Autumn Budget 2025 – How am I Affected?

On Wednesday 26th November, the Chancellor of the Exchequer delivered this Labour government’s second budget. But what changes have been laid out? And how will they affect you and your business?

National Minimum Wage Increase

Much like the announcement in last year’s budget, the National Living Wage will be increasing from April 2026 for those over 21 years of age. The rate will be raised from £12.21 to £12.71 – a 4.1% increase.

For 18–20-year-olds, an increase of 8.5% will bring their minimum wage to £10.85 an hour. This larger increase is an effort to bring earnings closer to that of older workers.

The minimum wage for under 18s and apprentices is also increasing. A 5.6% increase sees this rate rise from £7.55 to £8.00.

Income Tax and National Insurance Freezes

The freeze of Income Tax and National Insurance thresholds has been extended to April 2031. By this date, the thresholds will have remained the same for 10 years.

As the National Minimum Wage is increasing whilst the tax thresholds stay the same, more individuals will be pushed into higher tax bands, resulting in them paying more tax.

Taxing Salary Sacrifice Pensions

A salary sacrifice pension is where an employee accepts a lower salary with a contractual agreement that their employer pays the difference directly into their pension tax-free. As their salary is lower, they in turn pay less Income Tax and National Insurance on their wages.

This budget has announced that an annual cap of £2,000 will be applied to salary sacrifice pensions from April 2029. This means that any amount over this cap will be taxed in the same way as other employee pension contributions.

Increases to Non-Employment Tax Rates

Basic and higher tax rates for dividend income will increase by 2% from April 2026. The additional rate will remain at 39.35%

Tax on savings and property income will also increase by 2% across all bands (including the additional rate) from April 2027.

Changes to ISAs

April 2027 will see reforms to the current ISA Allowances. Currently, investors can put up to £20,000 each tax year into an ISA (or split the amount over several ISAs). The new changes stipulate that only £12,000 of the original allowance will be allowed into cash ISAs. The remaining £8,000 can still be invested, but only into an investment ISA (i.e., a stocks and shares ISA).

Those aged over 65 are exempt from this change and may continue to put the full £20,000 into a cash ISA if they would prefer.

Electric Vehicle Duty

A new excise duty will apply to electric and hybrid vehicles from April 2028. This will be charged at £0.03 per mile for fully electric cars, and £0.015 per mile for plug-in hybrids. These rates will be subject to increases with inflation.

This measure could be seen as disincentivising electric vehicles, but increased funding for EV charging and business rate relief being applied for charging points is hoped to encourage drivers to still make the switch.

Introduction of Mansion Tax

The budget has announced a high-value surcharge, known as Mansion Tax, will be introduced in 2028. This will see an additional £2,500 charge on properties valued over £2 million, or £7,500 for properties valued over £5 million. The surcharge will be collected alongside council tax. It is expected to raise over £400 million by 2031 whilst only affecting the top 1% of properties in the country.

Two-Child Benefit Cap Scrapped

Since 2017 parents have only been able to claim universal credit and other benefits for their first two children. The 2025 Budget has declared that this cap will be scrapped from April 2026. This hopes to reduce the number of children currently living in poverty in the UK.

Additional Changes

  • Increases in funding should ensure that apprenticeships for under 25s will be free for small and medium sized businesses
  • A 40% allowance will be given to allow businesses to write of more of their initial investment costs
  • Higher business rates will be imposed on properties worth over £500,000 (i.e., warehouses owed by online retail giants) to allow rates to be lowered for an estimated 750,000 hospitality, leisure, and retail businesses
  • Customs duty will apply to all parcels – should be implemented by March 2029 at the latest
  • Gambling duty reform will take place from April 2026. The highest increase will be on remote gaming (online casinos), which will be applied at 40%
  • Fuel duty will remain frozen until September 2026
  • Tobacco and alcohol duties will increase again in the next tax year
  • The sugar tax will now include dairy-based drinks (such as milkshakes)

 

If you require any advice regarding changes announced in the budget, or you require help with accounting, tax preparation, or payroll, please do not hesitate to contact us.

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Companies House Fee Increases

From 1st February 2026, Companies House will be implementing higher fees for submissions. This is following a previous price hike in May 2024, and in addition to a shift to software-only filing from April 2027. With some costs set to double it is vital that you plan ahead and assess the impact this will have on your business.

 

What are the New Companies House Fees?

