Following the recent budget, changes to the income tax threshold may affect your earnings. This article highlights key adjustments in income tax rates and thresholds and provides tax-saving tips to help you navigate these updates effectively.

Income tax thresholds remain frozen until April 2028

The tax thresholds have been frozen since April 2021 meaning more people are finding their income falls into a higher band. Being aware of your total taxable income each tax year means you can take planning steps to reduce your tax liability.

For the thresholds, it is ‘Adjusted Net Income’ that is the amount that is considered. This is all your income, including interest, net rental income (after expenses), dividends, pension income (including state pension) LESS personal pension contributions and GiftAid donations.

If your adjusted net income exceeds £100,000, you start to lose your tax- free personal allowance. The effective tax rate on income that falls within the band of £100k – £125k can be up to 60%.

If you or your partner are in receipt of child benefit clawback of this commences once either partner’s income exceeds £60k. If it exceeds £80k then the whole of the benefit is repayable. The charge applies to the partner with the highest adjusted net income over £60k. ‘Partner’ means someone who you’re married to, in a civil partnership with or living with as if you were.

Tax tip

• Consider making a personal pension contribution or GiftAid payment to reduce taxable income below £100k and preserve your personal allowance (worth up to £5,028), or below £60k to preserve child benefit. Be mindful of the timing of pension contributions and donations, to ensure you utilise them in the most tax efficient year.
• Closely monitor dividends taken from your company each tax year. It may be possible to take a short-term loan form the company instead of a dividend; please discuss with your accountant before doing this

Unlock the Full Potential of the Budget with Competex:

The budget has introduced some significant changes. At Competex, we break down the key changes and provide advice on how to use them to your advantage. Whether it’s for your personal taxes or business planning, we’re here to help you navigate the complexities.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

Explore Related Insights

To better understand the recent budget changes and their potential impact on your business, we recommend exploring the following articles:

• Employer National Insurance and Allowance Changes: What You Need to Know
• Business Asset Disposal Relief (BADR) – What the 2024 Budget Means for You
• Dividend – Tax Rates and allowances | Budget 2024
• Capital Gains Tax Changes: Key Updates and Planning Tips

The post Income Tax Threshold – Budget 2024 first appeared on Competex.

The post Income Tax Threshold – Budget 2024 appeared first on Competex.

The recent UK Budget has brought about key changes to income tax thresholds that could impact your earnings, particularly when it comes to Business Asset Disposal Relief (BADR). This article outlines the updated income tax rates and thresholds, focusing on how these adjustments may affect your business assets, and offers practical tax-saving tips to help you manage these changes effectively.

Business Asset Disposal Relief (BADR)

This can be claimed on qualifying business asset disposals such as when you close a company. To qualify, certain conditions must be met:

• The company must be a trading company
• You must have held at least 5% of the shares for at least 2 years
• The distributions must be made within 3 years of the ‘cessation of trade’

The relief currently reduces the CGT rate on the gain to 10% for all taxpayers. From April 2025 the rate will rise to 14% and from April 2026 it will be 18% (to match the rate that will be payable by basic rate taxpayers on all capital gains).

Tax tip

• If you were thinking of closing your company and have accrued significant reserves, you may wish to close early to secure BADR at the lower rate. For every £10,000 of taxable gain, the 4% tax increase will give rise to additional tax of £400.
• Note that it is the date the distribution is made that determines the tax point, and the distribution is made when the funds are transferred to your personal bank account. This would be when you withdraw the funds from the business bank account following cessation, or when you receive the distribution from the liquidators.
• If you opt for a members’ voluntary liquidation, because reserves are more than £25,000, you will need to allow time for the liquidators to obtain the necessary clearances before the distributions can be made. This typically takes 4 to 8 weeks for the first distribution which is normally 85% -90% of the total funds.

Unlock the Full Potential of the Budget with Competex:

The budget has introduced some significant changes. At Competex, we break down the key changes and provide advice on how to use them to your advantage. Whether it’s for your personal taxes or business planning, we’re here to help you navigate the complexities.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

Explore Related Insights

To better understand the recent budget changes and their potential impact on your business, we recommend exploring the following articles:

• Employer National Insurance and Allowance Changes: What You Need to Know
• Income Threshold Adjustments: Key Implications for 2024
• Dividend – Tax Rates and allowances | Budget 2024
• Capital Gains Tax Changes: Key Updates and Planning Tips

The post Business Asset Disposal Relief (BADR) – Budget 2024 first appeared on Competex.

