SECTION 01
General Tax & Allowances.
The foundations every UK taxpayer needs: how HMRC identifies you, how your tax code works, what your tax-free allowances are, and how Income Tax actually stacks up across the bands.
What is a UTR (Unique Taxpayer Reference)?
A UTR is a 10-digit number HMRC uses to identify you for tax. You receive one automatically when you register for Self Assessment, and a separate one when a company is incorporated. The personal UTR and the company UTR are different numbers; do not confuse them when filing. You'll find your UTR on your Self Assessment registration confirmation, on prior tax return paperwork, and in your Personal Tax Account on GOV.UK.
What does my tax code mean in 2025/26?
Your tax code tells your employer or pension provider how much tax-free pay to give you. The standard code 1257L means £12,570 of Personal Allowance: the number is your allowance divided by 10. The letter adds nuance.
| Letter | What it means |
|---|
| L | Standard Personal Allowance |
| M | You receive Marriage Allowance from your spouse (+10% PA) |
| N | You give Marriage Allowance to your spouse (-10% PA) |
| K | Deductions exceed allowances; you owe extra tax via PAYE |
| BR / D0 / D1 | All income taxed at basic / higher / additional rate |
| NT | No tax to be deducted |
What are UK Income Tax rates for 2025/26?
Five bands. The Personal Allowance is the first slice of income that is not taxed. Above that, every additional pound is taxed at the rate of the band it falls in, not the band it pushes you into. There is one nasty quirk: between £100,000 and £125,140 the Personal Allowance tapers away, creating an effective 60% marginal rate.
Income Tax bands 2025/26 (visualised)
0%
£0 to £12,570
Personal Allowance
20%
£12,571 to £50,270
Basic rate
40%
£50,271 to £100,000
Higher rate
60%
£100,001 to £125,140
PA taper trap
45%
£125,141+
Additional rate
Bar widths are illustrative, not to scale. The 60% marginal rate happens because your Personal Allowance disappears at £1 lost per £2 earned over £100,000.
What is the Marriage Allowance worth?
Up to £252 per year. The lower-earning spouse can transfer £1,260 of unused Personal Allowance to a basic-rate-paying spouse. Both must be married or in a civil partnership; the receiver must not pay higher or additional rate Income Tax. Backdate up to 4 tax years on first claim, which can mean a one-off payment of over £1,000.
What is the Annual Investment Allowance?
£1 million per year of qualifying plant, machinery, equipment, commercial vehicles and integral features. 100% deduction in the year of purchase. Cars usually do not qualify; use Writing Down Allowances or, for new electric vehicles, the 100% First Year Allowance instead. The £1M limit is per group of associated companies, not per company.
What are the simplified expenses flat rates?
For sole traders and partnerships, simplified expenses save the bookkeeping hassle on certain costs.
| Expense type | Flat rate |
|---|
| Vehicle, first 10,000 business miles | 45p per mile |
| Vehicle, after 10,000 business miles | 25p per mile |
| Use of home as office, 25 to 50 hours/month | £10/month |
| Use of home as office, 51 to 100 hours/month | £18/month |
| Use of home as office, 101+ hours/month | £26/month |
Once chosen for a vehicle, you cannot switch to actual costs for that vehicle later.
What is Making Tax Digital (MTD)?
HMRC's programme requiring digital record keeping and software-based filing. Already mandatory for VAT (all VAT-registered businesses). Coming for Income Tax (MTD ITSA): from April 2026 for sole traders and landlords with qualifying income above £50,000; from April 2027 for those above £30,000. Partnership inclusion in MTD ITSA is currently deferred.
SECTION 02
Self Assessment.
The annual tax return for sole traders, partners, landlords, directors, and anyone with income outside PAYE. Everything you need: who needs to file, when, what the rates are, and the change in basis periods.
Do I need to file a Self Assessment tax return?
Yes if any of these apply to you:
- You are self-employed earning over the £1,000 trading allowance
- You are a partner in a partnership
- Your total income exceeds £150,000 (raised from £100,000 in 2024/25)
- You have rental income over £1,000
- You have significant dividend, savings or investment income
- You have foreign income
- You have capital gains exceeding the £3,000 Annual Exempt Amount
- You are a high-income parent on Child Benefit (HICBC)
- HMRC has sent you a notice to file
Quick check: do I need to file SA?
