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Peria & Co, 29 Holme Chase, St Georges Avenue, Weybridge (2026)

We are a professional firm of Accountants and Tax Advisers based in Weybridge, Surrey providing specialist services to the small business and the individual. With many years of wide experience gained in both business and in practice, after occupying managerial positions in various firms of chartered accountants, in 2004 Luciano Peria founded Peria & Co. Our principal is a Fellow of the Association of Accounting Technicians and a Fellow of the Association of Taxation Technicians. Whilst based in Weybridge Surrey, today's communication technology allows us to offer our services over a much wider geographical area. We focus upon business clients, their directors, partners or proprietors, landlords as well as private individuals and are dedicated to the achievement of their objectives. Common to all our areas of business is our commitment to the highest standards of service based around long-term client relationships. We strive to provide imaginative yet pragmatic advice and solutions derived from a thorough understanding of our clients’ needs whether owner-managed businesses or private individuals. We utilise the latest technology to provide our clients with a complete solution to their accounting, tax and business needs. Responsibly yours! - You are giving us something precious: your trust. It makes us work even harder to do our very best for you. Should you have an enquiry, please do not hesitate to contact us by email at [email protected] or telephone us on +44 (0)1932 849023.

29/11/2025

Autumn Budget 2025

After an Autumn Budget overshadowed by an extraordinary leak from the Office for Budget Responsibility (OBR) and months of speculation, the Chancellor Rachel Reeves on Wednesday 26 November 2025 has unveiled tax-raising measures worth up to £26 billion.

The Budget began in a shambolic fashion after the (OBR) report was published online due to a “technical error” more than an hour before the Chancellor even stepped towards the despatch box.

Among the tax measures announced in the speech were:

• Extension of the personal tax bands for three further years
• National insurance on pension salary sacrifice
• Reduction in capital gains tax relief on employee ownership trusts
• Mileage-based charge on electric vehicles
• A high-value council tax surcharge on properties worth over £2m
• Freeze on fuel duty for five months
• Expansion of the sugar levy to milk products like lattes and milkshakes
• Increase in the national minimum wage and living wage
• Introduction of a tourism tax for local authorities
• Introduction of a gambling duty reform
• A reform of the ISA allowance
• Tackling construction industry scheme fraud
• Pursuing promoters of tax avoidance
• Publication of the government’s response to the loan charge review.

Below is a summary of some of the key tax measures announced in the UK Budget 2025, which may be of interest to you.

Income Tax
Dividends

From 2026/27, the dividend ordinary rate will increase from 8.75% to 10.75%, and the dividend upper rate will rise from 33.75% to 35.75%. The dividend additional rate remains unchanged at 39.35%, This change will make it more costly for business owners to extract monies for their owner managed company.

The current £500 of exempted tax-free dividend income will not change, although this has been reduced by successive chancellors and is now very limited.

It fell from £5,000 to £2,000 back in April 2018, then it was slashed to £1,000 in April 2023 and just £500 in April 2024. To make matters worse, the dividend tax rate was hiked in April 2022 too – up 1.25% for every tax bracket.

Savings

Savers will be hit by a further tax blow with a 2% increase in the tax on savings interest.

From 2027/28, the savings basic rate will increase from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47%.

The current tax-free savings interest thresholds will be frozen, gradually losing their advantage, so the £1,000 basic rate and £500 higher rate limit will remain, while those in the additional rate tax band never had a tax-free allowance any way.

Property

For the first time, there will be separate tax rates for property income affecting earnings from renting lands and building. From April 2027, income tax on property rental and income will fall under a new property tax.

The property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. These changes apply in England and Northern Ireland, with devolved administrations in Scotland and Wales retaining the power to set their own rates. Property owners should review their tax position ahead of this change becoming effective.

Finance cost relief will be set at the separate property basic rate (22%). This provides unincorporated landlords income tax relief at the basic rate on their mortgage interest costs.

The rationale given for the tax increase on property and investment income is that it is not subject to national insurance, the top rate of which is 2%.

Personal allowances and income tax thresholds - In a blow for earners, chancellor extends income tax threshold freeze for another three years

Rather than raise income tax rates which would have broken Labour’s manifesto pledge of not increasing the big three taxes on working people, the chancellor took the route of freezing income tax thresholds endlessly into the future.

The personal allowance and the thresholds for income tax will remain frozen until 5 April 2031. The personal allowance and thresholds were already frozen until 5 April 2028, so this extends the freeze by another three tax years. The freeze on personal tax thresholds rather than uprating with inflation has become a recurring measure announced at Budgets since Chancellor Rishi Sunak introduced it in Spring 2021, but it was only set to last until the 2025/26 tax year.

