A new 40% first-year allowance (FYA) is to be introduced from April 2026. It will apply to main rate expenditure on new assets, excluding cars. Both companies and unincorporated business will be able to benefit. The new allowance will be available from 1 January2026 for corporation tax and from 6 January 2026 for income tax. From 1 April 2026 for corporation tax and 6 April 2026 for income tax the main rate of writing down allowance (WDA) is reduced from 18% to 14%. A hybrid

As far as benefits in kind are concerned, there were both winners and losers in the Budget. Winner – easement for plug-in hybrid electric vehicles. Under the company car tax rules, the taxable amount depends predominantly on the list price of a car and its CO2 emissions. From 1 January 2025, new European Union and United Nations emissions standards were introduced which found the CO2 emissions for plug-in hybrid electric vehicles (PHEVs) to be higher than previously thought.

All things being equal, receiving a pay rise which takes your income over £100,000 would be seen as a cause for celebration. However, all things are not equal, and as press reports attest, some people would rather turn down a promotion or cut their hours than take their earnings over £100,000. We explain why this is. Reason 1 – loss of the personal allowance Individuals have a personal allowance of £12,570, allowing them to earn £12,570 before they pay tax. However, once thei

During the Chancellor’s Budget speech, savers received the unwelcome news that the rate of tax on savings income is to increase and the cash ISA limit to fall. Both changes will take effect from 6 April 2027. Taxation of savings income The taxation of savings income is quite complex as a number of factors come into play. The first complication is the personal savings allowance, which is available to some taxpayers but not all. Basic rate taxpayers have a personal savings allo

In her tax-raising Budget on 26 November 2025, the Chancellor announced that the dividend ordinary rate and the dividend upper rate are to rise by two percentage points from 6 April 2026. This will affect director/shareholders in personal and family companies who extract profits in the form of dividends. How dividends are taxed Dividends have their own tax rates, which are lower than the standard income tax rates. Dividend income which is not sheltered by the personal allowan

A new council tax charge, the High Value Council Tax Surcharge (HVCTS), is to be introduced in April 2028. The charge, dubbed ‘the mansion tax’, will be a recurring annual charge. It will apply to owners of residential properties worth more than £2 million in 2026 and will be levied on the homeowner rather than on the occupier. Social housing will be outside the scope of the charge. Council tax, which was introduced in 1993, taxes domestic property to provide money to fund lo

Corporate landlords will not be hit by the property tax rises that will apply to unincorporated landlords from 6 April 2027; they will continue to pay corporation tax on their rental profits, the rates of which are unchanged. However, this does not mean that their shareholders are immune from the Budget tax rises. Where profits are extracted from a property company in the form of dividends, the recipient shareholders will be affected by the increases in the dividend tax rates

Unincorporated landlords pay income tax on the profits of their property rental business. This is currently at the normal income tax rates. However, this is set to change from 6 April 2027 when property income will have its own tax rates. The bad news is that the new property tax rates will be two percentage points higher than the current income tax rates. Current rates and new rates For 2025/26 and 2026/27, unincorporated landlords pay income tax on their rental profits at 2

An increasing number of people live on cruise ships. They sell or rent out their main residence and spend their days living on the waves. The benefits are various – no meals to get yourself, entertainment every night, different ports to discover, even your washing done. You can even own a ‘villa at sea’, allowing residency aboard a ship for the duration of its life (or a minimum of 15 years). But what are the tax implications, if any? Unfortunately, UK tax liability is primar

For UK unincorporated businesses, the cash basis is now the default method for calculating taxable profits. Under this basis, income is taxed when received and expenses are deducted when paid, therefore there is no need to take into account debtors and creditors, prepayments or accruals. A further advantage is that, as income is only taken into account when received, relief for bad debts is given automatically. Capital expenditure is deducted as an expense, unless the capital

It is becoming increasingly noticeable that after a purchase is made in a shop or restaurant, the customer is asked ‘Do you want a receipt?’. Answering ‘no’ may help reduce paper, but business customers intending to claim against tax should always answer such a question in the affirmative. Keeping receipts is not a legal requirement for most personal transactions as consumer rights remain valid without one, other evidence (e.g. bank statements) proving that the transaction ha

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is mandatory from 6 April 2026 for self-employed traders and landlords whose combined gross trading and business income in 2024/25 is £50,000 or more. Those within MTD for ITSA must maintain digital records and submit quarterly updates and a final declaration to HMRC electronically using software compatible with MTD for ITSA. As the name suggests, MTD for ITSA relies on digital record-keeping and communication.

HMRC publish fuel-only rates which are only of relevance where an employee has a company car. The rates, which are updated quarterly, can only be used in two situations: · to make tax-free reimbursements to employees who meet the cost of business travel in their company car; and · to repay the cost of fuel provided or paid for by their employer and used for private journeys in a company car. The rate depends on the fuel type and, where relevant, the engine size. From 1 Septem

A director’s loan account is simply a means of keeping track of transactions between the director and the company of which they are a director. Where the company is a personal or family company, the director may borrow from the company or lend money to the company. Similarly, the director may meet expenses of the company, or the company may pay the director’s personal bills. These transactions are recorded in the director’s loan account. Dividend or salary payments may also b

It used to be possible to report errors in a VAT return to HMRC on form VAT652. This is no longer the case; form VAT652 was withdrawn from 5 September 2025. This means that now, where an error has been made in a VAT return, the error must be corrected in one of the following ways: · updating the next VAT return; · making the correction online; or · writing to HMRC to notify them of the correction. Updating the next VAT return An error can be corrected by making an adjustment

Many employers have a social event for employees around the Christmas period. This may take the form of a Christmas party or dinner or another social event, such as wreath-making and cocktails. When planning the event, it is important to consider the tax and National Insurance implications up front. Although there is a specific tax exemption for annual parties and other functions, there are conditions that must be met for the exemption to apply. Ensuring that your Christmas e

In these difficult economic times, tenants may struggle to pay their rent, leaving landlords out of pocket. In the absence of insurance that makes good the cost of unpaid rent, the way in which the landlord is able to secure relief for the bad debt depends on whether the landlord uses the cash basis or the accruals basis to prepare their accounts. Cash basis The cash basis is a simple way of preparing accounts that is based on money in and money out. It is the default basis o

Unfortunately, tenants (and their pets) may cause damage to a rental property. Where this is the case, the landlord may be left to repair the damage and pick up the bill. In this situation, can the landlord obtain tax relief for the costs incurred? Nature of costs The nature of the work will determine how and when tax relief is available. Where repairing the damage merely restores the property to the state that it was in before the damage, the associated costs are revenue in

The Renters’ Rights Act 2025 received Royal Assent on 27 October 2025. The Act is not yet in force; the first tranche of provisions come into effect on 27 December 2025 (two months from the date of Royal Assent). Some key provisions, including the abolition of section 21 evictions, an end to fixed-term tenancies, restrictions on the payment of rent in advance and rent increases limited to once a year, take effect from 1 May 2026. The remaining provisions will be brought in pr

At first glance, the UK’s income tax rates seem straightforward, comprising the basic, higher and additional rate bands (currently 20%, 40% and 45% in England, Wales and Northern Ireland). However, calculations show that there exists an often-overlooked quirk in the tax system that can push high earners into an effective marginal income tax rate of 60%. In 2023/24, approximately 634,000 taxpayers fell into the 60% band, with estimates that this will possibly reach over a mill