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.

 

 

Investors’ relief: How Could it Help You?

When it was introduced by Chancellor George Osborne in 2016, investors’ relief was billed as an extension of BADR and the two capital gains tax reliefs are similar in many ways. However, a key point of difference is that BADR is aimed at owners and shareholders who are active in the business, whereas investors’ relief is targeted at external investors.

A claim for investors’ relief may be made by an individual (the investor) who has made a gain on the disposal of a ‘qualifying share’.

Investors’ relief applies a reduced rate of CGT to so much of the gain as falls within the investor’s lifetime limit.

For 2026/27 the rate of CGT charged is reduced to 18% for the first £1m of gain. Investors’ relief remains attractive compared to the higher rate of CGT of 24%.

You must have subscribed for the shares and none of the company shares can be quoted. The shares must have been Ordinary shares at issue and disposal.

The company must have been a trading company and the shares held for at least 3 years. Generally, you cannot be an employee of the company but there are exceptions.

 

 

Windfarm Capital Allowances

A case was recently decided in The Supreme Court with justices unanimously favouring HMRC’s argument.

The company owns and operates offshore windfarms across the UK for the generation and sale of electricity. The expenditure related to various surveys and studies that supported the creation of the farms.

The key issue concerned whether expenditure on the environmental studies, including surveys and metocean reports, conducted before the windfarms became operational, constituted qualifying expenditure ‘on the provision’ of plant and machinery for capital allowances.

The issue centred around whether the costs incurred in obtaining the surveys and studies to investigate the environment were incurred ‘on’ the provision of the windfarms.

The expenditure on these studies and surveys was not incurred on the provision of plant or machinery and therefore does not qualify for capital allowances.’

 

£939bn Tax Collected

The latest figures show HMRC collected £938.8bn in taxes in 2025-26, a huge increase of 9.3% from £858.6bn the previous tax year. In the past two years, the figure is up £110.2bn from £828.5bn in 2023-24, a significant 13.3% hike in revenues pouring into the Treasury.

The annual tax take has grown from £428.6bn in 2006-07 to £938.8bn.

VAT was the highest ever collected at £180.7bn while corporation tax and related niche business taxes totalled a record £101.4bn, which HMRC said was up year on year due to ‘growth in onshore corporation tax receipts’.

National insurance is through the roof, with PAYE Class 1 employer NICs hitting a total of £143.9bn in 2025-26, up from £108.5bn in 2023-24 due to the huge rises implemented in April 2025 after the announcement at Budget 2024.

Annual CGT receipts for financial year 2025-26 are 62% higher than in 2024-25, rising from £13.68bn to £22.18bn.

Once again the tax that just keeps giving is inheritance tax are many thousands of estates are dragged in to the hugely unpopular death tax every month.

Inheritance tax receipts have hit a fresh high of £8.5bn, surpassing last year’s total and marks the fifth consecutive annual record.

 

EV charging 5% VAT ruling

HMRC has applied for permission to appeal against the decision of the First Tier Tribunal (FTT) following loss of case against Charge My Street earlier this year.

The tax authority disputes the tribunal’s decision that Charge My Street was correct to charge 5% reduced VAT rate on its supplies of electric vehicle charging.

The ruling overturned HMRC’s decision that had required charge point operators to charge the full 20% VAT.

 

Winter Fuel Payment Scams

HMRC has confirmed that it will not send texts or emails asking for winter fuel payments to be repaid, or to request bank details. This follows the number of payment scams.

Pensioners who received the 2025 winter fuel payment will have to pay the full amount back to the government where their total income for the year to 5 April 2026 exceeds £35,000. This limit is based on the individual’s income, not household income. HMRC estimates that approximately 2 million people will need to repay their 2025 winter fuel payment.

The payments will begin to be recovered through the tax system from April 2026. In most cases, this will be done automatically by HMRC.

HMRC has warned that “scammers” may “use the recovery process as a hook to use texts, emails and phone calls” to target pensioners. The press release reveals that HMRC has already received more than 25,000 winter fuel payment scam referrals.

