Today, we would like to issue an important reminder to landlords, as well as to anyone considering entering the rental market. Whether you’re already a seasoned landlord or thinking about investing in rental properties, it’s crucial to understand that rental income is considered part of your personal income and is, therefore, subject to taxation. As a result, HMRC will tax your rental income according to income tax rules, just as it would with any other form of income you receive.  This means keeping accurate and clear records  is vital in order to comply with tax regulations and avoid unnecessary complications. 1. What exactly counts as rental income? This doesn’t only refer to the monthly rent you collect from tenants. It includes any other payments you might receive in connection with the services you provide as a landlord. For instance, if you offer additional services, such as paid cleaning services for communal areas or grounds maintenance that your tenants pay for separately, these payments are also considered by HMRC. Even if you charge tenants for utilities or provide furniture as part of a furnished let, any payments you receive in these capacities should be declared as part of your rental income. It’s important to ensure all these sources of income are recorded accurately, as failing to declare any form of rental-related income can lead to fines or penalties. 2. How can I manage my rental income better? Managing rental income efficiently is key to reducing your tax liability and staying organised throughout the year. Besides the obvious task of keeping clear, organised records, landlords can benefit from various schemes and strategies aimed at reducing their tax burden. One of the most straightforward and commonly utilised methods is by deducting qualified expenses.  These qualified expenses can include a wide range of costs, such as property management fees, letting agent commissions, maintenance costs, repairs, and accounting fees.  By declaring these allowable expenses, you can significantly reduce your total taxable income, which, in turn, lowers the amount of tax you are required to pay. There are also other tax reliefs that landlords may be eligible for, depending on the type of property and the specific circumstances. For example, the Wear and Tear Allowance was previously available for landlords of fully furnished properties, allowing them to claim for depreciation of furniture and fixtures. Though this scheme has been replaced with a new relief system, landlords can still claim for replacing furnishings, appliances, and other essential items in a rental property. Another option to explore is the Rent a Room Scheme, which allows you to earn up to £7,500 per year tax-free if you rent out a furnished room in your home. Understanding these allowances and staying informed about changes in tax regulations can help ensure that you’re taking full advantage of available reliefs and deductions, making your rental business more profitable. The importance of seeking professional advice While it’s entirely possible to manage your own rental income and expenses, taxation rules can often be complex and subject to frequent changes. For landlords, especially those with multiple properties or more complicated rental arrangements, the support of a professional accountant or tax advisor can be invaluable. A professional can assess your individual circumstances, ensure that you are claiming all the deductions and reliefs you’re entitled to, and help you formulate a tailored tax plan that suits your specific needs. By seeking expert advice, you can avoid making costly mistakes and save time in navigating the often intricate world of taxation. A qualified accountant can also provide guidance on long-term tax planning, such as how to handle income from multiple properties, how to manage vacancies, and how to prepare for future tax changes. Remember, taxation doesn’t have to be overwhelming or stressful with the right advice and planning in place. For more assistance, or to discuss how best to manage your income and taxes, contact TB Accountants. We’re here to help make tax compliance easier, so you can focus on the success of your rental business. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

Today, we’re going to delve into a common misconception that many people have when it comes to VAT registration and thresholds. It’s something we often hear discussed: the belief that £90,000 is the VAT annual tax-free threshold (recently increased from £85,000 in the previous Budget). But is this assumption correct? Let us assure you – it is absolutely not! 1. When are businesses required to register for VAT? At TB Accountants, we’ve handled numerous compliance checks and audits where the issue of whether a business has registered for VAT on time has been raised. In some instances, HMRC has even required businesses to pay VAT on sales made before they officially registered! This highlights how crucial it is to understand when VAT registration is necessary and to be proactive about it. According to current regulations, whether you’re self-employed or operating as a company, if your total turnover hits £90,000 over any consecutive 12-month period, you are obligated to register for VAT without delay. It’s essential to note that these 12 months do not need to follow the traditional structure of a calendar or financial year. They can span any period of 12 consecutive months. For example, your threshold could be reached between June 2023 and May 2024, or even from May 2024 to April 2025. Thus, it is critical to monitor your sales and turnover closely, ensuring you are aware of when you are likely to cross the £90,000 threshold. 2. What happens after registering for VAT? Once you have registered for VAT, you are required to begin charging VAT on all sales made after your registration date. A major misconception is that the £90,000 figure represents a tax-free allowance. This is incorrect – it merely serves as the threshold for VAT registration. Once you are registered, VAT must be collected on all sales, no matter how small your turnover might be moving forward. There is no tax-free allowance in this regard. It is imperative that you collect and remit VAT accurately, ensuring that all VAT is properly accounted for and submitted to HMRC. Failure to do so could lead to penalties or additional scrutiny from HMRC, which can be both time-consuming and costly. At TB Accountants, we strongly advise that businesses seek the assistance of a professional tax advisor. Navigating the complex and ever-evolving world of taxation can be challenging, and a qualified expert can help ensure that your tax affairs are managed efficiently and in a cost-effective manner. Not only can we help you understand the intricacies of VAT and other taxes, but we can also provide guidance on how to organise your finances in a way that minimises your tax liability and supports the growth of your business. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

