Have you heard of ‘salary sacrifice’ pensions? This type of occupational pension is aimed at helping individuals save on tax contributions whilst also contributing to their pension. Let’s find out more! 1. What is ‘salary sacrifice’? A salary sacrifice arrangement equates to tax savings for employees. Employees agree to reduce their monthly salary, with the sacrificed amount paid directly into their occupational pension by the employer. Consequently, the employee’s taxable income decreases, and the sacrificed salary can grow tax-free in the pension fund. This arrangement also reduces the employer’s National Insurance contributions, which can then be potentially used to reinvest into employee pensions. Example: Consider the case of Mr W, a manager earning £50,000 annually. Regular Occupational Pension: Mr W contributes £2,500 (5% of salary), and the employer contributes £1,500 (3%) The total pension contribution is £4,000 Mr W’s PAYE and NIC: £11,477.60 Net annual salary: £36,022.40 Employer’s NIC: £5,644.20 Salary Sacrifice Pension: Mr W sacrifices £2,500, reducing the annual salary to £47,500 Employer adds the sacrificed £2,500 plus their £1,500 contribution to the pension Total pension contribution: £4,000 PAYE and NIC: £11,177.60 Net annual salary: £36,322.40 Employer’s NIC: £5,299.20 2. Employer Benefits Employers save on National Insurance contributions, and savings increase as more employees are hired. For example, with 50 employees each earning £50,000 and sacrificing 5% of their salary, an employer can save £17,250 annually. 3. How do Employers Gain from this? The main benefits are: Increased take-home pay due to reduced taxes Higher pension contributions Compound growth of pension savings over time The potential drawbacks are: Restricted for low-income employees if the salary falls below the National Minimum Wage May affect income-related benefits and statutory pay calculations 4. Implementation Employers should contact payroll or pension providers to offer this scheme. Employee consent is needed, typically through contract adjustments. Salary sacrifice arrangements often ‘win-win’, saving money for both employers and employees. However, it’s crucial for employees to understand the pros and cons before opting in, especially higher-rate taxpayers or those concerned about future financial implications such as mortgage applications. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

‘Hard water’ contains a large amount of minerals, such as calcium and magnesium, which form a thin film on the hair, making it difficult for moisture to penetrate, resulting in dry and brittle hair, ultimately leading to hair loss. And how hard is the water in the UK? Presumably, many people have heard of it. Many international students and workers, upon moving to the UK, are deeply distressed. Moreover, it’s not just about the water being hard – it also rains for almost 10 months a year! Why is the water quality in the UK so hard? 1. Chemical makeup of water The ‘hardness’ of water is determined by the concentration of dissolved magnesium and calcium ions in the water. In the UK, water sources mainly come from groundwater and rivers, which pass through many geological and soil layers, thus containing higher levels of magnesium and calcium ions, leading to higher water hardness. 2. Geological Conditions Most parts of the UK are located below limestone formations, which are rich in calcium and magnesium. When water passes through these formations, it dissolves a certain amount of calcium and magnesium, increasing the water hardness. 3. Natural environment In areas with less rainfall, the concentration of dissolved minerals in the water increases due to evaporation, resulting in increased water hardness. Therefore, the hardness of water in the UK is mainly due to the high content of magnesium and calcium ions in the water source, as well as the combined effects of geological, soil, and environmental factors. Let’s take a look at the PPM measurement. PPM is the unit of water hardness, which refers to the concentration of calcium and magnesium ions in the water. 1 ppm represents 1 milligram per litre (mg/L) of calcium carbonate in water, so we can use PPM indicators to measure water hardness: 0 – 50 PPM – Soft water 51 – 100PPM – Moderately soft water 101 – 150PPM – Slightly hard water 151 – 200PPM – Moderately hard water 201 – 275 PPM – Hard water 276 – 350 PPM – Very hard water England mostly consists of hard water areas, while Scotland has mostly soft water. Compared with the granite areas in the north and west of England, the chalk and limestone areas in the south and east of England release more minerals into the water as it flows. Therefore, the water quality in the south and east of England is much harder than in other parts of the UK. The town with the hardest water in the UK? Ipswich! The hardest water in the UK is undoubtedly in Ipswich! This is a town in Suffolk, eastern England. Data from the local water department shows that the calcium carbonate content in the water in this town is the highest in the UK, reaching 423 milligrams per litre! 4. What can you do? There are a few solutions if you want softer water, whether it’s for washing your hair or for consumption: Install a filtered shower head to soften hard water Use a water filter for drinking water Purchase bottled water for drinking If you’re living in the UK, there are lots of things you need to take care of – your residence, employment, and importantly, tax! If you need advice on any tax-related issues, contact TB Accountants for professional advice. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

For business owners in the UK, one of the most stressful events is likely a surprise visit from the tax office.  Without any prior notification, they may suddenly inspect your store or any other business premises. This often happens when HMRC suspects a business of tax evasion. According to official data, there have been 4,314 such surprise inspections by HMRC over the past five years. These inspections are so sudden that business owners often don’t know how to respond, which can lead to mistakes, especially if they’re nervous. Without preparation, a business could face serious consequences. So, how can you be prepared? 1.What is a ‘Dawn Raid’? In the industry, surprise inspections are known as a ‘dawn raids’. When HMRC suspects a business of significant tax evasion, they may conduct a dawn raid. While these often happen early in the morning, they could happen at any time of day, emphasizing the unplanned nature of the inspection. When handling most cases, HM Revenue and Customs noticed that if they planned a visit to businesses or requested necessary information through correspondence, the businesses would preemptively destroy some crucial evidence. Therefore, surprise inspections can help HMRC uncover more evidence and information. 