Did any of the above apply to you in the tax year?
YES ↓NO ↓
YES, file SA100Register by 5 October following the tax year. File online by 31 January.
NO filing neededBut still keep records of any side income for 5 years in case anything changes.
When are Self Assessment deadlines?
Two filing options, two payment dates each year.
| Event | Deadline |
|---|
| Register a new SA case | 5 October following the tax year |
| Paper SA100 return | 31 October following the tax year |
| Online SA100 return | 31 January following the tax year |
| Balancing payment | 31 January following the tax year |
| First Payment on Account | 31 January (during the next tax year) |
| Second Payment on Account | 31 July following the tax year end |
What are Payments on Account?
Advance instalments towards next year's tax. If your last Self Assessment liability was £1,000 or more (and less than 80% was collected at source via PAYE), you pay 50% by 31 January and another 50% by 31 July, both based on the prior year's tax. If your income drops you can apply to reduce them via your Self Assessment account or form SA303. Reduce them too aggressively and HMRC will charge interest on the shortfall.
How much is Class 2 and Class 4 NIC for 2025/26?
Class 2: effectively abolished as a mandatory contribution from April 2024. Self-employed earning over £6,725 are credited automatically (no payment); below that, voluntary at £3.45/week to protect State Pension entitlement.
Class 4: 6% on profits between £12,570 and £50,270, then 2% above. Class 4 was reduced from 8% to 6% in April 2024 as part of the National Insurance cuts. So a sole trader on £40,000 of profit pays roughly £1,646 Class 4 NIC plus £5,486 Income Tax for 2025/26.
From 2024/25, all sole traders and partnerships report profits on a tax year basis (6 April to 5 April), regardless of accounting period. Businesses with non-31-March/5-April year ends had a transitional year in 2023/24 with up to 23 months of profits reported.
The transitional spread
Transitional profits are spread over five tax years (2023/24 to 2027/28) by default, with overlap relief brought forward from when you first started trading. Many practices have not optimised this; we have rebuilt several cases for clients and saved tens of thousands.
What is the High Income Child Benefit Charge?
From 2024/25 the threshold rose from £50,000 to £60,000, with full clawback at £80,000. The charge claws back 1% of Child Benefit for every £200 of adjusted net income over £60,000. Above £80,000 the entire benefit is effectively recovered. Worth re-claiming Child Benefit if you paused it before April 2024; many families reverted to claiming once the thresholds moved.
SECTION 03
CIS Construction Industry Scheme.
A withholding-tax scheme that affects every UK contractor and subcontractor in construction. Below: how the money actually moves, the three rates, monthly returns, and how to reclaim what's been deducted.
What is CIS?
A withholding tax scheme. Contractors deduct tax from the labour element of payments to subcontractors and pay it to HMRC monthly. The deducted amount is an advance payment of the subcontractor's eventual tax bill, claimed back through Self Assessment (sole traders) or set off against PAYE (limited companies).
How CIS money flows: a £1,000 labour invoice
1. Subcontractor invoices contractor
£1,000 labour + £200 materials = £1,200 total
↓
2. Contractor deducts 20% from labour only
£200 deducted (materials excluded). Subcontractor receives £1,000 (£800 labour + £200 materials)
↓
3. Contractor pays HMRC by the 22nd
£200 deduction sent to HMRC, plus monthly CIS300 return filed by the 19th
↓
4. Subcontractor reclaims via SA or PAYE
Sole trader: claim on SA100, refund within 4 to 8 weeks. Limited company: offset against PAYE/NIC monthly via EPS
What are the CIS deduction rates?
| Status | Rate | Applies to |
|---|
| Gross Payment Status (GPS) | 0% | Approved subcontractors who pass HMRC tests |
| Verified subcontractor | 20% | Registered with HMRC for CIS |
| Unverified subcontractor | 30% | Not registered, or HMRC cannot verify |
Materials, plant hire, fuel for plant, manufacturing or prefabrication of construction items, and consumable stores are excluded from the deduction. Only labour is in scope.