The post Business Asset Disposal Relief (BADR) – Budget 2024 appeared first on Competex.

Following the recent budget, changes to the income tax threshold may affect your earnings. This article highlights key adjustments in income tax rates and thresholds and provides tax-saving tips to help you navigate these updates effectively.

Income tax thresholds remain frozen until April 2028

The tax thresholds have been frozen since April 2021 meaning more people are finding their income falls into a higher band. Being aware of your total taxable income each tax year means you can take planning steps to reduce your tax liability.

For the thresholds, it is ‘Adjusted Net Income’ that is the amount that is considered. This is all your income, including interest, net rental income (after expenses), dividends, pension income (including state pension) LESS personal pension contributions and GiftAid donations.

If your adjusted net income exceeds £100,000, you start to lose your tax- free personal allowance. The effective tax rate on income that falls within the band of £100k – £125k can be up to 60%.

If you or your partner are in receipt of child benefit clawback of this commences once either partner’s income exceeds £60k. If it exceeds £80k then the whole of the benefit is repayable. The charge applies to the partner with the highest adjusted net income over £60k. ‘Partner’ means someone who you’re married to, in a civil partnership with or living with as if you were.

Tax tip

• Consider making a personal pension contribution or GiftAid payment to reduce taxable income below £100k and preserve your personal allowance (worth up to £5,028), or below £60k to preserve child benefit. Be mindful of the timing of pension contributions and donations, to ensure you utilise them in the most tax efficient year.
• Closely monitor dividends taken from your company each tax year. It may be possible to take a short-term loan form the company instead of a dividend; please discuss with your accountant before doing this

Unlock the Full Potential of the Budget with Competex:

The budget has introduced some significant changes. At Competex, we break down the key changes and provide advice on how to use them to your advantage. Whether it’s for your personal taxes or business planning, we’re here to help you navigate the complexities.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

The post Income Tax Threshold – Budget 2024 first appeared on Competex.

The post Income Tax Threshold – Budget 2024 appeared first on Competex.

Following the recent budget, there are notable changes to dividend tax rates and allowances. This article highlights the essential updates in dividend taxation, along with key tax-saving tips to help you make the most of these adjustments.

Dividend Tax Rates and Allowances – 

The dividend allowance remains at £500 per annum. Above this, dividends that fall into the basic rate band are taxed at only 8.75% compared to 33.75% if in the higher rate band or 39.1% if in the additional rate band. Here is a reminder of the relevant bands:

• Basic rate band – £50,270
• Higher rate band – £50,271 to £125,140
• Additional rate band – above £125,140

Tax tip

• Be sure to utilise the dividend allowance every tax year if possible. If your spouse or civil partner does not receive dividends consider transferring shares to them, particularly if they are a lower rate taxpayer.
• Consider other income you have in the tax year and, if possible, only take dividends that bring your total income up to £50,270. This way you will benefit from the much lower tax rate on dividends.

Unlock the Full Potential of the Budget with Competex:

The budget has introduced some significant changes. At Competex, we break down the key changes and provide advice on how to use them to your advantage. Whether it’s for your personal taxes or business planning, we’re here to help you navigate the complexities.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

Explore Related Insights

To better understand the recent budget changes and their potential impact on your business, we recommend exploring the following articles:

• Employer National Insurance and Allowance Changes: What You Need to Know
• Business Asset Disposal Relief (BADR) – What the 2024 Budget Means for You
• Income Threshold Adjustments: Key Implications for 2024
• Capital Gains Tax Changes: Key Updates and Planning Tips

The post Dividend – Budget 2024 first appeared on Competex.

The post Dividend – Budget 2024 appeared first on Competex.

With the recent budget updates, many may wonder what changes to Capital Gains Tax (CGT) could mean for them. This article focuses on the key adjustments in CGT rates and allowances, with tax tips to help you make the most of these changes.

