Previously, we discussed that rental income is considered part of your personal income, meaning all profits derived from it are subject to personal income tax. This implies that when you receive income from renting out a property, it is combined with other sources of income, such as your salary or investment gains, and taxed accordingly. However, there are ways to reduce your tax liability by deducting certain expenses that are deemed “qualified” by tax authorities. These qualified expenses can significantly lower the amount of taxable income from your rental activities. So, which specific expenses fall under this category? Let’s take a deeper look. 1. What qualifies as a vacancy? Throughout the rental process, many landlords experience vacancy periods for various reasons. For example, when you’re searching for new tenants by advertising the property or during the handover period when one tenant moves out and you’re preparing for the next tenant to move in. During these times, although you might not be collecting rental income, there are often ongoing costs associated with the property, such as property management fees, utility bills, or payments to letting agents for marketing the property. The key question is: Can these costs be considered deductible expenses for tax purposes? The answer lies in your intentions. If the vacancy is temporary and you plan to continue renting the property—whether due to tenant turnover, refurbishments, or routine maintenance—the tax authorities will view your rental business as ongoing. In this case, these costs related to the vacancy period can be claimed as legitimate deductions, reducing your overall tax burden. However, if you decide to stop renting out the property permanently, the expenses incurred during the vacancy may not be eligible for deduction. 2. Other possible scenarios It’s not uncommon to find that during a vacancy period, the lack of rental income might cause your expenses to exceed your revenue for that year, potentially resulting in a financial loss. For example, if your total rental income for the year is £10,000, but you have £12,000 in allowable expenses (which could include maintenance, repairs, insurance, and property management fees), this would create a £2,000 loss. While this loss can’t be used to offset other forms of income like wages or investment returns, it can still be beneficial. If you own multiple rental properties, and one incurs a loss while others remain profitable, the loss from one property can be used to offset the income from your other properties. This approach allows you to reduce the amount of taxable income from your overall rental portfolio, minimizing your personal income tax liability for that year. Some professional advice from TB Accountants Being a landlord involves navigating through a maze of often complex tax regulations and compliance requirements. Failing to understand which expenses can be deducted or how to handle losses from your rental properties can lead to costly mistakes. To avoid any uncertainties or oversights, we highly recommend consulting with a qualified professional. An accountant or tax advisor who specialises in rental property income can ensure that you’re making the most tax-efficient decisions, while staying fully compliant with tax laws. Getting professional advice is especially important if you own multiple properties or if you’re unsure how to handle vacancies, losses, or other unique circumstances that might arise. 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. Related guides VAT on Rental Income: Do Landlords Need to Pay VAT? Overseas Landlord Tax: UK Tax on Rental Income

In recent years, many countries, including France, Canada, Japan, and the United States, have adjusted their retirement ages, moving toward delayed retirement. This change is mainly in response to population aging, pension system pressures, and labour market changes. By extending working years, the goal is to better adapt individuals, businesses, and governments to future economic and social demands while ensuring the long-term sustainability of pension systems. As for the UK, it started its gradual delay in retirement by 2010, progressively raising the State Pension Age and delaying the time when individuals can receive state pensions. What is the current retirement age? Since October 2020, the statutory retirement age in the UK for both men and women has been 66, at which point they can start receiving state pensions. However, this age may be increased. According to an independent review by the previous Conservative government, it is recommended to raise the state pension age from 66 to 67 between 2026 and 2028. Recently, Labour Chancellor Rachel Reeves suggested raising the state pension age to 68 to save £6.1 billion for the Treasury, freeing up more funds for policing, education, and other areas. How does the pension system work? There are three main types of pension in the UK: Basic State Pension Workplace Pension Personal Pension Basic State Pension This is the regular pension provided by the government once an individual reaches the state pension age. The amount varies based on National Insurance Contributions (NICs), and taxes must be paid on it. For those reaching state pension age after April 6, 2016, the New State Pension applies. Eligibility: A minimum of 10 years of NICs is required. These contributions can come from paid work or from credits earned through certain benefits (e.g. for parenting or caregiving). Amount for 2024/2025: The full New State Pension is £221.20 per week. This amount is adjusted annually based on the ‘Triple Lock’ policy, which increases it by the highest of wage growth, inflation, or 2.5%. Those who don’t meet the minimum income threshold or care for disabled individuals may be eligible for Pension Credit. From April 2024, Pension Credit will be £218.15 per week (single) and £332.95 per week (for couples). Those eligible for Pension Credit may also qualify for other financial support, such as housing benefit, council tax reductions, or help with heating costs through the Winter Fuel Payment and Warm Home Discount programs. Workplace Pension A workplace pension, also known as an employer pension, is legally required for employers to set up and contribute to for their employees. Under the auto-enrolment system, if an employee is over 22 years old, below the state pension age, and earns more than £10,000 per year, their employer must contribute to a pension for them. Employers and employees both contribute to this pension. Typically, employees contribute 5% of their pre-tax salary, while employers contribute at least 3%. The total minimum contribution is 8%, with tax relief applied to the employee’s contribution. Though auto-enrolment is mandatory, employees can choose to opt out. However, by opting out, they miss out on the employer’s contribution and tax benefits. Employees who opt out can re-join at any time. The age for accessing workplace pensions is the same as the state pension (and may be increased). Pay-out options include lump-sum withdrawals (with 25% tax-free) or purchasing an annuity for a steady income after retirement. Personal Pension Personal pensions run alongside state and workplace pensions and provide additional retirement income security. They are often used by the self-employed, those without a workplace pension, or those wanting to increase their retirement savings. Personal pensions can be set up with financial institutions, insurance companies, or pension providers and come with tax benefits. There are various types of personal pensions, such as: Stakeholder Pensions: Allow flexible contributions with funds invested in stocks, bonds, or other financial assets to grow over time. There are government-imposed fee caps. Self-Invested Personal Pensions (SIPP): Provides individuals with control over their investment choices within tax-advantaged savings. All types of pensions are subject to income tax upon withdrawal, with tax-free allowances of up to 25% of the total savings. Tax on the remaining 75% depends on the pension’s value and the individual’s total income. 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. Related guides State Pension Age Rises to 67: What Changes in 2026 Pension 25% Tax-Free Lump Sum: How It Works

