Rumours were flying this week that HMRC announced a 22 per cent tax on your ISA if you are holding uninvested cash. This has since been described by the treasury as ‘nonsense’.
Do you know what your Personal Savings Allowance is?
While most taxpayers in the UK will know the thresholds for Income Tax, a worrying few know the way in which personal savings can be subject to tax.
With ISAs set for a significant overhaul, understanding the less tax-efficient saving options will soon be more important.
How much tax do you pay on your savings?
While your savings are not taxed, any interest generated by those savings could be subject to tax if it exceeds your Personal Savings Allowance.
Depending on the rate of Income Tax you pay, your Personal Savings Allowance will differ.
The thresholds are:
ISAs remain the more tax-efficient saving strategy as the interest generated from them is tax-free.
It is therefore most effective to utilise the full £20,000 saving limit for an ISA as early in the tax year as possible to benefit the most from the accumulation of interest.
How should tax on savings be managed?
The main issue is that tax on savings is often overlooked, resulting in HMRC taking action for underpaid taxes.
This will often manifest in a charge through PAYE, as employees are more likely to overlook this obligation.
Those filing Self Assessment tax returns should already be declaring interest earned, so any compliance issue in that group points to a wider problem with handling tax obligations.
When attempting to make the most of saving strategies, it is best to seek professional financial advice.
This will be more important if the saving limit for Cash ISAs falls to £12,000 for under-65s in 2027 as proposed, leaving younger savers to have to find new ways to grow their wealth.
Our professional team can help you to determine an effective saving strategy that suits your financial goals while helping you to be mindful of the tax obligations that you may face.
We do not want to see anyone caught off-guard by an unexpected tax bill and understanding your exposure is vital for preventing this.
Get in touch with our team to regain confidence in your saving strategy.
The £2,000 cap on National Insurance (NI) free salary sacrifice pension contributions was sold as a tax on high earners but, if you look closer, the opposite is true.
In fact, the people most exposed are middle-income savers and the small businesses that employ them. For the so-called “squeezed middle”, it is yet another quiet hit to take.
Why do the rules adversely affect middle-earners?
From April 2029, salary sacrifice tax relief will continue to be available, but only the first £2,000 of employee pension contributions each year will be free of NI.
Anything above that becomes liable to NI for both the employee and the employer and the full adverse effect is clear once the different rates of NI are accounted for.
If a person’s total pension contributions are modest, say up to six per cent, those individuals who earn between £35,000 and £50,270 will pay an eight per cent NI charge on pension contributions above the £2,000 cap.
By contrast, an individual whose earnings already exceed the upper earnings limit of £50,270 will pay employee NI at just two per cent on those same excess contributions.
This imbalance in the NI system means that those on lower incomes could pay four times the NI rate on their pension savings in excess of the new threshold than the highest earners pay.
How does this change affect employers’ National Insurance bills?
Many employers currently share their own NI savings by topping up staff pensions, but a new 15 per cent employer NI charge on contributions above the cap makes those top-ups unaffordable for a lot of firms.
As a result, some employees could see the overall efficiency of their pension saving above the cap fall by as much as 23 per cent once lost top-ups are counted.
Even those who stay below the threshold are not safe, as the Office for Budget Responsibility (OBR) estimates that around 76 per cent of higher employer costs are eventually passed back to staff through weaker pay rises and trimmed benefits.
Don’t wait for the change
The good news is that there is time to plan, as the rules do not take effect until April 2029, which leaves room to act while current allowances still apply.
If you are a middle earner, this is exactly the moment to review your pension strategy, weigh up complementary options such as ISAs and make sure your retirement plans stay on track.
To talk through what the salary sacrifice cap means for you, please get in touch with our team.
When Rachel Reeves announced a temporary cut in VAT from 20 per cent to five per cent for family attractions and children’s dining over the summer holidays, the hospitality and leisure sectors broadly welcomed it.
The scheme runs from 25 June to 1 September and is funded, according to the Treasury, by closing a tax loophole used by oil and gas companies with overseas operations.