The table below shows both the current fees and those that will apply from 1st February 2026. We have also included the percentage increase as a comparative measure.

Service Submission Type Current Fee Fee from February 2026 Percentage Increase
 

Company Incorporation

 Digital £50 £100 100%
Paper £71 £124 74.6%
Digital (same day) £78 £156 100%
 

Confirmation Statement

 Digital £34 £50 47.1%
Paper £62 £110 77.4%
Change of Company Name Digital (same day) £83 £85 2.4%

 

On the other hand, fees for voluntary strike-off are set to decrease. Digital submissions will fall from £33 to £13. Paper submissions will fall from £44 to £18. This is a return to the pre-2024 rates.

 

Why Are Companies House Increasing Their Fees?

Companies House are increasing their fees as part of a government scheme to tackle business fraud and modernise their systems. They hope that, by increasing costs, criminals will be dissuaded from abusing the company register and setting up fake companies for illegal use.

The additional revenue will be used to cover the implementation of new software and structural changes under the Economic Crime and Corporate Transparency Act. These changes can already be seen with the implementation of mandatory identity verification for directors and PSCs earlier this year.

 

How Will This Affect My Business?

With annual fees like the confirmation statement increasing, it is important that small businesses factor the price increases into their 2026 budget. You should also check that all information is current and correct before filing to avoid additional fees for submitting corrections.

If you are worried about the impact of these changes on your business, or you are looking for an accountant to submit to Companies House on your behalf, do not hesitate to contact us.

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Understanding CIS Gross Status

CIS can be confusing for both contractors and subcontractors alike. Accounting for your CIS deductions can create issues when billing for your work. CIS gross status can help to alleviate the stress, but is it right for you?

What is CIS?

CIS stands for the Construction Industry Scheme. It is a tax compliance framework that applies to both contractors and subcontractors within the construction industry. When paying a subcontractor, contractors must deduct CIS from their pay, submitting this amount to HMRC. These CIS deductions are then applied as advance payments towards the contractor’s PAYE and NI tax balance.

CIS covers several areas of work, including the construction of both permanent and temporary buildings, civil engineering, and demolitions. On the other hand, surveying and the manufacture of building materials are exempt from CIS. GOV.UK have a CIS Guide which breaks down which services fall under the Construction Industry Scheme.

Contractors must register for CIS. Subcontractors do not have a legal obligation to register, but they will have a higher deduction rate if they do not.

The Construction Industry Scheme was introduced as an effort to reduce rates of tax evasion within the construction industry by enforcing mandatory reporting of payments to subcontractors. It is helpful, particularly for smaller contractors, as it enables them to split their tax liability throughout the year.

What are the CIS rates?

The rate at which CIS is deducted depends on each subcontractor’s tax treatment. The rates are as follows:

Tax Treatment Rate When does this apply?
Standard Rate 20% When a subcontractor has registered for CIS
Higher Rate 30% When a subcontractor has not registered for CIS
Gross Rate 0% When a subcontractor has registered for CIS and has been granted gross status

 

When you begin working with a subcontractor, you must verify them through the GOV.UK portal. To verify them you will need their name and UTR number. Verification gives you the subcontractor’s tax treatment.

Once verified, you will also receive a verification number. Most accounting software will require this when setting up a subcontractor as a supplier.

What does CIS Gross Status Mean?

CIS Gross Status sets the CIS rate at 0%. This means no CIS is deducted; contractors must pay a gross rate subcontractor in full.

Under this status, subcontractors can pay their PAYE & NI at the end of the tax year, rather than spread throughout. If you are reliant on cash flow, this can be very beneficial as you will no longer need to wait until the end of the year for the CIS to be refunded.

As the requirements to become eligible for gross payment status are quite strict, it can also show clients and contractors that you are reliable and financially responsible. This could help to sway a contract negotiation in your favour.

Am I Eligible for Gross Status?

To be eligible for CIS Gross Status, you must:

  • Do or provide labour for construction work in the UK
  • Have a business bank account
  • Have no outstanding balances with HMRC – PAYE, VAT and Corporation Tax/Self-Assessments must have been paid on time
  • Meet a minimum turnover within the last 12 months

The minimum turnover needed to be eligible is reliant on the type of business:

Type of Business Minimum 12-Month Turnover (excluding VAT)
Sole Trader £30,000
Partnership £30,000 per partner – £100,000 within the whole partnership
Limited Company £30,000 per director – £100,000 within the whole company

Please note, if your company has five or less directors, each must have an annual turnover of at least £30,000.