Following the start of the new tax year, the State Pension system is undergoing a series of significant changes. From 6 April 2026, the State Pension age is gradually increasing. This not only affects when individuals can retire, but it will also have a profound impact on income, employment, and overall life planning. If you are currently formulating or already have a retirement plan, understanding these changes is particularly important. State Pension age increase According to the government's established schedule, the State Pension age is gradually increasing from 66 to 67. This adjustment officially began in April 2026 and will be completed by early 2028, applying to both men and women across the UK. This policy was first proposed in 2011 and confirmed by legislation in 2014. The Pensions Act 2014 not only brought forward the process of raising the age from 66 to 67 by eight years, but it also adjusted how it is implemented. Specifically: For those born between 6 April 1960 and 5 March 1961, the pensionable age will be 66 plus a specified number of months. For those born between 6 March 1961 and 5 April 1977, they will become eligible upon reaching their 67th birthday, rather than on a single fixed date for an entire cohort. Furthermore, under the Pensions Act 2007, the State Pension age is set to rise further from 67 to 68 between 2044 and 2046. This means there is a strong possibility of further increases to the retirement age in the future. The core reason for raising the State Pension age is shifting demographics. As life expectancy continues to rise, the number of people claiming a pension is increasing, and the duration of their claims is lengthening. This places sustained pressure on public finances. The Office for Budget Responsibility estimates that raising the pension age from 66 to 67 will save the government approximately £10 billion per year by the end of this decade. Therefore, raising the retirement age is viewed as a crucial policy tool for controlling pension expenditure. At the same time, the law dictates that the pension age must be reviewed at least once every five years. The underlying principle of this is to ensure that UK residents spend a certain proportion of their adult lives eligible to receive a pension. The practical impact of the retirement age increase While financial savings at the policy level are highly important, what matters more to the average person is how this change will affect their daily life. Delayed pension claims The most direct impact is the delay in being able to claim a pension. This means many people will temporarily lose the pension income they would otherwise have received, thereby lowering their disposable income. Research shows that when the pension age previously increased from 65 to 66, the relative income poverty rate among the affected demographic more than doubled, jumping from 10% to 24%. This indicates that for some groups, policies of this nature can create significant financial pressure. More people delaying retirement The increase in the pension age also impacts employment. Historical data demonstrates that a segment of the population will choose to delay retirement and continue working. For example, when the pension age rose from 65 to 66, the employment rate for 65-year-olds increased by roughly 10 percentage points. However, this shift is largely concentrated within a minority. Overall, only about one in ten people will extend their working lives due to the policy change, while the vast majority will stick to their original retirement plans. Additionally, this increase in employment stems primarily from people remaining in their current roles, rather than re-entering the workforce or taking up new jobs. It is important to note that as people age, employment rates naturally decline at a rapid pace, while the risks of health problems and disabilities increase. These factors restrict the ability of older age groups to continue working. Consequently, with the pension age rising to 67, the potential for employment growth may be much smaller than seen previously. Changes to wages and National Insurance contributions For employers, the change in the pension age will also require practical, operational adjustments. Once an employee reaches State Pension age, they are no longer required to pay employee National Insurance contributions, but the employer must still continue to pay secondary Class 1 contributions. This means businesses must ensure they promptly update the insurance category of their employees within their payroll systems. For example, after an employee reaches pension age, their National Insurance category must be adjusted to 'C' in the payroll software, which stops the deduction of employee contributions. This adjustment is treated as a mid-year category change, meaning employers need to record the year-to-date figures separately for both before and after the change until the tax year concludes. Employers are also required to verify documentation proving that the employee has reached pension age, such as a passport or a birth certificate. A summary of new tax year State Pension rates The State Pension age is the earliest point at which an individual can begin claiming their State Pension. This age may differ from the time they can access an occupational pension or a personal pension. Alongside the policy changes, pension amounts have also seen an increase. From 6 April 2026, the new rates are as follows: Full new State Pension: £241.30 per week, £965.20 every four weeks, and approximately £12,547 annually. Full basic State Pension: £184.90 per week, £739.60 every four weeks, and approximately £9,614 annually. Category B (based on a spouse or civil partner's insurance), Category C, and Category D (non-contributory) pensions: £110.75 per week. Individuals can use the online checking tool provided by the UK government to find out when they will reach State Pension age, when they will qualify for Pension Credit, and when they can access related benefits, such as free bus travel at age 60 in Scotland. The government is currently conducting a separate independent review into the State Pension age alongside the work of the second Pensions Commission, which was established in 2025 and is expected to publish its final report in 2027. The reviews will examine changes in life expectancy, savings levels, auto-enrolment, and pension matters relating to the self-employed. The findings could influence whether the pension age will be raised even further in the future. However, any new adjustments must first secure parliamentary approval before they can be officially implemented. In an environment of constantly shifting policies, understanding your pension timeline early on is a vital step in long-term financial planning. Frequently Asked Questions What is the UK State Pension age in 2026? The State Pension age is rising from 66 to 67. The increase began in April 2026 and will be complete by early 2028, applying to both men and women across the UK. Who is affected by the rise to 67? Those born between 6 April 1960 and 5 March 1961 reach pensionable age at 66 plus a specified number of months. Those born between 6 March 1961 and 5 April 1977 become eligible on their 67th birthday, rather than on a single fixed date for the whole cohort. Will the State Pension age rise again after 67? Under the Pensions Act 2007 it is set to rise from 67 to 68 between 2044 and 2046. The law also requires a review at least every five years, and a new Pensions Commission is expected to report in 2027. How much is the full New State Pension from April 2026? From 6 April 2026 the full New State Pension is £241.30 a week, £965.20 every four weeks, or about £12,547 a year. The full Basic State Pension is £184.90 a week, roughly £9,614 a year. Do you still pay National Insurance after State Pension age? Employees stop paying National Insurance once they reach State Pension age, but the employer continues to pay Class 1 contributions. Payroll must be updated to NI category C, and because this is a mid-year category change, employers must keep separate year-to-date records either side of it. Related guides UK Retirement Age: When Can You Retire and How Much? Pension 25% Tax-Free Lump Sum: How It Works Why TB Accountants? Professional Assurance: Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service: We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support: Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide: Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. 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@tbagroup.uk 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.

