Author: Glenn

The second 2024-25 payment on account for self-assessment taxpayers is due on 31 July 2025. If you are finding it difficult to meet this tax bill, there are options available to ease the burden.

Taxpayers with liabilities of up to £30,000 can use the online Time to Pay (TTP) service to set up instalment payments. This service is available without the need for direct contact with an HMRC advisor and can be accessed up to 60 days after the payment deadline.

To be eligible for the online service, the following conditions must be met:

• No outstanding tax returns
• No other unpaid tax debts
• No existing HMRC payment plans

For those who do not qualify for the online option, alternative payment plans can be arranged. These plans are typically tailored to the individual's or business's specific financial situation, allowing repayment over an agreed period.

HMRC will generally grant extended payment terms if they believe you will be able to pay the full amount in the future. However, if HMRC determines that additional time won't resolve the issue, they may require immediate payment and take enforcement actions if the debt remains unpaid.

Employers must act now to meet the deadline for paying Class 1A NICs for 2024–25 to avoid HMRC penalties. These contributions are due by 19 July 2025 if paying by post, or by 22 July 2025 for electronic payments. Class 1A NICs apply to most taxable benefits given to employees and directors, including company cars and private medical cover. Employers should ensure payments are correctly referenced using their Accounts Office reference number and clearly mark the relevant tax year. Importantly, July payments always relate to the previous tax year, even if made in the new tax year.

Class 1A NICs are payable by employers on the value of most taxable benefits offered to employees and directors, such as company cars and private medical insurance. They also apply to any portion of termination payments exceeding £30,000, provided Class 1 NICs have not already been deducted.

To ensure payments are correctly allocated, employers should use their Accounts Office reference number as the payment reference and clearly indicate the relevant tax year and month. Note that Class 1A NICs paid in July always relate to the previous tax year.

These contributions typically apply to benefits provided to company directors, employees, individuals in controlling positions, and their family or household members.

Capital Gains Tax on certain residential property sales must be reported and paid within 60 days to avoid penalties and interest.

The annual exempt amount applicable to Capital Gains Tax (CGT) is currently £3,000. CGT is normally charged at a simple flat rate of 24% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 18%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 24% CGT. 

These rates also apply to gains from the sale of residential property, except for a principal private residence (PPR), which is usually exempt from CGT. Most homeowners don’t pay CGT when selling their main family home but gains from other types of property may be taxable.

This includes:

• Buy-to-let properties
• Business premises
• Land
• Inherited property

Any CGT due on the sale of UK residential property must usually be reported and paid within 60 days of the completion date. This means a CGT return must be submitted and a payment on account made, within that 60-day window.

Failing to meet the deadline can lead to penalties and interest, so it’s important to plan ahead and ensure timely reporting whenever a non-PPR property is sold. And if required, we can help you with the computations and filing formalities.

The impact of frozen personal allowances often leads to fiscal drag, a situation where individuals pay more tax as their earnings rise without a corresponding increase in allowances.

This occurs because tax thresholds remain fixed while wages increase, thus pushing more people into higher tax brackets or causing them to pay tax for the first time. Since April 2022, a number of key tax thresholds, including personal allowances, have been frozen and will remain so until at least the 2028-29 tax year.

Fiscal drag is largely driven by inflation, wage growth and the government's decision to keep tax thresholds unchanged. As inflation erodes the value of money, wages rise nominally, but without a rise in allowances, taxpayers are increasingly “dragged” into higher tax bands. This increases tax revenue for the government without changing tax rates, which is why HM Treasury often uses frozen thresholds as a means to boost tax receipts.

Adjusting tax thresholds to align with inflation or another index is referred to as "indexation." The government’s approach to increasing certain thresholds each year based on inflation is called "uprating." However, this policy is not consistently applied. When thresholds are frozen, tax revenues increase for HM Treasury without the need for any adjustments in tax rates. According to the latest estimate from the Office for Budget Responsibility (OBR), the freeze on Income Tax thresholds is projected to generate an additional £38 billion annually by 2029-30.

As of April 2025, more employers can claim the increased £10,500 Employment Allowance thanks to relaxed eligibility rules. This increase will help employers reduce some of the impact of the recent increases in employers' NIC.

The Employment Allowance allows eligible employers to reduce their National Insurance liability. The current allowance that applies from April 2025 is £10,500. Previously, the allowance was £5,000 per year. You can claim less than the maximum if this covers your total Class 1 NIC bill. 

A claim for the Employment Allowance is usually made when filing your Employer Payment Summary (EPS) as part of the Real Time Information (RTI) submissions to HMRC.

The previous eligibility restriction, which limited the allowance to businesses with less than £100,000 in annual employer NIC liabilities, was removed with effect from April 2025. This change means that more employers can now qualify for the allowance.

Connected employers or those with multiple PAYE schemes will have their contributions aggregated to assess eligibility for the allowance. The Employment Allowance can be used against employer Class 1 NICs liability. It cannot be used against Class 1A or Class 1B NICs liabilities. The allowance can only be claimed once across all employer’s PAYE schemes or connected companies. De minimis state aid rules may also apply in restricting the use of the allowance.

Employment Allowance claims need to be re-submitted each tax year. There are a number of excluded categories where employers cannot claim the employment allowance. This includes limited companies with a single director and no other employees, employees whose earnings are within IR35 ‘off-payroll working rules’ and someone you employ for personal, household or domestic work (unless they are a carer or support worker).