about adding humour to your customer strategy

We’re accountants, so obviously we don’t have a sense of humour (we’re kidding, we like a joke as much as the next business person). But we can give you advice on how greater customer engagement and stronger relationships both lead to higher sales – and that’s great news for your targets and overall revenue.

For more on the use of humour in our workplaces and marketing, watch this short TED talk from Tom Fishburne from Marketoonist, explaining the power of humour.

steve@bicknells.net

Charging interest on a Directors’ Loan Account

Directors Loan

When you’re the director of a business, it’s likely that there will be occasions where you borrow money directly from your company, or inject your own capital into the business.

A Directors’ Loan Account (DLA) keeps track of this money owed between the company and its directors. In many companies, the account is in credit – i.e. the company owes money to the director. This can be due to directors injecting startup capital into the company, not drawing dividends they are owed, or other expenses that have been subsidised by the director.

In these situations, it’s worth considering charging interest on the balance that’s due. But how do you do this? And what impact does charging interest have for the director and company?

Understanding interest on Directors’ Loan Accounts

Let’s take a look at some of the rules around applying interest on DLAs, and the potential benefits this can bring to your company and tax planning.

  • Any interest paid re these DLAs will be deductible when calculating your company’s taxable profits. Because of this, it’s possible to achieve tax savings of up to 25%.
  • For the individual, a basic-rate taxpayer has a Personal Savings Allowance (PSA) of £1,000 and will pay 20% on the excess. So, paying interest is more tax-effective than declaring dividends. The PSA for a higher-rate taxpayer is £500.
  • The interest rate needs to be a commercial rate. In other words, the interest rate used must not exceed the rate you’d expect to see from a third-party lender.
  • Where interest is paid to an individual, basic rate tax needs to be deducted at source from any payment made to the director.
  • This tax is reportable to HM Revenue & Customs (HMRC) on a calendar-quarterly basis, with the amount deducted offset against tax due on the individual’s personal tax return. Where the company accounts are not drawn up to a calendar-quarter end, a fifth return is required up to the balance sheet date.
  • The company can take into account any interest due, but not paid, until up to twelve months later when calculating its own profits. However, the individual will only include as income any interest that’s actually been paid. Note though that ‘paid’ can include crediting to a DLA!. This can give a timing advantage.

Talk to us about maximising the tax benefits of your DLA

Any interest you receive is not subject to National Insurance Contributions (NICs) and is particularly tax effective when shielded by the Personal Savings Allowance (PSA).

The reporting requirements for interest on DLAs are no walk in the park.

How do you pay interest to a director or individual lender? CT61 – Steve J Bicknell Tel 01202 025252

Are you missing out on Qualifying Interest Relief? – Steve J Bicknell Tel 01202 025252

Understanding the Tax Consequences of s455 Directors Loan: A Guide for UK Business Owners – Steve J Bicknell Tel 01202 025252

Because of this, it’s a good idea to talk to us first, so we can make sure you have a workable system in place prior to making any payments. We can also give an opinion of the acceptability of the proposed rate of interest to pay, and how it measures up against current market rates.

Get in touch to talk about interest on your DLA.

steve@bicknells.net

The top tax-effective benefits for directors and employees

Offering benefits-in-kind to your staff is a great way to make your business an attractive place to work. And these benefits add even more value if they’re also either tax-effective or tax-free.

You can offer certain concessions that make benefits provided to your employees (including directors) either low-tax or no tax. To be clear, we’re talking here about general employee benefits, not higher-value items such as company cars or share options etc.

Under certain circumstances, these general benefits-in-kind (BiK) become taxable if they’re provided as part of a flexible salary sacrifice system. But let’s look at the kinds of benefits you can offer – and the avantages they have for your employees.

The top tax-effective benefits to offer your team

If you want to offer employee benefits, but don’t want these BiK to end up attracting significant tax penalties for the employee, there are several useful benefits to consider.

For example:

  • Gifts of £50 or under – gifts not exceeding £50 can be given to employees without any tax or National Insurance charges arising. The cost is tax-deductible by the company. The gift must not be related to any work achievements, must not be money, must not be a contractual entitlement and, for directors, the total must not exceed £300 per annum.
  • Annual staff functions – annual functions, such as the yearly Christmas party or team summer barbecue, can be given to employees, provided the total cost per person during the year doesn’t exceed £150 per guest, including VAT.
  • Work mobile phones – a single mobile telephone can be provided to each employee together with the associated line rental and call charges, with no personal tax charge for any private use.
  • Free staff meals – free meals can be provided on company premises or in a staff canteen, provided that it’s on a reasonable scale.
  • Employer pension scheme contributions – as an employer, you can contribute (sometimes, have to contribute) to employee pension funds, within certain annual and lifetime limits. Topping up your employee’s contributions helps to increase the overall benefit of the mandatory work pension scheme.
  • Life insurance cover – Death in Service cover can be provided for your employees, and will normally be tax free, both the insurance premiums paid and any claims paid.
  • Health and medical check-ups – one health-screening assessment and one medical checkup per annum can be provided to each employee. This doesn’t cover full medical insurance, and also doesn’t generally cover medical treatment.
  • Welfare counselling – counselling can be provided to your employees free of tax, but this doesn’t cover medical treatment, legal, tax or financial advice. However, debt counselling is covered.
  • Business mileage – where your employee uses their own car for business travel, that business mileage can be reimbursed at a rate of £0.45/mile for the first 10,000 miles in a tax year and £0.25/mile thereafter.
  • Home-working allowance – you can pay an allowance of £6/week (£26/month) to employees who are required to work from home.
  • Private gyms – gym facilities can be provided to your employees and their family members, as long as the gym premises are not available to the general public.
  • Staff suggestions – rewards for making innovative business suggestions can be paid free of tax, as long as the amount doesn’t exceed £25. If an employee’s suggestion is implemented, a further award, linked to a proportion of the financial benefit to the company, can be made, subject to a cap of £5,000.
  • Long-service awards – you can offer a long-service award to a member of staff after a minimum of 20 years’ service. There must be at least ten years between awards that are made and the award has to be articles rather than cash. The overall cost can’t exceed £50 per year of service.

You can find out more details on the many available employee benefits-in-kind on the Expenses and benefits: A-Z page on the HMRC site.

If you provide a range of attractive tax-effective benefits to your employees, this goes a long way to creating a more satisfied, happy and productive workforce.

Many of the rules around employee benefits are complex and difficult to calculate, so it’s well worth talking to us about your benefits plans and where we can offer advice. We can walk you through the available options and show you the tax implications for your team.

steve@bicknells.net

Spreading your tax costs with Time To Pay

HM Revenue & Customs (HMRC) expects you to pay your taxes on time. But if you’re finding it difficult to pay in full, HMRC can be approached to allow a Time to Pay arrangement.

A Time to Pay arrangement will allow you to pay your debt off in pre-agreed installments, reducing the impact of a large tax bill – and helping you manage your debt and cashflow.

How does Time to Pay work?

If you need to request a Time to Pay arrangement for self-assessment tax, Employer’s PAYE and VAT, these can often be made online using a ‘self-service’ system.

Where you owe other types of tax, or where the conditions for online applications are not met, you’ll need to contact HMRC to discuss your situation.

  • The easiest (although not always the quickest) way to discuss your Time to Pay request is by telephone to 0300 200 3835.
  • HMRC agents will want to know about all taxes you owe, not just the one(s) where you want to spread payment. They will also ask for details of your income and outgoings, and any savings or assets that may be able to be used to reduce the amount owed.
  • Presuming that you agree to a payment plan with HMRC during the call, they will usually want to set up a Direct Debit straight away.

Making use of the self-serve Time to Pay system

If you don’t have any existing payment plans or debts with HMRC, the ‘self-serve’ system may be more straightforward, provided that the applicable tax returns have already been filed. The conditions and amounts vary depending on the particular tax.

For example:

  • Self-Assessment: You must apply no more than 60 days after the payment deadline and owe no more than £30,000.
  • Employer’s PAYE: You must be within 35 days of the deadline, owe no more than £15,000 and have no outstanding penalties. The maximum period over which the amount due can be spread is six months.
  • VAT: For VAT, you need to apply within 28 days of the due date and owe no more than £20,000. You can’t apply for a Time to Pay arrangement through the self-serve scheme if you use either the cash accounting or annual accounting schemes.

The self-serve option for Time to Pay does make the process easier, but remember that HMRC isn’t obliged to offer you the option of settling your taxes owed via installments.

If you fail to pay your taxes, HMRC can take recovery action in the County Court, and apply for the taxpayer to be put into liquidation or made bankrupt where appropriate.

Talk to us about making Time to Pay work for you

One of the best ways to avoid getting into difficulties with your tax liabilities is to work more closely with your accountant. As your tax adviser, we’ll produce regular forecasts so that any financial stresses can be foreseen well in advance.

Where unexpected circumstances do arise, putting a suitable payment plan in place with HMRC is the most sensible way to manage this situation. Ignoring your tax problems won’t make them go away and burying your head in the sand can lead to serious penalties and legal action.

Get in touch to talk about Time to Pay.

Steve@bicknells.net