A restaurant owner in Knaresborough was recently fined for committing tax evasion for more than 3 years, with unpaid Value-Added-Tax (VAT) of over £51,700. The owner Razaul Karim applied for a VAT registration for his restaurant in 2013, subsequently cancelling his registration in 2015 after declaring that the annual turnover was below the registration threshold. However, records show that in August 2019, the restaurant had a turnover of almost £130,000, well over the registration threshold of £85,000. This case brings to our attention how important it is for takeaway and restaurant businesses to be aware of how VAT is calculated, especially since HMRC has very specific rules for how different foods and drinks are taxed. Many other business owners have been caught out for accidental tax avoidance and evasion because of this. We’ve created a guide to help you understand the basics, so that you can avoid making any costly mistakes. 1. What is Value-Added-Tax (VAT)? VAT is a basic consumption tax levied at the point of sale for most goods and services, is collected by suppliers and remitted to HMRC. Assuming your business is based in the UK, you only need to register for VAT if your annual turnover reaches £85,000. Our guide will assume that you’ve already registered for VAT. 2. How is VAT calculated for food? Most foods will either be zero-rated or charged at the normal rate of VAT (20%). Generally, the following foods fall into the zero-rated category: Raw meat and fish Vegetables and fruits Grains, nuts and legumes Culinary herbs Other foods that fall under the standard rate include catering foods, alcoholic beverages, sweets, crisps, salty snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water. If you are running a restaurant or catering service, you cannot simply judge based on the VAT rate of the food itself. You need to consider three important factors: Is the food itself zero-rated, or subject to the standard rate? Is the food served on the premises, or for takeout? Is the food hot or cold? 3. Which rate of VAT do I apply to sales? It’s important to distinguish between the sale of food itself, and food sold ‘in the course of catering’. Even if the underlying food is zero-rated based on the explanation above, if it is sold ‘in the course of catering’, the standard rate will still apply. How is this determined? HMRC has provided some official guidance: Food and beverages prepared on the premises (excluding cold takeaway food) Providing cooked/ready-to-eat food/meals, regardless of whether cutlery is included Providing food and beverages as a third-party (i.e. catering service) Cooking or preparing food at the client’s premises (e.g. chef rental service) On the other hand, the following situations are usually zero-rated: Providing chilled takeaway food Grocery store sales Sale of food and beverages that require further preparation by the customer Besides from this, you also need consider whether you are selling hot food: Food that is heated and eaten hot Food that stays hot after heating Advertising/marketing the food as hot Food that is heated on request Food that is provided with packaging for heat retention Hot food is always standard-rated, whilst cold food can be zero-rated. 4. What are the different rules for eat-in and takeaway? Additionally, you’ll also need to consider where the food is consumed. Regardless of the underlying VAT rate, if your customer is consuming food or beverages on the premises, you’ll still need to charge the standard rate of VAT. ‘Premises’ is defined as an area occupied by a food retailer or set aside specifically for the consumption of purchased food or beverages, including any spaces shared with other food retailers. If you’re operating a takeaway, the underlying VAT rate and hot/food distinction outlined above will also still apply. The standard rate of VAT will apply if: The food itself falls under the standard rate The food is classified as hot food The food is consumed on the premises (if you are selling takeout but offer an optional seating area) Takeout food is zero-rated if: The food itself is zero-rated The food is classified as cold food The food is consumed off-premises 5. Some advice from TB Accountants So, let’s look at an example. If you run a coffee shop and you sell raw coffee beans in a container for customers to take with them, the coffee beans are zero-rated. If you then use those coffee beans to produce hot coffee to sell to customers, the standard rate of 20% will apply. This is the case whether they are taking the coffee away or sitting down at your premises. Still confused? Many business owners are. TB Accountants is here to provide you with expert support. Get in touch with us and we’ll see how we can help you. 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 legal or professional advice. If you have any questions, please contact TBA Group via email or WhatsApp. Related guides VAT on Food in the UK: What's Zero-Rated and What's 20%? 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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. Related guides Non-Dom Abolished: Overseas Income Rules from April 2025 Non-Resident Directors: UK Income Tax and NIC Rules

Many people who have moved to the UK will still maintain some form of income abroad. Under the current rules, if you are a UK tax resident and domiciled in the UK, you must pay taxes on your global income and gains, regardless of where the income is earned. However, if you apply for non-domiciled (‘non-dom’) status, you can choose to avoid paying taxes on overseas income and capital gains. The non-dom status means that you live in the UK, but your permanent home is in another country. However, changes will be made from the 6th April 2025 – the current non-dom tax rules will end. The system of taxation based on domicile will be abolished and replaced with a more direct foreign income and gains system (FIG). So, how will the new FIG system work? Current non-domicile tax rules If you move to the UK and meet the HMRC’s criteria for residency (e.g. residing in the UK for 183 days, main residence, family members, and workplace), you are classified as a UK tax resident. However, if your permanent home (i.e. family base) is abroad, you can claim non-domiciled status. According to current regulations, your domicile is one of the factors determining your tax status. HMRC considers your domicile to be the country or region where your father intended to reside permanently when you were born. Under current rules, if you are resident in the UK but have claimed non-domiciled status, you can still voluntarily pay on overseas income and capital gains, or opt to pay on a remittance basis. If you opt to pay tax on a remittance basis, you do not need to pay taxes on overseas income and capital gains unless the earnings are brought into the UK. You will also generally lose your personal allowance and any capital gains tax allowances. Additionally, after several tax years, you must pay an annual charge: £30,000 if you have been a UK tax resident for at least seven of the past nine tax years. £60,000 if you have been a UK tax resident for at least 12 of the past 14 tax years. Other regulations such as mixed fund ordering rules also apply. Changes after April 2025 Earlier this year, the Chancellor announced the abolition of the existing system. Starting from the 6th April 2025, all rules relating to domiciled status will be abolished and replaced with a new Foreign Income and Gains Tax (FIG) system. Under the new FIG system, HMRC will primarily base its taxation policies on UK residency. Qualifying taxpayers—within the first four tax years after emigrating to the UK—will not need to pay UK taxes on foreign income and gains and can freely bring these funds into the UK tax-free, including non-resident trust distributions. Additionally, you will not need to consider mixed funds or ordering rules from the old system, reducing the burden on taxpayers. Note that there