2.HMRC’s powers during a raid Once HMRC obtains a search warrant from the court, they assign officers to carry out dawn raids at various locations. It’s important to note that such raids are not necessarily limited to a single site. HMRC often conducts sudden searches of any premises related to the individuals or businesses under investigation. This means they can simultaneously raid a taxpayer’s residential address, business premises, and even the offices of their professional advisors. Under the Police and Criminal Evidence Act 1984 (PACE), HMRC can apply for a search warrant to investigate suspected tax fraud. With a warrant, HMRC must convince a court that: A prosecutable offense has occurred The premises may contain material valuable to the investigation The material likely serves as evidence for criminal proceedings The material isn’t protected by legal privilege, exclusion, or special procedure materials If these conditions are met, HMRC has further rights during a raid, such as forced entry, searching individuals if they suspect them of carrying relevant materials, and making arrests if they suspect an individual of an offense. 3.How to respond to an HMRC Raid — Three Key Tips Given the increasingly strict regulatory environment, the risk of a raid is real. Such a raid can disrupt, stress, and pressure a business, but with preparation, businesses can handle the situation effectively. Before a Raid: Preparation is Key Develop a crisis management plan, setting out a policy for handling such inspections Train employees on the importance of staying calm, polite, and professional during a raid Reception, security, and IT staff may need extra training, as they’ll likely be the first to meet related officers Conduct mock drills if necessary to familiarise staff with procedures During a Raid: Cooperate Fully It’s illegal to obstruct officers or attempt to destroy or hide documents or data Have trained staff present during the inspection to monitor HMRC officers, document all actions, and note down questions and responses Ensure officers stay supervised and that any issues or questions are promptly raised with the legal team After a Raid: Gather Documentation and Seek Professional Advice Obtain copies of HMRC’s notes and any documents they examined or copied Review all records of questions and the responses provided If necessary, seek professional advice from a tax consultant or legal advisor You might also consider setting up an internal investigation team to audit relevant business areas and minimise future issues Generally, after completing a raid, HMRC may take a considerable amount of time, often several years, to review the materials. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

Living and working in the UK means you have to deal with HM Revenue and Customs (HMRC). One crucial method of communication is the Self-Assessment Tax Return which HMRC uses to collect income tax. Generally, if you are a full-time employee, your taxes are automatically deducted from your salary and pensions under the PAYE system. However, if your total taxable income exceeds a specified amount or if you have additional untaxed income, you must declare it on your tax return. Today, we provide a guide detailing who must register for a self-assessment tax return, deadlines, and associated penalties. Who needs to register for Self-Assessment? You must submit a tax return if any of the following applies to the previous tax year (April 6 to April 5): You are self-employed and your income exceeds £1,000 (before deducting eligible expenses). You are a partner in a business partnership. Your total taxable income exceeds £150,000. You need to pay Capital Gains Tax when selling or disposing of valuable items, which requires a tax return. You need to pay high-income child benefit charges. If you have any other untaxed income exceeding £2,500, you may also need to submit a tax return, such as: Income from renting properties. Tips and commissions. Interest from savings, investments, and dividends. Foreign income. Other reasons you may need to register and fill out a tax return: To claim certain income tax deductions. To prove you are self-employed, such as for tax-free child benefits or maternity pay. To pay voluntary National Insurance contributions. Is there a deadline? If you have never submitted a self-assessment return before, you must register by October 5 to notify HMRC. Upon registration, you will receive a Unique Taxpayer Reference (UTR) number, which allows you to activate your online services account. After registering, you must submit your self-assessment tax return by the deadline: For online submissions: The deadline is January 31 following the tax year. For the 2024 to 2025 tax year, you must submit by January 31, 2025. For paper submissions: Although most people submit online, HMRC still accepts paper forms. You can request a paper self-assessment form (SA100) by calling HMRC. The deadline for paper forms is October 31 (or January 31 for pension scheme trustees or non-resident companies). For the 2024-2025 tax year, submit paper returns by midnight on October 31, 2024. The mailing address for paper forms is: Self-Assessment HM Revenue and Customs BX9 1AS United Kingdom After submitting your paper return, you can check when you will receive a response from HMRC. If you need to submit an SA100 tax return for the 2021 to 2022 tax year or earlier, you’ll need to obtain the form from the National Archives. Are there penalties for not registering or submitting my tax return? If you miss the deadline for submitting or paying taxes, you will incur penalties. A £100 penalty applies if your tax return is late by three months. Additional delays or late payments result in more fines and interest charges. You can appeal penalties if you have a reasonable explanation. How to Change Your Self-Assessment Tax Return? You can change your return after submission if you made an error. Your tax bill will update automatically based on your amendments. You can also correct your tax return within 12 months of the self-assessment deadline either online or by sending a new paper form. For example, for the 2022 to 2023 tax year, you typically need to make changes by January 31, 2025. If you miss this deadline or need to amend previous tax years, you must write to HMRC. Note that you must wait three days (72 hours) after submission before updating your return. Here’s how to do it: Log in to your account. Select “S elf-Assessment Account” from “Your Tax Account.” Choose ‘More Self-Assessment Details.’ Select ‘Overview’ from the left menu. Choose ‘Tax Return Options.’ Select the tax year you want to amend. Access the tax return, make corrections, and resubmit. If modifying a paper form, call HMRC for the SA100 form. Download all other forms and supplementary pages. Then, send the corrected pages to the self-assessment address, marking each page as “Amendment” and including your name and UTR. If you can’t find the address, send your corrections to: Self-Assessment HM Revenue and Customs BX9 1AS If you need to declare foreign income, the process differs, and you should consult a professional advisor. What if I no longer need to file? In some cases, you might no longer need to complete a self-assessment tax return for various reasons, such as: No longer renting properties. No longer receiving high-income child benefits. Your income falls below the £150,000 threshold. You are no longer self-employed. If you believe you no longer need to submit a return, inform HMRC immediately. If HMRC agrees, they will send a letter confirming that you do not need to file. If they do not agree before the January 31 self-assessment deadline, you may face penalties. If you are no longer self-employed, you must notify HMRC that you have ceased self-employment. Even if you inform them your self-employment has ended, they may still require you to submit returns for future years. If you have verified that you no longer need to submit a tax return, you should inform HMRC. You can notify HMRC through an online form, their digital assistant service, or directly by phone or mail. Regardless of the method, provide your National Insurance number and UTR for identification. Some advice from TB Accountants Whether you are a newcomer or experienced in taxation matters, registering and filling out a self-assessment tax return can be complex. We recommend preparing in advance and maintaining good record-keeping habits. If you’re confused, especially with diverse income sources, consulting a tax expert or hiring one to assist with your forms can alleviate stress. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