Capital gains tax (CGT) rates increased from 30 October 2024

Higher rates will apply to gains crystallised on 30 October 2024 or after. Previously, the tax rate that applied to capital gains (apart from on residential properties) was 10% if the gain fell within the basic rate band of £50,270, or 18% if it fell in the higher or additional rate band. These rates have been increased to 18% and 24% respectively.

The tax rates on gains arising on the sale of residential property are not changing and remain at 18% and 24%. This means that moving forward the rates arising on all capital gains will now be the same.

How do you determine which tax rate applies to you?

First you need to calculate all other taxable income.  You then add the taxable capital gain (total gains made less the annual allowance of £3,000) and if this falls within the basic rate band of tax (currently £50,270) then the gains will be taxed at the lower rate of either 10% or 18% (depending on when the gain arose; before or after 30 October).

Note that sales of the following items are not subject to CGT:

• Cars
• Personal items such as jewellery, art, antiques, coins, stamps, with a value of £6,000 or less per item
• Stocks and shares held in an ISA or PEP (personal equity plans were discontinued in 1999 and replaced by ISAs but some may still be in existence)
• Government gilts
• Premium bonds
• Lottery, pools or betting winnings
• Items with a lifespan of less than 50 years such as clocks, watches and machinery

Tax tip

• The annual CGT allowance of £3,000 is staying, which means you can realise capital gains of up to this level each tax year and pay no tax. Consider utilising this allowance every tax year.
• Transfer shares to your spouse or civil partner. These transfers are tax free and means both of you can utilise the £3,000 allowance.
• Utilise the annual ISA allowance of £20,000. All income and gains arising from these are tax free. You can invest the £20,000 in either a cash ISA, stocks and shares ISA or Lifetime ISA, or a combination of these. In addition, parents can pay up to £9,000 into a Junior ISA for each child.
• The maximum amount you can pay into a Lifetime ISA each tax year is £4,000, and this forms part of the £20,000 annual allowance. The government add a 25% bonus to the amount saved in a Lifetime ISA every year, in addition to interest, which makes this type of account particularly attractive. The savings can be used to buy your first home or withdrawn at age 60 or over. You can only open one if you are aged 18 to 39.

Unlock the Full Potential of the Budget with Competex:

The budget has introduced some significant changes. At Competex, we break down the key changes and provide advice on how to use them to your advantage. Whether it’s for your personal taxes or business planning, we’re here to help you navigate the complexities.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

Explore Related Insights

To better understand the recent budget changes and their potential impact on your business, we recommend exploring the following articles:

• Employer National Insurance and Allowance Changes: What You Need to Know
• Business Asset Disposal Relief (BADR) – What the 2024 Budget Means for You
• Income Threshold Adjustments: Key Implications for 2024
• Dividend – Tax Rates and allowances | Budget 2024

The post Capital Gains Tax (CGT) Increased – Budget 2024 first appeared on Competex.

The post Capital Gains Tax (CGT) Increased – Budget 2024 appeared first on Competex.

Following the recent budget announcements, you may be wondering how changes in Employer National Insurance (NI) and allowances will impact you. This article highlights the adjustments in Employer NI and allowances, along with tax tips to help you navigate these updates.

Are you an employer?

If you employ others, or you employ yourself or your spouse through a limited company, then you need to be aware of some changes from April 2025:

• Employers NI will increase from 13.8% to 15% and the threshold lowered from £9,100 to £5,000.
• The national minimum wage for employees will rise to:

NOTE :  The national minimum wage does not apply to directors, unless they have a contract of employment. It also does not apply to children under school leaving age (under 16) or if you employ your children who still live at home.

Tax tip – what salary should you plan to pay yourself in 2025/26?

• Currently we recommend that you pay yourself £12,570, before withdrawing any remaining funds you need as dividends. This is because there is no employee NI on salary up to the personal tax threshold of £12,570 and the salary is allowed as a corporation tax deduction which can be worth up to 26.5% tax relief.
• In 2025/26 you might be tempted to take just £5,000 so that no employer NI is payable. However, since the rate of employers NI of 15% is still less than the rate of corporation tax relief (minimum 19% but could be as much as 26.5%, depending on company profits for the year), we believe that in most cases it will still be tax efficient to pay a minimum salary of £12,570. The employer NI payable will be £1,135.50 and the corporation tax saving will be a minimum of £1,438.30 (on the extra salary of £7,570 above £5,000).
• You need to take a salary of at least £6,500 in 2025/26 (£6,396 2024/25) to qualify for a credit for national insurance contribution purposes. This could be an important factor to consider when deciding the level of salary to pay your spouse or partner

Can you claim the employment allowance?

