As the current tax year concludes on April 5, it is imperative to review and utilize available tax allowances before regulatory changes take effect on April 6. Implementing a proactive strategy in coordination with professional accounting advice can significantly increase your fiscal position and mitigate future liabilities. 

 

Various tax rules are set to change from April 6, so it is important to use up what is available this tax year to maximise the current rules. 

 

There are many ways to reduce your tax liability each year through proper and full use of the allowances, but it is always best to work with your accountant to do everything the right way, so you don’t create a problem for yourself further down the line. 

 Check that your State Pension NICs record is complete 

Make the most of your pensions contributions 

You can put as much as you like into a personal pension scheme, but there are limits on how much of your contributions will benefit from tax relief. For example, if you’re not earning at all, you can add a maximum of £3,600 including tax relief into a pension. If you are earning, you can put up to 100% of your relevant UK earnings into a pension to get tax relief, up to a maximum of £60,000. So, even if you earn enough to get more tax relief than this, you won’t receive it on contributions above this figure. 

 

You also cannot reclaim more tax relief in a year than you were due to pay in tax, so you need to ensure your pension planning takes this into account. But you can do something called Carry Forward, which enables you to use any unused annual allowance from the previous three years, to maximise the benefits of any unused amounts from these years. 

 

If you earn more than £200,000 a year, your annual allowance for pension contributions could reduce from £60,000 to as low as £10,000, so you must take this into account when making decisions about optimising your tax allowances towards the end of the tax year. 

 

One important thing to remember is that if you are a 40% or 45% taxpayer, you may need to reclaim your additional pension contribution tax relief – anything above the basic rate of tax relief of 20% - through your tax return directly from HMRC. So, if this hasn’t been done, even in previous years, you should speak to your accountant for advice. 

 

 

Company owners should pay themselves in dividends 

 

With the festive season approaching, many companies are preparing for their annual Christmas celebrations. However, it is worth remembering that HMRC provides a tax-efficient allowance to help businesses cover the cost of staff events. 

 

Employers can spend up to £150 per employee per year on annual events such as a Christmas party without creating a taxable benefit. This allowance can also apply to virtual events, which may be particularly useful for organisations with remote or geographically dispersed teams. 

 

To qualify for the exemption, the event must be open to all employees. If a business operates across multiple locations and hosts separate events at each site, the exemption can still apply provided every employee has the opportunity to attend at least one event. 

 What if Multiple Events Are Held?  

What Happens if the Limit Is Exceeded? 

If the £150 threshold has already been used or the event does not qualify for the exemption, the cost becomes a taxable benefit. 

 

In this case, the employer must: 

Report the benefit on each employee’s P11D form, and 

Pay Class 1A National Insurance contributions on the full cost of the event. 

Where the cost is covered through a salary sacrifice arrangement, and the value of the sacrificed salary exceeds the cost of the event, the higher salary amount must be reported instead. 

 

 

  VAT Registration: What You Need to Know 

Value Added Tax (VAT) must be charged by sole traders and companies once their taxable turnover exceeds £90,000 in a rolling 12-month period—or if they expect to exceed that threshold within the next three months. At that point, businesses are legally required to register for VAT with HMRC. 

 

You can also choose to register voluntarily before reaching the threshold. This can be beneficial if your business regularly purchases goods or services that include VAT, as registration allows you to reclaim VAT on eligible expenses. 

 

There are several VAT schemes available, each designed to suit different business types and sizes. Selecting the right one can help reduce administrative burden and maximise financial benefits for your business 

  Choosing the Right VAT Scheme for Your Business 

Cash Accounting Scheme: A Simple Way to Manage VAT 

The Cash Accounting Scheme offers a straightforward approach to handling VAT, especially for businesses looking to improve cash flow. Under this scheme, you only pay VAT once your customer pays their invoice, and you can reclaim VAT on purchases once you've paid your suppliers. 

 

To join the scheme, your business must have an annual turnover of £1.35 million or less. If your turnover exceeds £1.6 million, you’ll need to leave the scheme and switch to a different VAT accounting method. 

 

This option can be particularly helpful for businesses that experience delays in receiving payments, as it ensures you’re not paying VAT upfront before income is received. 

 

 

Flat Rate VAT Scheme: Simplify Your Tax Without the Hassle 

Annual Accounting VAT Scheme: Fewer Returns, Less Admin 

  Child Trust Funds: Fifth Cohort Gain Access This September 

Young adults born on September 1, 2007 will be able to access their Child Trust Funds (CTFs) for the first time this September, as they officially turn 18. 

 

CTFs were introduced by the UK Government to help families—especially those on lower incomes—build savings for their children’s future. The scheme began for children born on or after September 1, 2002, making this year’s group the fifth cohort to benefit from the initiative. 

 

The first accounts were opened in January 2005, when providers began setting up funds and distributing government-funded vouchers to kickstart each child’s savings journey. 

As these young adults come of age, they now have the opportunity to take control of their funds—whether to invest further, support education, or take their first financial steps into adulthood. 

  What Did the Government Pay Into Child Trust Funds? 

Can You Add Money to a Child Trust Fund? 

Yes—you can! Contributions to a Child Trust Fund (CTF) have always been allowed, and they still are. Up to £9,000 per year can be added to the account until the child turns 18. 

 

In CTF terms, a “year” runs from the child’s birthday to the day before their next birthday. It’s important to note that any unused portion of the £9,000 allowance does not roll over—if it’s not used within that year, it’s lost. 

 

Until age 18, the CTF grows tax-free. From age 16, the child can take control of the account—meaning they can manage how it’s invested—but they cannot withdraw the funds until they turn 18. 

 

Once they reach 18, they have two options: 

- Cash in the fund and use the money however they choose 

- Transfer it into an adult Individual Savings Account (ISA), allowing the investment to continue growing 

 

At this point, the original CTF account will be closed, and the young adult takes full ownership of their financial future 

Forgotten Where Your Child’s CTF Was Opened? 

  First labour budget 2024 

Labour Chancellor Rachel Reeves presented her inaugural Budget at the end of October, marking the first time a female Chancellor of the Exchequer has done so. The Budget places the greatest financial burden on Britain's wealthiest individuals and businesses. 

 

Starting in April next year, employers will face an increase in National Insurance (NI) contributions to address a £22 billion deficit attributed to the previous Tory government. Additional measures include adjustments to inheritance tax on farms passed down to the next generation, which has caused concern among British farmers, and changes to Capital Gains Tax (CGT) rates. Other measures include maintaining the freeze on the 5p reduction in fuel duty. 

  What do you need to know? 

What about state pension and minimum wage? 

Starting April 2025, the minimum wage for those over 21 will increase from £11.44 to £12.21 per hour, and for those aged 18 to 20, it will rise from £8.60 to £10 per hour. The long-term goal is to establish a single rate for all adults. 

 

Thanks to the "triple lock" which aligns with the rise in average weekly earnings, the Basic State Pension will increase by 4.1% from April. This means the full new State Pension will go up from £221.20 to £230.25 per week. 

 

Additionally, there will be an increase in the earnings threshold for the allowance paid to full-time carers. The maximum earnings threshold will rise from £151 to £195 per week. 

 

 

Anything else? 

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