Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.
While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.
Whose Fault is it anyway?
Who is to blame if your tax return is late?
Are you disorganised or one of those people who leave things to the last minute? Should we have nagged you more often to get your information to us?
As of today with just a few days to go to the 31 January deadline I have just a handful of returns still to be submitted. I am dealing with them as people send me the information I need. I think that without exception, they all know I am waiting for them. There are a couple of dead ones but I am waiting for the lawyers dealing with the estates to get back to me.
I have heard it said that there are 12 months in the year in which accountants can prepare, plan and execute appropriately so they should not blame their clients, staff, the weather or politics. But some of you, and you know who you are, just don’t come through with the information. We can of course get some of t directly from HMRC and that helps but there are some of you just beyond even that help.
I have also heard it said that if your tax return isn’t complete and you don’t know how much you’re due to pay on 31 January, then your accountant is a dinosaur/moron/too busy, and there will always be clients who leave things until the last minute but ultimately it is the accountant’s responsibility to deal with this.
However, despite accountants having a role to play, there are limits to what they can control. Having said that, wee will always do our best to get every tax return submitted. I received details for a return on 26 January and it went back out for signing the same day.
So, if your return is late, whose fault is it?
Benefit Cheats to Forfeit Driving Licences
Benefit fraudsters who refuse or fail to pay back their debts could end up losing their driving licences. The draft legislation means that benefit cheats could lose their licences for up to two years.
The government plans to recover up to £8.6bn in overpaid benefits over five years.
For the DWP to be able to apply to the court, the benefit cheat must owe over £1,000 and there must have already been ‘frequent requests’ requesting repayments.
There will be safeguards including reporting mechanisms and independent oversight to ensure the powers are used proportionately and safely.’
Affordable and sustainable’ repayment plans for debts will be available to those who come forward, with harsher punishments such as removing someone’s driving licence considered a ‘last resort’.
The DWP will also be allowed to deduct money directly from bank accounts from benefit cheats that work in PAYE employment.
Neonatal Care Leave
Neonatal Care Leave and Pay will be available for parents of children born on or after 6 April 2025. There is no qualifying service for this leave, however, there are special rules relating to eligibility for pay.
To qualify, neonatal care must start before the end of 28 days beginning with the day after the child’s birth.
This includes palliative or end of life care, or medical care received in a hospital or another place where the child was an inpatient in hospital and the care is received upon leaving hospital; and the care is under the direction of a consultant; and the care includes ongoing monitoring by, and visits to the child from, healthcare professionals arranged by the hospital.
To be entitled to take the leave, employees must be taking it to care for the child, give notice and be either the child’s parent, intended parent, or the partner of the child’s mother at the date of birth.
Employees can take one week of leave for each ‘qualifying period’ of neonatal care, which is any period of seven days during which the child receives care without interruption.
A maximum of 12 weeks leave and pay is available to be taken before the end of 68 weeks beginning with the child’s date of birth.
There are two tiers of periods of neonatal care leave.
HMRC’s Report Card
The latest Public Accounts Committee (PAC) report on HMRC has been released.
According to the report, HMRC’s customer services have deteriorated even further since this committee last reported a year ago. In 2023/24, HMRC answered just 66.4% of customers’ attempts to speak to an adviser, against a target of 85%. Average call waiting times exceeded 23 minutes. HMRC says it has not been adequately resourced to meet telephone demand from customers, but it must take responsibility for its own failings to offer sufficiently effective digital services to customers.
The committee is concerned that HMRC has sought to degrade its telephone service to drive taxpayers to digital channels.”
The report says that “HMRC’s treatment of taxpayers has damaged trust in the tax system. It cuts off calls after customers have been waiting 70 minutes, without any explanation. It does not provide a callback option. It cannot provide callers with accurate information on expected call waiting times.”
Love or Just Tax?
Currently, unmarried couples, single people, and widows and widowers do not have any “special” tax reliefs, exemptions or allowances.
There are however a number of incentives to tie the knot.
Inheritance tax
You can leave assets to a surviving spouse although there are some restrictions if the transferee is domiciled abroad.
No inheritance tax to pay and you can also transfer any unused nil rate band and residential nil rate band.
In addition, the surviving spouse benefits from an uplift in the value of the asset for capital gains tax purposes.
Capital gains tax
Inter-spouse transfers can be made without triggering any capital gains tax (CGT). This can be a useful tool to take advantage of any available tax-free annual exemption (currently in 2024/25 £3,000) or available capital losses.
