While employers were previously required to start using payroll software to report taxable benefits by April 2026, the deadline has been delayed to 6th April 2027.
This means employers can continue using P11D forms to report benefits in kind until next year.
When compulsory reporting is introduced next April, most employee benefits – except for cheap or interest-free loans and employer-provided accommodation – must be payrolled.
These exceptions can still be reported through a P11D form for the foreseeable future, but it’s likely they will eventually be subject to mandatory payrolling, too.
For the 2026–2027 tax year, payrolling benefits remains voluntary, but if employers do want to payroll employee benefits for this year, they must register before 6th April 2026.
Here’s how things will change when payrolling benefits becomes mandatory.
Reporting employee benefits from 2027–2028 onwards
Once payrolling is mandatory, it won’t be necessary to register, as HMRC will automatically enforce this and remove benefits from employee tax codes in time for the deadline.
If an employer wants to payroll a cheap or interest-free loan or accommodation before this, they can register voluntarily. For the time being, though, the P11D process will still be available for employers who don’t want to payroll these benefits after March 2027.
If employers cannot accurately determine taxable benefit values during the tax year and can only provide reasonable estimates, there will be an end-of-year process to account for this.
To support employers transitioning to payrolled benefits, HMRC also won’t be charging penalties for errors during the first year (unless there is evidence of deliberate non-compliance). However, penalties and interest will still be charged for late filing and late payment.
How will this impact cashflow for businesses?
Tax is deducted in real time through payrolling, but employees may be taxed simultaneously on benefits received in previous years through their tax code. This means the mandatory payrolling move could see employees facing tax deductions for multiple tax years all at once.
If multiple deductions would cause financial difficulties for an employee, HMRC may accept a request to spread previous underpayments across more than one tax year. The tax agency will soon provide further guidance to help employers support their employees with this.
A technical note from HMRC is available on the government website, which explains mandating the reporting of benefits in kind and expenses through payroll software.
If you are an employer and your business needs help with payroll and tax management, you can always come to the gbac team to benefit from a range of financial services.
Our accountants in Barnsley can help you get ahead of the benefit payrolling mandate, ensuring everything is running smoothly by the time it’s no longer voluntary. Simply call 01226 298 298 or email info@gbac.co.uk to find out what our accountants can do for you.
Under the Employment Rights Bill moving through Parliament, there will be some significant changes to Statutory Sick Pay (SSP), which are due to take effect by next spring.
Not only will workers be entitled to claim SSP from day one of their sickness, without a waiting period, but the government will also be removing the lower earnings threshold.
While other statutory payments are recoverable from HMRC, SSP is not, so the employer must bear the full cost. This means employers should revise their sick pay policies ASAP.
Here’s what employers should know to start preparing for SSP changes in April 2026.
Day one SSP entitlement
As of April 2025, the weekly SSP rate has increased from £116.75 to £118.75, but under current rules, workers must still wait at least three days to claim on their fourth day of absence.
Removing this waiting period means employees will be entitled to SSP from the first day of sickness, instead of only qualifying if their sickness lasts more than three days.
This day one right will ease financial pressure for employees, who will no longer have to choose between going to work while they’re ill and not getting paid. However, it will increase the cost for employers – who may also face lost productivity through increased absences.
To reduce sick leave abuse, employers should ask their employees to check in with them each day that they’re off sick, and hold a return-to-work interview every time.
No lower earning threshold
There is currently an earnings threshold to qualify for SSP, which means that an employee can only claim this statutory payment if they earn a minimum of £125 a week.
When the lower earnings limit is scrapped, workers who are off sick will be able to claim SSP even if they earn less than £125 a week. This makes sick pay more accessible for those with irregular working hours, part-time contracts, or low wages.
Employees will receive either the standard rate of SSP or 80% of their average weekly income – whichever is the lowest. This change means those who earn between £125–£148 a week will receive less per day, but they’ll still benefit from more qualifying days.
What should employers do about SSP?
While higher costs may be a concern, this is a beneficial opportunity for employers to upgrade their systems and policies for clearer and more consistent business planning.