Christmas is a very important holiday in the UK, and giving gifts is a key part of this tradition. Many people are willing to spend a significant amount of money to buy gifts, hoping to bring joy to their family and friends. But here’s a reminder: make sure to keep an eye on your gifts! Reports indicate that UK thieves are already ‘back to work’ and the number of burglaries has soared. Every year around this time, thieves target people’s Christmas presents. According to police data, jewellery, smartphones, Apple Watches, and other items are among the most commonly stolen goods, with some worth over £100,000. So, how can we prevent these losses? Which Christmas gifts are most popular with thieves? During the holiday season, burglary cases spike. Particularly at Christmas, when homes are full of gifts—some are meant for others, and some are received by the household. Thieves take advantage of this, often breaking in when people are out at gatherings. A report from UK police shows that thieves steal almost any gift, including bottles of alcohol or even a single piece of candy. Recently, media reported that a family’s entire Christmas haul was stolen, with all the presents under the tree taken, including candy from the table. Based on police data, here are the most commonly stolen items and their value: Stolen Items Value Jewellery £103,234 Cash £99,570 Electronics £24,608 Sports Watches £13,475 Decorations £12,255 Hand Tools £3,000 Photography Equipment £2,597 Women’s Clothing £1,050 Alcohol £865 Medals/Currency Collectibles £600 Men’s Clothing £500 Shoes £120 According to police, in the reported burglaries, jewellery and watches account for 32% of cases. These items are hard to trace and easy to hide, making them prime targets for criminals. In England and Wales, one in three burglary reports involves stolen jewellery or watches. Next in line are electronics, including computers, tablets, and cameras, which account for 23% of stolen items, many of which are worth over £1,000. Police note that laptops and tablets are particularly easy to carry off. High-risk areas for burglaries in the UK The following regions in the UK have the highest burglary rates: Middlesbrough: 22 burglaries per 1,000 households | Middlesbrough, in North Yorkshire, has the highest burglary rate in England and Wales. The risk of burglary in this northern town is 11 times higher than in other areas. Manchester: 20 burglaries per 1,000 households | Manchester ranks second in terms of burglary rates, with 20 burglaries per 1,000 households last year. Despite its reputation for being safer than London, Manchester has a higher burglary rate than any other district in London. Doncaster: 18 burglaries per 1,000 households | Doncaster ranks among the top areas for burglaries, with 18 burglaries per 1,000 households. In London, the following districts are particularly prone to burglaries: Southwark: 14 burglaries per 1,000 households Barnet: 13 burglaries per 1,000 households Hackney: 13 burglaries per 1,000 households Haringey: 13 burglaries per 1,000 households Kensington and Chelsea: 13 burglaries per 1,000 households Have you insured your home? If you live in a high-risk burglary area or have valuable gifts at home, it’s worth checking if you can claim under your home contents insurance if you’re a victim of a burglary. Over 80% of home insurance policies automatically increase coverage during Christmas. Although they may not explicitly mention ‘Christmas coverage’ you might see terms like ‘seasonal increase’ or ‘holiday coverage’ in your policy, which applies to this period. Insurers often increase your coverage by a fixed amount (typically between £1,000 and £10,000) or by a certain percentage of your total insurance. For example, AXA Insurance automatically increases its clients’ home contents coverage by £7,500 during Christmas, covering the 30 days before and after Christmas. Other insurers may have shorter coverage periods, such as 14 days before and after Christmas. Tax considerations In the UK, the Insurance Premium Tax (IPT) is applied to most general insurance premiums, similar to VAT. The IPT has two rates: 12% for standard policies like home, car, or pet insurance, and 20% for policies covering travel or the sale of home appliances and cars. If your annual premium is £300, with a 12% IPT, you would pay £336. With a 20% rate, the cost would be £360. IPT applies to most insurance policies, but some, like life insurance or commercial aircraft insurance, are exempt. To lower your premiums, you can consider increasing your voluntary excess (but note that this will increase your costs if you need to make a claim), adding extra security measures to your property, and avoiding posting pictures of expensive gifts on social media, which could attract thieves. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Many pensioners recently received the £10 Christmas bonus from the government. However, the distribution of this bonus hasn’t been met with joy, because in winter, people face another important expense—heating. Recently, the UK House of Commons voted to reject a proposal to prevent cuts to the winter heating subsidy, with a result of 348 votes against 228. This means that about 10 million pensioners in the UK will not receive heating subsidies this winter. The £10 Christmas bonus, in comparison, is virtually meaningless in the face of heating costs, and over a million elderly people will fall into poverty because they can’t afford to heat their homes. Why reduce the winter fuel subsidy? The reason is simple—it’s to fill the UK government’s budget deficit. How severe is the UK’s financial deficit? According to foreign media reports, UK prisons are overcrowded, but the government can’t even afford to build new ones. This shows just how bankrupt the UK government is. By July of this year, the UK government’s public debt had reached about £2.7 trillion, approximately 99.4% of the country’s GDP. This means the government needs to pay nearly £100 billion in interest each year, which is roughly 10% of government spending, just to cover the debt hole. Many local governments in the UK are in even worse financial shape. Since 2020, several cities in the UK, including Birmingham and Nottingham, have declared bankruptcy. With such dire finances, Labour’s Chancellor of the Exchequer, Rachel Reeves, has proposed