The turnover must be related to construction activities. Any non-construction turnover should be excluded.

Once gross status is granted, HMRC will continuously review your CIS. If you fail to comply with CIS rules (such as paying your tax on time) they can revoke your gross status.

How Can I Apply for CIS Gross Status?

You can apply for gross status online or by post.

Online submissions are done through the GOV.UK portal. You will be required to provide the UTR number, turnover, proof of turnover, and bank details. Additional information, such as your NI Number, and PAYE and VAT registration numbers, will also be requested.

If you cannot complete a submission online, you can apply by post. In addition to the information needed for an online submission, you must complete a form depending on your business type.

An agent (i.e., an accountant) can also submit a Gross Payment Status application on your behalf.

I am Unsure About Applying for CIS Gross Status – Can You Help?

At WKM Accountancy Services, we can assess your eligibility for CIS Gross Status and make the application on your behalf. We also offer other CIS-related services.

If you would be interested in this service, or require help with the other financial aspects of your business, please contact us.

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Companies House Filing Changes

From 1st April 2027, all companies will have to file their annual accounts using software. New reporting requirements will also be introduced. This is yet another financial blow to business owners, following the announcement of plans to close both Companies House and HMRC’s free filing services earlier this year.

What Changes are Coming?

All companies will be required to submit their annual accounts using commercial software (such as Xero and Capium). As such, both the web and paper-based filing systems used by Companies House will be closed. Whether you submit your accounts yourself, or through an accountant, you must use accounting software from 1st April 2027.

Furthermore, profit and loss accounts will become mandatory for small and micro-entity companies from this date. Previously, an exemption was in place that allowed the smallest businesses to submit simplified accounts (known as abridged accounts) where the main document was the balance sheet, rather than the profit and loss. The removal of abridged accounts will lead to further preparation time, costing these businesses more to submit their accounts.

It is important to note that no changes are currently planned to change the services for confirmation submissions and director information updates. However, directors and people with significant control (PSCs) are now required to verify their identity with Companies House.

Why are these Changes Happening?

These filing changes are being introduced as part of the Economic Crime and Corporate Transparency Act 2023. The use of software is intended to reduce errors and formatting issues, as they will be prepared to government specifications. Online filing is also more secure than paper filing as there is less risk of accounts being tampered with or being lost in the post.

Having profit and loss information available for all companies on the Companies House register is believed to improve access to credit for small businesses and micro-entities, as this will be available for lenders to assess. It is also expected to prevent money laundering as these businesses will have to disclose more information.

What do I Need to Do Before the Changes Take Place?

Before these changes occur, you will need to select the accounting software you wish to use going forward. There are many options to choose from so it can feel quite overwhelming. GOV.UK offer a tool to help you find software that works best for the type of accounts you need to submit. The software will be able to generate reports, which include the profit and loss if you have not had to create one yourself before.

Are There Any Further Changes Planned?

Companies House are planning to implement further changes after April 2027 but have not announced any details yet. You can follow our blog to keep up to date with future updates.

I’m Worried About the Changes – Can You Help?

At WKM, we understand that changes to filing can be stressful, particularly for small businesses. If you are unsure about using software for your accounts, please do not hesitate to contact us for advice. You can also find further information about software and cloud accounting on our website.

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Companies House Identity Verification

From 18th November 2025, all directors and people with significant control (PSCs) must verify their identity with Companies House. Verification is a new legal requirement being introduced to crack down on the use of companies for illegal purposes as part of the Economic Crime and Corporate Transparency Act 2023.

 

How Can I Verify?

The identity verification process can be done using two methods:

  • You can verify online using a GOV.UK One Login. This can also be done through the GOV.UK app.
  • You can verify in person at a post office. Find more information here.
  • At WKM, we can submit your documents on your behalf as Authorised Corporate Service Providers (ACSP), as we have been verified as Companies House authorised agents.

It is recommended that you verify your identity now. This will allow you to correct any inconsistencies before verification becomes mandatory.

Please note that each director and PSC must verify their identity. We recommend checking the information Companies House currently holds for your company to ensure all individuals are on the register, and that their information (i.e. date of birth) is correct.

 

What Information is Needed for Identity Verification?