When are CIS returns due?
Monthly, by the 19th of each month, covering payments made in the previous tax month (6th to 5th). The CIS deductions themselves are paid to HMRC by the 22nd (electronic) or 19th (post) of the same month. Late returns trigger a £100 penalty on day one, escalating to £200 plus a percentage of the deductions for repeated failures.
What is Gross Payment Status (GPS) and how do I qualify?
GPS allows a registered subcontractor to be paid 100% (no CIS deduction). To qualify you must pass three HMRC tests:
- Turnover test: excluding materials, £30,000 per individual director or £30,000 multiplied by the number of directors for a company
- Business test: carrying on a construction business in the UK
- Compliance test: filed and paid taxes on time over the past 12 months
HMRC reviews compliance annually and can withdraw GPS for repeated lateness. Losing GPS can cripple cashflow.
How does a subcontractor claim back the deductions?
Sole trader subcontractors: claim CIS suffered on the Self Assessment return; if total CIS suffered exceeds total tax due, HMRC refunds the difference, usually within 4 to 8 weeks of filing.
Limited company subcontractors: offset CIS suffered against PAYE/NIC owed each month via the Employer Payment Summary (EPS). Any excess at year end is repaid by HMRC.
Why CIS clients refund well with us
The size of your refund depends on the legitimate expenses you claim. Tools, vehicle costs, fuel, PPE, training, professional fees, mileage, phone, sub-let storage. Our specialism is making sure none of it is missed.
Do I need to register as a CIS contractor?
You must register as a contractor if your business pays subcontractors for construction work, OR if your business is not in construction but spent more than £3 million on construction in the previous 12 months (deemed contractor rules). Register before paying the first subcontractor; failure to register can result in HMRC assessing missed deductions plus penalties.
SECTION 04
VAT.
Registration thresholds, rates, the four schemes, Making Tax Digital, and what Brexit changed for exporters. Updated for the 2025/26 thresholds and the post-2024 MTD rules.
What is the VAT registration threshold?
£90,000 of taxable turnover in any rolling 12-month period (raised from £85,000 in April 2024). You must register within 30 days of crossing it, or as soon as you reasonably expect to cross it in the next 30 days alone. The deregistration threshold is £88,000.
Registration check
Has your taxable turnover in the last 12 rolling months exceeded £90,000?
YES ↓NO ↓
Register within 30 daysPenalties accrue if you miss the deadline. We file the registration in 24 hours.
Continue monitoringRecheck monthly. Voluntary registration may make sense if your customers are mostly VAT-registered.
What are the UK VAT rates?
| Rate | % | Applies to |
|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Domestic fuel, children's car seats, home energy-saving materials |
| Zero-rated | 0% | Most food, books, newspapers, children's clothing, public transport |
| Exempt | n/a | Insurance, education, finance, health, most property (no input VAT recoverable) |
How does Making Tax Digital for VAT work?
All VAT-registered businesses must keep digital records and file VAT returns through MTD-compatible software. Manual or spreadsheet-only submissions are not allowed. We use Xero, QuickBooks and FreeAgent for clients depending on size and sector. Penalties apply for non-compliance; new points-based late submission penalties replaced surcharges from January 2023.
When are VAT returns due?
One month and seven days after the end of each VAT period. For a quarter ending 31 March, the return and payment are due 7 May. Direct Debit gives an extra three working days for payment to leave your account. Late filing accrues penalty points; four points (or two for annual filers) triggers a £200 fine.
Can I reclaim VAT from before I registered?
Yes. Reclaim input VAT on goods purchased up to 4 years before registration, provided you still hold the goods at the registration date and they are for business use. Reclaim VAT on services received up to 6 months before registration. Include the reclaim on your first VAT return.
Is the VAT Flat Rate Scheme worth it?
Sometimes. Pay HMRC a fixed percentage of gross turnover instead of input/output VAT difference. Applies to businesses with turnover under £150,000. Sector rates 9% to 14.5% with a 1% first-year discount. Worth it if your input VAT is genuinely low (consultancy, IT services without much expenditure). Limited cost trader rules push many service businesses to a flat 16.5%, which usually loses money compared to standard.