We often encounter clients who are confused about their tax obligations, particularly when it comes to income earned overseas. Many people find themselves asking, “As a UK resident, do I have to pay tax on my overseas income?” or “Do I only need to pay tax if the money is brought into the UK?” Today, we’re going to clarify how UK tax residency works and address some of these common questions. Understanding your tax obligations when it comes to overseas income is crucial, especially if you are moving between countries or earning money abroad. 1. Global taxation basis vs remittance basis There are two primary methods by which overseas income is taxed in the UK: global taxation and the remittance basis. Global taxation simply means that you are required to declare and pay tax in the UK on your worldwide income, which includes any earnings and capital gains, regardless of where that income was generated. In other words, if you are subject to global taxation, all your income – whether earned in the UK or abroad – is taxable in the UK. The Remittance basis , on the other hand, means you only need to declare and pay UK tax on overseas income when it is transferred into the UK. This method allows you to keep your foreign income abroad without having to pay tax on it, provided the money stays outside the UK. However, once that income is remitted, or brought into the UK, it becomes taxable. But how do you know which taxation method applies to you? The answer depends on your UK tax residency status , which is determined by a set of rules enforced by HMRC. 2. Understanding tax residency in the UK In the UK, being classed as a tax resident usually refers to an individual who spends a significant amount of time in the country. The standard rule for tax residency is that if you have lived in the UK for at least 183 days in a tax year , you are considered a tax resident. However, it’s not just about how many days you’ve been physically present. There are other factors, such as where your main home is located, whether your family lives in the UK, and whether you have work ties in the country. In addition to tax residency, there is another classification called domicile . Your domicile refers to the country you consider your permanent home, and this is often linked to your family ties or where your long-term home is located. A person may be a tax resident of the UK without being domiciled there, which brings about different tax rules. For individuals who are UK tax residents but are not domiciled in the UK , you have the option to choose between the global taxation and the remittance basis . If you opt for the remittance basis, you will not have to pay UK tax on your foreign income, provided it stays outside the UK. However, it is vital to notify HMRC if you choose the remittance basis, as failing to do so can result in fines and possible investigations. 3. Key points to consider about overseas income There are several key points to bear in mind when dealing with overseas income and UK tax residency: Foreign income under £2,000 : If your overseas income is less than £2,000 in a tax year and you are a UK tax resident, you don’t need to declare it or pay tax on it, even if you bring the money into the UK. Living in the UK for fewer than 7 years : If you have been living in the UK for fewer than 7 years, you can elect to use the remittance basis without being required to pay the remittance basis charge . However, after this period, should you choose to remain on the remittance basis, you will need to pay an annual charge. Remittance basis charge (RBC) : The RBC is payable by individuals who have been UK tax residents for a longer period of time and continue to use the remittance basis. If you have been a UK tax resident for at least 7 out of the last 9 tax years , you will need to pay an RBC of £30,000 per year . If you’ve been a UK tax resident for at least 12 out of the last 14 years , this charge increases to £60,000 per year . UK domiciled residents : If you are domiciled in the UK, you are required to follow the global taxation rules, meaning you must declare and pay tax on your worldwide income. However, UK domiciled residents can benefit from various personal allowances , which help reduce their overall tax liability. Becoming domiciled : Once you have been a UK tax resident for 15 out of the last 20 tax years , you will automatically be treated as UK domiciled for tax purposes. This means that global taxation applies to you, even if you were not domiciled in the UK initially. 4. Some advice from TB Accountants Deciding how to declare and pay tax on overseas income is not always straightforward. It largely depends on your unique circumstances, including your income, where it’s earned, and your tax residency status. We at TB Accountants always recommend seeking professional advice when considering the implications of the global taxation and remittance basis systems. Navigating these rules can be complex, and it’s important to ensure that you’re fully compliant with UK tax law while also taking advantage of any reliefs or exemptions that may apply to you. Furthermore, be aware that the UK tax authorities have recently introduced new changes to the rules surrounding overseas income and tax residency. These changes are set to take effect from April 2025 , and it’s crucial to stay informed about how these updates may impact your financial situation.  It is also possible that the new Labour government may announce further changes before this date. We will be sharing further information on these changes in due course, so be sure to stay connected with us for the latest insights and advice on this evolving topic. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

Over the past decade, HMRC (Her Majesty’s Revenue and Customs) has frequently conducted surprise audits, and the number of tax investigations has significantly increased year by year to ensure businesses remain compliant with tax regulations. Many clients facing a tax investigation need to hire accountants and other professionals to defend their case, gather evidence, and organize their accounts. The entire process can be costly, often reaching thousands of pounds in fees. But what exactly does this process entail, and how could it affect you? Can HMRC audit accounts submitted for previous years? How many years back can HMRC audit? How should you respond? Can HMRC audit accounts submitted for previous years? Yes, HMRC has the authority to audit accounts from previous years. The specific audit period will depend on your unique situation, but an audit typically begins with the most recent tax return you have submitted. Once HMRC completes an initial review, one of the following scenarios may occur: Scenario 1: If no errors are found, the investigation will be closed immediately. Scenario 2: If HMRC identifies unintentional mistakes, they can re-examine previously closed tax returns going back up to four years. Scenario 3: In cases where errors are attributed to negligence, HMRC can audit records up to six years into the past. Scenario 4 : If deliberate tax evasion is discovered, HMRC may extend the audit period to as much as twenty years. How many years back can HMRC audit? At any point during an audit, HMRC has the right to extend the period under review if new information comes to light. For instance, if an initial audit covers four years but HMRC suspects negligence, they may decide to extend the audit to six years. In cases of suspected or proven tax evasion, the review can extend as far back as 20 years. In addition to your tax returns, HMRC might request access to other financial documents, such as land registry records or information on overseas bank accounts. These too can be audited for the same time periods (four, six, or 20 years), depending on the severity of the issue. How should you respond? The broader the scope of the investigation, the more concerned taxpayers tend to become. When large amounts of time have passed, it can be difficult to recall potential errors in past tax returns, or you may find that relevant documents have been lost. So, what steps should you take? Keep accurate records: Ensure that all documents, including statements and tax returns, are meticulously recorded and properly stored each year. Seek professional advice: If you are unsure about any aspect of your taxes, it is highly recommended that you consult a tax professional for guidance and support. A qualified expert can help clarify your situation and provide peace of mind during the audit process. Remaining organised and seeking advice early can help you navigate an audit with confidence and ensure that any issues are addressed promptly and correctly. Once you receive a tax audit notification, the individual or business involved must follow the instructions outlined in the letter to prepare. Since the process can be quite complex, taxpayers or businesses typically require assistance from professional accountants or tax experts to navigate through it smoothly. During the investigation phase, professionals are needed to help their clients collect and organize all the necessary documents, cross-check the accuracy of all financial data, and ensure they are fully prepared for the HMRC’s review. These steps are crucial to successfully manage the audit process. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

