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.
HMRC has launched a new campaign to remind people that earning extra income from a ‘side hustle’ – a smaller income source outside of your primary job – also comes with tax obligations.
As of January 2025, online trading platforms must automatically report user income to HMRC if they make at least 30 sales or earn €2,000 or more (about £1,700) in a calendar year.
This means that anyone who sells goods or services online, whether through websites or mobile apps, needs to be aware of their income reporting requirements and pay the right amount of tax.
If you’re trading at all, be it online or offline, then you need to report your trading income to HMRC and pay income tax on any earnings that exceed your personal allowances.
So, if you have a side hustle or you’re planning to start one, here’s what you need to know.
What counts as trading?
Common activities that are often seen as hobbies to earn a bit of extra money, but are actually categorised as trading by HMRC and generate taxable income, include:
- Making or upcycling items to sell – like arts and crafts, beauty products, or furniture
- Buying things to resell at a higher price – such as clothing, collectibles, or home goods
- Providing a service as a ‘side gig’ – e.g. dog walking, tutoring, gardening, or deliveries
- Working multiple jobs at once – having lots of ‘hustles’ without a main income source
- Creating online content or being an influencer – getting paid for content posted online
- Renting out spare rooms or full properties – e.g. holiday lets through apps like Airbnb
Decluttering and selling off unwanted personal possessions normally isn’t considered trading. However, if you’re regularly selling items or picking up extra work through an app in your spare time, this is likely to be considered self-employment income for tax purposes.
Are there any exemptions?
If you’re trading, but your income for the tax year is less than £1,000, then you won’t owe any tax.
You’ll only need to inform HMRC and submit a self-assessment tax return if your trading income exceeds the £1,000 annual tax-free trading allowance.
This is in addition to the annual tax-free personal allowance of £12,570 that everyone earning less than £100,000 a year is entitled to – so the trading allowance is especially relevant for anyone who has multiple jobs but no primary source of income.
If you rent out a spare room in your home, you can earn up to £7,500 a year tax-free through the government’s Rent a Room Scheme. For other property income from rentals or holiday lettings, the £1,000 annual tax-free property allowance applies.
These are separate allowances that can only be used for the specified type of income, but it’s possible to claim them all in the same tax year if you have eligible earnings.
How to pay income tax on side hustles
You can find more details on side hustle tax obligations on the Tax Help for Hustles webpage.
It’s important to keep records of your trading income so you can report it to HMRC accurately and punctually, then pay any tax you might owe. Otherwise, you could be facing late self-assessment penalties and late payment interest on top of a backdated tax bill.
To make things easier for small ‘side hustle’ earners, the government is planning to launch a new online reporting tool – but in the meantime, self-assessment tax returns will be required.
If you find tax management confusing because you’re used to relying on PAYE, you might want to hire a personal tax consultant to complete your self-assessment submissions on your behalf.
Here at gbac, we have a team of accountants in Barnsley who can help individuals across the country with bookkeeping and filing taxes. Just contact our tax agents on 01226 298 298 or email us at info@gbac.co.uk to find out what we can do for you.
After the 2025–2026 tax year starts on 6th April, directors of close companies will have to report the dividend income they receive from their company separately.
In broad terms, a close company is an owner-managed company controlled by its directors (or five or fewer ‘participators’). The reporting change is expected to affect around 900,000 directors who previously only needed to report their total dividend income.
HMRC is implementing this change because the tax agency can’t tell from total figures which dividends came from the director’s company and which came from other sources.
Enforcing separate dividend disclosures will ensure that HMRC can identify an owner-manager’s remuneration package accurately to confirm they are complying with tax rules.
Here’s how dividend income reporting requirements will change for close company directors.
What do close company directors have to disclose?
From April 2025, answering the tax return question about whether you are the director of a close company will no longer be voluntary – this disclosure will become mandatory.
For each tax year, directors of close companies will now be required to disclose the:
- Name and registration number of the company
- Highest percentage shareholding in the company
- Dividend income received from the company
However, despite a delayed implementation planned for April 2026, employers will no longer need to report employee hours data (the actual hours each employee worked).
This would have made the real-time reporting process too complicated, but fortunately for businesses, this burden was shelved due to a high forecast cost of nearly £60 million.