On the surface, this looks like good news worth welcoming.
However, for the businesses applying the new rules, the reality of delivering the rate cut is more complicated than the headlines suggest.
The rules shift from one service to the next
How the cut works depends heavily on what is being sold. Admission tickets to amusement parks, water parks, zoos, museums, soft play and similar venues qualify, as do children’s and family tickets to cinemas, theatres and concerts. However, pay-per-ride attractions do not.
Children’s meals only qualify when served from a clearly marketed, separate children’s menu.
A smaller portion of an adult dish does not count, nor does a discounted adult meal or a takeaway. Season tickets and annual passes are generally excluded too.
The result is that many businesses will apply two VAT rates at once on the same bill.
Tills, accounting systems and front-of-house staff all need to handle that from day one, then revert again from 1 September.
This adds an additional layer of complexity to VAT reporting that businesses need to consider right away.
Encouraged, but not required
The Government has urged businesses to pass the saving on to customers and the Competition and Markets Authority has new anti-profiteering powers to prevent unethical activity.
Even so, there is no legal obligation to lower prices at the till and many businesses will weigh up rebuilding margin, reinvesting and matching competitors before deciding exactly what savings to offer to consumers.
Given the wider cost challenges that businesses currently face, the scheme may not deliver the lift at the till that many customers are expecting.
Right idea, wrong season?
There is also a question of timing. The scheme targets the period when families already spend most on days out and when operators are near capacity.
A cut would arguably do more for businesses in the quieter autumn and winter months. As designed, it looks more like household support than business stimulus.
Any support for the sector is welcome, provided businesses seek the expert guidance required to manage obligations and make the most of any new opportunities.
Inheritance Tax (IHT) is paid on all items of your estate after you pass away if you exceed certain thresholds.
Whilst many people focus on their savings, properties and investments, the items you own, commonly referred to as personal chattels, are also included in the calculation of the estate’s value.
There has been a growing trend in recent years for people to invest in luxury goods, including cars, watches, jewellery and handbags, instead of or alongside more mainstream forms of investments, like stocks and shares.
However, many may not realise the impact that this has on their own estate, especially if the value of these assets increases significantly.
What is Inheritance Tax?
Often referred to as a “death tax” by the press, IHT is a tax on the estate, money, property and possessions of someone who has passed away.
In the UK, the standard tax-free threshold, known as the Nil-Rate Band (NRB), provides each individual with £325,000 of IHT-free assets.
On top of this, homeowners benefit from the Residence Nil-Rate Band (RNRB), which is a further £175,000 allowance if you leave your main home to a direct descendant, such as a child or grandchild.
Subject to other tax reliefs, such as Business Property Relief or Agricultural Property Relief, everything above these thresholds is taxed at a rate of 40 per cent.
A spouse can transfer any unused NRB or RNRB to the surviving spouse, which means a couple can pass on up to £1 million tax-free under the right circumstances.
As mentioned, all assets in the estate are included in your IHT calculations. This includes any classic cars, jewellery and handbags.
Unlike Capital Gains Tax, there is no general low-value exemption for personal chattels under IHT, so even modest items can form part of the estate’s overall value.
Are there ways to protect my luxury collections from Inheritance Tax?
There is a possibility that IHT could be waived on luxury collections if you are willing to part with them at least seven years before you die, thanks to the seven-year gifting rule.
This means providing clear evidence that the asset was passed on. Whilst you may be able to admire your collection from afar, you won’t be able to continue to personally possess it.
Gifted assets must be kept with the individual to whom they were gifted, as holding onto them causes them to be known as a gift with reservation of benefit and does not limit IHT exposure.
In some circumstances, you can pay a market-rate rent to use the items after making the gift, though this must be regularly reviewed to remain at market value. This approach requires careful consideration and advice.
Seeking expert support is always wise when planning your estate, regardless of how you intend to reduce IHT exposure.
Chancellor Rachel Reeves announced an increase in HMRC’s approved mileage rates for cars and vans from April 2026 for the first time since 2011 in a speech to the House of Commons in May.