is a time limit of four years! After the four-year period, taxpayers must pay UK taxes on global income and capital gains brought into the UK. As with the current remittance basis, if you choose the new FIG system, you will no longer be eligible for a personal income tax allowance and annual capital gains tax exemption. Under the new rules, if a taxpayer opts for the FIG system, they need not apply annually but should apply within the tax years the system is applicable. For example, if Mr W applies for the new 4-year FIG system in the first year, but chooses not to apply in the second year, he can still apply in the third and fourth years. If an individual temporarily leaves the UK within the four-year period, they can apply for the remaining eligible tax years under the FIG system upon their return. For instance, if Mr Z becomes a non-UK resident in the second and third years but returns as a UK resident in the fourth year, he can still use the FIG system in the fourth year. Are there any transition policies? For current UK non-domicile residents or those who have already opted for the old policy, the UK government offers several temporary transition measures. Here are some key points: Temporary Repatriation Facility Individuals who have opted for the remittance basis can remit foreign income to the UK at a 12% tax rate in the 2025/2026 and 2026/2027 tax years. Additionally, mixed funds and ordering rules will be relaxed to allow individuals to benefit more easily from the temporary measures. Starting from the 2027/2028 tax year, foreign income remitted to the UK will be taxed at the normal rate. Eligibility for the FIG System Individuals who have lived in the UK for less than four years as of April 6, 2025 (and have lived outside the UK for 10 tax years) can use the FIG system for the remaining four years. Capital Gains Tax Base If non-UK domiciles have previously applied for the remittance basis for foreign capital gains, HMRC will allow the base value of assets to be reset to April 5, 2019, to reduce capital gains tax. Partial Taxation for Transition Period Between April 6, 2025, and April 5, 2026, if taxpayers have switched from the remittance basis to global taxation and do not qualify for the FIG system or transition policy, they will only need to pay UK income tax on 50% of their foreign income for that tax year. From the 2026/2027 tax year, full reporting will resume. Overseas workday relief policy will remain Related to the domicile remittance basis is the Overseas Workday Relief (OWR). If you are a non-domicile and have not been a UK tax resident for the past three years, but your employer requires you to work in the UK for some time, you can use this relief to apply for a tax reduction on income earned abroad for the first three tax years of UK residence (if you opt for the remittance basis). In other words, income earned abroad that is not remitted to the UK is not subject to UK tax. Any withheld income tax from your salary can be refunded. The new Overseas Workday Relief (OWR) will be similar to the current relief and will apply to the first three tax years of UK residence. Employees eligible for OWR upon returning to the UK in 2023-24 or 2024-25 should still be able to apply for the full three years of OWR. However, those re-entering from 2025-26 who are not eligible for the FIG system will not be able to apply for OWR. The new OWR will provide income tax relief whether or not the income is brought back to the UK. However, it will not offer National Insurance Contributions (NIC) relief, so any NIC liability will be determined as usual. Advice from TB Accountants Under the current system, those with significant foreign income or gains who do not wish to pay UK taxes often choose the remittance basis to save a considerable amount. However, with the new system, this approach may change. Additionally, the FIG-related regulations do not currently involve inheritance tax issues. However, there are indications that the UK government is considering simplifying inheritance tax rules to align with the residency-based system. This is still under negotiation. It is certain that the new system will be implemented starting 6th April 2025. Therefore, those who have moved or are considering moving to the UK should stay updated and plan their taxes accordingly before 2025. TB Accountants would like to remind everyone that tax calculations are complex. Additionally, the rules set to change next year may still change further if there is a change in government. Given the potential for rapid changes, we recommend seeking professional tax 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. Related guides UK Tax Residency: Do You Pay Tax on Overseas Income? Non-Resident Directors: UK Income Tax and NIC Rules

When companies become increasingly globalised, it is common for UK companies to appoint directors who reside outside the UK but perform duties within the country. While this brings valuable professional expertise, it also introduces complex employment tax considerations that are frequently overlooked. Failure to manage these risks effectively can lead to unexpected tax liabilities for both the individual and the company. Why is Tax Payable? Under UK tax law, directors are classified as employees for Income Tax purposes. This means that regardless of whether an individual is a UK tax resident, or whether their primary employer is based outside the UK, any remuneration related to duties performed in the UK -including salary, benefits, and equity incentives - may be subject to UK Income Tax and National Insurance contributions (NICs). A core principle here is 'territoriality': if the relevant duties are performed within the UK, the UK retains the right to tax the corresponding earnings. In practice, HM Revenue and Customs (HMRC) requires remuneration to be split between 'UK duties' and 'non-UK duties' on a 'just and reasonable' basis. In other words, tax is only levied on the portion of income directly attributable to duties performed in the UK. It is particularly important to note that HMRC applies a very strict interpretation to UK duties that are 'merely incidental' (which might otherwise be excluded from UK tax). Activities such as attending board meetings, negotiating contracts, or overseeing UK operations are generally deemed to be substantive UK duties. Consequently, in the absence of applicable tax relief, the remuneration associated with these activities will typically be taxable in the UK. Double Taxation Treaty Relief and the STBV Scheme The good news is that director remuneration may qualify for UK tax relief under the UK's extensive network of Double Taxation Treaties. Eligibility depends on the specific terms of the treaty between the UK and the director's country or territory of tax residence. Generally, UK tax on director remuneration may be relieved if: The director is a tax resident of a country or territory that has a Double Taxation Treaty with the UK; The director is present in the UK for no more than 183 days in any rolling 12-month period; and The remuneration is paid by a non-UK employer and the costs are not borne by a UK entity. Crucially, if the costs associated with the director's UK duties are borne by a UK company, eligibility for treaty relief may be compromised. Even the reimbursement of expenses could potentially disqualify the individual from claiming this relief. Short-Term Business Visitors (STBV) Scheme Where treaty relief is expected to apply, HMRC offers an administrative easement known as the Short-Term Business Visitors (STBV) scheme. This arrangement allows UK companies to bypass Pay As You Earn (PAYE) operations for eligible individuals, provided that information regarding the visitors is reported annually. However, the STBV scheme is not guaranteed to apply to directors. If HMRC determines that the UK company acts as the economic employer of the individual, it may refuse the application of the scheme. National Insurance