It is well known that taxes in the UK are not cheap. However, if you seek professional advice in advance to plan a reasonable tax bill, you still have the opportunity to reduce some of the costs. In recent years, His Majesty’s Revenue and Customs (HMRC) has ramped up tax investigations, targeting both businesses and individuals suspected of non-compliance with tax regulations. So, what’s been happening, and why has there been such a sharp increase in penalties? Let’s explore. 1. Investigations One of the key trends in recent times has been the heightened scrutiny of high-profit companies and small to medium-sized enterprises (SMEs). HMRC investigations into these groups have surged by 60%, making them the primary focus of enforcement efforts. Smaller businesses and individual taxpayers haven’t been spared either, with investigations in this category increasing by 22%. Even large corporations have faced increased attention, seeing a 17% rise in cases. During the 2021/22 fiscal year, HMRC significantly expanded its specialist tax investigation teams, adding over 3,000 new staff to the compliance and audit departments. This bolstered workforce enabled a more rigorous and widespread approach to identifying and penalising errors. A substantial number of businesses were fined for mistakes in their paperwork, with particular emphasis placed on Value-Added Tax (VAT) penalties, which have been extended in scope this year. Even businesses filing zero returns or requesting refunds can face penalties if they delay the submission of accurate VAT data. 2. A new record for penalties HMRC’s collection of penalties has reached its highest level on record, with a 25% increase leading to £851 million collected. This is part of a broader trend of rising fines over the past three years, contributing to an estimated £37 billion in unpaid tax debt. Despite these results, HMRC has faced criticism for being overly severe in issuing fines for what are sometimes genuine errors. The authority’s approach, often described as ‘shoot first, ask questions later’, has left many businesses and individuals feeling frustrated. The penalty process, once initiated, is stringent, although it’s worth noting that around 50% of fines are overturned on appeal. In defence of their actions, an HMRC spokesperson explained that the goal is to ensure taxpayers meet their obligations – ‘[we] are committed to helping customers pay the taxes they owe on time. We impose penalties to encourage compliance and to sanction those who fail to meet their obligations. If customers are unable to pay on time, they can contact us to discuss their options’ . For taxpayers – whether individuals or businesses – who owe less than £30,000, there is the possibility of arranging a payment plan, allowing them to pay off outstanding debt in manageable instalments. 3. Global tax auditing trends and digital compliance While HMRC intensifies its tax audits within the UK, over 80 other countries are embracing digital solutions such as electronic invoicing or continuous transaction controls (CTCs). These technologies enable tax authorities to monitor business transactions in real time, ensuring greater transparency and compliance in tax systems around the world. This global move towards digital tax compliance underscores the importance of businesses remaining vigilant and up to date with their tax obligations as the era of manual processes rapidly becomes a thing of the past. As HMRC continues its stringent enforcement measures, it is clear that the focus is on encouraging tax compliance and reducing tax debt, even if that means more aggressive measures and penalties for non-compliance. In recent years, His Majesty’s Revenue and Customs (HMRC) has ramped up tax investigations, targeting both businesses and individuals suspected of non-compliance with tax regulations. So, what’s been happening, and why has there been such a sharp increase in penalties? Let’s explore. 1. Investigations One of the key trends in recent times has been the heightened scrutiny of high-profit companies and small to medium-sized enterprises (SMEs). HMRC investigations into these groups have surged by 60%, making them the primary focus of enforcement efforts. Smaller businesses and individual taxpayers haven’t been spared either, with investigations in this category increasing by 22%. Even large corporations have faced increased attention, seeing a 17% rise in cases. During the 2021/22 fiscal year, HMRC significantly expanded its specialist tax investigation teams, adding over 3,000 new staff to the compliance and audit departments. This bolstered workforce enabled a more rigorous and widespread approach to identifying and penalising errors. A substantial number of businesses were fined for mistakes in their paperwork, with particular emphasis placed on Value-Added Tax (VAT) penalties, which have been extended in scope this year. Even businesses filing zero returns or requesting refunds can face penalties if they delay the submission of accurate VAT data. 2. A new record for penalties HMRC’s collection of penalties has reached its highest level on record, with a 25% increase leading to £851 million collected. This is part of a broader trend of rising fines over the past three years, contributing to an estimated £37 billion in unpaid tax debt. Despite these results, HMRC has faced criticism for being overly severe in issuing fines for what are sometimes genuine errors. The authority’s approach, often described as ‘shoot first, ask questions later’, has left many businesses and individuals feeling frustrated. The penalty process, once initiated, is stringent, although it’s worth noting that around 50% of fines are overturned on appeal. In defence of their actions, an HMRC spokesperson explained that the goal is to ensure taxpayers meet their obligations – ‘[we] are committed to helping customers pay the taxes they owe on time. We impose penalties to encourage compliance and to sanction those who fail to meet their obligations. If customers are unable to pay on time, they can contact us to discuss their options’ . For taxpayers – whether individuals or businesses – who owe less than £30,000, there is the possibility of arranging a payment plan, allowing them to pay off outstanding debt in manageable instalments. 3. Global tax auditing trends and digital compliance While HMRC intensifies its tax audits within the UK, over 80 other countries are embracing digital solutions such as electronic invoicing or continuous transaction controls (CTCs). These technologies enable tax authorities to monitor business transactions in real time, ensuring greater transparency and compliance in tax systems around the world. This global move towards digital tax compliance underscores the importance of businesses remaining vigilant and up to date with their tax obligations as the era of manual processes rapidly becomes a thing of the past. As HMRC continues its stringent enforcement measures, it is clear that the focus is on encouraging tax compliance and reducing tax debt, even if that means more aggressive measures and penalties for non-compliance. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