This news comes as a surprise to many businesses, as a review of the Approved Mileage Allowance Payment (AMAP) rate hadn’t been tabled.
What changes have been made to the Approved Mileage Allowance Payment rate?
The announcement of a higher 55p per mile rate for cars and vans for the first 10,000 miles is a 10p increase from the previous 45p per mile rate.
This rate still falls to 25p once a driver has covered more than 10,000 miles in a year.
Despite this welcome headline rise, the motorcycle mileage rate stays the same at 24p per mile and the bicycle rate remains at 20p per mile.
Employees can also claim 5p per passenger, per business mile for carrying passengers in their car or van.
How does the Approved Mileage Allowance Payment Rate affect employees?
If your employees travel for work in their own vehicle, they are able to claim back the money for every mile they have driven or cycled.
You can choose to reimburse employees above these rates but be aware that the excess is subject to tax and National Insurance.
If you are paying below these rates, employees may be able to claim tax relief on the shortfall, so it is worthwhile letting them know.
We recommend taking a moment to review your current mileage reimbursement policy.
If you’re unsure how these changes affect your business or want to check your payroll is set up correctly, we’re here to help.
Weak economic growth and tighter regulations on lenders are to blame for the largest drop in bank lending to UK businesses in 30 years, according to new data.
A study conducted by Boston Consulting Group showed British bank loans to companies outside of the finance sector fell to 59 per cent of UK Gross Domestic Product (GDP) in the third quarter of last year.
Back in 2008, before the financial crash, bank loans were roughly 90 per cent of GDP.
Small and Medium-sized Enterprises (SMEs) have been disproportionately affected by this dip in lending.
How have SMEs been affected by a fall in loans?
SMEs make up 99.9 per cent of all UK businesses and Bank of England data shows that SME-specific lending has almost halved over the last 15 years. It now sits at a 30-year low of 6.5 per cent of GDP in 2026.
Traditional banks are favouring SMEs that have physical capital they can repossess if the SME defaults on a loan, placing knowledge-based SMEs at a disadvantage.
Insolvency rates are also rising. Without the safety net of bank overdrafts or bridge loans, a late payment from a major client can now escalate into forced insolvency.
Why don’t banks want to loan to Small and Medium-sized Enterprises?
Banks have moved away from broader SME lending, which carries higher risks and offers lower profits due to the work that is needed to perform due diligence on smaller businesses.
Instead, the banks have turned to lending more within specific sectors, such as property, with real estate SMEs now receiving 51 per cent of all loans.
Banks have also reported that the demand for loans has gone down due to weak economic growth. However, SMEs say they are less likely to apply for a loan because of a fear of rejection.
It is worth remembering that bank loans are not the only way to finance an SME and seeking professional financial support is vital for understanding your options.
Despite becoming mandatory for sole traders, landlords and self-employed individuals with qualifying incomes over £50,000 from 6 April 2026, 65 per cent have still not registered for Making Tax Digital (MTD) for Income Tax.
Running your business means spinning a lot of plates and you shouldn’t have to sacrifice growth to stay on top of your bookkeeping.
That is why many businesses are keen to explore the benefits of outsourcing their bookkeeping to professionals, to help them free up more time.
Before you make the move, you may be wondering how outsourcing can really support your success:
There’s a common assumption that outsourcing is expensive, but it can often reduce your overall costs.
Hiring-in house comes with salaries, employer taxes, pensions, training and overheads.
That is adding a lot more costs to the service.
Outsourcing means you are only paying for what you need and you do not have to commit to a full-time hire for expert financial support.
So, whether you need ongoing or occasional support, you can control the costs and uphold professional standards.
Bookkeeping is an important cog in running your business and keeping you compliant.
However, it rarely is the best use of your time as a business owner or senior leader.
Hours spent reconciling accounts or chasing paperwork are ones that could be used to focus on your sales and growth.
Outsourcing frees you and your team from these routine tasks.