The government introduced the employment allowance ten years ago with the aim of helping small businesses with employment costs. It means that for those business that are eligible, no employer NI is payable up to a set level each tax year. From 2025/26, the level increases from £5,000 pa to £10,500 for each company, or group of companies. There are certain eligibility criteria but basically you can claim provided:

• There are at least 2 directors, or 1 non-director, paid over the secondary threshold (£9,100 2024/25, £5,000 2025/26)
• Not more than 50% of your work is in the public sector

Check the HMRC guidance for other eligibility criteria or contact us for further advice HMRC guidance – employment allowance

Tax tip

Consider employing your spouse or civil partner. We always advise that you only pay them a reasonable salary for work undertaken, and that you retain a record of tasks assigned to them.

If you make them a director too, they can be paid for ‘director services’, attending board meetings and reviewing accounts etc, which will provide additional justification for any salary paid.

Unlock the Full Potential of the Budget with Competex:

The budget has introduced some significant changes. At Competex, we break down the key changes and provide advice on how to use them to your advantage. Whether it’s for your personal taxes or business planning, we’re here to help you navigate the complexities.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

Explore Related Insights

To better understand the recent budget changes and their potential impact on your business, we recommend exploring the following articles:

• Dividend – Tax Rates and allowances | Budget 2024
• Business Asset Disposal Relief (BADR) – What the 2024 Budget Means for You
• Income Threshold Adjustments: Key Implications for 2024
• Capital Gains Tax Changes: Key Updates and Planning Tips

The post Employer NI and Allowances – Budget 2024 first appeared on Competex.

The post Employer NI and Allowances – Budget 2024 appeared first on Competex.

The Chancellor, Rachel Reeves, unveiled the first Labour budget since 2010, promising to ‘invest, invest, invest’ in the UK’s economy. While this budget contains significant announcements for small business owners, several important details were not addressed in her televised speech that will also impact accountants and bookkeepers. Here’s a comprehensive breakdown of the key points from the Autumn Budget 2024.

Major Changes to Employer National Insurance

One of the most noteworthy announcements is the overhaul of the Employer National Insurance (NI) contributions, which will take effect from April 2025. Here are the crucial changes:

Increased Rate

The rate for Employer NI will rise from 13.8% to 15%, increasing the cost for businesses.

Lower Earnings Threshold

The threshold for Employer NI, currently at £9,100, will be reduced to £5,000. This means that businesses will begin paying NI contributions at a lower income level, leading to higher costs for employers.

Employment Allowance Increase

The Employment Allowance, which currently provides a reduction of £5,000 in NI contributions for certain small employers, will be increased to £10,500. Furthermore, the eligibility threshold of £100,000 for employers will be eliminated. However, limited companies with only one employee who is also a director will still be ineligible for this allowance.

The Employment Allowance will now be an important relief to claim, and we will be issuing further guidance on who is eligible very soon.

Renewed Commitment to Making Tax Digital for Income Tax

The government has reaffirmed its commitment to the rollout of Making Tax Digital for Income Tax (MTD IT). This initiative requires businesses and landlords with qualifying income to maintain digital records and submit updates to HMRC quarterly via compatible software. Key points include:

• MTD IT will apply to self-employed individuals and landlords with qualifying income exceeding £50,000 starting April 2026.
• For those with qualifying income over £30,000, the requirement kicks in April 2027.
• Individuals with incomes over £20,000 will be included by the end of this parliamentary session (by 2029 at the latest).

“Stay ahead of the changes! Read our latest blog on Making Tax Digital (MTD) and discover the key updates you need to know.”

Increased Interest Rates for Late Tax Payments

To encourage timely tax payments, the government has announced an increase in the late payment interest rate. Currently set at the Bank of England base rate plus 2.5%, bringing the total to 7.5%, this will rise to the base rate plus 4% from 6th April 2025. This change aims to close the tax gap and enforce stricter compliance with tax regulations.