Contributions Unlike Income Tax, National Insurance contributions (NICs) are determined by whether an individual physically works or is present in the UK, rather than their tax residency status. Furthermore, NICs are not governed by Double Taxation Treaties. Although the UK has social security agreements with certain countries or territories to alleviate or prevent double NICs liability, there are important exceptions. For instance, the UK does not have relevant social security agreements with countries such as Australia or South Africa. This means that directors from these regions may still be liable for UK NICs, even if they qualify for Income Tax relief. Structurally, NICs are divided into employee contributions (primary NICs) and employer contributions (secondary NICs). In most scenarios, the UK company will be regarded as the 'host employer' under NICs regulations, thereby incurring the responsibility for secondary employer contributions. While limited statutory exemptions exist (such as the 52-week rule for seconded workers), these exemptions generally do not apply to directors, as holding a directorship is typically deemed to establish an employment relationship in the UK under domestic tax law. Mitigating Potential Tax Risks If a company intends to appoint a non-UK resident director, or if you are uncertain whether your current setup complies with requirements, the following measures can help mitigate potential tax risks: Assess UK duties at the earliest opportunity Establish a clear understanding of the specific duties the director will perform in the UK and their projected length of stay ahead of time. Even short visits can trigger tax obligations for the UK company. Apportion remuneration reasonably Implement a logical and supportable split of remuneration based on the duties performed inside and outside the UK, allowing for an accurate assessment of potential UK Income Tax and National Insurance (NICs) exposure. Review cost-sharing arrangements Avoid having the UK company bear the director's remuneration or related expenses where possible, as such arrangements can jeopardize eligibility for tax treaty relief. Consider applying for an STBV agreement Where eligibility criteria are met, applying for a Short-Term Business Visitors (STBV) arrangement with HMRC can streamline and simplify compliance processes. Appointing a non-UK tax resident director to a UK company involves more than corporate governance; it is a highly tax-sensitive decision. From Income Tax to National Insurance contributions, and from Double Taxation Treaties to compliance reporting, every stage can impact corporate costs and regulatory risk. Whether you are planning such an appointment or already operate with overseas directors, undertaking a professional evaluation and planning early is essential to minimise potential risks and fully utilize available tax reliefs. Frequently Asked Questions Do non-UK resident directors pay UK tax? Potentially, yes. Directors are classified as employees for UK Income Tax purposes, and under the principle of territoriality the UK retains taxing rights over duties performed in the UK, regardless of where the director lives or where their main employer is based. Which director activities count as UK duties? Attending board meetings, negotiating contracts and overseeing UK operations are generally treated as substantive UK duties. HMRC applies a very strict interpretation to duties claimed to be merely incidental, so it is rarely safe to assume a UK visit carries no tax consequence. Can a double taxation treaty remove the UK tax charge? It may. Relief generally requires the director to be a tax resident of a country that has a double taxation treaty with the UK and to meet the treaty conditions. Crucially, if a UK company bears the cost of the director's UK duties, including reimbursed expenses, eligibility for treaty relief can be lost. What is the Short-Term Business Visitors (STBV) scheme? The STBV scheme is an HMRC administrative easement that lets a UK company avoid operating PAYE for eligible individuals where treaty relief is expected to apply. It is not guaranteed to cover directors: if HMRC considers the UK company to be the economic employer, the scheme may not be available. Are National Insurance contributions treated the same as Income Tax? No. NICs depend on physical presence in the UK and are not governed by double taxation treaties. The UK has social security agreements with some countries but not others, such as Australia. In most cases the UK company is treated as the host employer and incurs employer NICs. Related guides UK Tax Residency: Do You Pay Tax on Overseas Income? Non-Dom Abolished: Overseas Income Rules from April 2025 Why TB Accountants? Professional Assurance: Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service: We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support: Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide: Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. 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@tbagroup.uk 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 the UK, whether you’re an employee or an employer, it’s nearly impossible to avoid one key system when it comes to payroll – PAYE (Pay As You Earn). This means that when an employer processes payroll, they automatically deduct Income Tax, National Insurance Contributions (NICs), and other applicable deductions (such as student loans or pension contributions). PAYE significantly reduces the administrative burden for both employers and employees. However, before you start using the system, there are a few key documents you need to understand – particularly the often-confused P45, P60, and P11D forms. Still unsure about the differences and usage of these forms? Then you’ll definitely want to save this article! They are directly linked to your resignation, onboarding, tax filing, and benefit declarations. P45, P60, and P11D What is a P45? When an employee leaves a job, the employer must provide them with a P45. This form records the employee’s earnings and tax paid during the current tax year (which runs from 6 April to 5 April the following year) up to the date they left. A P45 has four parts: Part 1: Sent by the employer to HMRC Part 1A: Retained by the employee Parts 2 and 3: Given to the next employer or Jobcentre Plus By law, employees should receive their P45 on their leaving date. When joining a new employer, you're often asked to provide Parts 2 and 3 of your P45 so the employer can apply the correct tax code. If you don’t have a P45, your new employer may have to use an emergency tax code, which could result in overpaying tax. If it’s your first job or you’re starting a second job, you naturally won’t have a P45. In that case, your employer will ask you to fill in a Starter Checklist, which collects your basic tax details (such as whether you have other jobs, your National Insurance number, and whether you have a student loan), so the correct tax code can be applied. The P45 is valid for the entire tax year in which it is issued. If the tax year changes between jobs, you will need to fill in a Starter Checklist instead. What is a P60? In contrast to the P45 which is issued when you leave a job, a P60 is issued if you are still employed at the end of the tax year (5 April each year). Your P60 includes: Your National Insurance number Your employer’s PAYE reference number Your tax code at the end of the year Total earnings for the tax year Total tax paid through PAYE, including breakdowns by tax type The P60 is very important – it helps you check whether you’ve overpaid tax. If you have, you may be able to claim a refund. If you’ve had multiple jobs, each employer should issue you with a separate P60. We recommend keeping your P60s for at least four years as evidence of your income and tax history. This will be crucial if you ever need to prove your tax status or resolve any tax issues with HMRC. What is a P11D? Now that