How does Brexit affect VAT on goods sold to the EU?
Sales of goods to EU consumers are now zero-rated UK exports if you have proof of export. EU consumers may face import VAT and duty in their country, which affects pricing. The IOSS (Import One Stop Shop) lets you collect EU VAT at point of sale for low-value parcels. Sales to EU businesses (B2B) follow zero-rated rules. Service supplies follow different place of supply rules.
SECTION 05
Corporation Tax.
For UK limited companies and LLPs taxed through the corporate route. The two-rate structure, Marginal Relief, R&D, and dividend extraction maths after the April 2025 NIC hike.
What are Corporation Tax rates for 2025/26?
Two rates with a tapered band between them.
| Profit level | Rate |
|---|
| Up to £50,000 | 19% small profits rate |
| £50,001 to £250,000 | Marginal Relief tapers from 19% to 25% (effective marginal rate 26.5%) |
| Over £250,000 | 25% main rate |
The £50,000 and £250,000 thresholds are divided by the number of associated companies. So a group of three associates each see thresholds of £16,667 and £83,333. This catches a lot of family company groups.
When is Corporation Tax due?
Payment is due 9 months and 1 day after the end of the accounting period. The CT600 return is due 12 months after the period end. So for a year ending 31 March 2026: pay by 1 January 2027, file by 31 March 2027. Companies with profits above £1.5 million pay in quarterly instalments; above £20 million the rules tighten further.
What is R&D tax relief and is my company eligible?
From April 2024 the merged R&D Expenditure Credit (RDEC) scheme replaced the old SME and RDEC schemes for most claims. Headline rate 20% (taxable) giving an effective benefit of around 15% for profitable companies. R&D-intensive loss-making SMEs (R&D over 30% of total expenditure) get an enhanced rate.
Reality check
Qualifying activity must seek a scientific or technological advance. Building a website, applying off-the-shelf software, or doing market research is NOT R&D. We refer real R&D claims to specialist providers and turn down weak ones; HMRC scrutiny is high.
What dividend tax do I pay as a director-shareholder?
Dividend allowance is £500 (reduced from £1,000 in April 2024). Above that:
| Band | Dividend tax rate |
|---|
| Basic rate (within £37,700 band) | 8.75% |
| Higher rate (£50,271 to £125,140) | 33.75% |
| Additional rate (above £125,140) | 39.35% |
Dividends fall on top of other income for rate-band purposes. The classic £12,570 salary plus dividends extraction strategy still works, but is materially less attractive than two years ago thanks to the lower allowance and the post-April-2025 employer NIC changes.
Can I claim entertaining clients as a tax-deductible expense?
Client entertainment is allowable in the company accounts but not deductible for Corporation Tax. So it reduces book profit but not taxable profit. Staff entertainment up to £150 per head per year (across all events combined) is fully deductible and not a benefit in kind. Mixed events apportion.
SECTION 06
PAYE & National Insurance.
Payroll mechanics, RTI, P11D, and the major April 2025 NIC changes that hit every employer in the country. If you employ anyone (including yourself as a director), this section matters.
What is PAYE?
Pay As You Earn: the system through which employers deduct Income Tax and Class 1 NIC from employee pay and remit to HMRC. Real Time Information (RTI) means a Full Payment Submission is filed on or before each payday. PAYE/NIC payment is due by the 22nd of the following month (electronic) or 19th (post).
What are the National Insurance rates for 2025/26?
The big one. Employer NIC was hammered in the Autumn 2024 Budget; the changes took effect from April 2025 and added significantly to wage costs across every UK business.
Before April 2025
- Employer rate: 13.8%
- Secondary threshold: £9,100
- Employment Allowance: £5,000
- £100k prior-year NIC cap on EA
- Class 1A on benefits: 13.8%
From April 2025
- Employer rate: 15%
- Secondary threshold: £5,000
- Employment Allowance: £10,500
- EA cap scrapped (most employers can claim)
- Class 1A on benefits: 15%
Employee Class 1 NIC is unchanged: 8% on earnings between £12,570 and £50,270, 2% above. The cuts in January and April 2024 brought it down from 12%.