Immediate Increases to Capital Gains Tax and Changes to Reliefs

From 30th October 2024, significant changes to CGT were introduced:

• For lower rate taxpayers, CGT will increase from 10% to 18%, and for higher rate taxpayers, it will rise from 20% to 24%.
• This adjustment aligns CGT rates on all assets with the current rates applicable to residential property, which will remain unchanged.
• Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will see a phased rate increase: from 10% to 14% for disposals after 6th April 2025 and from 14% to 18% for disposals after 6th April 2026.

Additionally, the government plans to increase the CGT rate on carried interest (compensation for fund managers) to 32% from April 2025, with further reforms expected in April 2026.

Introduction of Advanced Electronic Signatures

Starting 6th April 2025, tax advisers will be required to provide an Advanced Electronic Signature for certain income tax repayment claims. Specific claims affected by this requirement have not yet been clarified.

Changes to Tax Rules on Liquidations of LLPs

From 30th October 2024, the government will modify how capital gains are taxed when a Limited Liability Partnership (LLP) is liquidated, and assets are disposed of to a contributing member or a connected person. The specifics of these changes are yet to be disclosed.

Close Company Loans to Shareholders

The government intends to eliminate “opportunities to side-step the anti-avoidance rules” for shareholders taking loans from close companies. Details on how this will be implemented have not yet been provided.

Extension of 100% First Year Allowances for Zero-Emission Cars

The 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars will be extended for an additional year, continuing until 31st March 2026 for limited companies and 5th April 2026 for sole traders and partnerships.

Double-Cab Pick-Ups Classified as Cars

Effective from 1st April 2025 for Corporation Tax and 6th April 2025 for income tax, double-cab pick-up vehicles (DCPUs) will be classified as cars for tax purposes. This reclassification will affect capital allowances, benefits in kind, and certain deductions from business profits. However, for VAT purposes, these vehicles may still be classified as vans, allowing VAT recovery on purchases.

High Income Child Benefit Charge (HICBC)

The government has decided not to proceed with reforms to base the High Income Child Benefit Charge on household incomes. Starting in 2025, employed individuals will be able to pay their HICBC through their tax codes, potentially removing the need for many to file a tax return. For those who do not pay through their tax codes, HMRC will pre-populate self-assessment tax returns with HICBC data to mitigate the risk of taxpayers overlooking this obligation.

Conclusion

The Autumn Budget 2024 introduces critical changes for small businesses, making it essential for business owners to stay informed. At Competex, we’re here to help you navigate these new policies with clarity and confidence.

For further insights, you can read the full report on the government’s website. If you’re looking for expert guidance on how these updates impact your business, reach out to us at Competex to see how we can support your success under the latest regulations.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

The post Autumn Budget 2024: Key Takeaways first appeared on Competex.

The post Autumn Budget 2024: Key Takeaways appeared first on Competex.

As the UK Budget approaches, many are considering potential tax changes in the upcoming UK Budget Tax Update and whether to take last-minute actions to safeguard their finances. This article highlights essential factors to keep in mind regarding these updates and offers practical advice on steps to take before the 30 October deadline.

What Taxes Might Increase After the UK Budget Tax Update?

Although the government has promised not to increase VAT, income tax, or employee national insurance, reports suggest they need to raise £25 billion a year in tax savings. Consequently, several taxes are rumoured to be targeted, including:

• Capital Gains Tax (CGT)
• Inheritance Tax (IHT)
• Pension Tax Relief

What Are the Current Capital Gains Tax Rates?

Capital gains tax is currently charged on profits above £3,000 per tax year at the following rates:

• Shares: 10% for basic rate taxpayers, 20% for higher rate taxpayers.
• Second properties: 18% for basic rate taxpayers, 24% for higher rate taxpayers.

These rates might increase following the UK Budget Tax Update, possibly with immediate effect after the Budget.

What Actions to Take for Capital Gains Tax?