we’ve covered resignations and joining new jobs, let’s look at a form relevant during employment – the P11D. If you receive Benefits in Kind (non-cash benefits) as part of your job – such as: A company credit card Interest-free loans Private medical insurance Company cars or other assets used for personal reasons Then your employer is required to submit a P11D form to HMRC on your behalf. This form lists the taxable value of each benefit, which is used to determine whether you need to pay additional Income Tax. If your total income (including benefits) exceeds £8,500, the employer must submit a P11D. Employers usually give you a copy of the P11D, but if they don’t, they’re still legally required to inform you of the benefits included. If your employer is using payrolling benefits (where tax is deducted through payroll instead), you may not receive a P11D. Employer responsibilities As an employer, if you provide any Benefits in Kind to employees, you must: Submit a P11D for each employee receiving benefits Submit a P11D(b) to report the Class 1A NICs owed on these benefits The key deadlines are: Submission deadline (P11D & P11D(b)): 6 July each year Employee copies must be provided by: 6 July Class 1A NICs payment deadline: 22 July each year The P11D is a crucial document in the UK’s tax system for declaring employee benefits. Even non-cash perks with monetary value can lead to tax liabilities. Both employers and employees should understand these responsibilities to avoid future penalties or unexpected tax bills. Some advice from TB Accountants The different uses of the P45, P60, and P11D highlight the UK’s emphasis on real-time compliance and transparency in payroll and taxation. For employers, these forms are not only records of employee tax status – they are legal obligations. Any delays, omissions, or errors could lead to HMRC investigations or fines. For employees, understanding these forms can help clarify your salary and tax structure. More importantly, it can determine whether you receive a timely tax refund, avoid excessive emergency tax codes, or correctly report additional income from self-employment or investments. 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. Related guides What Is a P45? When You Get One and How to Get a Copy P60 Explained: What It Shows and Why You Need to Keep It

We’re now in a new tax year. If you were employed in the previous year, have you checked your P60? When you apply for a mortgage, loan, or encounter any situation requiring proof of your tax records, if you cannot provide a P60, or you provide an incorrect one, you’re likely to face some trouble. It’s therefore vital that you check. 1. What is a P60? Throughout the tax year, HMRC will closely monitor and record your statutory wages, tax payments, National Insurance, and any benefits you receive. The P60 form is a document that records this information and is issued as part of your annual tax settlement—it can be seen as a final tax receipt provided by the tax authorities when the tax year closes. Employees generally receive the P60 document at the end of the tax year (early April). Your employer must provide you with the P60 by the 31st May of the following tax year at the latest. If they haven’t done so by that date, you should request it from them. Alternatively, you can obtain your P60 information online by creating a personal tax account on HMRC. If you changed jobs during the tax year, you will only receive the P60 from your current employer at the end of the tax year. If you resign after the end of that tax year, your former employer will give you a document called P45, which is similar to P60 and serves as a different form of tax receipt. The difference is that P45 is used to record your income and tax status for the year before leaving that job. 2. What personal details are included in the P60? Generally, HMRC will issue a P60 template which is then filled out by the employer. Regardless of who the employer is, the P60 form has the same format and includes the following information: Payments made Tax deductions Employee NI contributions Statutory deductions included in the salary, such as: Statutory Maternity Pay (SMP) Statutory Paternity Pay Statutory Shared Parental Pay Statutory Adoption Pay Student Loan and Postgraduate Loan deductions Tax code at the end of the tax year Employee name National Insurance number Employer’s PAYE reference number Employer’s name and address 3. Why do you need a P60? The P60 serves as an annual statement of your tax. You therefore need to ensure that the information on it is accurate. Living in the UK, it can be very helpful, for example, if you think you have paid too much tax, you can use the P60 to check. If you want to apply for a loan, you need it as proof of income. Or if you are applying for tax relief, the relevant department needs to use it to serve as financial proof of eligibility. After receiving the P60, you should keep it as evidence of your income and tax status for at least four years. This way, for whatever reason, when you need to prove your tax identity to HMRC or need to resolve some issues, you will have enough evidence to address any problems and confirm your tax identity. At the same time, employers also need to keep these records and retain copies for three years after issuing the employee’s P60. 4. If your P60 information is incorrect, what should you do? After receiving the P60, you must carefully check every detail on it. If your details are incorrect, you can contact your employer or HMRC directly to correct the details. If it has already been submitted to HMRC, then you need to contact HMRC directly to correct your information. If you believe you have paid more tax than you should have, and HMRC has not contacted you to inform you that you will receive a refund, you can submit a self-assessment form to claim these refunds. We want to remind everyone that while HMRC may be able to automatically detect and correct some tax errors, correcting any issues with the P60 is usually the responsibility of the taxpayer themselves, so taking swift action to avoid any penalties is crucial. 5. Can self-employed individuals obtain a P60? Since the P60 is issued by employers, if you are self-employed, you may not receive a P60. If you need to provide four years of income for a mortgage application or other purposes, self-employed individuals can use the SA302 document, which you can download from the HMRC website 72 hours after submitting your tax return. 6. Guidelines for Employers Employers must strictly comply with P60 form rules and must issue a P60 to each employee no later than the 31st May. If you miss the deadline of May 31st, you may face fines. If the P60 remains outstanding, HMRC may impose an initial fine of nearly £300, plus daily interest fines of around £60. Whether HMRC decides to impose fines typically depends on the reason for the initial delay in the form being issued. The longer the delay, the greater the likelihood of being fined. However, if the delay is due to updating or correcting errors, you can appeal to HMRC to cancel the fine. 7. How do employers issue P60s? This depends on how your payroll is managed. If you have an accountant handling payroll, they are likely to be able to issue these forms for you. If you manage payroll yourself, then you are responsible for producing P60s. You can distribute P60s in paper or electronic form according to your and your employees’ preferences. If you use accounting software, this is likely to help you issue P60s quickly and is a very efficient way to manage this task. Companies with fewer than 10 employees can use HMRC’s Basic PAYE Tools, which is a free payroll software. HMRC’s software not only helps you generate P60s and other forms but also assists in calculating taxes and National Insurance contributions. If you prefer using paper materials, you can order P60 forms from HMRC, but these forms may take several working days to arrive, so be sure to order them well before the May 31st deadline. 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. Related guides What Is a P45? When You Get One and How to Get a Copy P45 vs P60 vs P11D: What's the Difference? UK Payroll Forms