If you’re a UK employer, to make sure you’re ready for the upcoming changes, you should:
- Revise budgets for increased sick pay costs (especially for lower-paid workers)
- Update payroll systems and HR policies to reflect the changes to SSP
- Implement fair absence management procedures to avoid discrimination
- Train managers to handle sickness absences with an inclusive approach
To help you plan for these adjustments, you should read through the official factsheet on the lower earnings limit removal, which is published on the government website.
Additionally, employers may find it helpful to outsource payroll services to ensure statutory payments are managed effectively. If you’re interested in this type of financial service, gbac has a team of accountants in Barnsley who would love to hear from you.
Call us on 01226 298 298 or email us at info@gbac.co.uk for more information!
A now-closed consultation by HRMC has provided further details about the Inheritance Tax (IHT) allowance for business and agricultural properties in the UK.
From 6th April 2026, to qualify for 100% relief, the total value of a property must be no higher than £1 million, while any eligible assets above this value will receive a reduced relief rate of 50%.
Under the new relief threshold, as an example, a business valued at £5 million could become liable for an additional £800,000 tax bill from next spring. This makes it crucial to get ahead in adapting to the upcoming changes to the £1 million IHT allowance for individuals.
Keep reading to learn more about how these changes will affect future estate planning.
How will business and agricultural IHT reliefs work?
Any lifetime transfers of business or agricultural property made within 7 years of death will use up the £1 million allowance. Similar to the nil rate band, the allowance will be renewed every 7 years.
Business and agricultural properties that only qualify for the 50% relief rate, including Alternative Investment Market (AIM) shares, won’t use up the full allowance.
While spouses and civil partners will qualify for their own allowances, any unused amount of each £1 million allowance won’t be transferable like the nil rate band.
IHT planning for business and agricultural properties
With unrestricted business and agricultural relief currently available, planning for IHT is important to ensure that 100% relief will still be available after the rules change.
From next year, there will be more incentive to make lifetime gifts if the allowance isn’t enough to cover the value of a business or agricultural property, which has implications for Capital Gains Tax (CGT).
Alternatively, putting a substantial gift into trust could be worthwhile – for example, gifting a £2 million agricultural property into trust would result in a lifetime IHT bill of just £35,000.
However, when making a lifetime transfer of such a property to a spouse or civil partner, this relief will only be available after the property has been held for 2 years.
Get help with IHT for a business or agricultural property
Annex A of HMRC’s Inheritance Tax reliefs consultation features several case studies illustrating how the allowance will be applied – but if you need more help managing your tax liabilities, you may want to speak to professionals like our accountants in Barnsley.
To discuss IHT planning with the team here at gbac, give us a call on 01226 298 298 to arrange a consultation, or send an email to info@gbac.co.uk and we’ll be in touch.
With Capital Gains Tax (CGT) rates increasing and the annual exempt amount reduced to just £3,000, it’s not surprising that HMRC is collecting considerably more revenue from CGT.
Basic rate taxpayers are facing almost double the CGT rate for disposals, up from 10% in 2024 to 18% in 2025, while higher rate taxpayers will also see an increase from 20% to 24%.
It’s important to keep up to date with the changes, as this will be an unpleasant hike – especially for couples who plan for the lower income partner to make taxable gains to reduce CGT.
So, are you staying on top of CGT planning for asset disposals this year?
What counts as a disposal for CGT?
‘Chargeable assets’ that are liable for CGT upon disposal include most personal possessions worth more than £6,000, property that isn’t a main residence, main homes that are very big or used for business, non-ISA shares, business assets, and (potentially) crypto-assets.
There’s a common misconception that CGT is only due if you sell an asset. However, giving an asset away to anyone other than your spouse or civil partner is also considered a disposal.
Similarly, exchanging an asset for something else or receiving compensation for an asset (such as an insurance claim if it has been lost or damaged) count as disposals, as well.
However, if you don’t receive any proceeds from gifting an asset, you might not have the funds to pay the CGT bill for the disposal – which will be calculated based on the asset’s market value.