More information on which companies are categorised as close companies and tax obligations for close company directors is available in HMRC’s Company Taxation Manual on the government website.
Get help with accounting and secretarial services
Making mandatory dividend disclosures accurately and on time is essential if you want to keep up with regulations – otherwise, you could face a tax compliance investigation by HMRC.
This means keeping thorough company accounts and declaring all dividend income as requested.
If you have any concerns about close company dividend disclosures, or you’re looking for accounting services or company secretarial services to manage bookkeeping and tax obligations on your behalf, you can contact the tax consultants at gbac.
Our team of accountants in Barnsley will be happy to help if you call us on 01226 298 298. You can also email enquiries to info@gbac.co.uk and we will get back to you as soon as we can.
As the 2024–2025 tax year comes to a close, you should be completing your year-end tax planning to ensure all loose ends are tied up before moving on to new tax year planning.
While the end of the current tax year on 5th April is currently the main focus for many tax planners, the start of the new tax year on 6th April should be given just as much attention.
Here are some of the factors you should be accounting for in your new tax year plans:
Personal Allowance
The annual tax-free Personal Allowance remains the same as it has since 2021, as it has been frozen at £12,570 until 2028. This freeze is expected to result in 2 in 9 taxpayers moving into the higher rate or additional rate brackets of Personal Income Tax by 2028.
The tapering of the tax-free allowance will also contribute to this increase, as higher earners will lose £1 of their annual allowance for every £2 they earn over £100,000.
Depending on their individual earnings, couples should look into claiming the Marriage Allowance or transferring investments between partners to reduce their taxable income.
Other tax allowances
Tax is also charged on personal income from savings interest and dividends from company shares if it isn’t covered by the standard Personal Allowance or other allowances.
The Personal Savings Allowance is £1,000 for nil or basic rate taxpayers and £500 for higher rate taxpayers, while additional rate taxpayers are not eligible. Meanwhile, the Dividend Allowance is only £500, with the tax rate dependent on the individual’s income tax band.
If rising interest rates could increase your tax liability, you might want to look into other investment options, such as an Individual Savings Account. You won’t be taxed on interest and dividends from an ISA if they fall within the £20,000 annual tax-free allowance for ISAs.
It’s much easier to move income around to make the most of allowances at the start of the tax year, so you should take stock now rather than waiting until next March.
High Income Child Benefit Charge
Whether you’re married or not, if you or your partner earn over £60,000 a year after certain allowances and claim Child Benefit, then the highest earner will be taxed on this benefit.
The High Income Child Benefit Charge (HICBC) taxes 1% of the benefit for every £200 earned over the threshold, so you’ll have to pay all of it back if you earn £80,000 a year or more.
For parents with two children, this would be the same as adding another 11.26% to the responsible taxpayer’s marginal tax rate – so it may be worth opting out instead.
Otherwise, shifting investment income could also help to keep both parents under the HICBC threshold, even if both earners are within the higher rate tax band.
Plan for 2025–2026 taxes with gbac
If you have any concerns about the taxes and allowances mentioned above, or you’re looking for professional help to legally reduce your tax liability, you can come to gbac.
We have an experienced team of accountants in Barnsley who can provide tax consultancy services to individuals and organisations across the country.
The sooner you get started planning for the new tax year, the better – so get in touch by calling 01226 298 298 or emailing info@gbac.co.uk to set up a consultation.
This year, 1.1 million taxpayers missed the 31st January deadline for filing their tax returns and paying the tax they owed for the April 2023–April 2024 tax year.
HMRC has made it clear that there are few acceptable reasons for filing late tax returns – so not only will they incur a penalty for late payment, but they’ll also have to pay late payment interest.
In 2024, a record total of £409 million was paid to HMRC in late payment interest, which is triple the amount that HMRC collected three years ago.
But why is there such a big increase, and how can you avoid being charged late payment interest?
Why are so many people paying late payment interest?
There are several reasons for the increase in late payment interest collections, including increasing interest rates and frozen or reduced tax liability thresholds.
At the start of 2022, HMRC charged an interest rate of 2.6% on outstanding tax balances, but the average interest rate increased to 7.6% in 2024. Since February 2025, it has been 7%.