Since coming to power, the UK Labour Party has consistently emphasised that the UK is facing a dire situation, attributing everything to the mess left by 14 years of Conservative rule. The world was then hit with explosive news: the UK is on the brink of bankruptcy! It is reported that the Prime Minister’s office acknowledged ‘Britain is bankrupt, broke, and broken’. The strain on the UK’s public finances is not news to anyone following current affairs. However, few expected that the finances could be so tight as to be ‘on the brink of bankruptcy’. After the statement was released, the Labour government boldly announced a staggering figure: a budget deficit of £22 billion. This news immediately sparked intense discussions worldwide about what has happened to the once-great British Empire. Many commentators online felt that the media was sensationalising the issue, pointing out that even a single company like Evergrande Group can be in debt to the tune of £220 billion. Can a £22 billion budget deficit really lead to the bankruptcy of the country? However, upon further reflection, it’s notable that since the end of the pandemic, ten local councils in the UK have declared bankruptcy. Even Birmingham, the UK’s second-largest city, and the industrial city of Nottingham have announced bankruptcy. People have begun to suspect that the funding shortfall in the UK might be even larger than reported. Is the UK indeed on the road to bankruptcy? How will the Labour government respond to this situation? 1.Why is there a £22 billion shortfall, leading the UK towards bankruptcy? On July 29, the UK’s new Chancellor of the Exchequer, Rachel Reeves, publicly stated that the Labour government immediately ordered an audit upon taking office. The financial audit report revealed a significant fiscal black hole. The new government inherited a fiscal shortfall of £22 billion from the previous Conservative government, placing the UK’s public finances in a precarious position. The audit report highlighted that the Conservative government made significant funding commitments during its 14 years in power to gain public support, without understanding where the funds would come from. These unfunded promises amount to billions and include the Rwanda plan, higher UK standards, and new hospital projects. It is estimated that this year alone, funding for the government’s asylum system exceeds £6.5 billion, including payments for resettled individuals and costs related to the now-abandoned Rwanda plan. Military assistance to Ukraine has exceeded reserves by £1.7 billion, and railway construction costs have exceeded £1.6 billion. Moreover, the previous government failed to increase departmental budgets to cover public sector salaries, which exceeded the amounts recorded in the last spending review by £11-12 billion. However, former Conservative Chancellor Jeremy Hunt dismissed these claims as fabrications.  Regardless of whether Rachel Reeves’ claims are fabricated, it cannot be denied that successive UK governments have been adept at passing the blame. Historically, each government tends to exaggerate the shortcomings it inherits, providing itself with a layer of protection. If they fail to deliver, they can blame the mess left by the previous administration. For instance, the Conservatives have never stopped quoting Labour’s former Chancellor Liam Byrne, who left a note for his successor in 2010. In the political arena, Reeves’ tactics of passing the blame can be understood by politicians. However, for ordinary people, what we want to know is: how will the Labour government tackle these challenges? Labour has spent most of its time during the election assuring that it would not raise taxes. However, with such a significant fiscal shortfall, it seems the government may have little choice but to justify tax increases. Many believe that while politicians play games, it is ultimately the ordinary citizens who suffer. 2.How will the government respond? With a fiscal shortfall in national public finances, the government cannot simply dissolve or cease operations; it must carefully consider how to cut unnecessary spending while increasing revenue through various means. On Monday, the Labour Chancellor officially announced the details of a spending cut plan. Overall, the government aims to cut £5.5 billion in spending this year and an additional £8 billion next year. She also confirmed that difficult decisions regarding tax increases would be included in this autumn’s budget, to be announced on October 30. Regarding the measures the Labour government plans to implement, here are several key points: Winter Fuel Subsidy The Chancellor stated that one way to cut spending is to stop providing winter fuel subsidies for retirees (except those receiving state benefits). This subsidy, worth £300, is applicable to all individuals above state pension age. The government confirmed that starting this winter, retirees will only receive this payment if they are on a pension, meaning ten million people will no longer receive it. This move will save the government approximately £1.5 billion. The proposal has been highly controversial, facing opposition from various sectors. Charities are concerned that this will affect 1.8 million low-income individuals. However, Reeves stated that considering the state of public finances, this decision is ‘fair’. Public Sector Salaries The Chancellor promised that the government would increase salaries for six million public sector workers by £9 billion. NHS workers and teachers will receive a 5.5% salary increase, while most other departments will see a 5% raise. Additionally, the government plans to address long-standing protests over low pay by increasing salaries by 22% for junior doctors over two years. Tax Increases The government confirmed that the budget on October 30 will include ‘difficult decisions’ regarding taxes, public spending, and welfare. This indicates that tax increases are on the table, exceeding what is outlined in Labour’s manifesto. Increasing capital gains tax and cutting pension tax relief are being considered. Cost Cutting Rachel Reeves stated that departments must bear one-third of the costs for public sector pay raises, which amounts to approximately £3.2 billion next year. Proposed measures include stopping ‘all unnecessary consulting expenditures’ which will save £550 million next year; achieving administrative efficiencies across government, saving £225 million, and addressing surplus public buildings. Additionally, the Treasury stated that ending the Rwanda plan will save another £1.4 billion. New Hospitals The Labour government will conduct a comprehensive review of the Conservative government’s new hospital plan, which promised to build 40 new hospitals in England by 2040. Rachel Reeves indicated that since the announcement of this plan in October 2020, only one new project has opened to patients, and only six projects have started construction, adding that the previous government failed to fulfil its commitments due to inadequate funding. Social Care Cap The Conservatives promised to implement a cap on social care costs by October 2025, limiting personal contributions to no more than £86,000. This timeline is now cancelled, and Labour plans to establish a Royal Commission to seek a cross-party solution. Rachel Reeves stated that the £1.1 billion needed for reforms over the next two years has not been secured. Transportation Additionally, the Conservatives’ promised £1 billion transport projects have yet to receive funding.  However, the Labour government has decided that several major road upgrade projects will not proceed, including the planned dual carriageway and tunnel on the A303 near Stonehenge and the A27 Arundel bypass. Moreover, plans to reopen closed rail lines under the Restore Rail program will be scrapped. Advanced British Standard Last year, former Prime Minister Rishi Sunak announced the Advanced British Standard, a qualification combining A-levels and T-levels, but Rachel Reeves stated that the previous government ‘did not set aside a penny for it’. Therefore, this plan will be cancelled, claiming it would save £200 million. National Westminster Bank Shares Rachel Reeves stated that the current government will also abandon a Conservative plan to sell the government’s 20% stake in NatWest through a ‘Tell Sid’ campaign. Reeves indicated that she still plans to sell these shares, but retail sales would waste taxpayer money and potentially lose hundreds of millions due to discounts. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