Even if you sell an asset for less than it’s worth, its market value will still be used to calculate CGT liability, so you wouldn’t avoid this tax by selling the asset at an undervaluation.
In the case of cryptocurrency, if it’s used to pay for goods or services or there’s a currency conversion – such as switching Bitcoin to Ethereum – then there may be a taxable gain.
How can you reduce a CGT bill?
While there is now less scope for tax planning for CGT, there are still a few opportunities to help reduce your taxable gains, which include the following options:
- Making use of the £3,000 exempt amount every year (because it can’t be carried forward)
- Making personal pension contributions in the same year to reduce the rate from 24% to 18%
- Crystalising assets that stand at a loss (reducing gains without wasting the exempt amount)
Additionally, spouses and civil partners should continue to plan for CGT as a couple, as they can utilise two exempt amounts and the basic rate if only one of them is a basic rate taxpayer.
More information on the rules, allowances, and rates can be found in HMRC’s online CGT guide.
Another option is to seek professional tax advice from a financial consultant. Here at gbac, we have a team of accountants in Barnsley who can help you optimise disposals to reduce CGT.
To find out more, call us on 01226 298 298 or send an email to info@gbac.co.uk today.
With the annualised rate for daily penalties increasing by 250% alongside the late payment interest rate rising, it’s more expensive than ever to be late when paying VAT.
If you have missed the deadline for filing your VAT return and paying your tax bill, the last thing you should do is bury your head in the sand and ignore your VAT liability.
Here’s an explanation of how HMRC applies penalties and interest to late VAT payments, and what you can do to prevent your VAT debt from snowballing.
VAT late payment penalties
HMRC considers the payment and penalty for each VAT return separately, but the penalty can be avoided by making a payment within 15 days of the original due date.
If the late payment is made after this point, HMRC will charge an initial penalty of 3% (up from 2%).
However, if payment is made more than 30 days late, an additional 3% will be charged – totalling 6%.
Additionally, HMRC will immediately implement a daily penalty after this 30-day period. The annualised rate of the daily penalty has increased to 10% from the previous 4%.
VAT late payment interest
HMRC also charges interest from the day after the due date until the outstanding VAT is fully paid.
This means that even if payment is made in full within 15 days and there is no penalty, interest will still be charged for each day that the VAT bill was overdue.
The interest rate is calculated by adding 2.5% to the Bank of England base rate, but as of 6th April 2025, HMRC has introduced an additional 1.5% surcharge.
Currently, the Bank of England base rate is 4.5%, so the late payment interest rate is now 8.5%.
Late VAT repayment plans
The 8.5% late payment interest rate and 10% daily penalty rate are quite harsh, so it’s best to make a payment on account with whatever funds are available by the due date.
This will help you to avoid interest and reduce penalties on the outstanding amount.
If you can’t make a payment on time, you can ask HMRC to set up a ‘Time to Pay’ arrangement. This will allow you to pay in instalments and avoid further penalties.
However, this won’t remove any penalties you have already received, and you will still be charged interest. This type of VAT repayment plan is also unavailable for anyone using a cash accounting scheme or an annual accounting scheme.
Get help with VAT management
Of course, the best way to avoid penalties and interest charges is to make sure you file your tax return and pay the VAT due before the deadline for the relevant tax year.
To do this, you must keep accurate records and submit declarations on time – which may require help from professional tax consultants like our accountants in Barnsley.
Here at gbac, we offer a variety of bookkeeping and tax management services, so why not call us on 01226 298 298 to find out how we can help you manage VAT payments?
Alternatively, you can email your information to info@gbac.co.uk and we’ll be in touch.
Employed taxpayers who are liable for the High Income Child Benefit Charge (HICBC) will no longer need to submit a self-assessment tax return from summer 2025 onwards.
HMRC is introducing a new online service for employed taxpayers to report the charge instead.
Here’s what parents claiming Child Benefit need to know about paying the HICBC this year.
When is the HICBC payable?
For the 2025–2026 tax year, Child Benefit will be paid every 4 weeks at a rate of £26.05 a week for the first child and £17.25 a week for each additional child.