Call it what you will, Fiscal drag or the stealth tax.

The government’s continued reliance on fiscal drag represents the biggest long-term tax challenge for individuals. The extension of the freeze on the Personal Allowance and the Higher Rate Threshold means that as wages naturally rise, more of individuals including pensioners will be pulled into paying tax and existing taxpayers paying tax at the higher 40% rate, simply because the thresholds are not moving with inflation.

ISA limit reduced to £12k

The Chancellor confirmed cash ISA limit will be cut to £12,000. However, savers over 65 will be able to continue to have the full £20,000 limit, at least for now.

There will be a split ISA allowance going forward for adults, with £12,000 allocated to cash and £8,000 to stocks and shares for each person. The new limits will come into effect in three years’ time. From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.

Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031.

3p mileage charge for EVs

EV drivers face a pay-per-mile tax on their annual mileage, due to be added to road tax and monitored at MOTs. The chancellor plans to introduce the tax from April 2028 with a special electric vehicle mileage rate set at 3p per mile. But this will not affect petrol and diesel drivers.

The mileage charge will be payable each year, at 3p per mile and 1.5p for plug in hybrids. Vans, buses, motorcycles, coaches and HGVs will be excluded initially.

Capital Allowances

From 1 April 2026 (corporation tax) and 6 April 2026 (income tax), the main rate writing-down allowance will reduce from 18% to 14%. The writing down allowance cut will hit businesses looking to invest.

A new 40% first-year allowance for main rate assets (excluding cars, second-hand assets, and assets for overseas leasing) will be introduced from 1 January 2026.

The 100% first-year allowances for zero-emission cars and electric vehicle charge points are extended to 31 March 2027 (corporation tax) and 5 April 2027 (income tax).

Businesses should model what this means for their investment timelines and tax positions.

Foreign income and gains regime

Minor corrections have been introduced to ensure the foreign income and gains regime (FIG regime) operates as intended across income tax, capital gains tax (CGT), and inheritance tax (IHT). These changes take effect from 6 April 2025, with some provisions effective from 6 April 2026.

Abolition of Notional Tax Credit for Non-UK Residents:

From 6 April 2026, non-UK residents will no longer be treated as having suffered income tax on UK dividends. This change removes the notional tax credit previously available under ITTOIA 2005, s 399.

These measures reflect the Government’s ongoing efforts to align UK tax policy with international standards, simplify the tax system, and address technical issues.

National living wage rate goes up 4.1%

The government has confirmed above inflation rises in the national living wage with a 4.1% rise, while national minimum wage up 8.5% from 1 April 2026.

From 1 April 2026, the national living wage (NLW) will rise by 4.1% to £12.71 per hour for eligible workers aged 21 and over.

The national minimum wage (NMW) rate for 18 to 20-year-olds will also increase by 8.5% to £10.85 per hour, narrowing the gap with the NLW. This will mean an annual earnings increase of £1,500 for a full-time worker, and marks further progress towards the government’s goal of phasing out 18 to 20 wage bands and establishing a single adult rate.

The NMW for 16 to 17-year-olds and those on apprenticeships will increase by 6% to £8 per hour.

This will come at a cost for businesses. Employers will need to build this into their budgets for next year and consider the implications across their workforce as this adds pay pressure up the pay scales.

National Insurance Thresholds – Class 1

The thresholds for national insurance remain frozen until 5 April 2031. The thresholds were already frozen until 5 April 2028, so this extends the freeze by another three tax years.

National Insurance Thresholds – Class 4

The thresholds for national insurance remain frozen until 5 April 2031. The thresholds were already frozen until 5 April 2028, so this extends the freeze by another three tax years.

Claims to Incorporation Relief

Where a person transfers a business to a company on or after 6 April 2026 and satisfies the conditions for CGT incorporation relief, the relief will only apply if the person makes a claim in their self-assessment tax return for the year of the transfer.

For transfers before that date, the relief applies automatically where the conditions are met, subject to the ability to make a claim to disapply relief.

This is a change to a procedure that has been around for many years and one to be mindful of when carrying out incorporations.

Salary Sacrifice Arrangements

Pension salary sacrifice arrangements allow employees to give up part of their salary in return for their employer making an equivalent contribution to their pension pot. This is instead of the employee making the contributions themselves.

Pension savers will be hard hit when the measure is due to come into force when tough new rules on the use of salary sacrifice for pension contributions start.

But the chancellor will not introduce the measure immediately, leaving pension savers and employers to contemplate possible alternative approaches for a few years. The plan will see the capping of national insurance contribution (NICs) relief on salary sacrifice into pension schemes to the first £2,000 of pension contributions per person from 2029.