• Dispose of shares with accrued gains to secure the current capital gains tax rate and use the £3,000 annual exemption.
• Transfer shares to a spouse, allowing both of you to use the exemption and potentially pay a lower tax rate.
• Move shares into a tax-free ISA, though note that this could trigger a capital gain.
• If you are in the process of arranging for your company to be struck off and have drafted/are drafting cessation accounts up to 30 September or prior, you should arrange for the funds to be withdrawn from the business bank account, since this is the date that will be deemed to be the distribution date for capital gains tax purposes.

What Are the Current Thresholds and Reliefs for Inheritance Tax?

Inheritance tax is currently set at 40%, and in many cases the estate value threshold is £500,000. This includes a tax-free threshold of £325,000 and an additional NIL rate band of £175,000 if you leave your home to children or grandchildren.

The UK Budget could affect annual gift exemptions and unrestricted lifetime gifts after the tax update. Current exemptions include:

• £3,000 per year in lump-sum gifts.
• Smaller gifts of up to £250 per recipient.
• Wedding gifts: £5,000 to a child, £2,500 to a grandchild.
• Unrestricted lifetime gifts, provided you live for at least seven years after making the gift.

What Actions Should You Take for Inheritance Tax?

• Utilize the £3,000 annual gift exemption for inheritance tax or double it if you didn’t use it in 2023/24 either.
• Use other gift allowances, such as £250 per person or wedding gift exemptions.
• Make larger lifetime gifts, which are currently excluded from your estate if you live for at least seven years after making the gift (it’s possible this period could be extended or some other restriction imposed).

What Changes Could Affect Pension Tax Relief?

Pension contributions may also be targeted. Currently, the annual allowance for contributions is £60,000, but this could be reduced. Additionally, tax relief on pensions might be restricted to the basic rate of 20%. There’s also speculation that the tax-free lump sum withdrawal limit of £268,275, available at age 55, might be reduced.

What Actions to Take for Pension Tax Relief?

• Top up your pension pot before the Budget to maximize current tax relief.
• Consider early withdrawal, particularly if you’re approaching retirement age and want to lock in the current tax-free lump sum allowance (do take advice before doing so).

Conclusion: Act Now to Prepare for Potential Tax Changes Following the UK Budget Tax Update

The UK Budget 30 October Tax Update could bring significant changes to tax reliefs and rates, particularly for capital gains, inheritance, and pensions. While there’s still time to act, reviewing your financial situation now and taking steps to minimize your tax exposure could help you stay ahead of any new legislation. Be sure to consult with a tax professional or your financial advisor for personalised advice.

Stay Ahead of the Changes!

Don’t wait until the UK Budget Tax Update takes effect! Reach out to COMPETEX today for expert guidance on the necessary steps you can take now to protect your finances. Our knowledgeable team is here to assist you with adapting to the new changes and ensuring you make informed decisions.

For further information or to discuss how we can support your financial needs, please reach out to us:

Email: info@competex.co.uk

Website: www.competex.co.uk

The post “Are You Ready? Important Actions to Consider Before the UK Budget on 30 October!” first appeared on Competex.

The post “Are You Ready? Important Actions to Consider Before the UK Budget on 30 October!” appeared first on Competex.

There is no doubt that we are moving into an age where everything is becoming more digital. HMRC’s initiative on Making Tax Digital (MTD) will change how individuals and businesses record and report their transactions and taxes. HMRC believes that MTD will reduce the scope for errors and enable taxpayers to keep better track of the taxes they owe. Reports indicate that MTD has worked for VAT, with businesses feeling more confident about the VAT returns they submit and producing them much quicker than before.

April 2026: Who needs Making Tax Digital (MTD) ?

The next stage of MTD will apply to individuals with rental income or sole trade income of more than £50,000. These individuals will need to adopt a new way of reporting this income to HMRC from April 2026.

Every receipt and every expense will need to be fed into a digital system that is compatible with MTD reporting.

If you currently use spreadsheets, you will need to make them API-enabled to connect with the appropriate software for reporting. You must enable all interfaces between different systems electronically. You will need to submit quarterly reports to HMRC using this software.

HMRC is likely to reduce the threshold for joining MTD to include everyone over time. They have already announced that individuals with rental or sole trade income exceeding £30,000 must join starting in April 2027.