The High Income Child Benefit Charge will only apply if an individual receiving the benefit – or their partner – earns an annual income of more than £60,000.
For every £200 earned above this threshold, 1% of the benefit is removed. This means that when annual income reaches £80,000, the charge is 100%, reducing the benefit to zero.
This charge can lead to a high effective marginal tax rate for taxpayers with multiple children.
What is the HICBC online service?
If you’re an employed taxpayer, you’ll be able to use the new digital service from HMRC to report the amount of Child Benefit you’ve received. You’ll then have the choice to pay through PAYE.
There will be no need for you to submit a tax return unless you have other chargeable gains.
However, taxpayers who must file returns for other reasons will still be required to report the HICBC on their returns, and if you’ve submitted a return before, then HMRC will continue to send notices.
In this case, taxpayers need to be careful, because ignoring a tax notice could incur a penalty.
Paying the HICBC in 2025
Whether HMRC’s online service will reduce the issues associated with the HICBC remains to be seen. One of the main problems has always been lack of awareness, and with the new service, most employed taxpayers won’t be used to dealing with HMRC directly.
Guidance on the Child Benefit Tax Charge is available on the government website, but if you would rather seek out personal tax advice, you can contact our accountants in Barnsley.
If you don’t want to opt out of receiving Child Benefit, the team here at gbac could help you with adjusting investments and optimising allowances to stay below the HICBC threshold.
Just call us on 01226 298 298 or send an email to info@gbac.co.uk to set up a consultation.
Landlords and self-employed people earning between £20,000 and £30,000 a year will now be required to switch to the Making Tax Digital (MTD) regime from 6th April 2028.
HMRC previously stated that the Making Tax Digital for Income Tax (MTD for ITSA) scheme would expand to include lower-income taxpayers by the end of this Parliament, but April 2028 is an earlier start than expected, pushing 900,000 more taxpayers to make the switch.
If you earn £20,000–£30,000 annually from self-employment or rental income, here’s what you need to know to follow HMRC regulations and avoid penalties for non-compliance.
New MTD for ITSA deadline
As reported earlier, taxpayers earning more than £50,000 a year must begin using the MTD for ITSA system for the 2026–2027 tax year from 6th April 2026.
However, the deadline for filing returns and paying tax bills for this year is not until 31st January 2028. This doesn’t leave much time for HMRC to sort out any issues with this group before the next wave of taxpayers start using the system by April 2028.
Unrepresented taxpayers earning £20,000 to £30,000 a year will need access to free or low-cost software to prepare for 2028, which currently has limited availability – though there could be more options available in the next couple of years.
The relevant income for this threshold will be for the 2026–2027 tax year. This may be lowered in the future, as the government plans to expand MTD to include taxpayers earning below £20,000.
MTD self-assessment submission
While it was thought that taxpayers could use the standard online HMRC service to submit year-end self-assessment tax returns, this is not going to be possible.
HMRC has specified that mandated taxpayers must use suitable MTD software that can handle tax return submissions. If your chosen software isn’t capable of this, then you will need a different software package to meet HMRC’s year-end requirements.
The tax agency has provided a list of MTD compatible software on the government website.
Time to switch to MTD software
Do you earn £20,000 to £30,000 a year from self-employment or renting out properties as a landlord? Are you prepared for Making Tax Digital for Income Tax?
It’s better to switch to new software sooner rather than later, so you can get to grips with the new system before April 2028 and avoid penalties for late submission or late payment.
If you aren’t sure which software to use or would rather outsource digital accounting to the professionals, you can speak to our team of accountants in Barnsley.
At gbac, we provide a range of financial services, including bookkeeping and tax management, which can help you streamline your accounts and stay up to date with HMRC compliance.
To learn more about how we can assist you, browse our website or call 01226 298 298. You can also email us at info@gbac.co.uk and we will be in touch with more information.
While the originally planned Spring Forecast was upgraded to a Spring Statement, there were no tax increases announced on Wednesday 26th March – but is this simply a deferred burden?
The Chancellor of the Exchequer’s update on the government’s financial plans included several consultations on matters such as R&D tax relief and HMRC penalties, but no tax changes.