The information required for identity verification are as follows:

  • Photo ID (i.e., a biometric passport, UK driving licence, UK biometric residence permit)
  • Your current address
  • The year you moved to your current address

 

What Will Happen Once I am Verified?

Once verified, you will receive a Companies House personal code. The code is for each individual, not the company. From Autumn 2025, you will need to link your identity to your companies using this code. Keep the code secure ready for when this feature is introduced.

 

Why Do I Need to Verify?

Your personal code will be used when filing confirmation statements from Autumn 2025 onwards. It must also be provided if you are appointed as a director, or become a PSC, for another company after verification is made compulsory.

Companies House may strike off a company from its register if the directors/PSCs are not verified. New companies will not be able to register with Companies House until all individuals are verified.

 

If you need any help with your verification, changing details on Companies House, or any other accounting needs, please do not hesitate to contact us.

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HMRC Free Filing Scrapped – What you need to know

From April 2026, both HMRC and Companies House will close their free filing portals for Corporation Tax and accounts. Prepare now to get ahead of the change.

When will the Free Filing Services Close?

The closure of both platforms was announced earlier this month and will take effect from midnight on Tuesday 31st March 2026.

Why are the Free Filing Services Closing?

HMRC have stated the current service they provide does not meet current digital standards. They believe the modernisation of Corporation Tax and accounts filing could improve the accuracy of the returns submitted.

By closing their filing platforms, HMRC and Companies House are encouraging businesses to make the switch to using accounting software. This aligns with the government’s Making Tax Digital (MTD) plans.

How will the Free Filing Closure Affect Me?

If you use either filing platform, you will need to find another method of submission. Submitting the figures using accounting software will bypass the portal and submit the figures directly to HMRC and Companies House. The downside, particularly for smaller businesses, is that most software will charge a subscription fee, adding an additional cost to already increasing overheads.

If you believe this will affect you, please get in touch.

What do I Need to do Before the Services Close?

Before the closure, you must log in to the HMRC online service and save copies of at least the last 3 years of submissions. This must be done before 31st March 2026 as you will be unable to access this information once the platform has closed.

I Need Help with the Switch – What Should I Do?

At WKM Accountancy Services, we are experienced with a variety of accounting software and are happy to help to find the right package for you and your business. If you need advice regarding the upcoming submission changes, or any aspect of your accounts, please do not hesitate to contact us.

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Making Tax Digital for Self-Assessment (MTD ITSA)

The way Self-Assessments are submitted is changing from April 2026. Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) will see a shift to digital record keeping for the self-employed and landlords.

What is MTD ITSA?

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is the next phase of the digitalization of the UK tax system. The change in the law will see self-employed individuals and landlords keeping records and submitting tax returns digitally.

The new rules will require the use of compliant software to submit a self-assessment, and quarterly submissions known as “Digital Quarterly Updates”.

Why is MTD ITSA Being Introduced?

MTD is being introduced to modernise the UK tax system. It was first announced in the 2015 Budget, with plans to update several aspects of the tax system in phases. This first change was MTD for VAT, which was implemented in 2019.

The change to digital self-assessments is expected to reduce the risk of human error, which accounts for much of the corrections needed for self-assessments each year. The reduction in errors is expected to reduce the self-assessment tax gap. This is an estimate of the tax that has not been collected by HMRC. It was 24.3% in the 2022-23 tax year. This is around £5.9bn that is estimated to have not been paid.

Using software is also expected to save time and be more productive for individuals as the information will be ready by the year end due to the quarterly updates, and records will be kept digitally, removing the need to sort through physical paperwork.

When Will MTD ITSA be Introduced?

MTD ITSA will be introduced in phases depending on an individual’s qualifying earnings. Using the table below, you can see when your self-employment or rental income will be subject to the New MTD ITSA rules:

Yearly Qualifying Income MTD Start Date
Over £50,000 6th April 2026
Between £30,000 and £50,000 6th April 2027
Below £30,000 To Be Announced

The government is currently reviewing whether MTD ITSA should apply to those with a turnover of less than £30,000. If the decision is made to implement MTD ITSA for this group, it should not start until after the other bands have submitted returns, but an exact date is not known.

MTD for partnerships had previously been scheduled for April 2025, however this has been postponed. A new start date has not yet been announced.

Digital Quarterly Updates

One of the largest changes that will be implemented with MTD ITSA is the introduction of Digital Quarterly Updates. Previously, self-assessments have required a single submission by 31st January. But under the new MTD ITSA rules, information must be submitted every quarter, as well as a final submission by 31st January.