At the end of this month, the Labour government will announce its first autumn budget after taking office. Recently, the government has emphasised that they are facing a £22 billion spending gap and are preparing to make ‘tough decisions’.  In this context, is the UK about to raise taxes? This has become a focal point of public attention. As speculation grows, many media outlets seem to have insider information suggesting that the government may focus on adjusting capital gains tax, increasing pension taxes, and inheritance tax. How can we save as much as possible in this time? We believe you can take advantage of current tax rules before the next budget. Our top tips to get ahead of the Budget 1.Contribute to Pensions There are rumours that the new Chancellor of the Exchequer may adjust annual pension allowances and tax relief. Currently, taxpayers can benefit from pension tax relief. As a higher or additional rate taxpayer, you can gain more benefits—40% to 45% pension tax relief. For instance, a higher rate taxpayer contributing £60,000 would only need to spend £36,000, while an additional rate taxpayer would only need to spend £33,000. If you haven’t contributed much to your pension in recent years, you can carry forward unused allowances from the last three years, potentially allowing contributions to rise to £200,000 this tax year (provided your income reaches this amount). 2.Maximize Your ISA Allowance In addition to potential pension adjustments, it’s rumoured the government might increase capital gains tax. If so, you may want to maximise your ISA contributions before the budget is announced. Whether when selling and cashing out or rebalancing your portfolio, investing through an ISA allows you to avoid capital gains tax altogether. Reports indicate a 31% increase in the number of people utilizing the full £20,000 ISA allowance compared to last year. 3.Purchase a Junior ISA for Your Children Many have opened Junior ISAs for their children this tax year, with a 40% increase in account numbers, as parents want to ensure allowances are secured while protecting investments from tax. Junior ISAs provide triple tax benefits, allowing contributions of £9,000 per tax year, which can grow tax-free. This might not seem significant for younger children, but it can have a massive impact as they grow. For those worried about inheritance tax (IHT) increases, Junior ISAs can help pass on assets without significant tax liabilities. 4.Use Bed and ISA for Existing Investments If you hold assets outside of your ISA or pension, you can utilize the Bed & ISA process to sell those assets within your £3,000 CGT allowance and transfer them into an ISA. This method is smart for those whose portfolios exceed their ISA limits, as it allows for the immediate sale and repurchase of assets without worrying about dividend or capital gains taxes. 5.Utilise Your Capital Gains Tax Allowance Capital gains tax is charged on profits from selling assets (including property or investments), and everyone has a £3,000 allowance each tax year. You can choose when to realize gains, potentially taking advantage of this allowance within the current tax year. Spreading out gains over several years can lower your tax bill. To reset your capital gains tax, you can sell and repurchase within an ISA, exit the market for 30 days, or consider new investments. 6.Transfer Assets to Your Spouse If you are married or in a civil partnership, you can transfer ownership of some assets to your spouse or partner without incurring capital gains tax. This won’t reset the tax bill to zero, but they can utilise their own allowances to reduce tax liabilities. If they are on a lower income tax rate, they may pay a lower rate on capital gains tax. 7.Use Your Gift Allowance You can donate up to £3,000 each year, which will be deducted from your estate immediately. This not only provides an opportunity to save on inheritance tax but allows your family to benefit from your generosity while ensuring the funds are used wisely. A word from TB Accountants We want to remind you that the above tips are merely for reference and may not suit everyone. It’s crucial to avoid rushing into decisions; you should consider your personal circumstances carefully. Even if the UK government raises taxes, don’t let these policies pressure you into making decisions you wouldn’t normally make. Remember, the value of all investments can go up or down, and your returns may be less than your investment. If you’re seeking the best strategy for your situation or are uncertain which approach is right for you, you should consult a financial expert. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 recent years, the UK government has introduced many housing policies to the public, aimed at encouraging young people to buy homes and helping first-time buyers get on the property ladder sooner. The UK offers four different types of property ownership – this can be different from other countries, so make sure you are aware of how the property market works here! This time, the key issues we’ll be covering are: What are the different types of property ownership? The explanation and the pros and cons of each type. Should you choose freehold or leasehold? We hope this analysis provides valuable guidance for your decision-making and addresses any questions you may have in the related fields. 1. Freehold Let’s start with Freehold. Simply put, if you buy a freehold property, you own the house and the land it’s on with no time limit. You are free to use, rent, or transfer it, and it can be passed down through generations. You don’t need to pay service charges or ground rent. However, freehold properties are usually more expensive, and in the UK, only houses are typically sold as freeholds, offering fewer choices. 2. Leasehold Leasehold means that you’ve bought the right to live in the property, but the land it sits on still belongs to the landowner. Essentially, you are still a tenant, and the freeholder is your landlord. However, don’t worry too much; the lease period is long, usually between 125 and 999 years for new apartments. 3. Share of freehold Share of freehold is a special type of leasehold. Some freeholders divide their houses into separate apartments to earn more from the land. In this case, the owners of different units share the freehold rights of the land with their neighbours within the same building. 4. Shared ownership Shared ownership is another type of leasehold, which is part of the UK government’s assistance scheme for first-time homebuyers. The buyer gradually purchases 100% ownership of the property. For example, you can initially buy 25%, and the remaining 75% belongs to a housing association. After moving in, you pay rent on the part you don’t own. Once you have the money, you can buy back the remaining share. This process is known as “staircasing.” For example, Ms. Zhang purchased a 50% share of a one-bedroom property in East London through this scheme and paid rent on the remaining 50% owned by the landlord. In the third year, after saving some money, she bought an additional 20% share from the landlord. The following year, she purchased the remaining 30% share. Eventually, Ms. Zhang achieved full ownership of the one-bedroom property. Some advice from TB Accountants In our opinion, the choice of ownership depends on your budget, needs, and investment expectations.  