a fiscal cut plan, which includes cutting £5.5 billion in spending this year and £8 billion next year. The £300 winter heating subsidy for the elderly is part of the £5.5 billion in cuts for this year. Are the Labour Party and the Conservative Party fighting again? In the vote against cutting the winter heating subsidy, the proposal was ultimately rejected with 348 votes against 228. However, in the UK House of Commons, the Labour Party holds 410 seats. Apart from one member who voted against the Labour government’s proposal, over 50 other members didn’t vote. This indicates that within the Labour Party, there is some disagreement over the policy to reduce heating subsidies. Conservative Party leader and former Prime Minister Rishi Sunak mocked, ‘They are shouting loudly now. But these arguments couldn’t even convince his own 50+ members, who suddenly found they had urgent matters elsewhere’. Starmer quickly fired back: ‘Before he complains about us cleaning up his mess, perhaps he should apologize for the £22 billion black hole. Mr. Sunak pretends everything is fine. This is the argument he made during the election, and it’s why he’s sitting there [in opposition] while we’re here [in government]’. This was a sharp exchange, essentially saying: Labour argues that they had to reduce subsidies to clean up the financial mess left by the Conservative Party, and since the Conservative policies were ineffective, it’s Labour who became the governing party. Therefore, the Conservative Party has no right to criticize the fiscal measures taken by Labour, as Labour sees the Conservatives as the root cause of the current problems. Many families will face a tough winter Winter in the UK can be quite cold! Reducing winter heating subsidies for pensioners means that many elderly people will have a particularly hard time this winter. Surveys show that 55% of retirees are considering reducing heating, and two-thirds say they will take additional energy-saving measures. In 2022, as the Russia-Ukraine conflict escalated, energy prices continued to rise. The UK government implemented a plan to cap energy price increases at 10% per year. In the winter of 2021, the maximum annual energy price for an average household was capped at £1,100, but this winter it will rise to £1,717. It is estimated that at least 27 million households in the UK will continue to see their energy bills rise. During the 2022 energy crisis, many places opened ‘heat banks’ in libraries, community centres, and other locations, where people without money to heat their homes could stay warm for free. It is expected that this year the number of ‘heat banks’ will increase, especially for elderly people who cannot afford heating costs. This makes people feel frustrated about the £10 Christmas bonus, as they might be too cold at home to enjoy Christmas. More importantly— The £10 Christmas bonus was introduced in 1972 by the Heath government during a period of high inflation, to help pensioners have a good Christmas. Half a century has passed, but the Christmas bonus has remained at £10. If adjusted for inflation, that £10 would be equivalent to £168 today! Many people have suggested that the Labour government should reassess the level of the Christmas bonus, as at today’s prices, £10 can barely buy two large hamburgers. Can this really help people enjoy Christmas? This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

When running a company, unforeseen challenges can arise, such as prolonged periods of inactivity or zero revenue. However, if you’re not ready to dissolve or liquidate the company, what can you do? Here’s our suggestion – consider dormancy. If your company has had no transactions or ceased trading entirely during the tax year but you don’t wish to close it, many business owners opt to make it dormant. A dormant company has fewer reporting requirements and is exempt from corporation tax, saving time and money while protecting your interests, such as the business name or intellectual property. What is a dormant company? A dormant company is registered with Companies House but does not conduct business, trade, or earn income. It does not: Buy or sell goods or services, Earn interest, Manage investments, or Engage in other business activities. According to HMRC, such a company is ‘inactive’ for corporation tax purposes. A company can be dormant from the time it is established or after a period of activity. What is considered a transaction for a dormant company? Transactions that classify a company as ‘active’ include: Buying or selling goods and services Receiving rental income or property sales revenue Incurring significant expenses, such as: Paying employees Paying directors’ salaries Distributing shareholder dividends Managing investments Receiving dividends Earning interest Paying bank fees Covering formation and accounting costs via a business bank account Exempt activities Certain actions do not count as significant accounting transactions and are permitted for dormant companies: Initial shareholder subscriptions Fees paid to Companies House for filing confirmation statements, changing the company name, or re-registration Penalties for late filing with Companies House How does dormancy save costs? Opting for dormancy offers several advantages: Temporary pause: If you cannot operate the company due to health issues, maternity leave, travel, or other reasons, dormancy lets you preserve company assets, such as property rights or the business name. Lower administrative costs: Dormant companies have fewer filing requirements and reduced statutory obligations for small, inactive entities. Strategic planning time: Allows you to restructure without the immediate burden of maintaining a trading business. No time limit: A company can remain dormant indefinitely. Cost efficiency: Dormancy is cheaper than closing and reopening a company. Future opportunities: Retain your business name and branding, preventing others from registering them. Making your company dormant Evaluate Eligibility: Ensure the company meets dormancy requirements, such as no significant financial transactions. Complete pending transactions or dissolve assets, if necessary. Prepare Required Information: Gather these details for filing with Companies House: Company name Office address Directors’ names Shareholders’ names Provide at least one SIC code (Standard Industrial Classification) Notify Companies House: Formally inform Companies House of the dormant status. The status will be updated on their website and made publicly accessible. Inform HMRC: Notify HMRC immediately to avoid unnecessary tax obligations or penalties. Notify the Bank: If the company has a business bank account, inform the bank of the status change. Some banks offer specialized services for dormant accounts. Maintain Compliance: Even as a dormant company, you must fulfil specific legal obligations. Dormant company obligations with Companies House Annual Accounts: Directors must submit annual dormant accounts to Companies House. These are simpler than active company accounts and typically include only a balance sheet and accompanying notes. Submit them within 9 months of the accounting reference date (ARD). Confirmation Statements: All companies, active or dormant, must file a confirmation statement at least