Each update will include the income and expenditure for that quarter and must be submitted using MTD-compatible software. These submissions will be cumulative, meaning that you can make amendments to previous submissions within the next quarter, rather than submitting a separate return for corrections. This method is like a VAT return.

It is important to note that this change in submissions is not expected to affect payment methods, such as payments on account, as the final submission deadline will still be 31st January.

MTD-Compatible Software

MTD-ITSA requires the use of compatible software. For software to be classed as MTD compatible, it must meet the following requirements:

  • It must allow digital record keeping. Examples include features for bank connections or transaction imports, and allow invoices, bills, and receipts to be posted. Records must be kept for at least 5 years as per government requirements.
  • It must be able to submit the quarterly updates and final declaration directly to HMRC.
  • It must generate the information for the final declaration and provide a calculation of the tax owed.
  • It must be easy to use.
  • It must update figures such as tax rates and allowances in line with government announcements.
  • It must be secure and offer 2-factor authentication to help keep information safe.

A list of MTD-compatible software is available on the GOV.UK website.

Voluntary Sign-Up to MTD ITSA

If you would like to start submitting your self-assessment in line with MTD ITSA regulations before your earning band’s start date, you can sign up voluntarily if you meet the following criteria:

  • Your details on HMRC are correct
  • You live in the UK
  • You have a National Insurance (NI) number
  • You have submitted a Self-Assessment previously
  • Your accounting period is from 6th April to 5th April
  • You have no outstanding tax

Signing up will mean that you are abiding by MTD ITSA rules during the testing phase. Please note that, during the testing, you cannot claim any losses from previous years or change your accounting period. There is also criteria will prevent you from signing up, such as having a payment plan in place with HMRC.

Is Anyone Exempt from MTD ITSA?

Some individuals may be exempt from MTD ITSA, these include:

  • Those who do not have a National Insurance (NI) number
  • Anyone with a physical or mental condition which would prevent digital access
  • Anyone who has difficulty using digital technology due to their age or a lack of accessibility in their area

 

If you would like further advice on how to prepare for MTD ITSA, or require any further help with your self-assessment, please do not hesitate to contact us.

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Self-Assessment Deadline 2024

The self-assessment deadline for 2023/24 tax returns will soon be upon us. It is important to know when your information needs to be submitted.

When is the Self-Assessment Deadline?

The deadline for the online submission of self-assessments is 31st January following the tax year. For 2023/24 returns, the deadline is 31st January 2025. This is also the payment deadline. You must ensure the tax return is submitted and paid before midnight to avoid penalties.

How Do I Know to Complete a Self-Assessment?

If you have previously completed a self-assessment, HMRC will notify you if a return is needed for that tax year. If you have met the criteria to complete a self-assessment for the first time, you will need to notify HMRC.

How do I Submit a Self-Assessment?

You can submit self-assessments through the HMRC portal. You will need our Unique Taxpayer Reference (UTR), which you will have received after registering for self-assessment.

If you are working with an accountant, they can submit the return on your behalf. We offer self-assessment services to clients across the UK. You can visit our page to learn more.

How Do I Pay my Self-Assessment Tax?

You can pay your self-assessment tax in a variety of ways. HMRC provide a breakdown of the available methods here.

Some additional methods include paying via your tax code if you are on a payroll, or setting up a payment plan with HMRC.

Most individuals will make two payments a year, known as payments on account.

Is there a Fine for Missing the Deadline?

If you miss the deadline HMRC will issue penalties. Penalties are split into two types: late filing & late payment.

These penalties will increase over time.  Submit and pay before the deadline to avoid additional charges.

I Need Help Preparing my Self-Assessment – Who Can I Talk to?

We understand that self-assessments are an additional task on top of your workload, and that it can be difficult to know what you can claim. If you need assistance to complete your self-assessment tax return, please contact us.

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Autumn Budget 2024 – How Will it Affect Me?

On Wednesday 30th October, Rachel Reeves delivered her first budget as Chancellor of the Exchequer, and Labour’s first budget in 14 years. But what changes have been announced in the Autumn Budget? And how will those changes affect you?

National Minimum Wage Increase

The National Minimum Wage (NMW) will increase from April 2025. The hourly rate will rise by 6.7% for those aged 21 and over. The current NMW hourly rate is £11.44, this will rise to £12.21 next year.