The Chancellor branded the £2,000 cap as a “pragmatic step”.

High Value Council Tax Surcharge - £2.5k mansion tax for expensive houses

The new mansion tax means properties worth over £2m face £2,500 annual charge and £7,500 for £5m plus properties owners from April 2028in England for residential properties.

This charge will be based on updated valuations to identify properties above the threshold and will be in addition to existing council tax.

Properties above the £2m threshold will be placed into bands based on their property value. Charges will increase in line with CPI inflation each year from 2029-30 onwards.

The charges will be levied on property owners rather than tenants, meaning landlords will have to pay the charge, unlike council tax. Local authorities will collect this tax charge.

Business rates

Expect several changes to business rates. The government announced changes to the multipliers used to uprate business rates, reducing rates for retail, hospitality and leisure properties.

The Chancellor introduced permanently lower tax rates for over 750,000 retail, hospitality and leisure properties.

The next digital frontier: Chancellor mandates e-invoicing by 2029

A significant development for business compliance was the announcement of e-invoicing in the UK for VAT invoices from 2029.

The government will require electronic invoicing for all VAT invoices for business-to-business and business-to-government transactions from 2029.

Following the path of many global jurisdictions, the government is moving to digitise transactions between businesses, requiring invoices to be issued and exchanged electronically via a structured format.

‘E-invoicing refers specifically to structured, machine-readable invoices designed for direct system-to-system exchange. These invoices use standardised data fields that enable automation, validation and effective integration with accounting and tax systems’,

Why e-invoicing matters now

The move to mandatory e-invoicing is not just about compliance; it’s a massive shift towards efficiency and real-time data.

• Automation: e-invoices remove the need for manual data entry, reducing human error, accelerating reconciliation and speeding up payment cycles.

• Compliance certainty: because the invoices are generated in a structured digital format and potentially flow through a government-approved network, they provide a high degree of confidence in the audit trail.

The Budget 2025: WHAT IT MEANS TO YOU

Working Persons

While income tax rates on earnings from a job or self-employment were not increased, income tax thresholds will now remain unchanged until 2031.

Future pay increases will see a greater proportion of income brought into tax, achieving the same result as a tax rate rise.

Workers on either the national minimum wage or national living wage will see increases in their pay from April 2026.

The rates of National Insurance Contributions (NIC) paid by employees and employers remain unchanged.

Employees paying into a workplace pension scheme under the salary sacrifice method will see annual contributions above £2,000 a year subject to NIC from April 2029.

Business owners

If you have employees, increases to both the national minimum wage and national living wage will have a cost impact.

Both employer and employee NIC will be payable on salary sacrifice pension contributions above £2,000 per year from April 2029.

Both measures could have further implications on staffing and recruitment decisions for your business.

From January 2026, investing in equipment will benefit from an increase in first year capital allowances for most main rate assets, where other allowances are not available. This is offset to some extent by a reduction in the main writing down allowance rate from 18% to 14%.

For companies, corporation tax rates and thresholds remain unchanged.

If you are a company shareholder, from April 2026 dividends drawn from the company will be subject to higher rates of tax.

The basic and higher rates of dividend tax will rise by 2% to 10.75% and 35.75% respectively.

Following these changes, ensuring you are still on the most tax-efficient route to extract profit from the company will be important.

Property owners

If you own a rental property personally, profits earned will be subject to higher property income tax rates, with a 2% rise across the basic, higher and additional rate bands from April 2027.

If you sell a rental property, the rates of capital gains tax remain unchanged.

The widely anticipated introduction of a ‘mansion tax’ was announced with owners of properties worth more than £2 million subject to a minimum additional annual council tax surcharge of £2,500 from April 2028.

Should you need any assistance with any of the above, please get in touch with us at [email protected]

Disclaimer: Whilst we take care to ensure the accuracy of this document, no responsibility for loss incurred by any person acting or refraining from action as a result of this information can be accepted by the authors or firm.

17/03/2025

Year End Tax Planning 2025

As the 2024-25 tax year draws to a close, and with significant tax changes coming from 6 April 2025, now is a great time to take control of your tax affairs.

Tax rates and allowances

Income Tax

Earning between £12,571 and £50,270 will be taxed at the basic rate of 20% (dividends 8.75%).

Earning between £50,271 and £125,140 will be within the higher tax band which will be taxed at 40% tax (dividends 33.75%).

Earning over £125,140 will be taxed at the additional rate of 45% (dividends 39.35%).

Income-producing assets can be transfer to a spouse or civil partner to ensure that both are utilising all the available allowances and are taxed at their lower marginal rate.