once every 12 months. This ensures the company’s registered details remain accurate and up-to-date. The confirmation statement must include: Company name and registration number Registered office address Directors’ and secretaries’ details Shareholder or guarantor information SIC codes Share capital details PSC (Persons with Significant Control) register Company’s registered email address You have 14 days from the due date to submit the statement. Can Dormant Companies Be Reactivated? Yes, dormant companies can be reactivated at any time, for any duration. To resume trading, you must: Notify HMRC of the change Begin paying corporation tax and fulfilling tax-related responsibilities Update Companies House with statutory accounts and tax filings as required Reactivation requires you to: Register for corporation tax services via your company’s Government Gateway account Submit statutory accounts and corporation tax returns to HMRC Some advice from TB Accountants If you’re planning to pause operations or face temporary financial challenges but see potential for the future, dormancy is a practical solution. It helps preserve your company’s integrity while reducing the administrative burden. However, even dormant companies must adhere to specific legal procedures, such as filing dormant accounts and confirmation statements.  It is important to ensure that you are aware of these obligations, even when your company is dormant. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

Starting and running a business does not guarantee smooth sailing or profits every year. If your company faces challenges, such as prolonged losses or an inability to meet its financial obligations, you may need to consider closing it down. In the UK, how can a business owner close a company? And if there are outstanding tax debts, can they simply be ignored? Closing your company Generally, to close a limited liability company in the UK, you must obtain the consent of the company’s directors and shareholders. There are several ways to close a company, depending on whether your company can pay its bills—in other words, whether it is solvent or insolvent. If your company is solvent When a company can pay its bills, the directors may decide to close the company for reasons such as retirement, exiting a family business with no successor, or simply not wishing to continue operations. In this case, you can choose one of two methods: Apply to strike off the company Members’ Voluntary Liquidation (MVL) If your company is insolvent When a company is insolvent, the interests of creditors take precedence over those of directors or shareholders. Depending on the circumstances, you can: Place the company under administration Apply to strike off the company Liquidate the company via: Creditors’ Voluntary Liquidation (CVL) Compulsory Liquidation (initiated by a court) Below, we focus on the various procedures for closing an insolvent company and what steps directors must take. Placing the Company Under Administration If your limited liability company or limited liability partnership (LLP) is heavily in debt and unable to repay it, you can place the company under administration. This process allows you to pause operations and gain breathing room to potentially avoid liquidation. During this time, directors are protected from legal action by creditors. Entering administration: Appoint an Administrator: This must be a licensed insolvency practitioner. Once appointed, the administrator takes control of the company and its assets. Administrator’s Plan: The administrator has 8 weeks to prepare a plan outlining how they will proceed. This plan is shared with creditors, employees, and Companies House. Possible Outcomes: Negotiate a Company Voluntary Arrangement (CVA) to allow continued operation. Sell the business as a going concern to preserve jobs and customer relationships. Liquidate the company’s assets to repay creditors. Close the company if no other options are viable. Applying to strike off the company You can apply to remove your company from the Companies Register if it meets certain conditions: No trading or stock sales in the past 3 months No name changes in the past 3 months No ongoing liquidation processes No creditor agreements, such as a CVA If these criteria are not met, liquidation will instead be required. Liquidating the company Creditors’ Voluntary Liquidation (CVL) When a company is insolvent and cannot recover financially, directors may voluntarily liquidate the company. This process requires the appointment of a licensed insolvency practitioner. Steps for CVL: Call a Shareholders’ Meeting: A resolution to liquidate must be passed with 75% shareholder approval (by value of shares). Appoint a Liquidator: This person will oversee the liquidation process. Notify Companies House: The resolution must be filed within 15 days. Advertise the Resolution: Publish it in  The Gazette  within 14 days. Compulsory Liquidation If debts are unpaid, creditors can apply to the court to force your company into liquidation. The court may issue a winding-up order, and creditors can seize assets to recover debts. Your options after receiving a court order: Repay the debt Negotiate a repayment plan, such as a CVA Place the company into administration Voluntarily liquidate the company Challenge the court’s decision If no action is taken within 14 days, creditors may seize assets or force liquidation. Handling outstanding taxes If you owe taxes to HMRC, you must address them carefully and promptly. HMRC is a priority creditor, meaning tax debts must be paid before other creditors during the liquidation process. What happens if you ignore your tax debts? HMRC may: Visit your premises to assess the situation. Assign a debt collection agency to resolve unpaid taxes. Take enforcement actions, such as: Seizing business assets. Collecting funds directly from your business bank account. Pursuing court actions to recover debt. Obtaining third-party debt orders to recover payments owed to your company. Severe cases HMRC can petition for compulsory liquidation if taxes remain unpaid. Additionally, directors may face investigations, disqualification from holding directorships for up to 15 years, or personal liability for company debts. Individual criminal charges may also apply in cases of fraud or tax evasion. Some advice from TB Accountants Closing a company in the UK involves complex legal and financial procedures. Seeking professional advice from accountants or insolvency practitioners is highly recommended to ensure compliance and minimise risks. This includes: Preparing accurate financial records. Managing cash flow during liquidation. Closing accounts with HMRC to prevent future legal issues. For further assistance we recommend that you consult with a professional accounting team to explore your options and navigate the closure process smoothly. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

