Annual reports continue to play a pivotal role in businesses’ governance and financial transparency.
The importance of annual reports for your business
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If my business shrinks, should I deregister for VAT?
While we would like to be in a position where every business is on the fast track to growth, there are times when things need to be pared down somewhat.
Employee Ownership Trusts: Are they still the right step for your business?
Employee Ownership Trusts (EOTs) have become one of the UK’s fastest-growing business succession models, and for good reason.
Since their introduction in 2014, the Employee Ownership Association and WREOC have reported a 1,640 per cent increase in EOT-owned businesses in the past decade and 560 transitions in 2024 alone.
However, with the recent Autumn Budget announcing that Capital Gains Tax (CGT) now applies to EOTs, companies may question whether this once tax-efficient strategy is still worth it.
What is an Employee Ownership Trust?
An EOT is when a trust acquires a controlling interest (more than fifty per cent) of a company on behalf of its employees.
EOTs can allow employees to collectively benefit from the success of the business while owners reduce their involvement over time.
To qualify for EOT reliefs, the company must be a trading business or a holding company of a trading group.
Business owners may retain a minority shareholding or continue as directors, provided they do not control the trust.
Are EOTs still beneficial post-Budget?
In this year’s Autumn Budget, Rachel Reeves announced that CGT relief on disposals to EOTs will now stand at 50 per cent – half of the previous 100 per cent relief.
HMRC reported that the cost of CGT relief has increased significantly over the years, reaching £600 million in 2021/22.
With forecasts suggesting it could rise to more than 20 times the original cost, to £2 billion by 2028–29, the Chancellor decided to act.
Despite these changes, EOTs can still offer significant tax advantages, including tax-free bonuses of up to £3,600 per employee each year and no Inheritance Tax (IHT) implications for selling shareholders.
Employee ownership can also improve incentivisation and retention due to increased involvement in the company.
Selling to an EOT can also avoid the uncertainty of third-party buyers and allow founders to protect the business’s identity and company culture.
What are the current policies of an EOT?
As with any exit strategy plan, challenges can arise, and choosing the right model for your business is important.
EOTs have faced several changes from this year’s Budget and 2024’s Autumn Budget to encourage employee ownership.
These include rules around UK residency for trustees and companies having to meet qualifying conditions for CGT relief, which were extended to four years.
For business owners considering an exit in the coming years, seeking financial advice can help you make the most of your finances and understand how the current policies will affect you.
For expert financial advice and support in relation to EOTs, contact our team today.
Failure to prevent fraud – Are you at risk of this new offence and how can better accounting and audits help?
As the Government continues to put preventative fraud measures in place, it is essential that companies and Limited Liability Partnerships (LLPs) understand any changes that impact them.
In September, a new regulation was introduced as part of the Economic Crime and Corporate Transparency Act 2023 that puts pressure on large companies to proactively ensure their fraud procedures are up to standard.
What was introduced?
The new failure to prevent fraud corporate offence will see companies and LLPs classed as committing fraud if any person associated with the company, such as an employee, agent, subsidiary or contractor, becomes involved in fraudulent activity that benefits the company.
The introduction of the law also covers what is deemed fraudulent behaviour, including:
- Fraud by false representation
- Fraud by failing to disclose information
- Abuse of position
- False or inaccurate accounting
- Fake trading and cheating public revenue
- Participating in any form of fraud
These offences carry major fines, as the amount handed to companies is unlimited and, while companies may not be found guilty of the primary offence, the reputational damage can be significant.
What can companies do to manage any fraud concerns?
The best approach to managing any fraud challenges is to ensure your accounting and auditing processes are robust enough to spot any concerns and give you the ability to address them.
Organising your accounts allows you to understand your financial position and check all incoming revenue and outgoing expenditure.
It also allows you to spot any suspicious activity and immediately investigate to find out the source of the problem.
Regularly conducting financial audits, like organising your accounts, gives you the ability to build a better picture of your company’s finances.
Auditing allows you to spot signs of fraud and improve your internal controls. Both accounting and auditing help you meet your compliance obligations.
Having effective procedures helps you manage fraud challenges confidently and protect your business.
For support ensuring your accounts and auditing prevent fraud, contact us today.
Pensions and tax: Ongoing reform and its impact on tax-efficient saving
The Autumn Budget confirmed that pensions and tax-efficient saving are entering a period of sustained and important change.
Reforms to salary sacrifice, ISAs and the growing focus on unspent pensions all make it harder to build and pass on wealth tax efficiently.
For savers, business owners and higher earners, the changes that are being introduced over the next few years need to be understood and planned for.