You can focus on building your business and improving your operations. While you know your finances are keeping up behind the scenes.
It also reduces the pressure on your team to manage the bookkeeping and allows them to have tunnel vision on higher-value work.
Outsourcing allows you to rely on a team of trusted professionals, instead of one person.
Qualified accountants bring that expertise and knowledge of the latest regulations that an in-house bookkeeper may not possess.
This can help to reduce errors and ensure that there is informed advice on hand when you need it most.
They can also be there to support you as you grow and give you expert advice as your team expands, without the additional costs of hiring in-house.
Mistakes in bookkeeping could really put your business at risk of fines and reputational damage.
Outsourced providers already have the correct processes and systems in place to make sure your reporting is accurate and efficiently handled from day one.
Successful bookkeeping is all about understanding your business and knowing what is coming in and going out.
Not having the right financial support means you could struggle to use your data to help support your decisions.
Outsourced providers will often use advanced cloud-based accounting systems that give you real-time access to your numbers.
Given the current uncertainty that many businesses are facing, outsourced bookkeeping can give you better visibility of your financial performance, including your cash flow and profitability.
Why should you outsource with us?
Outsourcing has many benefits, but it only works with the right partner by your side.
Our team will take the time to understand your business and tailor our services to your team.
We will help prepare your annual accounts, maintain your VAT records and can also offer management accounts, which will help give you a deeper understanding of your operations so you can make informed decisions.
If you want to learn how we can support your bookkeeping, get in touch.
The Government has confirmed it is putting its requirement for small and micro companies to publicly file profit and loss (P&L) information at Companies House on hold.
This is all part of the reforms under the Economic Crime and Corporate Transparency Act (ECCTA) and has eased some immediate pressure on small businesses.
However, they might not be off the hook just yet.
What was originally proposed?
The P&L reform was meant to increase what small businesses will need to disclose publicly and was meant to come into effect on 1 April 2027.
The original plans would have required small and micro entities to submit full statutory accounts, including a detailed profit and loss statement and this would be available on the public record.
Many smaller companies are currently able to limit what they disclose through abbreviated or filleted accounts.
This allows some performance data, such as profit margins and cost structures, to remain confidential.
The Government’s goal was to improve trust in company data and make it harder for misleading financial reporting to go undetected.
Why has the change been put on hold?
The pause comes following strong feedback from businesses and professional bodies, who raised concerns about the impact of full disclosure.
One of the biggest concerns for businesses was putting sensitive information in the public domain, which could be accessed by competitors.
Profit and loss data are linked to pricing strategies and competitive positioning for many small businesses.
Making this information publicly available could have left some firms at a disadvantage, especially in sectors where margins are tight.
There was also the concern about the additional compliance burden on firms with smaller teams and fewer administrative resources.
Having to prepare more detailed accounts for public filing would likely have taken more time and increased their professional costs.
Many owner-managed businesses are already dealing with rising costs and these reforms would not have come at a good time.
What does this now mean for businesses?
The current filing system is staying intact and companies can continue to submit reduced disclosures.
There is currently no confirmed timeline for reintroducing the requirement, although you should not presume it is removed from consideration.
The government has promised that if the policy returns, then businesses will be given enough time before any implementation.
Businesses still need to make sure they are keeping informed on any changes and there are also still reforms at Companies House that are continuing at pace.
The register is undergoing an overhaul aimed at improving accuracy and reducing the risk of misleading filings.
Some other changes already underway are stricter identity verification for company directors and increased enforcement on challenging incorrect information.
Financial disclosure may have been temporarily eased, but overall compliance is becoming more robust.
What should you be doing to stay compliant?
This waiting window, before any reforms are enforced, gives you some time to review your internal processes.
Your business needs to make sure you are maintaining accurate records and this will support your compliance and decision-making.
Even without public P&L disclosure, stakeholders will continue to expect transparency in your records.
Our team can help make sure your finances and records are in order and you are prepared for any scrutiny that may be on its way.
Do you want to learn more about how we can support you? Get in touch.