The Personal Allowance

The Personal Allowance is frozen until 5 April 2028. This means that as incomes rise, a larger proportion falls to be taxed. The freeze is expected to end from 6 April 2028, with personal tax thresholds uprated in line with inflation after this date.

Watch where income exceeds £100,000. Although the additional rate of 45% only applies to taxable income more than £125,140, you may still be subject to a higher effective rate of tax, as the Personal Allowance is reduced if adjusted net income is more than £100,000. The Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000, and where total adjusted net income is £125,140 or more, all Personal Allowance is lost. The effective ‘hidden’ rate of tax on this income, therefore, is 60%, and more if you are a Scottish taxpayer.

It may be possible to reduce taxable income and keep the Personal Allowance, by making personal pension contributions, or donations under Gift Aid.

Some people may be entitled to the Savings Allowance, which means savings income within the Savings Allowance is taxed at 0%. The amount of Savings Allowance depends on the marginal rate of tax: that is, the highest rate of tax to which you are liable. Basic rate taxpayers have a Savings Allowance of £1,000. Higher rate taxpayers have a Savings Allowance of £500. Additional rate taxpayers do not.

The Dividend Allowance is available to all taxpayers, whatever their marginal rate of tax. This charges the first £500 of dividends to tax at 0%. Savings and dividends within the Savings Allowance or Dividend Allowance still count towards the basic or higher rate band and can thus impact the rate of tax payable on income above the allowances. Some taxpayers may be entitled to the starting rate for savings.

The Dividend Allowance has become much less generous than previously, falling to £500 from 2024/25. The timing of dividends should be considered to ensure the Dividend Allowance is fully maximised.

Pension planning

You might also want to consider increasing your pension savings before 5 April 2025.

Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension, the government tops this up to £5,000. If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000.

If you have income more than £100,000, your £12,570 personal allowance may be tapered. For every £2 of income more than £100,000, the personal allowance is reduced by £1, reducing to nil where net income is £125,140 or more. Additional pension contributions can be even more effective if your income is between £100,000 and £125,140; the gross pension contribution reduces net income for the purposes of calculating the reduction in the personal allowance. This is effectively a 60% tax saving.

State pension

If you have gaps in your National Insurance record, you can make voluntary contributions for the previous 6 years.

If you have gaps in your National Insurance record, we recommend that you obtain advice from an Independent Financial Adviser to determine the suitability of making voluntary payments in your particular circumstances.

Savings

If you have some spare cash, an obvious tax planning point might be to maximise your ISA allowances for the 2024/25 tax year (currently £20,000 per person). If you are 18 or over, but under 40, you can open a Lifetime ISA to save for your first home or retirement. You can put in up to £4,000 each year, until you’re 50, but you must make your first payment into your ISA before you are 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. The £4,000 Lifetime ISA limit counts towards the £20,000 ISA allowance.

Capital Gains Tax

For 2024/25 you may make gains of £3,000 tax-free. The annual exemption for 2024-25 is £3,000. This exemption cannot be carried forward into the next tax year so if you don’t use it, you lose it. Capital Gains Tax rates for sales of most assets from 30 October 2024 are 18/24% depending on your level of income and at 28% for carried interest.

If you haven’t used your annual exempt amount, consider selling or gifting assets before 5th April 2025.

Also consider utilising your spouse or civil partners’ annual exempt amount by transferring assets to them before selling them.

Business Asset Disposal Relief is available on the first £1million of an individual’s lifetime qualifying gains. This can mean that Capital Gains Tax is due at 10% rather than 24% but you need to check that the conditions are met. The Capital Gains Tax rate for Business Asset Disposal Relief is increasing to 14% for sales from 6 April 2025 and 18% from 6 April 2026.

If you own a second home, consider making an election of which property is to be treated as your primary residence, and therefore which property is exempt from Capital Gains Tax.

Prepare for the abolition of the regime non-UK domiciled individuals (non-doms)

From 6 April 2025, extensive reforms will replace the current tax regime for UK resident, non-UK domiciled individuals (non-doms). These changes are far-reaching and will significantly impact the tax position of both non-doms and UK domiciled individuals who have spent time outside the UK.

If you’re affected by the changes, we encourage you to urgently review your affairs and to explore the options available to you ahead of 6 April 2025.

Inheritance Tax

Inheritance Tax (IHT) is charged at 40% on the part of your estate (property, money and possessions) that is above the £325,000 nil rate band (NRB) at death.

Make Gifts to Use Annual IHT Allowances: You can give away £3,000 plus £250 to as many individuals as you like in a year. Other limits apply to gifts in connection with marriage. It is important to keep records of gifts so that your representatives have a clear record when they are dealing with IHT after you’re gone.