Additionally, many tax allowances and tax thresholds have been frozen for several years already and will continue to be frozen until 2028, drawing more people into the Income Tax net and pushing existing taxpayers into brackets with higher rates.
The reduction of the Capital Gains Tax (CGT) exemption also played a part (with the increased CGT rates announced in the Autumn Budget sure to contribute further in the next tax year).
On top of this, HMRC will begin adding a 1.5% surcharge to the late payment interest rate from 6th April 2025 – pushing the current rate up to 8.5% if nothing else changes.
How to prevent late payment interest charges
If you’re already facing late payment interest charges on an outstanding tax bill, it would make sense to pay off your overdue tax liability as quickly as possible using savings income.
With such a high interest rate for late tax payments, the best thing to do is make sure you submit your self-assessment tax return as early as possible, so you’ll know how much your tax bill will be and can plan accordingly to pay it off quickly.
Regularly adding savings to a separate bank account for the specific purpose of paying taxes is a recommended approach – then you can look into setting up a payment plan with HMRC.
Once you’re up to date with previous tax bills, a HMCR Budget Payment Plan will allow you to make weekly or monthly payments towards your next bill. If it isn’t completely covered, you’ll only have to pay the difference, and if it’s less than expected, you can request a refund.
Take control of your tax liability with gbac
The worst thing you can do is bury your head in the sand and let your tax liability spiral with increasing penalties and late payment interest charges.
You should contact HMRC at the earliest opportunity and try to set up a Time to Pay (TTP) arrangement, so you can pay your overdue tax in more affordable instalments – though interest will still be charged until the balance has been paid in full.
If you’re feeling overwhelmed with overdue tax pressures and would prefer to have a professional handle your tax affairs for you, we can help you here at gbac.
Offering tax consultancy and HMRC liaison services, our accountants in Barnsley can not only advise you on the next steps to take control of your tax bill, but can also assist with all areas of tax planning to help keep everything on track for the future.
Simply call us on 01226 298 298 or email your enquiry to info@gbac.co.uk to learn more.
Are you planning to come from another country to work as an employee in the UK?
From 6th April 2025, an improved version of overseas workday relief (OWR) will be introduced.
This tax relief is currently available for UK resident non-UK domiciled employees – UK resident workers whose permanent residence is located outside of the UK for tax purposes – on offshore earnings, related to duties performed for their UK employer outside of the UK.
So, how is OWR changing, and what will this mean for non-UK domiciled employees and UK employers?
How is overseas workday relief changing?
Under the current OWR system, earnings for duties performed overseas as part of employment by a UK employer are exempt from tax in the UK if:
- The employee’s domicile is not in the UK
- They’re taxed on the remittance basis
- Their earnings aren’t remitted to the UK
This tax relief is currently available for up to 3 years.
From 6th April 2025, eligibility will be based on the employee’s residence instead of their domicile.
Qualifying new residents – people arriving in the UK to work as employees who haven’t been UK residents for 10 previous consecutive tax years – can claim OWR with the following conditions:
- Available for up to 4 tax years (with separate annual claims via self-assessment tax return)
- Exempting remuneration for duties performed overseas regardless of remittance to the UK
- Capped at the lower of £300,000 or 30% of the employee’s global income per tax year
This relief can be applied to employment income earned wholly or in part outside of the UK.
Do you need advice on claiming OWR?
At present, the OWR system does not entitle the claimant to the Income Tax Personal Allowance or the exempt amount for Capital Gains Tax when using the remittance basis.
While the remittance basis will be abolished, the new OWR system will be the same in this regard, as claiming OWR for a particular tax year will result in losing both of these allowances.
You can find the technical note from HMRC detailing the reformation of the taxation of non-UK domiciled individuals online, covering OWR on pages 12–16.
If you’re an employer of UK non-domiciled employees or a UK non-domiciled employee yourself, and you’re confused about qualifying for or claiming overseas workday relief under the current or upcoming tax rules, it may be best to seek professional guidance.
Our accountants in Barnsley would be glad to advise you on OWR rules and assist you with claiming tax reliefs to your full eligibility, so be sure to contact gbac for expert assistance.
Speak to one of our financial advisers by calling 01226 298 298, or email your details to info@gbac.co.uk and we will get back to you promptly with more helpful information.