The rental and sole trade income refers to the combined gross income rather than profit. For example, if you have £20,000 in rental income and £35,000 in sole trade turnover, you will meet the threshold

required to join MTD from April 2026.

What About My Usual Self-Assessment Tax Return?

If you join MTD for individuals, you will not complete your usual self-assessment tax return. At the end of the tax year, you will complete a final declaration in which you will confirm that the quarterly information you’ve already sent in is correct, and add any other personal income or reliefs.

The same deadline of 31 January will apply to the submission of the final declaration and payment of outstanding tax.

What is Pilot Testing for MTD for Income Tax

HMRC started running pilot testing in April 2024 to help iron out problems ahead of April 2026. A small number of businesses have opted to join the testing phase.However, to join voluntarily, you must meet certain eligibility criteria:

• You must use software that is already developed and available for use.
• You must have submitted at least one tax return previously.
• You must be up to date with all your taxes.

Many providers are still working on their functionality and will not be available to use until 2025/26, when more businesses are expected to join the scheme. This includes FreeAgent, Xero, TaxCalc, and IRIS.

The Current List of Software Providers That are Ready for 2024/25 is as Follows:

• 1 2 3 Sheets Ltd
• APARI
• Digita Personal Tax — Thomson Reuters
• Intuit QuickBooks Online
• Sage Accounting
• SE_reports
• self assessment direct

Recent Announcements on MTD for Individuals

HMRC has recently confirmed that:

• Quarterly submissions will move to a cumulative basis, meaning that an error in a previous report can be corrected in the next one, rather than having to re-submit a quarter.
• Anyone who does not have a National Insurance number will be exempt from joining.
• Landlords who hold property in joint names will have the option to report only their share of gross income (not expenses) in their quarterly submissions. The usual reporting of both income and expenses can be done in the final return.
• If a landlord holds property in their own name and in joint names, they will still need to report both income and expenses in their quarterly submissions for the solely owned property.

What is Making Tax Digital for Corporation Tax

To date, there has been little announced on MTD for Corporation Tax. HMRC has stated that the earliest it will commence is April 2026, but the likelihood is that it will be later. However, unlike MTD for individuals, which initially excludes smaller businesses, the current thinking is that MTD for Corporation Tax could apply to all businesses once introduced, except for those with a digital exemption.

If You Engage With Competex, We Will:

• Arrange the sign-up to MTD on your behalf, at the appropriate time.
• Provide compatible, friendly, and easy-to-use software.
• Handle all aspects of the reporting, including the final year-end declaration.

For further information, please contact us at info@competex.co.uk or visit our website at https://www.competex.co.uk.

The post Making Tax Digital (MTD) Update – Key Changes Ahead first appeared on Competex.

The post Making Tax Digital (MTD) Update – Key Changes Ahead appeared first on Competex.

• Will your annual net rental income be more than £1,000? You may need to Register for self-assessment
• Property income and associated expenses must be recorded separately for each property. Consider using software to record this information, or a spreadsheet (if simple).
• Are you renting out more than one property, or is there a significant number of transactions? Consider setting up a business bank account.
• Do you have a mortgage on the property? You may be able to claim interest on the loan against the income. Ensure you have informed your mortgage provider you are renting the property out.
• Do you need to register for VAT? You will if your annual rental income (before expenses are deducted) is more than £90,000.
• Consider paying voluntary national insurance contributions.
• Making Tax Digital will be commencing in April 2026 for landlords with income of £50,000 or more. Quarterly reports will need to be submitted to HMRC via approved software.
• Are you a non-UK resident renting a UK property? You will be required to pay 20% tax on each amount of rental income received. If you have no other UK income you may wish to consider applying to have the rent paid gross.
• Ensure you are familiar with your legal responsibilities as a landlord, including meeting safety standards.
• Some expenses will be of a capital nature, and some will be revenue. Only revenue expenses can be offset against rental income.
• If you are renting a residential property that is held in a company, partnership or trust, you will need to consider whether the Annual Tax on Enveloped Dwellings (ATED) is payable.
• Find out who is responsible for paying the Council Tax.

The post How do I set up as a landlord? first appeared on Competex.

The post How do I set up as a landlord? appeared first on Competex.