How much is the Employment Allowance?
£10,500 for 2025/26. Reduces employer Class 1 NIC. The £100,000 prior-year NIC cap was scrapped from April 2025, so most employers can now claim regardless of size. Excludes single-director companies with no other employees.
What is the National Living Wage in 2025/26?
| Age | Hourly rate from April 2025 |
|---|
| 21+ (National Living Wage) | £12.21 |
| 18 to 20 | £10.00 |
| 16 to 17 / Apprentice (Y1 or under 19) | £7.55 |
What is a P11D and when is it due?
Annual return reporting taxable benefits in kind: company cars, private medical insurance, beneficial loans over £10,000, similar. Due 6 July following the tax year. Class 1A NIC at 15% on the reported value is due by 22 July. Voluntary payrolling of benefits avoids P11D for those benefits but not for beneficial loans or accommodation. From April 2026, mandatory payrolling of most benefits is being phased in.
What is the difference between FPS and EPS?
FPS (Full Payment Submission): real-time PAYE filed on or before each payday with all employee pay, tax, NIC, student loan and pension data.
EPS (Employer Payment Summary): monthly return filed when there are no employees paid, when claiming Employment Allowance, when adjusting for statutory pay recovery, or when reporting CIS suffered. Due by the 19th of the following month.
How often must I run payroll?
As often as you pay employees: weekly, fortnightly, four-weekly or monthly. Monthly is the most common for SMEs. You must run payroll and file RTI on or before payday, even for a single director paying themselves once a year (an annual scheme is allowed in that scenario).
SECTION 07
Company Compliance.
Directors, identity verification under ECCTA 2023, the confirmation statement, formation, switching accountants, and the dormant or strike-off routes when you want to wind a company down.
Can I be a UK company director?
Yes if you are 16 or over, not undischarged bankrupt, not currently disqualified, and have completed Companies House identity verification (mandatory since autumn 2025 under ECCTA 2023). No nationality or residency restrictions. Each company must have at least one natural-person director, not just corporate directors.
Do company directors need to verify their identity with Companies House?
Yes. From autumn 2025, identity verification under the Economic Crime and Corporate Transparency Act 2023 is mandatory for all UK directors and PSCs. You verify once and receive an 11-character personal code used on every filing for life.
Fastest
GOV.UK ID Check app
5 to 10 minutes via UK passport NFC scan
Free
In person
Post Office
30 to 45 minutes including travel
Free
Broadest ID
Via an ACSP
For foreign passports and complex cases
£30 to £100
Full DIY guide with screen-by-screen videos: Identity Verification Guide.
What is a confirmation statement and when is it due?
An annual filing to Companies House confirming key company information: directors, PSCs, registered office, share capital, SIC codes. Due within 14 days of the company's anniversary (or last statement). Online filing fee was raised to £34 in May 2024 (from £13). Paper filing £62. Companies House will reject a confirmation statement if any director or PSC named on it is not yet identity-verified.
Online via Companies House (£50 standard, £78 same-day) or via a formation agent or accountant. You need: a unique company name, a UK registered office, at least one identity-verified director, at least one shareholder (can be the same person), Memorandum and Articles (model articles by default), share capital and SIC code. Register for Corporation Tax with HMRC within 3 months of starting to trade.
What does the registered office address need to be?
From March 2024, the registered office must be an "appropriate address" where post can be delivered and acknowledged by a person, and where post can come to the attention of someone acting on behalf of the company. PO Boxes are not allowed. Many directors use their accountant's address or a virtual office service to keep their home address off the public register.
What is a PSC and do I need to register one?
Person with Significant Control: anyone holding more than 25% of shares or voting rights, or with the right to appoint or remove a majority of the board. Every UK company must keep a PSC register and notify Companies House of changes within 14 days. PSCs themselves must complete identity verification under ECCTA.
What annual filings does a small UK company face?
- Annual accounts to Companies House (9 months after the accounting reference date for a private company; small companies file abridged or filleted accounts)
- CT600 Corporation Tax return to HMRC (12 months after period end)
- Confirmation statement to Companies House (annual)
- Plus any monthly PAYE/CIS, quarterly VAT, and director's personal Self Assessment if relevant
How do I switch accountants to LOYALS?