 

Making the Most of Rollover Relief

Rollover relief is given where a qualifying asset (the old asset) is sold at a gain, and the proceeds are used to buy a new qualifying asset (the new asset). The gain on the old asset is held over against the cost of the new asset, deferring the tax liability until such time as the new asset is disposed of. You might also see the relief referred to as the replacement of business assets relief.

For disposals made on or after 30 October 2024, the rates of CGT for most assets increased from 10% and 20% to 18% and 24% respectively, and the rate for assets qualifying for business asset disposal relief increased from 10% for 2024/25 to 14% for 2025/26 and 18% for 2026/27 onwards.

Generally, to claim rollover relief a person must be carrying on a trade within the charge to income tax or corporation tax.

Rollover relief can be claimed on assets owned personally by an individual but used in a trade carried on by their personal company (i.e., a company in which the individual has at least 5% of the voting rights). Assets used for the purposes of a trade or profession carried on by a partnership of which the person is a member are also eligible for rollover relief. The relief must be claimed by each partner, rather than by the partnership and calculated in relation to their interest in the old and new asset

To be a qualifying asset, the asset must:

• be used in the trade (an intention to use the asset for trading purposes is not sufficient); and
• fall within the asset classes listed in the legislation. These include:
  • land and buildings used in the trade;
  • plant & machinery of the trade that is fixed in place and is not intended to be moved (this would exclude, for example, vehicles);
  • goodwill. For companies, assets that fall within the intangible fixed assets rules are not qualifying assets for the purposes of CGT rollover relief but intangibles reinvestment relief may be available instead;
  • ships and aircraft; and
  • farming and fishing-related assets, such as quotas and entitlements under single or basic payment schemes.

Also, the old and new assets do not have to be in the same asset class as each other.

However, the new asset must be used in the trade immediately on acquisition  and must not have been acquired mainly with a view to realising a gain.

The new asset must be acquired within a 48-month window, which starts 12 months before the old asset was disposed of and ends 36 months after that disposal.

 

The Cash Basis for Trades

Under the cash basis an individual carrying on a trade may calculate their profits on a ‘cash in, cash out’ basis, rather than using the traditional accruals method of accounting. This is simpler for many individuals as it removes the need for year-end adjustments such as the calculation of accruals and prepayments.

A trade is an excluded trade where an election has been made for the herd basis rules or there is a claim for averaging of fluctuating profits.

So, if you have already made a herd basis election, you cannot then use the cash basis to calculate the profits of the tax years that are subject to the election.

Averaging claims are made for two or five consecutive tax years in which the taxpayer is or has been carrying on the trade, profession or vocation. Hence, it is not possible to use the cash basis to calculate profits for any tax years to which the averaging election applies.

It conversely follows that if you decide to use the cash basis, you cannot make herd basis or averaging elections that would apply to the tax years for which you are calculating profits under the cash basis.

Cars are still dealt with in the usual manner under the capital allowances rules (i.e., pooled based on the CO2 emissions of the car). The alternative for dealing with cars is to treat the car as being owned by the individual, rather than the business and then claiming a deduction per mile using the business mileage rates.

 

Revoking an Option to Tax on Property

It is possible to revoke an option to tax in three instances. Probably the most common is the ‘20-year revocation’. However, there are more conditions that must be met than just have 20 years passed since the option was exercised.

First, the property should not be within a capital goods scheme adjustment period, and secondly, the taxpayer (or relevant associate) should not have made a supply of a ‘relevant interest’ in the property at less than market value within the immediately 10 years prior.

In addition, there should not have been a pre-payment for expenditure on the property that relates to use of the property more than 12 months after the revocation.

If any of the above are not met, HMRC may not give permission to revoke the option.

If the option is revoked, then the supply of the property will revert to being exempt from VAT. The seller would then need to consider partial exemption rules regarding any related input tax.

 

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.