Please note that there are other rules regarding IHT gifts such as regular gifts out of income and the 7-year rule.

In addition to the announcement that current thresholds for NRB and RNRB are frozen until 5 April 2030, something which will bring more estates within scope of IHT by 2030, are the significant restriction to two key IHT reliefs: Business Property Relief (BPR) and Agricultural Property Relief (APR), applying from 6 April 2026 and the inclusion of unused pension funds and death benefits payable from a pension in the estate at death from 6 April 2027.

Furnished Holiday Lets

From 6 April 2025 the special rules for furnished holiday lets (FHLs) are being abolished. FHLs will be treated as a normal rental property business and the valuable tax reliefs previously available will be lost.

If you are thinking of selling your FHL, doing so before 6 April 2025 could be beneficial as it may allow you to claim Business Asset Disposal Relief and access the lower 10% rate of Capital Gains Tax. Alternatively, you may need to consider stopping the FHL business before the end of the tax year to qualify for Business Asset Disposal Relief on a sale within the next three years.

It is worth considering that you can still claim capital allowances for expenditure on a qualifying FHL prior to 6 April 2025, so you may wish to accelerate such expenditure.

Consider the best use of any losses available. Following the changes, FHL losses will be converted into normal property losses and available to offset against your other property income and not just FHL profits.

Double cab pick-ups

Make the most of the beneficial treatment before its gone.

From April 2025, HMRC will no longer use the VAT definitions of ‘car’ and ‘van’ to classify double cab pick-ups for benefit in kind (BIK) and capital allowance purposes, or when restricting car hire costs for calculating business profits. Instead of treating double cab pick-ups with a payload of one tonne or more as vans, the classification will be based on the vehicle’s primary suitability when it’s made available. With only vehicles “of a construction primarily suited for the conveyance of goods or burden of any description” being classified as vans, most (if not all) double cab pick-ups will be treated as cars.

From 6 April 2025, employees using double cab pick-ups for personal use will face higher Benefit In Kind (BIK) charges. Consequently, employers will have more Class 1A National Insurance contributions (NICs) to pay. This will apply to both the use of the vehicle itself, which will be based on the vehicle’s list price and CO2 emissions, and for fuel for private journeys.

Transitional rules apply to double cab pick-ups bought, ordered or leased before 6 April 2025, allowing businesses to rely on the previous treatment until the earlier of the vehicle’s disposal, the end of the lease, or 5 April 2029.

From 1 April 2025 for corporation tax and 6 April 2025 for income tax, businesses buying double cab pick-ups won’t be able to claim the same level of capital allowances as when these vehicles were classified as vans. For instance, a new van may qualify for 100% full expensing, whereas cars cannot. Transitional rules apply to expenditure incurred on double cab pick-ups as a result of contracts entered into before 1 April 2025 for corporation tax and 6 April 2025 for income tax, where the expenditure is incurred on or after that date but before 1 October 2025. In such cases the old treatment will apply.

From 1 April 2025 for corporation tax and 6 April 2025 for income tax, businesses leasing double cab pick-ups with CO2 emissions of more than 50g/km – in practice, this will be virtually all of these types of vehicles, will only be able to get relief for 85% of the costs, compared to previously being able to deduct the full cost.

Transitional rules apply to expenditure incurred on the hire of double cab pick-ups where the contracts for hire are entered into before 1 April 2025 for corporation tax and 6 April 2025 for income tax, and the expenditure is incurred on or after these dates but before 1 October 2025. In these cases, the old rules will apply.

Tax planning can be complex. We would always recommend that you seek professional advice when undertaking a review to ensure all changes are processed and managed effectively.

We hope that you find this guide useful, but please bear in mind that this only provides a summary of the options you should be considering and not all options will be suitable for everyone.

This guide is for general information only and does not substitute specific advice. You should not rely on it as specific advice and Peria & Co cannot accept any liability for its contents. If you need guidance, please contact us at [email protected] or call us on +44 (0)1932 849023.

28/11/2024

🎉 Celebrating 20 Years of Excellence! 🎉

Twenty years ago, Luciano Peria founded Peria & Co in 28 November 2004. Through dedication, hard work, and resilience, we have navigated the ups and downs of the industry. Today we stand proud of our journey and achievements.

We extend our heartfelt gratitude to our incredible colleagues and loyal clients. Your unwavering support and trust have been the cornerstone of our success. Together, we have built a legacy of excellence, innovation, and commitment.

Here's to many more years of growth and success! Thank you for being a part of our journey.

Warm regards

The Peria & Co Team

31/10/2024

Autumn Budget 2024 – What you need to know about Labour's first Budget in 15 years by a first female Chancellor.