If you’re not sure about which option is best for you, we highly recommend that you consult with the relevant professionals before making your choice.  Before buying, you should also make sure to ask about potential issues. One more important note – when purchasing leasehold property, be mindful of leases that are 90 years or shorter. Leases below 80 years are often considered undesirable and can significantly affect the property’s value, so be prepared to pay to extend the lease.  The costs for this can vary depending on the lease and property. If you have any questions regarding property ownership or related taxes, feel free to consult us further. Our advisors will provide you with professional advice. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

Recently, many people have asked us whether it’s more advantageous to take a salary or dividends as a company owner. When running a company in the UK, as a director of a limited company (LTD), even though you own the company, legally, you and the company are separate entities. This means that you need to decide how to pay yourself. There are two main options: taking a salary or dividends, which is a common dilemma for many business owners. 1. Taking a salary As a company director, you are also an employee of the company and can receive employee remuneration. If you pay yourself a director’s salary, it means you will have a fixed income throughout the year, enjoy employee benefits, and be eligible to participate in a workplace pension scheme. Additionally, when you need a loan, having a stable income will increase your chances of a successful application. However, the director’s salary is taxed at the source, with personal income tax deducted through the HMRC’s PAYE system. Remember the ‘60% tax trap’ we’ve discussed before? The higher your salary, the higher your tax rate. When your income exceeds £100,000, for every additional £2, your personal tax-free allowance is reduced by £1. This means you will pay more income tax, and both you and the company will need to pay National Insurance contributions (NICs), which increases your costs. You need to pay 8% employee in NICs on your director’s salary.  The company needs to pay 13.8% employer NICs on top of your director’s salary. 2. Taking dividends Unlike taking a salary, many directors prefer to take dividends, mainly for tax-saving purposes. The income tax rate on dividends is lower than the income tax rate on salaries, reducing the tax burden. Additionally, NICs do not need to be paid on dividends. 8.75% (Basic Rate) — Income between £13,070 and £50,270 33.75% (Higher Rate) — Income between £50,271 and £125,140 39.35% (Additional Rate) — Income over £125,140 However, dividends are a portion of the company’s profits. This means if the company is not profitable, you cannot take dividends. Furthermore, dividends can only be paid from the company’s profits, so you must first pay corporation tax. On the other hand, a director’s salary is a tax-deductible business expense, which helps reduce the company’s tax liability, but dividend income does not enjoy this benefit. 3. Choosing between the two According to the current tax law, taxpayers can have some tax-free allowances to reduce the dividend tax they would otherwise need to pay: the personal allowance and the separate dividend allowance. For the 2023/24 tax year, the tax-free personal allowance is £12,570. This allowance can only be used once in a tax year and applies to your total income, including any dividends. Therefore, if you received £10,000 in dividends and this was your only income for the year, you would not need to pay any tax. The dividend allowance refers to the amount of dividend income you can earn tax-free in a year. It is separate from the personal allowance, and you can use both allowances simultaneously. Therefore, dividend income below the allowance thresholds is not subject to tax. If a company decides to pay a salary to its directors, this amount will be considered a business expense and can be deducted from the company’s profits, thereby reducing the corporation tax owed. However, it is important to set an appropriate salary level to maximize the overall benefits of income tax and corporation tax. Next time, we’ll take a deeper dive into how you should decide which strategy to use, in order to maximise your earnings in the most tax-efficient way. For more personalised information, contact TB Accountants for a free one-to-one consultation. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

Last time, we explored the advantages and disadvantages of receiving a salary versus dividends from your company. But now comes the crucial question: which option is ultimately more beneficial for your specific situation, and what factors should guide you in making that choice? Historically, the answer was more straightforward—dividends were generally the more cost-effective option compared to taking a salary. However, recent changes in tax regulations have added layers of complexity to this decision, meaning there is no longer a simple one-size-fits-all answer. 1. New Regulations One of the most significant changes has been the reduction of the dividend allowance threshold in the 2024/2025 tax year, now set at just £500. This reduced threshold significantly limits the tax-saving benefits that dividends once provided, especially for directors looking to maximise their tax efficiency. Additionally, if a company’s corporation tax rate exceeds 19%, the tax advantages associated with dividends can diminish, making it essential to weigh the pros and cons more carefully. 2. TB Accountants’ Approach Our rule of thumb suggests a balanced strategy, where directors receive a low, tax-efficient salary from the company, keeping within the basic income tax bracket to minimise exposure to higher tax rates and National Insurance contributions. The remaining profits can then be allocated as dividends. Importantly, your salary can also serve as a business expense, lowering the company’s taxable income and offering further tax efficiency. Combining these two elements—salary and dividends—usually provides the most cost-effective means of drawing income from the company. Of course, each individual’s and company’s circumstances will influence the optimal approach. Before making a decision, consider a thorough analysis that takes into account several factors: How much profit has your company generated? How much are you looking to minimise your personal tax bill? How much can you reduce your company’s tax obligations? Do you wish to retain eligibility for state benefits, such as maternity pay or state pension, which are tied to your salary 3. Seek Professional Advice It’s worth noting that this approach is a basic tax strategy, and individual circumstances will vary. Therefore, we highly recommend consulting a professional tax advisor who can assess your specific situation and provide personalised advice. A professional can ensure your tax strategy aligns with your long-term financial goals and complies with the latest regulations. If you need further assistance, TB Accountants is here to help. Our team of experts can work with you to plan a tailored tax strategy that best suits your unique circumstances, ensuring your business and personal finances are as tax-efficient as possible. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .

On the 30th October, the Chancellor of the Exchequer Rachel Reeves announced Labour’s first Autumn Budget since taking office earlier this year. Reeves emphasised that Labour’s core goal is to revive the UK economy and boost investment. As anticipated, most of the budget is focused on tax increases, with many observers describing it as the largest tax hike budget in history.  According to government projections, the new measures in the Autumn Budget are expected to raise £40 billion. We’ve summarised the key points from the Autumn Budget so that you can see which policies could affect your finances. Increase in Statutory Minimum Wage Starting from April 2025, the statutory minimum wage for employees aged 21 and above will rise from £11.44 per hour to £12.21 per hour. The government estimates that 3 million low-income workers in the UK will benefit, raising their standard of living. For full-time employees meeting this threshold, the 6.7% increase equates to £1,400 per year. The minimum wage for young people aged 18 to 20 will also increase from £8.60 to £10.00 per hour, the largest-ever increase of £1.40, meaning that full-time young workers will earn £2,500 more next year. Additionally, eligibility for full-time carer allowances will expand, raising the maximum income threshold from £151 to £195 per week. Changes to Income Tax and National Insurance Employees and consumers alike can expect a favourable outcome, as the Chancellor stated the government will not raise income tax, employee national insurance, or VAT rates. However, from April next year, employer national insurance contributions will increase to 15%, and the threshold for employer national insurance contributions will be lowered. Employers will start paying national insurance for each employee from an annual income threshold of £5,000, down from £9,100. The Employment Allowance will however increase from £5,000 to £10,500, which means 865,000 eligible employers will no longer pay national insurance. Additionally, the freeze on income tax and national insurance thresholds will end in 2028, which will eventually prevent people from being pushed into higher tax brackets as wages rise. From the 2028/29 tax year, income tax thresholds will be adjusted based on inflation. State Pension Increase The government previously promised to maintain the triple-lock policy. Rachel Reeves confirmed that the national pension will increase by 4.1% in April 2025 as per the triple-lock guarantee.  The full new State Pension will therefore rise to £230.30 per week (£11,975 annually), while the full basic State Pension will increase to £176.45 per week (£9,175 annually). Second Home Stamp Duty Increase Landlords and those planning to purchase second homes may be disappointed by the Chancellor’s announcement. Reeves confirmed that the government will raise the stamp duty surcharge for purchasing a second property from 3% to 5%, effective from the 31st October 2024. This measure aims to support first-time and primary homebuyers. Capital Gains Tax Increase The budget mentions that the lower rate of capital gains tax will rise from 10% to 18%, while the higher rate will increase from 20% to 24%. For residential property, capital gains tax rates will remain at 18% and 24%. Reeves confirmed the continuation of the private residence relief policy, which exempts primary residences from capital gains tax. Inheritance Tax Reform The previous Conservative government froze the inheritance tax threshold until 2028. The Labour government announced it would extend this freeze by another two years, until 2030. This means that estates up to £325,000 can be inherited tax-free, while estates with a residence passed to direct descendants can benefit from a £500,000 exemption, increasing to £1 million if transferred to a surviving spouse or partner. From April 2027, inherited pensions will be subject to inheritance tax for the first time. The government will also reform agricultural and business property relief: the first £1 million in assets will remain exempt, but assets exceeding this will receive a 50% relief, meaning a 20% effective tax rate. Alternative investment markets and similar stocks will also see a 50% inheritance tax relief at an effective tax rate of 20%. Overall, these changes are expected to raise over £2 billion by the end of the forecast period. Business Measures The retail, hospitality, and leisure sectors will be eligible for a 40% reduction in business rates, with a cap of £110,000 per business. The lifetime limit for entrepreneurs’ relief on business asset disposal remains at £1 million to encourage investment in businesses. The disposal relief rate will remain at 10% this year, rising to 14% in April 2025 and 18% by 2026-27. Overall, these changes are expected to raise £2.5 billion. From 2026-27, the Treasury plans to introduce two permanently lower tax rates for retail, hospitality, and leisure properties. Notably, from April 2025, the UK government will formally move ahead with plans to abolish the non-domicile tax regime, which allowed UK residents with foreign domiciles to avoid UK tax on overseas earnings.  The Chancellor announced a new, residency-based scheme for temporary UK residents to make the UK more competitive internationally, though specific details were not provided. According to the Office for Budget Responsibility, these measures are expected to raise £12.7 billion over the next five years. Other Key Changes VAT on Private Schools From the 1st January 2025, VAT will apply to all education, training, and boarding services provided by private schools. The funds raised will support greater investment in public education, raising standards and creating more opportunities for all. Fuel Tax Freeze With high living costs and global uncertainties potentially causing fuel price fluctuations, the government has decided to freeze fuel tax from next year and extend the 5p per litre reduction for another year. This means the average driver will save £59 in the 2025/26 tax year, and fuel station charges will remain stable next year. Tobacco and Alcohol Tax From the 1st October 2026, the UK government will impose a uniform tax rate on e-cigarettes, and tobacco taxes will increase. Taxes on non-cask alcoholic beverages will rise with the retail price index, while