Author: Glenn

Many people rely on state benefits, but it is not always obvious which payments are taxable and which are tax-free.

HMRC’s guidance outlines the following list of the most common state benefits on which Income Tax is payable, subject to the usual limits:

• Bereavement Allowance (previously Widow’s Pension)
• Carer’s Allowance or (in Scotland only) Carer Support Payment
• Contribution-Based Employment and Support Allowance (ESA)
• Incapacity Benefit (from the 29th week you receive it)
• Jobseeker’s Allowance (JSA)
• Pensions Paid by the Industrial Death Benefit Scheme
• The State Pension
• Widowed Parent’s Allowance

The most common state benefits that are not subject to Income Tax include:

• Attendance Allowance
• Bereavement Support Payment
• Child Benefit (income-based – use the Child Benefit tax calculator to see if you’ll have to pay tax)
• Disability Living Allowance (DLA)
• Free TV Licence for Over-75s
• Guardian’s Allowance
• Housing Benefit
• Income Support – though you may have to pay tax on Income Support if you’re involved in a strike
• Income-Related Employment and Support Allowance (ESA)
• Industrial Injuries Benefit
• Lump-Sum Bereavement Payments
• Maternity Allowance
• Pension Credit
• Personal Independence Payment (PIP)
• Severe Disablement Allowance
• Universal Credit
• War Widow’s Pension
• Winter Fuel Payments and Christmas Bonus

The Enterprise Investment Scheme (EIS) is designed to help smaller, higher-risk trading companies raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies.

This scheme aims to encourage investment in early-stage businesses by providing substantial tax benefits to investors. However, in order to claim EIS tax reliefs, the issuing company must meet a set of strict criteria regarding its size, the amount of money it can raise, and the purpose and timing of the funds raised.

For individual investors, the tax benefits include 30% Income Tax relief on investments, with a maximum annual investment limit of £1 million, or £2 million if at least £1 million is invested in knowledge-intensive companies. The generous tax allowances are intended to offset the higher risk of investing in these smaller companies. It is important for investors to be cautious and only invest money they are prepared to lose, as these companies can be particularly volatile.

The tax advantages of the EIS go beyond just Income Tax relief. Investors can also benefit from Capital Gains Tax (CGT) deferral for the life of their investment and tax relief for any losses incurred on the shares. However, it’s worth noting that Income Tax relief is capped at an amount that reduces the investor’s Income Tax liability to nil for the year, meaning it can’t exceed the individual’s tax due. These tax benefits make the EIS an attractive option for those looking to support high-growth companies while taking advantage of potential tax savings.

Business Asset Disposal Relief (BADR) still offers a valuable tax break, but the CGT rate has risen to 14% from April 2025 and will increase again to 18% in April 2026.

BADR provides a valuable tax advantage by offering a reduced rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership.

The limits for BADR increased for disposals made on or after 6 April 2025. This has seen the CGT rate now applied at a rate of 14% (up from 10%). This change is now in effect and applies to any qualifying disposals taking place within the 2025–26 tax year.

The rate is set to increase again from 6 April 2026, to 18%. This means that disposals qualifying for BADR on or after this date will face a significantly higher CGT rate when compared to the previously long-standing 10% rate.

The lifetime limit for claiming BADR remains at £1 million, allowing individuals to benefit from the relief more than once, provided the cumulative gains from all qualifying disposals do not exceed this threshold.

Additionally, changes have been made to Investors’ Relief. The lifetime limit for this relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. In addition, the CGT rates for Investors’ Relief are now aligned with those for BADR, currently set at 14% and increasing to 18% from April 2026.

Running a small business can feel like juggling endless priorities, but taking time to set clear goals is essential if you want your business to grow and remain sustainable. Here are five goals that every owner should consider.

1. Strengthen cash flow management
Cash is the lifeblood of any business. Aim to forecast your cash flow regularly, monitor debtor days, and build a buffer for unexpected costs. Even profitable businesses can run into trouble if they neglect cash flow.

2. Build customer loyalty
Repeat customers cost less to retain than new ones do to acquire. Set a goal to improve customer service, gather feedback, and introduce loyalty or referral schemes. Strong relationships are a foundation for long-term stability.

3. Embrace digital tools
From accounting software to customer management systems, technology can save time and cut errors. Make it a goal to identify areas of your business that could benefit from automation or more efficient systems.

4. Focus on compliance and risk management
Keeping up with tax, employment, and regulatory responsibilities avoids costly penalties. Set processes for filing returns on time, maintaining accurate records, and regularly reviewing insurance and legal protections.

5. Invest in yourself and your team
Your skills and wellbeing directly influence your business. Set goals around training, mentoring, or simply creating space to recharge. Encourage team development too,  motivated employees often generate new ideas and efficiencies.

By working towards these five goals, small business owners can balance immediate demands with longer-term progress. The key is to revisit and adjust them regularly, so they remain relevant as your business evolves.

The UK’s financial regulator has proposed an increase to the level of savings protection available under the Financial Services Compensation Scheme (FSCS). If approved, the changes would take effect from 1 December 2025 and will be welcome news for individuals and businesses holding larger balances in UK banks and building societies.

Currently, the FSCS protects deposits of up to £85,000 per person, per institution. For joint accounts, that protection doubles to £170,000. There is also extra cover of up to £1 million for “Temporary High Balances” linked to certain life events, such as receiving proceeds from a house sale, inheritance, or insurance payout. This temporary cover applies for six months.

Under the proposals:

• The standard protection limit would rise from £85,000 to £110,000.
• The Temporary High Balance cover would rise from £1 million to £1.4 million.

The reason for the increase is straightforward: inflation has eroded the real value of the £85,000 cap, which was last set in 2017. Updating the limit to £110,000 would restore much of that lost protection and provide savers with greater confidence that their money is safe, even if their bank were to fail.

For most savers, the current £85,000 ceiling is already sufficient. However, those holding larger deposits, particularly following a major transaction, will welcome the higher limits. The proposal also means businesses holding funds in deposit accounts could benefit from increased protection.

A final decision is expected in November 2025, once the consultation has concluded. If confirmed, financial institutions will update their customer information to reflect the new limits by mid-2026.