On Wednesday, 30 October 2024 the new Chancellor of the Exchequer, the first female Chancellor, released her budget for "Change", explaining how it plans to tax, spend, borrow and invest in the years ahead.

From National Insurance Contributions and fuel duty to minimum wage increases and Capital Gains Tax, the Autumn Budget 2024 covers a wide range of topics that affect our daily lives.
Click here for the main takeways, and the one which you may find of interest to you.

11/03/2024

Don’t miss out on year-end tax planning

Year-end tax planning is not a straightforward matter. What needs to be done will depend upon individual circumstances and the business structure.

This article is general guidance and it is necessary to speak to advisors to ensure that the proposed changes are appropriate for your specific circumstances.

Because many of the allowances and reliefs offered by the tax system are lost if not used each year, now is the time to make sure your tax affairs are up to date. Be careful though: some reliefs can create problems if not used correctly, and in some cases trying to save tax can actually cost you money.

Whether you're a business owner, or an individual, it would be very wise to set some time aside do this, as a review can help you understand what opportunities, if any, may be available to you and your family. After all, the UK tax system is enormous and also very complicated. This being the case we would recommend talking to a tax advisor to help you to avoid the common pitfalls, explore any opportunities and maximise potential savings, where possible.

Personal allowance

The annual income tax personal allowance for 2023/24 is £12,570. If you have family members with less income than this, consider possible ways to utilise their allowance – family businesses can pay dividends or salaries (so long as actual work is performed) and trusts can distribute income to beneficiaries, for example.

£1 of the personal allowance is lost for each £2 of taxable income received above £100,000. This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140. Managing the timing of income between tax years, where possible, can also help – the tax payable on income of £100,000 one year and £150,000 the next is less than the tax on income of £125,000 a year for two years.

A similar tax trap applies for individuals subject to the high income child benefit charge (HICBC): where a household has received child benefit and adjusted income of a relevant person exceeds £50,000, it is clawed back proportionately, with the effect that, in a band of income between £50,000 and £60,000, every £1 of income is taxed at effective rates exceeding 50%.

Marriage allowance

Up to £1,260, 10% of the personal allowance, can be transferred to the spouse/civil partner where one party to the marriage/civil partnership is a basic rate taxpayer, and the other has income below the personal allowance. The reduction in the tax liability for the basic rate taxpayer is up to £252 in the current year.

Reducing taxable income

There are significant advantages in reducing taxable income. It may prevent the top slice of income from falling into the top tax bands. Also, the personal allowance is reduced by £1 for every £2 of net income over £100,000.

Taxable income can be reduced by moving investments into non-taxable investments, contributing into a pension, or giving to a charity. Where possible, income can also be deferred into another tax year or assets that give income can be given to a spouse or civil partner that incurs a lower tax charge. Trading losses from self-employment income can be set off against other income earned in the same year. Losses in the first four years of the business can be carried back up to three tax years.

Reducing income (through increased pension payments, charitable donations, or other measures) is also beneficial to retaining Child Benefits. Child Benefits are clawed back at 1% of the benefit for every £100 of income over £50,000. If both parents keep their income below £50,000, the Child Benefit will not be clawed back.

Pensions

Pension contributions made by an employer are tax efficient as there is no tax to pay, provided the annual allowance is not exceeded. This can be very tax efficient where the company is owned by the person receiving the benefit. In other cases, it is often beneficial to all parties for employees to sacrifice some salary in exchange for a pension contribution made by the employer. This reduces NICs, though this is not always so tax-efficient for high earners. For individuals earning more than £200,000, employer’s pension contributions are added back. Tax relief on contributions is restricted where gross income exceeds £260,000.

The rules for tax relief on pension contributions can be complex and advice needs to be taken to ensure that pension annual allowances tax relief is not clawed back. The standard annual allowance for pensions is £60,000 plus any unused relief brought forward from the prior three years. There are two tests for calculating the annual allowance available (and the position is further complicated in Scotland and the claim for relief may need to be made through the tax return). However, if the adjusted income exceeds £260,000, the individual’s annual allowance is reduced by £1 for every £2 in excess of that amount (a minimum £10,000 allowance remains available).

Stakeholder pensions are available to all UK residents and there can be benefits to making contributions to children’s pension schemes.
Funds invested in a pension grow free from tax. The limit on the total amount that can be held has been removed so it could be advantageous to make further contributions. That being said, it is possible that the Life Time Allowance could be reintroduced. There may, therefore, be some benefit in crystallising benefits from the pension pot now.

Once a person reaches 55, the pension benefits can be drawn down from a personal pension (but it may be more difficult, depending on the rules for defined benefit schemes). The tax implications of drawing a monthly payment or a lump sum need to be considered prior to making a withdrawal.