taxes on cask beverages will decrease by 1.7%. Airline and Private Jet Taxes Air Passenger Duty for short-haul economy flights will increase by up to £2, and an additional 50% will be applied to private jet taxes, with a maximum of £450 per passenger per flight. Bus Fare Cap The single-trip bus fare cap on several routes in England will rise from £2 to £3. Carer Allowance Currently, carers claiming benefits can earn up to £151 per week before facing deductions. This threshold will increase to £195 per week (or £10,000 annually), allowing carers to earn £45 more per week without losing any benefits. Housing and Infrastructure  The budget introduced new policies related to housing and infrastructure investment. For the new tax year, the government will provide £1 billion to speed up the removal of dangerous cladding on residential buildings. Local governments will retain revenue from social housing sales to reinvest in both existing stock as well as new supply. The Chancellor announced the opening of the TransPennine route connecting York, Leeds, Huddersfield, and Manchester, promising fully electric local and regional services between Manchester and Stalybridge by the end of the year. The East-West Rail route will also be launched to foster growth between Oxford, Milton Keynes, and Cambridge. Funds have also been allocated towards HS2 to commence tunnelling from Old Oak Common to Euston in London.  Without the tunnelling extension, passengers using HS2 would have needed to switch trains at the previously designated Old Oak Common terminus for onward travel to central London. For road maintenance, an additional £500 million has been allocated next year to meet the commitment of filling 1 million potholes annually. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 our previous reports, we shared that over 500,000 UK taxpayers have fallen into the 60% tax trap, an increase of nearly a quarter from last year due to the impact of frozen thresholds. As inflation continues to push up wages, the number of people caught in the high-income tax trap has surged significantly over the past year. Bowmore Financial Planning has warned that the new government should take urgent action to address this inequality, as it could deter people from striving to increase their income above £100,000 per year.  Bowmore’s CEO Mark Incledon stated, ‘As the rising cost of living erodes the real value of wage growth, the new government must address the problem’. This will only undermine people’s motivation to work harder, increase productivity, and ultimately drive economic growth.” — now let’s explore some strategies you might consider to help avoid it! 1. Utilising Personal Pensions When HM Revenue and Customs (HMRC) calculates your taxable income, only your adjusted net income is considered. This means that personal pension contributions have a direct impact on the final taxable amount, which could, in turn, help reduce your overall net income. For example, consider Mr Z, who has an annual income of £125,000. He decides to contribute £20,000 to his personal pension scheme. Under current regulations, personal pension contributions are eligible for 20% basic rate income tax relief, and higher-rate taxpayers can benefit from an additional 20%. Consequently, Mr Z can ultimately gain 40% tax relief, effectively increasing his pension contribution to £30,000. As a result, his adjusted net income reduces to £95,000, allowing him to retain his personal allowance while simultaneously enhancing his pension pot. At the same time, based on the performance of your pension fund, you may benefit from potentially higher returns, and in the long term, your interest can earn additional interest. 2. Non-Cash Bonuses For those employed in industries such as investment banking or sales consulting, requesting non-cash bonuses from your employer can be an effective approach. These bonuses could include benefits such as private medical insurance, a company car, or childcare provisions. By opting for these non-cash perks, you can potentially reduce your basic taxable income to below £100,000 while still enjoying additional ‘perks’ provided by your employer. Alternatively, you could donate to charity to cut your income to under £100,000 and get tax relief. 3. Tax-Free Savings When developing a financial plan, you must avoid being too hasty. While the interest rate on deposit accounts is certainly important—the higher the rate, the more you could potentially earn—we recommend also taking your situation into account. This will determine whether you have a tax-free allowance. If a portion of your annual income is derived from savings interest, opening an Individual Savings Account (ISA) could be a prudent choice. Individuals currently have an annual ISA allowance of £20,000 per financial year, and the income earned within an ISA account is completely tax-free. By taking advantage of this allowance, you can maximise your  savings and reduce the impact of taxable income from interest. After doing this, you could then consider opening other types of deposit accounts. 4.Investing in Start-Ups Another valuable strategy involves exploring the UK government’s Seed Enterprise Investment Scheme (SEIS). This scheme encourages investments in qualifying start-up companies and offers up to 50% income tax relief to investors. The plan requires that businesses must have been established for less than two years and have fewer than 25 employees. For instance, if you invest £10,000 in a qualifying start-up, your income tax bill could be reduced by £5,000. While this can be an attractive measure, it is essential to consider the risks involved in start-up investments and assess whether it aligns with your financial goals and risk tolerance. While these strategies offer promising  opportunities, the UK system is complex, and various aspects must be carefully managed. Therefore, we highly recommend consulting an advisor for tailored advice and meticulous planning to navigate these options effectively. If you have further questions or would like more information, please feel free to reach out to us for additional guidance! For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbgroupuk.com  or for a free one-to-one consultation.  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 .