Under 18s and apprentices will see their rate increase to £7.55 from £6.40.

The rate for 18–20-year-olds will increase by 16.3% to £10 per hour. This has been implemented as part of a long-term goal to consolidate NMW rates. This plan will see everyone over the age of 18 having the same minimum rate in the future, much like how the 21-22 age bracket was scrapped in April 2024.

Employer National Insurance Increase

From April 2025, the Employer National Insurance (NI) rate will increase from 13.8% to 15%.

Employer NI is the tax contribution made by employers on their employees’ earnings. These contributions are due on earnings which exceed the employer NI threshold. The budget announced that this threshold is now set to reduce from £9,100 to £5,000; employers will be paying a higher rate of tax on more earnings.

Employment Allowance Increase

To combat the impact of the changes to Employer NI, the Autumn Budget did announce an increase in Employment Allowance from £5,000 to £10,500.

Employment Allowance is a government scheme which allows eligible employers to reduce their National Insurance costs by the allotted amount each year. This means that an employer who claims the allowance in April 2025 can reduce their total ER NI contributions for the year by £10,500.

Capital Gains Tax Increases

The autumn budget also announces increases to Capital Gains Tax (CGT) rates in the next financial year. The lower rate will increase from 10% to 18%, whilst the higher rate will increase from 20% to 24%. The new rates match the tax rates for capital gains on property sales.

These rates are in effect from 30th October 2024. Remember that the rate used is dependent on when the sale occurred; sales made before the budget will not be taxed at the new rates. You can find more information on capital gains here.

Inheritance Tax

Currently, the tax-free threshold for inheritance tax (ITH) is £325,000. This increases to £500,000 if the estate is left to children or grandchildren. It was announced in the budget that these thresholds would remain frozen until 2030.

The largest change to IHT is that, from April 2027, inherited pensions will be included within the estate; they will be taxed.

Exemptions on IHT that previously applied to agricultural property have been reviewed. Previously, no IHT applied to agricultural land. The reformed relief will see the first £1m in combined assets be tax-free, but tax on value exceeding this will see a relief of 50%. This means that the IHT rate will be 20%, rather than the usual 40%.

If you need support or resources regarding inheritance tax, you can learn more here.

Carer’s Allowance

Carer’s allowance is a form of government support given to unpaid carers who provide care for a minimum of 35 hours per week. The allowance is currently £81.90 per week. However, you can only claim the allowance if you are earning below the weekly earnings limit. Once this limit is surpassed, you cannot claim the allowance and must repay any allowance claimed that year.

In the autumn budget, it was announced that the weekly earnings limit would be increasing from £151 per week to £181 per week. This will allow carers to work more hours a week without needing to forfeit their benefits.

Additional Announcements

  • Employee National Insurance, VAT, and income tax will not increase. The personal tax thresholds, which are used for income tax and Employee NI, are currently frozen until the 2027/28 tax year, but it will increase in line with inflation after this.
  • The corporation tax main rate (for companies with profits over £250,000) will remain at 25% for the duration of this Labour government.
  • Plans have been made for HMRC to hire additional compliance officers, update their IT systems, and enhance their app services.
  • Businesses in the retail, leisure and hospitality sectors will receive 40% relief on business rates from the 2026/27 tax year, up to a £110,000 cap.
  • “Non-Dom” status will be abolished from April. A new residence-based scheme will be introduced in its place.
  • Benefits will rise by 1.7%, in line with inflation, in April.
  • Stamp duty on purchases of second homes and residential property purchases by companies will increase to 5%
  • Fuel duty will remain frozen for the next tax year. The 5p cut will also continue.
  • Air passenger duty will see small increases, apart from on private jets, which will see a 50% increase.
  • A vaping liquid levy will be introduced, and tax on tobacco will continue to rise.
  • VAT will be applied to private school fees from 1st January 2024.
  • The bus fare cap will remain for another year, but it will be increasing to £3.

 

If you require any advice regarding changes announced in the budget, or you require help with accounting, tax preparation, or payroll, please do not hesitate to contact us.

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Do I Need to Complete a Self-Assessment?

The deadline to notify HMRC that you must complete a self-assessment tax return is quickly approaching, but it can be tough to know if you need to complete one. HMRC have criteria for who needs to submit a return. This varies depending on the income that you receive.

What is a Self-Assessment?