Charitable giving

A donation using Gift Aid to a charity before 31 January can be treated as being made in the prior tax year to accelerate tax relief. There may also be advantages in giving shares to the charity as it will create an income tax relief instead of triggering a Capital Gains Tax liability.

Charitable donations qualify for tax relief by extending the donor’s basic rate tax band. The mechanics can be confusing, but the net effect is that if a 40% taxpayer makes a cash donation of £100, the charity receives £125, and the individual can personally claim back tax of £25.

There are some traps to watch out for when making charitable gifts. If you make a donation under Gift Aid and have not paid sufficient tax to match it, your tax liability will actually increase - a Gift Aid payment of £100 by a non-taxpayer will make them liable to pay tax of £25. Not all donations qualify for tax relief either. For example, a gift to a US charity will not be allowable, but a gift to a UK charity created to support the US charity would be. Make sure that you check that your payment is going to the right entity or else both you and the charity will miss out on tax relief.

Inheritance tax (IHT)

Taxpayers have a £3,000 annual gift exemption, which can be carried forward one year. This means that you can make gifts of up to £6,000 every other year without suffering inheritance tax if you do not survive the gift by seven years.

If your income is greater than your living expenses, you may also be able to make larger gifts that will not be taxed regardless of when you die. To qualify, these must form a regular pattern of giving and should be properly documented. You should take professional advice before proceeding with such a strategy.

Easy Inheritance tax reliefs

You and your family can take advantage of a number of IHT free reliefs.

• An annual gift of £3,000. This provides parents (and grandparents) with an opportunity to make tax-efficient gifts.
• Small gifts of £250 per person as many as you care to make per tax year. This provides the opportunity of gifting £250 to each child or grandchild each and every tax year.
• Regular gifts from disposable income. This is a complex area and people can and do get it wrong, so it is worth seeking advice. When thought through and implemented correctly it is a valuable relief.

Tax-efficient investments

There are a number of tax-efficient investments. Some of these permit the investment to be carried back to previous years to accelerate tax relief. For example, up to 100% of investments into a qualifying EIS company can be carried back to the previous year. A maximum investment of £1 million is permitted (£2 million if invested in one or more qualifying knowledge-intensive companies). Tax relief is available at 30% and can be carried back a tax year.

Additionally, 50% income tax relief can be claimed on up to £200,000 in start-up companies. This can also be carried back to previous years.

EIS and SEIS allowances

Tax relief is given for qualifying investments in certain trading companies under the enterprise investment scheme (EIS) and seed enterprise investment scheme (SEIS) rules, where the company has obtained approval from HMRC. Income tax relief at 30% (EIS) and 50% (SEIS) on the amount invested can be attractive, as well as exemption from capital gains tax on disposal and the possibility to roll over (EIS) or partially exempt (SEIS) capital gains on other assets reinvested into such investments.

Watch out when making these investments though. To qualify for the capital gains tax exemption, you must have claimed income tax relief on the EIS or SEIS investment. For example, if you make an EIS investment in a year when you have no income tax liability, the gain made on disposal of that investment will be taxable.

Tax-efficient investments

ISAs are a tax-efficient way to save for higher rate taxpayers. The maximum allowance is £20,000.

Choice of owner of businesses

Where one spouse or civil partner has a lower tax rate than the other spouse or partner, it makes sense to ensure that business income is in the name of the person that has the lower tax rate. This is particularly important for property income as interest relief is restricted to the basic rate.

Dividend tax rates

Dividend tax rates are lower than the main income tax rates. There is a nil rate band for the first £1000 of dividends (£500 from 2024/25). Above this allowance tax is charged at 8.75% on dividend income up to the basic rate band limit, 33.75% on income above the basic rate limit to the higher rate band limit and 39.35% above that. There are other ways of extracting value from a company, such as taking capital repayments on loans made to the company, payment of bonuses may be tax efficient or increasing the pension contributions the company makes on your behalf.

Capital gains tax

Where possible, obtaining a capital payment can be tax efficient. Capital Gains Tax is subject to 20% (or 28% for disposals of carried interests or residential property that is not a principal private residence), which is lower than most personal tax rates.

The 2023/24 Capital Gains Tax (CGT) annual exemption is £6,000. Disposing of investments standing at a gain to utilise this amount may save tax of up to 20% (28% for chargeable residential property). A £1,200 tax saving is good but may not be worth the economic risk if you want to hold the investment long-term. For example, if shares are sold and bought back within 30 days, you will be treated for CGT under the shares matching rules, so if prices go up in the period between selling and reacquiring, you could miss out on growth in value that exceeds the tax saved.