In the recent Autumn Budget, the government officially announced a comprehensive reform of the tax policy for private schools. Starting 1 January 2025, private school fees (including tuition and boarding costs) will be subject to a 20% VAT at the standard rate. Under the new rules, any payments made after 29 July 2024, for terms commencing January 2025 or later, will incur VAT. Furthermore, tuition and boarding fees paid before 29 July 2024, for terms after January 2025 may also be subject to VAT, depending on the prepayment arrangements. An exodus from private schools? This change has alarmed many parents, prompting a wave of withdrawals from private schools. According to a recent study by a UK educational organisation, over 13,000 students have already left or are planning to leave private schools. For families who have recently moved to the UK, or are considering a move, this raises im portant questions – is sending children to private schools still worth it? How much will fees increase? And if state schools are the alternative, how can families secure places at better schools? Are private schools becoming less popular? Despite declining birth rates, private school enrolment had been steadily increasing until recently.  However, the trend has now reversed. According to a survey by the Independent Schools Council (ISC), private school enrolment dropped by 1.75% in September 2024 compared to the previous year. An additional 0.71% decline is expected in January 2025, when the VAT policy takes effect—potentially leading to 3,950 students leaving private schools. The most significant decline has been in junior schools, with enrolment dropping by 2.55%. In contrast, secondary schools saw a smaller decrease of 0.57%. Smaller private schools (fewer than 300 students) have been hit the hardest, with a 3.19% decrease, compared to a 1.34% decline in larger schools. Geographically, Wales experienced the largest drop in enrolment (5.52%), followed by Yorkshire and Humber (2.7%) and the North West (2.53%).  London saw the smallest decline at 0.64%. Boarding schools were particularly affected, with a 2.4% drop in enrolment, while day schools saw a 1.45% decrease. Key transition years showed the largest declines: Year 7 (secondary school entry) enrolment fell by 4.6%, reception year by 3.7%, and Year 3 by 2.4%, as some schools begin admitting students at age seven. Adjusting to the increased costs Amongst parents surveyed, 44% planned to reduce spending on private education due to the new tax policy. Notably: 13.4% plan to immediately transfer their children to public schools 10.4% intend to withdraw their children after the current school year 11% will switch from boarding to day schools 20.5% aim to move their children to less expensive private schools Local governments are concerned that the influx of students into state schools could strain the system. For instance, Kent County Council has warned that many state schools are already at capacity. Are private schools still a worthwhile investment? While private schools will charge 20% VAT on tuition and boarding fees, the government estimates the effective cost increase for schools will be about 15% of their fee income after reclaiming VAT on expenses. Some schools have pledged not to increase fees, while others are expected to cap rises to prevent losing students. For families considering private schools, thorough financial planning is essential. Research the actual costs, including tuition, boarding, and VAT, to determine affordability. Securing a state school place Public primary schools in the UK typically begin their academic year in September, with application deadlines from September to January of the previous year. For example, to enrol in September 2025, applications must be submitted by January 2025. Local councils manage public school admissions and assign places based on application forms. Tips for improving admission chances: Research Schools: Attend open days, review Ofsted reports, and check academic results. Understand Admission Criteria: Familiarize yourself with the admission policies of schools in your area. Complete the Common Application Form (CAF): List at least three schools in order of preference. Accurate and truthful information is critical to avoid application rejection. Schools prioritise applications based on criteria such as proximity, siblings already enrolled, religious affiliation, or in some cases passing relevant entrance exams. Children in foster care or previously in care receive the highest priority. Can buying a home help secure a school place? Proximity can significantly affect admissions. Parents often move closer to preferred schools, but compliance with regulations is crucial. The address on your application must be your child’s permanent residence. Proof of a new address may include: A solicitor’s letter confirming the purchase completion date A signed 12-month lease agreement Evidence of severed ties with a previous address While some schools offer places based on distance, others admit students from farther away depending on demand. Early preparation and timely applications are key to securing a place in a good school. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

With the announcement of the Autumn Budget, several tax increases have caused widespread confusion. For many immigrants with global income and assets, the abolition of the non-domicile (‘non-dom’) tax regime and the introduction of a residence-based tax system mean that individuals will be subject to ‘global taxation’ on any income or gains earned outside the UK. What does the abolition of the non-domicile tax regime mean for immigrants? How will the new system work, and how should we prepare for it? Current rules for non-domicile For immigrants living in the UK for at least 183 days, if their permanent home (or family base) is abroad, they may qualify as non-domiciled residents (‘non-doms’). Under the current system, they can avoid paying tax on overseas income for up to 15 years. Non-doms currently have two taxation options: Global Taxation: Pay UK tax on worldwide income and capital gains. Remittance Basis: Pay UK tax only on foreign income or gains brought into the UK, while overseas earnings not remitted to the UK remain tax-free. Those opting for the remittance basis lose UK income and capital gains tax allowances and may incur annual charges: £30,000 if they’ve been UK residents for 7 of the last 9 tax years £60,000 if they’ve been UK residents for 12 of the last 14 tax years For wealthy individuals domiciled in low-tax countries, this system offers significant and completely legal savings. In 2022-23, around 74,000 individuals claimed non-dom status. A high-profile example is Akshata Murty, wife of former UK Prime Minister Rishi Sunak, who faced controversy for her tax arrangements. Following public backlash, she agreed to pay UK tax on her global income. Changes to the rules According to the Autumn Budget, the non-dom tax regime will be abolished on 6 April 2025 and replaced with a new residence-based system. While details are sparse, it is estimated that these measures will generate an additional £12.7 billion for the UK over five years.  