HLAS

The government has announced plans for a new levy – the High-Value Council Tax Surcharge (HVCTS) – aimed at owners of residential properties in England worth £2 million or more. This surcharge is scheduled to take effect in April 2028, with a public consultation on the detailed rules set to take place in early 2026. At present, HVCTS will apply only to residential properties in England. It is not yet clear whether the devolved governments in Scotland, Wales or Northern Ireland will introduce similar measures. Not Linked to Existing Council Tax Bands Government information released after the Budget confirms that [...]

The recent Budget confirmed that dividend tax rates will rise from April 2026, with both the ordinary and upper rates increasing by 2%. For many small and medium-sized companies, dividends remain a key method for owners to draw income. With higher tax rates on the way, it’s likely that your approach to pay and profit extraction will need re-evaluating for the 2026/27 tax year. What Exactly Is Changing? From April 2026: The dividend ordinary tax rate will increase from 8.75% to 10.75%. The dividend upper tax rate will rise from 33.75% to 35.75%. The dividend additional rate will stay at [...]

The deadline for submitting your 2024/25 Self Assessment tax return is drawing near. To prevent penalties and interest, you must file your return and settle any tax owed by 31 January 2026. To ensure you meet the deadline, you should have: Full details of all income received, including employment, pension, self-employment, dividend, rental and savings income. Records of any allowable expenses and reliefs you intend to claim. Information regarding pension contributions or any charitable donations. Completing your return ahead of time not only avoids last-minute pressure but also allows you to review your figures carefully and plan for any upcoming [...]

The Chancellor has issued a formal letter to the Bank of England’s Monetary Policy Committee (MPC), reaffirming the UK’s 2% inflation target for the next 12 months, measured using the Consumer Prices Index (CPI). In the correspondence, the Chancellor notes that inflation has dropped markedly from its October 2022 high of 11.1%, with underlying price pressures continuing to ease. He also emphasised that measures announced in the recent Budget are forecast to reduce inflation by approximately 0.4 percentage points in 2026–27. Although confirming the MPC’s target is largely a continuation of the existing approach, it does offer ongoing certainty for [...]

For 2026/27, the annual investment allowance (AIA) will remain at £1 million and the full expensing regime will be available to companies. The rate of writing down allowance (WDA) applicable to qualifying capital expenditure in the main rate pool will drop from 18% to 14% on 1 April 2026 for companies and 6 April 2026 for unincorporated businesses. Businesses with an accounting period that spans the date of change must use a hybrid rate. There are no plans to alter the 6% rate of WDA for qualifying expenditure in the special rate pool. For qualifying expenditure incurred on or after [...]

Besides the new property income tax rates detailed in the taxes on income section, another change affecting property is the introduction of a high value council tax surcharge, otherwise known as the ‘mansion tax’.  The surcharge will be in addition to existing council tax and will be applied to properties with a value over £2 million. The mansion tax will range from £2,500 to £7,500 depending on the property’s value.  Properties will be valued before the introduction of the tax. The mansion tax is applied to the homeowner and not the council tax payer. Both of these measures will mean [...]

IHT can apply to certain lifetime transfers/gifts and also on the value of an individual’s estate at the time of death. The IHT nil rate band is £325,000, with an additional £175,000 ‘residence nil rate band’ available in some cases for leaving the family home to direct descendants. For any value remaining after the nil rate bands and IHT reliefs and exemptions, the maximum rate of IHT remains at 40%. The IHT nil rate band remains frozen at £325,000 for a further year until 2031. The residence nil rate band will also remain frozen at £175,000 until 2031. The residence [...]

National Insurance Contributions (NICs) NICs deducted from employee wages remain at the same levels as we head into 2026/27. This means that, for employees, no NICs are deducted on the first £12,570 of pay, then a rate of 8% applies on earnings up to £50,270, with a rate of 2% applied thereafter. For employers, the rate of NICs will remain at 15% after the first £5,000* paid to each employee. The available employment allowance to offset this cost remains at £10,500 for eligible claimants. *A higher threshold of £50,270 applies for employees who are under 21 and apprentices under 25. [...]

Business rates As announced in the 2024 Budget, two new lower multipliers for eligible retail, hospitality and leisure (RHL) properties with rateable values (RV) below £500,000 will be introduced from 1 April 2026. Each of the new multipliers is 5p lower than the standard multiplier for a business property of equivalent rateable value. The new multipliers will replace the 40% relief given to RHL businesses in 2025/26 and will be funded by a high-value multiplier on properties that have a rateable value above £500,000. Legislation and local authority guidance has already been published confirming the eligibility criteria for RHL properties. [...]

Updates are continuing to come through on HMRC’s ‘Making Tax Digital for Income Tax’ (‘MTD for IT’) initiative. It will initially apply from 6 April 2026 for sole traders and property landlords who generated gross trade and rental income (‘qualifying income’) of more than £50,000 in the 2024/25 tax year. The MTD for IT rules are mandatory and, if affected, you will be required to use ‘MTD-compatible software’ to maintain digital records and send a quarterly summary of your business and/or property income and expenses to HMRC, along with your end-of-year tax return. In a welcome announcement, the government said [...]