Tell us yes. We send a Professional Clearance Letter to your current accountant. They release records and confirm there is nothing outstanding. We register as your new agent with HMRC and Companies House. We pick up the next filing on the calendar. Typical handover: 2 to 3 weeks. Free and stress-free; we do all the work.
Can my company stay dormant?
Yes, if it has had no significant accounting transactions in the period. File dormant company accounts (form AA02) to Companies House and a confirmation statement annually. Notify HMRC the company is dormant for Corporation Tax. A dormant company that resumes trading must notify HMRC within 3 months.
What happens if I want to close a limited company?
Two main routes:
Strike-off (DS01)
- For companies with no significant assets and no creditors
- Costs £33
- Takes 2 to 3 months
- DIY-friendly with our project management
Members' Voluntary Liquidation (MVL)
- For solvent companies with assets to extract
- Opens up Business Asset Disposal Relief at 14% CGT (rising to 18% in April 2026)
- Needs a licensed insolvency practitioner
- Worth it for retained profits over £25k
SECTION 08
IR35 / Off-Payroll Working.
Why HMRC cares whether you "look like an employee" and what happens to the tax bill if it decides you do. The post-April-2021 framework is now well-established but still trips up new contractors.
What is IR35 and who does it apply to?
Off-payroll working rules. They apply when a contractor provides services through an intermediary (usually their own personal service company) but the working relationship looks like employment. Inside IR35: taxed broadly as an employee. Outside IR35: taxed as a business with normal company benefits.
Tests: control (does the client direct how, when, where you work), substitution (could you genuinely send a substitute), mutuality of obligation (must they offer work, must you accept), plus written contract terms and actual working practices.
Who decides IR35 status?
| Client size / sector | Who decides status | Who is liable |
|---|
| Medium and large private sector | End client (Status Determination Statement) | Fee-payer (client or agency) |
| All public sector | End client | Fee-payer |
| Small private sector | Contractor's own PSC | Contractor's PSC |
"Small" means meeting two of: turnover under £15M, balance sheet under £7.5M, fewer than 50 employees (thresholds raised in April 2025).
What happens if I am inside IR35?
Outside IR35: business
- Extract via salary + dividends mix
- Claim broad business expenses
- Use £5,000 trading allowance
- Defer income via retained profits
- Build pension via company contribution
Inside IR35: deemed employee
- PAYE and Class 1 NIC deducted by fee-payer
- Cannot claim broad business expenses
- Lose dividend extraction tax efficiency
- No statutory employee protections
- Limited tax planning options
Worth contesting Status Determination Statements that look wrong. We do this for clients regularly.
SECTION 09
HMRC, Penalties & Records.
What happens when filings go in late, how far back HMRC can investigate, and how long to keep your records. The penalty escalator is steep and almost always avoidable.
What are the late filing penalties for Self Assessment?
HMRC's penalty system escalates fast. The chart below shows how a single missed filing balloons over a year.
Day 1 late
£100 fixed penalty
Automatic, even if no tax is owed. Cannot be reduced for first offence.
3 months late
+£10 per day, capped at £900
Daily penalties accrue automatically until the return is filed or 90 days pass.
6 months late
+£300 (or 5% of tax due, whichever higher)
In addition to the previous penalties, not instead of. Running total can exceed £1,300.
12 months late
Another £300 (or 5% of tax due)
Behaviour-based penalties up to 100% of tax can apply for deliberate non-compliance.
Late payment penalties are separate from filing penalties: 5% surcharge after 30 days, again at 6 months, and again at 12 months. Interest accrues on the unpaid balance throughout.
How long can HMRC investigate me?
Routine enquiries must open within 12 months of filing. Discovery assessments can go back further:
| Behaviour | HMRC look-back window |
|---|
| Innocent error | 4 years |
| Careless behaviour | 6 years |
| Deliberate / fraud | 20 years |
Records should therefore be kept for at least 6 years for businesses (5 years and 10 months from end of tax year for self-employed records). We represent clients through enquiries and reviews as part of monthly service.
How long must I keep my business records?