The new plan may align with proposals from a previous Conservative government budget, offering insights for financial planning. Proposed alternative: the 4-year Foreign Income and Gains (FIG) regime Under this regime: Immigrants will receive 100% tax relief on foreign income and gains for their first 4 tax years in the UK. Overseas funds, including distributions from non-resident trusts, can be brought into the UK tax-free during this period. UK-sourced income and capital gains will remain taxable. After 4 years, global income and gains remitted to the UK will be taxable. Eligible individuals who become UK tax residents before 5 April 2025, and meet certain criteria, can still apply for FIG during the remainder of the 4-year period. Transitional Rules For existing non-doms or those using the remittance basis, transitional measures include: Temporary Repatriation Facility During the 2025/2026 and 2026/2027 tax years, previously unremitted overseas income can be brought into the UK at a reduced 12% tax rate. From the 2027/2028 tax year onward, normal tax rates will apply. Capital Gains Tax Base Reset Non-doms can use the asset value as of 5 April 2017, as the tax base for disposing of overseas assets after 6 April 2025. Inheritance Tax for Long-Term Residents Individuals who have lived in the UK for at least 10 of the past 20 tax years will face inheritance tax on non-UK assets for up to 10 years after leaving the UK. Overseas Workday Relief Adjustments For individuals claiming Overseas Workday Relief: The relief period will extend to 4 years to align with the FIG regime. Relief will apply only to overseas income not remitted to the UK. From 6 April 2025, limits will be introduced: Relief will be capped at the lower of £300,000 or 30% of total employment income. No income tax relief can be claimed for overseas income earned on or after this date. Employers will no longer need HMRC approval to calculate PAYE deductions based on UK workdays. Potential impacts and advice While the government expects these changes to boost tax revenue and fairness, critics warn that wealthy non-doms might leave the UK, undermining revenue projections. The abolition of non-dom benefits may also affect: High-end property markets Luxury consumption industries Trust structures for wealth planning For migrants or those considering moving to the UK, staying informed and preparing before April 2025 is essential to optimise tax strategies and secure long-term wealth stability. We recommend that you consult with a professional financial advisor to navigate these changes effectively. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

Despite the Bank of England lowering its base rate, savings account returns still exceed inflation. However, bond market forecasts suggest the Bank of England might further reduce interest rates in 2025, potentially dropping the base rate from 4.75% to around 4% by the end of next year. If true, savings rates could decrease even further. To make the most of your savings before potential rate cuts, now is the time to act. Whether your goal is short-term or long-term savings, this guide will help you select the best savings account for maximum returns. Types of savings accounts in the UK Nearly all banks in the UK offer savings accounts, distinct from current accounts used for daily expenses. Here are the common types: Regular Savings AccountsSave a fixed amount monthly for a set term (e.g. 12 months) and earn interest. These accounts help build a saving habit and often offer attractive rates. However, they may have limits on deposits or restrictions on withdrawals. Easy Access Savings AccountsSimilar to current accounts, these allow quick access to funds, making them ideal for short-term goals. However, interest rates are variable and may fluctuate. Fixed-Rate BondsLock your funds for a set term and earn a fixed interest rate. These provide certainty on returns but often impose penalties for early withdrawals. Notice Savings AccountsRequire advance notice for withdrawals, offering higher rates than easy access accounts in return for reduced liquidity. High-Interest Savings AccountsOffer competitive rates but often come with conditions, such as a high minimum deposit. Children’s Savings AccountsDesigned for those under 18, these accounts can be a valuable tool for teaching financial skills. Cash ISAs (Individual Savings Accounts)Tax-free savings with an annual allowance of £20,000. However, their returns may be lower compared to other account types. Lifetime ISAs (LISAs)Tailored for first-time homebuyers or retirement savers, LISAs include a government bonus and an annual limit of £4,000. Savings rates and bank options For savings to grow in real terms, interest earned must exceed inflation. Since October 2023, UK savings rates have outpaced inflation, marking a good period for savers. However, rates have been gradually declining since mid-2024 as inflation rises. According to the UK Office for National Statistics, October’s CPI inflation rate rose to 2.3% (up from 1.7% in September) and is expected to climb further, potentially reaching 2.75% by late 2025. Concurrently, savings rates, influenced by the Bank of England’s base rate, are projected to decrease. Still, many banks offer savings rates above inflation. Acting quickly is essential to secure these favourable rates. Recent recommendations from MoneySavingExpert (at the time of writing) include: Best Easy Access Accounts Plum Cash ISA: 5.18% Moneybox Cash ISA: 5.17% Atom Bank: 4.85% Best Notice Accounts Recognise Bank: 95-day notice, 4.95% Best Fixed-Term Accounts Oxbury Bank: 3-month term, 4.8% Habib Bank Zurich: 1-year term, 4.8% Secure Trust Bank: 2-year term, 4.61% DF Capital: 3-year term, 4.61% Choosing a savings account When opening a new savings account, consider the following factors: Interest RatesA good rate is key to higher returns. Check for promotional rates, their duration, and any conditions like minimum deposits. AccessibilityEvaluate your short-term cash needs. Easy access accounts are ideal for emergencies, while locking funds for longer periods may yield better rates. Terms and ConditionsWatch for restrictions like minimum deposits, mandatory monthly contributions, or withdrawal penalties. Tax ImplicationsMost UK savers don’t pay tax on interest due to the Personal Savings Allowance. However, if your interest exceeds this threshold, you may owe taxes. ProtectionThe Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000 per account. Consider diversifying funds across accounts if your savings exceed this limit. Is savings interest tax-free? Most people can earn some interest tax-free within the following allowances: Personal AllowanceUnused personal allowance (typically £12,570) can be applied to savings interest. Starting Rate for SavingsUp to £5,000 in tax-free interest is available, depending on your income. For every £1 above £17,570 in total income, the starting rate is reduced by £1. Example: Salary: £16,000 Savings interest: £200 Taxable salary after personal allowance: £3,430 Remaining starting rate: £1,570 (£5,000 – £3,430) Result: No tax on £200 interest. Personal Savings AllowanceTax-free allowances depend on your tax band: Basic rate: £1,000 Higher rate: £500 Additional rate: £0 Interest exceeding these thresholds is taxed at your income tax rate. By carefully choosing the right savings account and acting promptly, you can make the most of your money in 2025, even amid changing economic conditions. All information provided is up to date at the time of writing.  For up-to-date savings account details, we recommend checking directly with the financial institution in question or on MoneySavingExpert for up-to-date information. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .

In the UK, most people have heard of inheritance tax. If children inherit assets worth more than £325,000 from their parents, HMRC will levy this tax. Therefore, many people arrange their assets for their children and family members during their lifetime. For example, parents may transfer assets to their children early to avoid the high inheritance tax through the seven-year rule. However, you may not be aware that your situation could also involve a tax called Pre-Owned Asset Tax (POAT), which sometimes can be quite substantial. What is Pre-Owned Asset Tax (POAT)? POAT is a tax on pre-owned assets. It applies to assets such as property, land, personal valuables, cash, stocks, insurance products, and other intangible assets that people can freely gift during their lifetime. If, after gifting these assets, you continue to directly or indirectly benefit from them, you may be subject to POAT and required to pay income tax. According to POAT rules, any income you derive from the gifted assets is considered your taxable income, and the tax value is based on the annual benefit derived from these assets. Typically, POAT is calculated based on the ‘enjoyment value’ of the asset, often equivalent to the market rent paid when the asset is leased on the open market. This value is then taxed at your normal income tax rate. In general, POAT doesn’t take into account the asset’s income, but uses a fixed method to calculate the tax liability. When are you required to pay POAT? POAT applies to a wide range of situations. It includes not only gifting assets to family members but also placing them in trusts or selling them below their market value. The purpose of POAT is to prevent people from avoiding inheritance tax by gifting assets but still benefiting from them. If HMRC can’t levy inheritance tax, they will find another way, such as through income tax. In the context of inheritance tax, if parents gift assets to children and survive for seven years, the gifted assets are ignored when calculating whether inheritance tax is due. However, if they continue to benefit from those assets in some way, they must pay income tax according to POAT rules. Common examples: On 30 September 2012, Mr W and his wife sold their property and gave £450,000 (the proceeds from the sale) to their son to purchase a larger home. Later, when Mr W and his wife became elderly and frail, they moved into their son’s property rent-free. HMRC considered this as a POAT situation, and they were required to pay the tax. On 24 December 2013, Mr W gave his son £300,000, which the son used to buy a rental property. Later, the property was sold for £600,000, and in 2017, Mr W’s son used the proceeds to buy another property, allowing Mr W to live there. HMRC considered this an indirect benefit, and POAT was applied. GWR and POAT: The Difference You might have heard of GWR (Gift with Reservation of Benefit) while reading about inheritance tax rules. Both GWR and POAT are anti-avoidance measures aimed at preventing people from avoiding inheritance tax. The key difference is that GWR still requires inheritance tax to be paid, while POAT requires income tax. For example, if parents transfer ownership of a property to their children but continue to live in it, this is considered a gift with reservation of benefit (GWR). In this case, the property value will still be included in the estate for inheritance tax purposes when the parents pass away. Taxpayers can also try to ‘benefit’ in other ways, such as selling their house and giving most of the money to their children, who then buy another property for the parents to live in. In such cases, POAT may apply instead of GWR. How can you avoid or reduce POAT? While POAT rules are strict, there are ways to reduce its impact: Gift assets to a spouse: Transfers between spouses typically don’t fall under POAT rules. Pay market rent: If you gift money to children who buy property for you to live in, you can avoid POAT by paying a fixed rent. Fair trade disposal: If you dispose of assets to unrelated parties at fair market value or to related parties under fair terms, POAT may not apply. Choose to pay inheritance tax: If the asset is included in your estate for inheritance tax purposes, POAT may be exempt. £5,000 threshold: If the “appropriate rental value” in a given tax year is less than £5,000, POAT is not applied. Certain assets may be exempt: Assets used for business purposes or with low value may be exempt from POAT. In summary, as always, it’s important to consult a tax advisor to ensure you’re not violating any tax rules you might not be aware of. What should you do? If you find that your situation involves POAT, you must report these assets to HMRC every year. You need to inform them of the assets you continue to benefit from, their value, and the amount of tax you owe. Make sure you handle these matters correctly, as failing to do so can result in penalties. Many people don’t realise this tax rule until they deal with the inheritance left by their parents and discover they are liable for POAT. HMRC always has ways to collect taxes. They might notify the executor of your will about the tax liability when they are handling inheritance tax. If you face POAT issues and cannot afford or do not want to pay the tax, HMRC may offer solutions, such as opting to pay inheritance tax under the GWR rules instead. The impact of taxes will depend on various factors, and expert advice is essential. This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or   WhatsApp .