News

The Spring Statement 2025

Chancellor of the Exchequer, Rachel Reeves, held the Spring Statement on Wednesday 26 March 2025. In the run up to the event, the Chancellor stated that she ‘remains committed to one major fiscal event a year to give families and businesses stability and certainty on upcoming tax and spending changes and, in turn, to support the government’s growth mission’.

The Chancellor did meet her commitment that there would be no major tax announcements but tax is only one side of the equation. The other is spending and the Spring Statement confirmed a number of the measures recently announced, namely:

•          cuts to the welfare state

•          cuts to the civil service

•          an increase in defence spending.

There were also announcements about the rollout of the Making Tax Digital (MTD) for Income Tax project.

Spring Statement 25 read full document

Personal tax deadline has now passed

Please remember the payment deadline for your 2023/2024 personal tax deadline has now passed and interest will be accruing on any tax owed.

Also any tax owing for 2023/2024 will incur a 5% surcharge if not paid within 30 days of the deadline – see below for late payment penalties

Penalties are set as follows:

The penalties do not apply to payments on account – although interest will be due.

If you are struggling to meet the tax due  – you could apply online for a time to pay arrangement, to avoid penalties it is important this is in place before 1^st March.

Please review the attached document for more information on interest and penalties

Wishing you all the best for the holiday season

Please note our team will be working reduced hours over the festive period and our office will be closed from 24th December to 2nd January.

The Autumn Budget 2024

Chancellor Rachel Reeves delivered her Budget on Wednesday 30 October 2024. She pledged to ‘invest, invest, invest’ to drive growth and ‘restore economic stability’.

Billions in tax rises

Ms Reeves said the Budget will raise £40 billion in taxes. Employers’ National Insurance contributions (NICs) will be increased from next April while Capital Gains Tax rates will also rise. Inherited pensions will fall within the Inheritance Tax net from April 2027 while reliefs will be reformed on the passing down of agricultural and business assets. The Chancellor also confirmed the introduction of VAT on private school fees and the abolishment of the tax regime for non-UK domiciled individuals.

We are pleased to enclose a copy of our Autumn Budget 2024 which summarises the main points relating to taxation in the Chancellor’s speech.

We hope the summary will provide you with a useful update and allow you to get to grips with the changes. If you have any questions in understanding how the changes to tax affect you, please do get in touch.

MTD for Income Tax – A reminder of what’s to come

Due to a lack of updates from HMRC, you would be forgiven for thinking that the brakes had been applied to the rollout of MTD for Income Tax. You would be wrong! 

Despite the uncertainty surrounding the implementation of this new digital scheme, HMRC is still pressing ahead. This is what we know so far:

• The scheme will apply to self-employed individuals and property landlords.
• Phase 1 – from April 2026 – applies to those with an annual income of £50,000 a year or more.
• Phase 2 – from April 2027 – applies to those with an annual income between £30,000 and £50,000.
• The tax year dates remain unchanged.
• MTD for Income Tax also applies to self-employed individuals who must comply with MTD for VAT.

Regardless of which date the taxpayer enters the scheme, the compliance process is as follows:

• All income and expense information must be recorded and submitted digitally every quarter using HMRC approved MTD for Income Tax compatible software.

• Taxpayers must make any accounting adjustments or allowances to their digital records.
• The Final Declaration, which replaces the Self Assessment part of the return, must be filed, and any tax due should be paid by 31 January after the end of the tax year.

No announcements have been made regarding how or when individuals earning less than £30,000 a year or partnerships will be required to join the scheme.

We will let you know if any changes are made to the timings or the eligibility criteria.

Pension tax – what to expect from the new government

It seems likely that the new government will target pension savings in its first Budget. The media is rife with speculation and scaremongering. But what’s really likely to change and how might it affect you?

What are the likely changes?

There have been a number of hints that the Chancellor will announce higher taxes on pension savings in her 30 October Budget. The main targets appear to be: legacy funds in money purchase (MP) schemes (where you or someone else, e.g. your employer, pay into a fund which you can draw from age 55) which haven’t been undrawn when you die; reintroduction of the lifetime allowance (LTA) which caps the amount of funds qualifying for tax relief; and she might also look at reducing tax relief on pension contributions. We’re confident, despite suggestions to the contrary, that she won’t increase the tax rate on pension income.

Pension contribution relief

If you pay into an MP scheme for yourself, you’re entitled to tax relief on the contributions according to the rate of income tax you pay. If you pay higher rate tax (40%) on some of your income, you’re entitled to tax relief equal to 40% of the contributions you pay.

Example.Jack pays £15,000 into his pension in 2024/25. His income for the year is £60,000, of which £50,270 (the standard amount) is either not taxable or is taxable at the basic rate (20%). The balance of £9,730 is taxable at 40%. Jack is entitled to 40% relief on the £9,730 and 20% on £5,270. The net cost of the contribution to Jack is therefore £10,054 ((£9,730 – 40%) + £5,270 – 20%).

Possible change.The suggestion is that the government might change the rate of tax relief to a flat rate of 30%. This would be especially good news for lower earners who don’t pay higher or additional rate tax as they would get extra tax relief, but generally bad news for those who do. Those who only pay higher rate tax on a small amount of their income might still be better off with a 30% flat rate of tax relief.

Tip.Get more tax relief while you can. If you pay higher or additional rate tax on a significant part of your income, consider making a one-off pension contribution before the next tax year, perhaps even before the next Budget.

Reintroduction of the LTA

We think a return of the LTA is unlikely. The list of reasons for this are lengthy and the rules involved tricky. In our view, it wouldn’t bring in a significant enough tax haul for the complications involved.

IHT on legacy funds

The basic principle of a change to inheritance tax (IHT) on legacy funds would be to make any money left in an individual’s MP pension fund when they die liable to IHT. Currently, virtually all such sums are outside a person’s estate and so are not subject to IHT. Changing this might sound like an easy target for the Chancellor, but the tax haul is not as large as you might imagine. Estimates range between £2bn and £4bn over the next few years. One reason for the relatively low tax haul is that currently legacy funds are usually liable to income tax at up to 45% when paid to the deceased’s beneficiaries. This tax would have to be scrapped to prevent double taxation. Also, complex trust laws would have to be overcome. Lastly, the change would also be a disincentive for people to save into pensions, which no government wants. Therefore, we don’t expect anything more than the launch of a consultation in the next Budget.

Higher and additional rate taxpayers could face a reduction in the rate of tax relief they receive on their contributions into money purchase pension schemes. Consider maximising the higher rates of tax relief while you can by making extra contributions before the 2025/26 tax year.