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THE TAXMAN’S TWEAKS
The UK tax landscape is undergoing significant changes over the next few years. From digital reporting to increasing liabilities, it's essential to stay informed and prepared. Below is a summary of some of the upcoming updates.
Income Tax – Making Tax Digital (MTD) Making Tax Digital for Income Tax Self- Assessment (ITSA) will soon become mandatory for many self-employed individuals and landlords. Under MTD, you’ll be required to: • Keep digital records. • Submit quarterly updates to HMRC using approved accounting software.
When you need to start using MTD for ITSA depends on your qualifying income within a tax year. If your qualifying income is over: • £50,000 for the 2024/25 tax year, you will need to use it from 6 April 2026.
• £30,000 for the 2025/26 tax year, you will need to use it from 6 April 2027.
• £20,000 for the 2026/27 tax year, you will need to use it from 6 April 2028.
Payrolling Benefits in Kind (BIKs) From April 2027, all Benefits in Kind (except for employer-provided loans and
accommodation benefits) must be payrolled. This change means: • Real-time reporting of Income Tax and Class 1A National Insurance Contributions (NICs) via payroll.
• Annual P11D forms will not need to be prepared for most employees.
Company Car Benefits – BIK Increases The taxable benefit for company cars, especially electric and hybrid vehicles, will rise annually through to 2029/30.
• Electric car rates will increase from 3% in 2025/26 to 9% by 2029/30.
• All hybrid cars with CO2 emissions under 50g/km (regardless of electric miles range) will see rates rise to 19% by 2029/30.
Capital Gains Tax (CGT) From April 2026, the CGT rate for Business Asset Disposal Relief and Investors’ Relief will rise from 14% to 18%, bringing it in line with the lower main CGT rate.
Inheritance Tax (IHT) Several major IHT changes are set to take effect: • From April 2026 - Agricultural Property Relief and Business Property Relief will be capped at
a combined £1 million. Assets above this limit will still benefit from a reduced 50% relief.
• From April 2027 - unused pension funds and death benefits payable from a pension will be included in an individual’s estate for IHT purposes. These funds were previously outside the scope of IHT, marking a significant shift in pension planning.
These upcoming changes underline the importance of proactive tax planning.
Whether you're self-employed, an employer, or managing investments and pensions, it's vital to review your current setup to ensure compliance and optimise your tax position.
If there is anything in this article that affects you – or somebody you know – please speak to Steven McVitty for independent professional advice. 028 9032 5050.
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