- Self-employed and partnerships: 5 years from 31 January following the relevant tax year
- Limited companies: 6 years from the end of the accounting period
- VAT records: 6 years
- PAYE records: 3 years from the end of the tax year (but practically keep 6)
Records can be digital or paper; HMRC accepts good-quality scanned originals. Cloud bookkeeping platforms like Xero retain records indefinitely as part of the subscription.
SECTION 10
Personal Tax Planning.
Allowances, Capital Gains Tax, ISAs, pensions and the surprisingly powerful 60% relief in the £100k taper zone. The single highest-leverage tax planning area for higher earners.
What is the dividend allowance for 2025/26?
£500. Reduced from £1,000 in April 2024 and £2,000 in April 2023. Above the allowance, dividend tax is 8.75% basic, 33.75% higher and 39.35% additional. The combination of small allowance and lower personal allowance taper means the salary plus dividend extraction is now less attractive than it was; many director-shareholders should re-model after the April 2025 NIC changes.
What is the Capital Gains Tax annual exempt amount in 2025/26?
£3,000 (frozen since April 2024, down from £6,000 in 2023/24 and £12,300 before that). Rates from 30 October 2024:
| Asset | Basic rate band | Higher rate band |
|---|
| Residential property | 18% | 24% |
| Shares and other assets | 18% | 24% |
| BADR-qualifying business assets (first £1M) | 14% | 14% |
Business Asset Disposal Relief: 14% in 2025/26, rising to 18% from April 2026. If you are planning to sell a business in the next 12 months, the timing matters significantly.
What is the ISA allowance for 2025/26?
£20,000 across all adult ISAs (Cash, Stocks and Shares, Innovative Finance, Lifetime). Lifetime ISA contribution capped at £4,000 within the £20,000 (plus a 25% government bonus of up to £1,000). Junior ISA limit £9,000. Allowance does not roll over; use it or lose it by 5 April.
What is the pension Annual Allowance?
£60,000 (or 100% of relevant earnings if lower). Carry-forward unused allowance from the previous three tax years if you were a member of a registered scheme. Tapered Annual Allowance reduces by £1 for every £2 of adjusted income over £260,000, with a £10,000 minimum.
The 60% effective relief between £100k and £125,140
If your income falls in this range, every pound of pension contribution gets effective tax relief of 60% (40% income tax saved, plus the recovery of Personal Allowance you were losing to the taper). A £10,000 pension contribution can save £6,000 in tax. We flag this proactively for clients each year.
What is auto-enrolment pension for employers?
UK employers must automatically enrol eligible workers (aged 22 to State Pension age, earning over £10,000) into a qualifying workplace pension. Minimum 8% total contribution: 3% employer, 5% employee (relief at source means employee net is 4%). Re-enrolment every 3 years. The Pensions Regulator polices compliance; penalties from £400 escalating to £10,000 daily.
SECTION 11
Brexit & Trade.
Post-Brexit VAT, EORI, customs declarations and the IOSS for low-value parcels. If you import or export goods across UK borders, this section covers the essentials.
What is an EORI number and do I need one?
Economic Operators Registration and Identification number, required if you import or export goods between Great Britain and any other country (including the EU since Brexit). Free to apply via HMRC, usually issued within a week. Format: GB followed by your VAT number plus 000, or 12 digits if not VAT-registered. Northern Ireland traders may need an XI EORI as well.
How does Brexit affect VAT on goods sold to the EU?
Sales of goods to EU consumers are now treated like sales to the rest of the world: zero-rated UK exports if you have proof of export. EU consumers may face import VAT and duty in their country, which affects pricing.
The IOSS (Import One Stop Shop) lets you collect EU VAT at point of sale for low-value parcels (under €150), so the customer doesn't get a surprise bill at delivery. Sales to EU businesses (B2B) are zero-rated under similar rules. Service supplies follow different rules (place of supply).
Northern Ireland is different
The Northern Ireland Protocol creates separate rules for goods moving to and from NI. Goods moving GB to NI may need declarations and may be subject to EU VAT in some cases. Goods moving NI to EU continue under EU rules. Worth specialist advice if you trade in or out of NI.