Here’s a quick read for you today – let’s find out about how VAT is applied to some foods. 1. Essential vs luxury foods Luxury foods in the UK are usually subject to the standard rate of VAT at 20%. So, what foods are considered luxury items? Typically, items like champagne and caviar might be regarded as luxury foods, but the main focus is on non-essential items like chips and chocolate, which are also subject to the same 20% rate. On the other hand, essentials like bread and milk fall under the zero-rate category and are therefore exempt from VAT. 2. Bubble tea and more Recently, some of our clients have asked whether the bubble tea sold in their bubble tea shops qualify for zero-rating. If the main ingredient in the bubble tea is milk, with only a small amount of tapioca pearls, it may qualify for zero-rate VAT, but it must meet the following two conditions: It cannot be consumed on the premises, as dine-in requires an additional 20% VAT It must be a cold drink, as take-away hot drinks are also subject to 20% VAT It’s important to note that if the bubble tea shop sells other items like fruit teas or carbonated drinks, those products would not usually qualify for zero-rating. There are many other similar examples in other stores. For example, when we buy a sandwich at Pret A Manger (very popular in the UK!), the staff might ask if you’re eating in or intend to take the food away. The price is different because of the VAT charged on dine-in food. Additionally, even if you take the sandwich away, if it needs to be heated, you’ll still be charged 20% VAT. 3. Other foods? The government also often imposes 20% VAT on high-sugar content to control sugar intake, as a public health policy. However, for cakes, they consider them not as desserts, but as something that can be filling, so cakes are actually zero-rated! Chocolate, on the other hand, is still subject to the 20% rate. As you can see, there are lots of complex rules in place, so if you’re selling food, it’s important to make sure you are charging the correct amount of tax! 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. Related guides Selling Homemade Food UK: Registration & Hygiene Rules Eat In vs Takeaway VAT: Why the Prices Differ

Many people in the UK have experience with side businesses or have seen others share their experiences. Besides e-commerce platforms, an increasing number of people have started small home kitchens to sell homemade food. From baking cakes to preparing marinated dishes, customers can place orders online directly with the seller, often without using a food delivery platform. For home chefs, this significantly reduces labour and venue costs while generating extra income. Some people work full-time as students or employees during the weekdays and use their free time on weekends to pursue their passion and earn additional income. But did you know? Selling homemade food in the UK is subject to regulatory oversight, just like opening a restaurant. You must obtain the necessary certifications, fulfil your tax obligations, and may even be eligible for tax relief. Selling homemade food in the UK What Preparations Are Required? Running a home kitchen business in the UK is not as simple as cooking a meal for yourself. You need to follow these steps to ensure legal and compliant operation: Register as Self-Employed A home kitchen business is considered a type of food enterprise. Whether you do it full-time or part-time, you must register as self-employed with HMRC within three months of starting your business. Once registered: You can decide your working hours and methods (e.g. taking orders and preparing food); You earn income from selling food rather than receiving a fixed salary; You are responsible for tax obligations and business risks (e.g., paying taxes regularly and complying with hygiene inspections). If your business turnover is small and limited to occasional sales, HMRC may still classify you as self-employed, requiring registration. Registration Process: Visit the HMRC website and create a Government Gateway account (if you don’t have one); Fill in the self-employment registration form (provide your name, address, date of birth, National Insurance number, business type, etc.); Submit your application and wait for HMRC to send you a Unique Taxpayer Reference (UTR) number (usually received within 10 days); Use your UTR number to register for Self Assessment and submit a Self Assessment Tax Return annually. Register Your Food Business Under UK law, you must register your food business with your local council at least 28 days before starting operations. Registration is free and does not require renewal. If you plan to operate in multiple locations, you must register with each local council. Do not register too early. If your food business is not yet ready for commercial activity, wait until it is about to start before registering at https://www.gov.uk/guidance/food-business-registration. Operating a food business without registration may result in fines, up to two years' imprisonment, or both. Apply for a Food Hygiene Rating The Food Standards Agency (FSA) assigns a food hygiene rating ranging from 0 to 5 after an inspection. This rating assesses food safety and hygiene conditions. Inspections typically occur a few weeks after you register your food business (often unannounced), and the results are published on the FSA website for customers to check. Inspections cover: Food storage, handling, cooking, and refrigeration; Kitchen cleanliness, equipment hygiene, ventilation, and drainage; Whether employees maintain good hygiene practices. Apply for Food Premises Approval Depending on your business nature, you may need to apply for specific licences. You must apply if: ✅You handle raw or cooked meat, seafood, dairy, or other animal-derived foods and supply them to other businesses (e.g., supermarkets, restaurants) ✅You produce food in bulk and supply it to multiple locations instead of selling directly to consumers. You do not need to apply if: ❌You only sell food locally (e.g., selling homemade food directly to consumers) ❌Your business is retail-based and supplies small quantities (e.g., small restaurants, home kitchens, takeaways) ❌You have already registered your food business and do not engage in large-scale food processing. Establish an HACCP Plan A Hazard Analysis and Critical Control Points (HACCP) plan is a food safety management system designed to identify, assess, and control potential hazards in the food production process to ensure food safety. For more details, visit https://www.gov.uk/food-safety-hazard-analysis Obtain a Food Hygiene Certificate Before starting a home kitchen business, you must hold at least a Level 2 Food Hygiene Certificate and complete an accredited Level 2 Food Hygiene course to ensure you understand food safety and hygiene standards. Requirements for Selling on Food Delivery Platforms If you plan to sell via food delivery platforms such as Uber Eats, Deliveroo, Just Eat, or Panda Delivery, you may need to apply for an A5 licence, which covers businesses offering hot food for takeaway. Additionally, consider purchasing Public Liability Insurance to protect your business against risks such as food poisoning claims from customers. Taxation and Tax Relief As a home chef, you must declare and pay taxes based on your income. Some tax reliefs may apply: Personal Allowance: As of the 2024/25 tax year, the standard personal allowance is £12,570, meaning individuals earning below this threshold do not pay income tax; Trading Allowance: Self-employed individuals can receive up to £1,000 in tax-free trading allowance. However, this does not apply if you jointly own or control a trading business with family members; Business Expenses