A self-assessment reports income to HMRC which has not yet been taxed. Unlike employment income, where Income Tax and National Insurance are deducted from a person’s wages, the tax on other types of income is not deducted when it is received. This means that the tax must be collected through a self-assessment.

Self-assessments are currently submitted per tax year. Each tax year covers the period 6th April to 5th April. This means that the current tax year is 6th April 2023 to 5th April 2024. A shift towards quarterly returns will be introduced when Making Tax Digital (MTD) comes into effect.

Who Needs to Complete a Self-Assessment?

HMRC have set criteria which determine who should submit a self-assessment. As there are many ways to earn an income, eligibility is based on the type of income you have received during the tax year. You can find the information which applies to you by clicking the bullet points below:

Sole Traders and Self-Employed Individuals

If you are self-employed or a sole trader, you must submit a self-assessment tax return if you earn over £1,000 in the tax year.

Please note that you must notify HMRC that you have become self-employed within 3 months. Failure to do so will result in a £100 fine.

Income from Property Rental

If you receive income from a renting out a property that you own, you must complete a self-assessment. This will include your rental income and allowable expenses for the tax year.

Allowable expenses are costs relating to the property that you have paid. These include repair costs, water rates, cleaner’s fees, and rental costs if you are sub-letting. Please be aware that any costs paid by the occupants cannot be included on your return

If you are earning between £1,000 and £2,500 a year, contact HMRC. They will advise you whether a tax return is needed.

Dividend Income

If you are a company director or shareholder who receives dividends, you must complete a tax return.

Dividend tax thresholds follow the same bands as Income Tax, with the rate increasing as your taxable income increases. Dividend tax calculations can be affected by the personal and dividend allowances.

Business Partnership Income

If you are part of a business partnership, you must include the share of income you have received on a self-assessment. This is separate from your partnership tax return, but both must be submitted. On your self-assessment this income will be declared on an additional page called SA104.

High Taxable Income

You must complete a tax return if your adjusted taxable income is more than £150,000.

Adjusted net income is your total taxable income before any personal allowances have been applied, less certain tax reliefs (such as Gift-Aid donations and trading losses).

Capital Gains

If you have sold an item at a profit, which can be classed as an asset, you may have to pay capital gains tax. This must be included on your self-assessment.

You will have to pay capital gains tax on personal possessions worth £6,000 or more (excluding cars), business assets, and certain types of shares.

Sale of property will class as a capital gain if is not your main home, if you have let out your main home, or if you have used part of your home exclusively for business. Property gains must be reported to HMRC, and the tax must be paid, within 60 days of the sale. The figures submitted must still be included on your self-assessment, but you will not be taxed further if you have paid the capital gains tax.

High Income Child Benefit Charge

You will need to submit a self-assessment if either you or your partner receive Child Benefit, but one of your adjusted net incomes is more than £50,000. This is because you will receive a tax charge known as the High Income Child Benefit Charge. If you both have incomes greater than £50,000, whoever earns more will pay the charge.

The threshold for this charge will increase from the 2024/25 tax year.

Income Received from Abroad

If you are a UK resident and receive foreign income this must be included on a self-assessment.

If this income has already been taxed in another country, you may be eligible for Foreign Tax Credit. This is dependent on the double-taxation agreement that the UK has with the other country.

UK-Based Income for Non-UK Residents

If you are not a UK resident, you will still need to submit a self-assessment if:

  • you receive rent from a UK property
  • you sell goods or services/run a business in the UK
  • you have a pension outside the UK but you were UK resident in one of the 5 previous tax years
  • you have other untaxed UK income

Your tax will be calculated automatically on the days you work in the UK if you are employed in this country but live elsewhere.

I Am Eligible for Self-Assessment – How Do I Notify HMRC?

If you meet the criteria to submit a self-assessment, but have not received a notification, you must notify HMRC before 5th October by registering for self-assessment online.

If you have received a notification letter, or a self-assessment form, from HMRC you must complete and submit a tax return. You will receive this if HMRC are aware that you need to submit a return.

I Want Help to Complete My Self-Assessment – Who Can I Ask?

Accountants can register you for self-assessment and submit tax returns on your behalf. Once you have engaged with an accountant, they can request the relevant information from you and prepare your self-assessment for submission. If you are interested in our services, please do not hesitate to contact us.

If you need further information on how to pay your self-assessment tax please use our blog resources.

 

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