Salary sacrifice under pressure
From April 2029, both employer and employee National Insurance contributions will be charged on pension payments made via salary sacrifice above £2,000 a year.
Contributions up to that level stay as they are, but anything above it will be treated like normal pay for NIC purposes.
Salary sacrifice has long been a mainstay of tax-efficient saving, helping individuals reduce Income Tax and NICs, while boosting pension pots and, in return, allowing employers to cut their own NIC bill.
The new cap will particularly affect higher earners and those in generous salary sacrifice schemes. It may push employers to rethink how they structure their reward strategy.
ISA reform
Although not immediately obvious, the reforms to ISAs are also likely to affect tax-efficient retirement planning.
From April 2027, the annual ISA cash allowance falls to £12,000, although the overall ISA limit of £20,000 remains.
To use the full allowance, up to £8,000 will need to go into stocks and shares ISAs.
This nudges savers towards investment risk and increases the relative importance of pensions as a long-term savings vehicle, especially alongside tighter rules on salary sacrifice.
Unspent pensions and Inheritance Tax
Pensions are increasingly used for intergenerational wealth planning because, in many cases, they sit outside the estate for Inheritance Tax (IHT) purposes.
The freeze on IHT thresholds to 2031 will pull more families into the IHT net.
Whilst pensions were once seen as an effective method of protecting long term wealth, the decision in the 2024 Autumn Budget to include unspent pensions from 2027 means that careful consideration is needed when building up a larger pension pot.
This change, along with this extended IHT band freeze, is likely to bring in many more estates in the years to come.
Planning your next steps
Taken together, these moves reduce reliance on traditional tax shelters and make smart planning more important than ever. Now is a good time to review:
- How much you contribute to pensions
- Your estate planning and use of pensions in succession
- Any employer schemes or remuneration structures you rely on
Pay planning after the Autumn Budget: Thinking differently about reward
One of the key consequences of the 2025 Autumn Budget is the impact it is likely to have on how small and medium-sized businesses approach pay.
Working capital loans: A sign of the times or a useful support mechanism?
A recent report by Purbeck revealed that more than a third of SME loans agreed in October supported day-to-day cash flow – the highest level since early 2025.
The latest Barclays index shows that more than half of SMEs have paused spending due to weakened confidence.
Insolvency is also on the rise, with more than 2,000 companies entering liquidation in October 2025.
All of these figures illustrate the pressure created by rising costs and continued uncertainty.
The focus for business owners has now seemingly shifted from growth to keeping operations steady.
Growing loan values
Average SME borrowing has reached levels far above last year. Data from Q3 shows an increase of more than 40 per cent, with typical loans approaching £300,000.
Young firms have taken even larger steps, with average loans rising more than 60 per cent.
Purbeck also reported increased reliance on personal guarantee backed loans, leaving owners with higher personal exposure at a time when confidence is fragile.
The benefit of working capital loans
Working capital loans provide the funds firms need when they face late payments or seasonal dips.
These loans help companies cover wages, suppliers and routine overheads without disrupting daily operations.
Short-term borrowing works best when it supports clear, planned decisions rather than when it tries to fix urgent issues.
Anyone considering working capital loans can benefit from professional guidance before proceeding.
A sign of the times and a useful mechanism
Current demand reflects the pressure facing UK SMEs.
Working capital loans have become part of everyday business life for many firms and, when used sensibly, they can create room to plan for the future.
Before taking on new borrowing, it’s crucial to speak with us. Loans come with inherent risks that can lead to financial challenges if not carefully managed. Contact us for expert advice to ensure any borrowing aligns with your broader financial strategy and long-term goals.
Personal Tax freeze – The impact of fiscal drag
The Chancellor, Rachel Reeves, has confirmed her plans to extend the Income Tax threshold freeze.
The original end date of 2028 has now moved to the 2030/31 tax year forcing many into higher tax bands as wages rise.
What are the current thresholds?
As it stands, the Income Tax rates are as follows:
- Up to £12,570 = 0 per cent
- £12,571 to £50,270 = 20 per cent
- £50,271 to £125,140 = 40 per cent
- Over £125,140 = 45 per cent
For those with income above £100,000, the personal allowance reduces by £1 for every £2 of income above that level.
By the time income reaches £125,140, the personal allowance is no longer applicable.
What does freezing Income Tax do?
Until 2021, thresholds rose each year roughly in line with inflation, which helped prevent tax bills rising with inflation as incomes increase.
However, the combination of this threshold freeze and rising National Minimum Wage (NMW) and National Living Wage (NLW) means that some taxpayers will find themselves dragged into tax for the first time and others into higher tax brackets.