Deduction: You can claim a portion of business expenses such as council tax, heating, lighting, phone, and broadband costs to offset tax liability. If you run your home kitchen from a property you own, you may need to pay business rates for the portion used for business. Additionally, when selling your home, you might be liable for Capital Gains Tax on the business-used portion. Some Advice from TB Accountants This guide provides detailed information on starting a home kitchen business as a self-employed individual. However, some people wonder whether registering a company for food sales would be more advantageous. We would advise that this depends on your business scale, total income level, and financial planning. Registering a company may be beneficial if: Your annual income exceeds £30,000, and corporation tax is lower than income tax; You want to separate personal and business assets to reduce personal liability; You aim to optimise taxes through dividend payments and legitimate business expense claims (e.g., kitchen rental, equipment, ingredients, insurance, marketing); You plan to expand your food business and establish partnerships with food suppliers and B2B customers. Starting a business is never easy, whether it's a primary or secondary job. The registration process, document preparation, tax filing, and compliance requirements can be overwhelming. Don’t worry – our professional team is here to support you. From self-employment registration and tax filing to company registration and financial planning, our experienced tax experts offer personalised services to help your business thrive. 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. Related guides VAT on Food in the UK: What's Zero-Rated and What's 20%? Eat In vs Takeaway VAT: Why the Prices Differ

If you’ve been employed by one than one employer in the UK, you would have received a P45 document after the end of your previous jobs. But what is a P45? 1. What is a P45? Whenever anyone is employed by a company in the UK, their employer will register them with HMRC in order to pay the relevant taxes and National Insurance contributions. At the end of employment, the employer must provide a P45 form which shows detailed information about the employee’s income and previous tax paid. This is so that any new employer can easily follow up to declare the correct income tax information to HMRC. 2. What does a P45 look like? There is no standard format for P45. Each one is slightly different, but all formats will contain important information such as employee name, address, salary, national insurance number, and tax code. The P45 form is usually divided into four parts—1, 1A, 2, and 3, with the first part being sent to the tax office, 1A being retained by the employee, and parts 2 and 3 being given to the new employer. In general, the purpose of issuing P45 is to report changes in the employee’s employment status to HMRC to ensure accurate taxation. At the same time, it can also help employees transition into new jobs, or claim benefits during periods of unemployment. 3. When do you receive a P45? Generally speaking, employees can receive the P45 on the day of resignation, but if for some reason you have not received it, you can request it from your employer. The P45 has always previously been in paper form, but now it can also be generated electronically. If you are an employer, you have a legal obligation to issue this P45 form to employees who are leaving. Generally, your company’s payroll software can handle this operation for you. You can also use HMRC’s free PAYE tool, which can directly help you calculate taxes and national insurance, and help you issue forms such as P45. Even if an employee is dismissed by an employer, they still have the responsibility to issue a P45 form to the employee. 4. What if the employer refuses to issue a P45? If the employer refuses to issue a P45, or there are delays in receiving a P45, the employee needs to communicate with them immediately about the situation. In some cases, the delay may be due to administrative errors or technical issues and can be resolved through communication. However, if the employer unreasonably refuses to provide the necessary documents, some measures can be taken to resolve the issue, such as reporting the issue to HMRC. HMRC has protocols for such situations, and they can intervene on your behalf. If you have tried to obtain the document from the employer and it has been refused, it’s best to gather evidence in case you need to prove to HMRC that the employer has violated legal obligations. 5. Validity period of P45 The P45 is valid throughout the tax year in which it is issued. For example, if you receive a P45 in January 2024, the validity period of this tax form is only until the end of March 2024, before the new tax year begins in April. In some cases, if an employee resigns in the previous tax year, the P45 can still be used until May 24th. This means that if there is a change in the tax year between resignation and starting a new job, you will need to use an entry checklist instead. 6. Importance of P45 In terms of employment and taxation, the P45 is crucial for both employees and employers. For employees, P45 provides basic information about income, taxation, and employment status in the UK, which is essential for future job opportunities. It can prove to new employers your previous income and tax situation. At the same time, P45 provides necessary details to HMRC, ensuring that you are taxed correctly in your new job, ensuring you receive accurate wages, and avoiding any potential penalties due to incorrect tax calculations. If you cannot find a job immediately, during unemployment, you can also use the P45 form to apply for jobseeker’s allowance or tax refunds. For employers, obtaining and reviewing a new employee’s P45 is equally important. By accessing the employee’s P45, employers can verify the employee’s previous work experience and any relevant tax codes, as well as understand how much tax the employee has paid so far. This ensures that they classify employees correctly for wage purposes and avoid potential errors or penalties associated with incorrect tax reliefs. 7. What if there are errors on the P45? When you receive a P45 document from your employer, it’s best to check the information listed on it. If you find any errors, you should immediately contact your employer’s human resources department and request them to correct the details. If you believe that the tax code provided is incorrect, you should contact HMRC. If you find a job while updating the document and cannot provide the P45 form to your new employer—don’t worry, this will not affect your employment. However, as mentioned above, you may need to complete an entry checklist form with the assistance of your new employer. Provide this document to your new employer once all your P45 information is updated. 8. Some advice for prospective employers from TB Accountants Many employers often ask us – can they hire new employees without P45? In short, the answer is yes, you can hire employees without P45. Sometimes, the new employees you hire may not have a P45 for various reasons, such as being a graduate with no previous employer, waiting for the previous employer to issue a P45, or the new employee having previously only worked part-time. If your new employee arrives without a P45, you need to have the employee fill out an entry checklist (formerly known as the P46 form) and enter the information into your payroll system. If your payroll software does not generate the necessary checklist, you can find it on the government website. This way, you can temporarily use a temporary tax code for this employee until HMRC notifies you of the new code, or until the employee provides their P45. 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. Related guides P45 vs P60 vs P11D: What's the Difference? UK Payroll Forms P60 Explained: What It Shows and Why You Need to Keep It