As a result of buying the same share within 30 days of last sale, share matching rules mean that you will need to re calculate the capital gain on the disposal. Instead of using the share price on the date of the disposal the shares are matched with the newly purchased shares.

The UK tax system actively encourages taxpayers to plan and act each year to use the available reliefs and allowances. Doing so can create substantial savings but care is required to make sure that your actions do not backfire, creating larger tax liabilities than they save.

Company car choice

Choosing a lower-emissions car reduces the tax cost. A new electric car with emissions of 1–50g/km and a range of more than 130 miles has a taxable benefit of 2%. But, if the range is under 30 miles, the benefit increases to 14%. Petrol and diesel cars are taxed at even higher rates.

A car that is not being used will still be taxed unless it can be shown to not be available for use. The easiest way of doing this is to hand the keys back to the employer. It may be more tax-effective to cease using a company car and claim for mileage when using your own car for business travel. Currently, the tax-free mileage allowance that can be claimed is 45 pence per business mile for the first 10,000 miles and 25 pence for mileage in excess of 10,000 miles.

Capital Allowances

It is always important to review expenditure, which may qualify for Capital Allowances Relief. Alongside plant and machinery, this includes research and development, patents, specific intellectual property and buildings and renovating business premises in specific areas, amongst other items.

There are strict deadlines for claiming capital allowances. Capital Allowances can offer very generous tax allowances of up to 100%, which can result in significant tax savings and these should be considered carefully.

Full expensing

Full expensing is available to companies subject to Corporation Tax. If your capital expenditure in your company is greater than £1m, then an allowance can be applied whereby you can deduct from your taxable profits 100% of the qualifying expenditure in the year that expenditure took place.

Basis period

For 2024/25, the tax year basis of assessment will be used when taxing profits. The 2023/24 tax year is a transitional year. This change is being introduced to align trading income with non-trading income. This change will impact businesses and it is necessary to look at the cash flow impacts and funding requirements, whether the accounting year should be changed and how internal systems will be impacted. It is advisable to start planning for this immediately.

Business Asset Disposal Relief

If you have sold a business, or you're selling a business asset, then Business Asset Disposal Relief (BADR) may apply. Where this is the case, CGT is charged at 10% on any gains you make from the qualifying business assets. This is particularly significant for higher-rate tax payers as the CGT liability could be halved from 20% to 10%.

BADR is subject to a lifetime limit of £1m per person and applies to a sale for businesses trading as Sole trader, Partnership, Limited company, Joint venture and Trust.

If you own a business then you should review your BADR position regularly, the rules are sophisticated and it is easy to deviate away from them. You will therefore need to plan carefully prior to any sale to ensure you are fully compliant with the legislation. It may also be worth considering transferring shares between spouses, or civil partners, if you're in a family business.

The tax implications of becoming an investment company

If as your business scales you achieve cash surpluses, you may look to invest through your company in things such as land, property, and other assets. These investments could generate a decent return over time. If you're doing this however, you need to review the value of these assets and their contribution to your company's overall value.

If they make up 20% or more of your company's overall value then HMRC deem this as having a 'significant' impact. This means you're likely to then no longer qualify for:

• Business asset disposal relief
• Enterprise Investment Scheme shares
• The Enterprise Management Incentive share scheme for employees

Corporation Tax

The main rate of Corporation Tax is 25% for some businesses. If your profits are greater than £250,000 then you will be subject to 25% rate. Businesses with taxable profits less than £50,000 will be taxed at the current 19%.

To note, if these thresholds are shared between associated companies, then they could be lower dependent on how many associated companies you have.

If your profits are between £50,000 and £250,000 then a tapered rate will be applied. The tax rate increases from 19% to 25% depending on the amount of profit, the main rate is reduced by marginal relief. If your company is accounting for deferred tax, you may need to factor in the increased rate in your deferred tax calculations for your year-end accounts.

Other matters

There are many other ways of reducing tax, but often these may not be attractive to most taxpayers. These include moving overseas to a low tax environment, letting a room in your home, utilising tax benefits of furnished holiday lets and incorporating let properties so that interest deductions are not restricted (although the Stamp Duty Land Tax (SDLT) costs may be prohibitive).

Tax planning can be complex. We would always recommend that you seek professional advice when undertaking a review to ensure all changes are processed and managed effectively.

We hope that you find this guide useful, but please bear in mind that this only provides a summary of the options you should be considering and not all options will be suitable for everyone.

This guide is for general information only and does not substitute specific advice. You should not rely on it as specific advice and Peria & Co cannot accept any liability for its contents. If you need guidance please contact us at [email protected] or call us on +44 (0)1932 849023.

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