Over time, take-home pay may grow slowly even if gross pay rises.
Who is affected the most by the Income Tax freeze?
Those earning moderate salaries and getting regular pay rises feel it first.
People on minimum wage or part-time hours who previously paid no tax may begin to pay Income Tax.
Higher earners face quicker erosion of their tax-free allowance and larger portions of their income taxed under higher bands.
Inheritance Tax (IHT) freeze extended
The IHT nil-rate band has also been frozen at £325,000 until 2031, along with the £175,000 residence nil-rate band – a year longer than anticipated.
As property values continue to increase year by year in many UK regions, more estates are likely to be liable for IHT as a result.
What should you do now?
A review of pension contributions can help limit Income Tax exposure. Estate plans should also be revisited to reflect rising asset values and longer-term IHT risk.
How to prepare for the Autumn Budget’s changes to APR and BPR
Last year’s Autumn Budget hit business owners hard with the announcements of changes to Agricultural Property Relief (APR) and Business Property Relief (BPR).
The new Inheritance Tax (IHT) rules, set to take effect from April 2026, could create substantial tax liabilities, especially where assets are handed down through generations.
Farmers, business owners and AIM investors are amongst those most affected by these upcoming changes and assessing your estate planning has never been more important.
With further changes to these reliefs announced in the Chancellor’s latest speech, now is the time to prepare.
What changes has the Autumn Budget brought for APR and BPR?
During her speech, the Chancellor confirmed that any unused £1 million allowance for the 100 per cent rate of APR and BPR will be transferable between spouses and civil partners, even if the first death was before 6 April 2026.
This is set to match the relief the transferable IHT nil-rate band offers and eases concerns for families who feared losing part of their relief entitlements.
However, the reforms also mean that any value above the £1 million threshold will still only receive 50 per cent relief.
This will create a 20 per cent IHT charge where the combined thresholds – nil-rate band, residence nil-rate band and APR/BPR – are exceeded. For a couple, this means that they have an effective threshold of up to £3 million.
For some people, this brings a significant change to their estate as business and agricultural assets were commonly held under the assumption they would pass tax-free upon death.
How may these changes affect you?
Many individuals now have limited time to review their Wills or consider whether lifetime gifting might be appropriate to distribute the estate in advance of their passing.
The lack of additional measures means that anyone relying on the traditional approach of passing assets upon death may be at risk of unexpected tax liabilities.
Families dealing with incapacity or outdated Wills may have challenges updating their affairs in time before April 2026.
To protect your family wealth, it is important to seek professional help when assessing how the new APR and BPR limits will affect you.
Our specialist team can advise you on your estate planning options and assess further business assets and partnerships.
Do you want to know if the new APR and BPR changes affect your estate? Speak to our team today.
Will your festive spirits be dampened by tax liabilities? How trivial benefits impact your business
The festive season is rapidly approaching and it is natural to want to treat your employees.
Unfortunately, even small gifts can have implications for your tax and National Insurance Contributions (NICs), so you should understand the implications of any kind gestures.
We are no Scrooge, we just want to help you understand how to spread festive cheer while staying tax-efficient.
What are trivial benefits in kind?
Trivial benefits are small, non-cash gifts or perks given to employees.
In order for benefits to qualify as trivial, they must meet the specific requirements from HMRC.
The gift must:
- Cost £50 or less
- Not be cash or a cash equivalent (like gift cards exchangeable for cash)
- Not be a reward for work or performance
- Not be part of an employee’s contractual benefits
- Not replace salary or bonuses
The most common examples of trivial benefits include seasonal gifts like a hamper or wine but can also include flowers or theatre tickets.
Directors can also receive trivial benefits, but these cannot have a combined worth of more than £300 per tax year.
What are the tax liabilities of trivial gifting?
Trivial benefits tend to be extremely tax-efficient as, if they meet the HMRC requirements, they are completely exempt from tax and NICs.
There is currently no need to report qualifying gifts to HMRC and they do not need to be listed on your P11D form.
It is important to declare any gift that does not fall within the criteria, as this will need to be recorded in the same way as other benefits and you will need to pay any tax or NICs owed.
If you are paying tax on employee benefits through your payroll, filing P11D forms is not required.
However, you will still need to submit a P11D(b) to pay any Class 1A NICs due.
You should track your trivial benefits to ensure that they meet the criteria and you remain compliant.
We can help you manage your obligations so your festive cheer does not turn sour.
To incorporate tax-efficient gifting into your business strategy, please get in touch with our team.