So, what did the Spring Statement reveal, and what might this mean for the next Budget?
The ‘Stability Rule’
Before she became the Chancellor, Rachel Reeves set a public finance goal that was dubbed the ‘Stability Rule’ – requiring the government to match day-to-day expenditure with revenue.
When Reeves shared her Autumn Budget in October 2024, the Office for Budget Responsibility (OBR) projected the government would meet the Stability Rule with a spare £9.9 billion.
However, the OBR recalculated this margin ahead of the Spring Statement and found that the government would actually fail to meet the Rule by £4.1 billion – a reversal of £14 billion.
Considering the £9.9 billion margin proved to be inadequate the first time, it’s a surprise that the new figure in the Spring Statement is the same – despite the raft of welfare spending cuts.
This has prompted speculation that the measures announced in the Spring Statement are designed to fit the Stability Rule rather than to help the British people earn and save money.
Autumn 2025 Expectations
The issue with maintaining the same margin is that when the OBR publishes its next assessment this autumn, it’s likely the Stability Rule will be missed again. In this case, the Chancellor will probably have to increase taxes to recover instead of making further cuts to spending.
There are already signs of preparation for this in the Spring Statement, which suggests a review of the balance of cash and shares in Individual Savings Accounts (ISAs).
If the government lowers the £20,000 annual tax-free investment limit for cash ISAs, this would produce extra revenue for the government due to the reduction in tax relief.
On top of ongoing ‘stealth taxes’ from frozen thresholds and increased National Insurance Contributions (NICs) already underway, new tax rises are likely to be unveiled in the next Budget in Autumn 2025 – so the Spring Statement isn’t much more than a holding exercise.
Time for Tax Planning
As it did in summer 2024 ahead of the new Labour government’s first Autumn Budget, it’s likely that speculation about incoming tax increases will escalate over the next few months.
In the meantime, as the 2025–2026 tax year has just begun, it would be smart to focus on your own financial planning. At gbac, we’re here to help with tax management services.
Our accountants in Barnsley can support you in improving your tax efficiency while complying with HMRC rules. Simply call 01226 298 298 or email info@gbac.co.uk to get started.
In an instance of surprising generosity, HMRC compensates smaller employers to make it easier for them to administer statutory payments to their employees.
From 6th April 2025, the compensation rate is going up to 8.5% – almost triple the previous 3%.
Employers can usually only claim back 92% of statutory maternity, paternity, adoption, or parental bereavement payments, but smaller employers can recover the whole cost plus compensation.
This means the total statutory payment recovery rate for small employers will be 108.5% – excluding Statutory Sick Pay (SSP), which is no longer recoverable.
Here’s what small employers should know about recovering statutory payments.
Who counts as a small employer?
Employers are eligible for Small Employers’ Relief if their total Class 1 National InsuranceContributions for the last complete tax year didn’t exceed £45,000 before the qualifying week.
This total includes both employee NICs and employer NICs, but excludes Class 1A or 1B contributions. It also ignores any reductions (like the Employment Allowance).
With the Class 1 NIC rate being lower for 2024–2025 than it was in 2023–2024, an employer who might previously have been just above the £45,000 threshold could qualify in 2025–2026.
The qualifying week (Sunday to Saturday) will depend on the type of leave. For example, the qualifying week for maternity pay is the fifteenth week before the pregnancy due date.
If a smaller employer can’t afford to make statutory payments to an employee, they can apply to HMRC for advance payments up to four weeks before the first payment is required.
Statutory payment recovery
HMRC’s guide to financial help for statutory pay can be viewed on the government website.
Whether at the normal rate or the small employer rate, employers can claim statutory payment relief on a monthly basis. Your payroll software should do this automatically using the employer payment summary, though you might have to specify that you’re a small employer.
If you need professional help with payroll services to manage statutory payments and claim Small Employers’ Relief, you can always come to our accountants in Barnsley.
At gbac, we provide a range of financial services to help employers of all sizes manage their books in compliance with HMRC regulations. Call 01226 298 298 or email info@gbac.co.uk to learn more.