Income tax
Some married couples are be able to transfer up to £1,260 (currently in 2024/25) of their personal allowance to their spouse. This could prevent the personal allowance being wasted by a spouse with no income.
Where a marriage ends and the couple divorce, there is CGT exemption on transfer of the main residence (marital home) as well as stamp duty land tax exemption for transfers of residential property.
Employment Allowance
In the recent budget there were various National Insurance changes:
- The secondary threshold (ST) reduces to £5,000 per annum (from £9,500), including equivalents for payrolls that are not annual.
- The rate of secondary (employer) national insurance contributions (NICs) increases to 15% (from 13.8%).
- The employment allowance increases to £10,500 (from £5,000) and the £100,000 eligibility threshold is removed.
In 2025/26, there are more earnings subject to employer NICs at a greater percentage. This has cost implications which, perhaps, places greater importance on making sure you claim the allowance if eligible.
The removal of the £100,000 threshold opens this up to more employers.
arn about the benefits of integrated tools and AI that take away the pain of manually reconciling data from different systems and free up your team to focus on important value-adding activities. 11 February, 11 am
Allowance eligibility in 2024/25 is not an automatic indication that eligibility will apply in 2025/26. Your circumstances may have changed, and for example, an unconnected (eligible) company in 2024/25 may be connected (ineligible) in 2025/26, or vice versa.
The only thing that has changed regarding employment allowance eligibility is the removal of the £100,000 NICs restriction. This stated that, if the employer paid more than this in the previous tax year, they were not eligible to make a claim. All other restrictions remain unchanged, including non-eligibility because for single-director companies.
It is no longer necessary to confirm that the de minimis state aid received is less than the threshold for 2025/26 but the RTI specifications for 2025/26 still have the state aid items as valid fields, but they do not need to be populated.
Is HMRC Inhibiting Growth?
According to a recent report on the impact of the new tougher HMRC approach to R&D claims, of those challenged:
- 34% had their claim denied entirely
- 38% had to pay back at least some money to HMRC, and
- 29% survived the inquiry process with their claim intact.
In addition small and medium-sized enterprises (SMEs) with small claims are now at a much higher risk of inquiry, with 30% of SME claims suggesting that SMEs defending their claim are likely to face a harder, more stressful and frustrating process than a larger company.
Is R&D tax relief no longer an attractive option. The original purpose of the schemes was to incentivise companies to undertake risky technical work, but has this changed.
BADR – Business Asset Disposal Relief
The current qualifying BADR conditions for shareholders, all of which must be met by the seller shareholder throughout the two-year period before the relevant share disposal, are summarised below. Broadly they must:
- own shares in a qualifying trading company;
- be a director or employee of that company.
- hold the shares in their ‘personal company’. This means, in turn, that they must own at least 5% of the company’s ordinary share capital carrying at least 5% of the voting rights and they must also meet one of two alternative 5% economic interest tests.
The last Budget immediately increased the main CGT rate to 24% for post-29 October 2024 disposals. However, business owners were pleased to see the retention of the 10% BADR CGT rate for the remainder of this tax year.
The BADR CGT rate increases from 6 April 2025, effectively reducing the value of the relief.
The future ‘reductions’ in the CGT savings from BADR are likely to persuade more small business owners to accelerate their exit plans, whether this is by a purchase of own shares, management buy-out, or a company sale.
Tattoos and Recruitment
So, what are the implications of turning down an applicant because you do not like their tattoos?
A recent survey found that one in three working people have a tattoo, with one in nine being visible, so it’s not uncommon for this to come up during the recruitment process.
Under current employment law regulations, there are no specific protections for individuals with tattoos. You determine what rules you put in place regarding them and a lot of employers will include these rules as part of a wider dress code or appearance policy, or as a stand-alone tattoo policy.
Whilst the tattoo itself may not be protected, if it can be linked to a protected characteristic such as religion or race, then a blanket policy could be indirectly discriminatory.
Virgin Atlantic became the first UK airline to allow their cabin crew to display tattoos, and the Met Police relaxed its rules allowing officers to have visible neck tattoos.
A survey has found that only a third of the British public consider visible tattoos to be unprofessional, unless on the face or neck.
You ultimately set your own code but as tattoos become more accepted in society generally, you need to tread carefully if you don’t like them.
You need to ensure you aren’t indirectly discriminatory.
If you are confident there is no risk of discrimination, then you can choose not recruit an individual with tattoos. But others may judge the situation differently.
Questions?
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at alan.long@thelongpartnership.co.uk.
