Author: Glenn

Chancellor Rachel Reeves delivered her first Spending Review to Parliament last week, setting out the government’s financial priorities for the next three years. Her approach signals a shift away from austerity towards a strategy of state-backed investment, aimed at boosting growth and productivity while maintaining fiscal credibility.

The review promises a substantial increase in capital spending, with key allocations for transport infrastructure, energy security, housing, and green technology. The government pledged a multi-year uplift in NHS and defence funding, while committing to invest heavily in rail, roads, and nuclear energy projects.

Day-to-day departmental budgets are set to grow modestly in real terms, but the largest gains will be in capital allocations. The spending framework also relies on projected efficiency savings of £14 billion, which will be used to fund some of the more ambitious commitments.

For UK businesses, the implications vary by sector. Construction and engineering firms can expect opportunities from increased infrastructure spending, particularly those aligned with green objectives and transport. Firms in digital healthcare, AI, and clean energy technologies may also see a benefit from targeted support and public procurement opportunities.

Technology businesses are likely to see some growth stimulus through investment in digital public services and AI infrastructure. Similarly, the life sciences and carbon capture sectors are expected to benefit from targeted research and development initiatives.

However, the business community remains cautious. The Spending Review comes at a time when government debt is at historically high levels, and market confidence is sensitive to fiscal overreach. Some forecasters have warned of a potential shortfall of up to £20 billion in the government’s medium-term plans, which could necessitate either tax increases or tighter departmental controls later this year.

There is also concern over the government’s reliance on efficiency savings to meet its commitments. While welcomed in principle, businesses and economists alike remain sceptical about how quickly those savings can be delivered in practice.

In summary, the Spending Review presents a growth-focused and investment-driven agenda. For business, it brings opportunities, particularly in sectors aligned with the government’s infrastructure, green and digital priorities. However, there are risks associated with delivering on these promises if forecasts fall short or efficiency measures do not materialise as planned.

Lifetime gifts can reduce Inheritance Tax, but survival for seven years and using key exemptions like the £3,000 annual allowance are crucial to making them fully tax-free.

Most gifts made during a person’s lifetime are not immediately subject to Inheritance Tax (IHT). These are known as potentially exempt transfers (PETs) and can become completely exempt from IHT if the person making the gift (the donor) survives for more than seven years after making the gift.

If the donor dies within three years of making the gift, it is treated as if the gift was made on the date of death, and the full rate of IHT may apply. However, if death occurs between three and seven years after the gift, taper relief can reduce the amount of tax payable. The further away from death the gift was made, the lower the tax rate applied, although this only reduces the tax due on the amount above the nil rate band.

It’s important to note that taper relief does not reduce the value of the gift itself, only the tax payable, and it does not apply where the gift is within the nil rate band. Additionally, it does not lower the tax on chargeable lifetime transfers to below the amount originally assessed when the gift was made.

Each tax year, individuals can also take advantage of specific IHT exemptions that allow gifts to be made tax-free, regardless of survival for seven years.

The annual exemption allows you to gift up to £3,000 in total each tax year without adding to the value of your estate for IHT purposes. This amount can be given to one person or shared among multiple recipients. If the full £3,000 exemption isn’t used in one tax year, it can be carried forward, but only for one additional tax year.

The small gift allowance allows you to give as many gifts of up to £250 per person per tax year as you like, as long as no other exemption is used for the same individual. This is ideal for birthday or seasonal gifts made from regular income.

Additionally, you can make tax-free gifts in celebration of weddings or civil partnerships. These are exempt up to £5,000 for a child, £2,500 for a grandchild or great-grandchild and £1,000 for anyone else.

Identity verification is now rolling out for directors, PSCs, and agents, with more filing roles to be included soon under new anti-fraud rules.

Companies House is beginning to roll out mandatory identity verification. This is part of wider reforms introduced by the Economic Crime and Corporate Transparency Act that was granted Royal Assent in October 2023. This legislation strengthens Companies House’s authority to prevent the misuse of corporate structures and tackle economic crime.

A key feature of the Act is the requirement for identity checks for individuals involved in company formation, management, or ownership in the UK. Eventually, anyone incorporating a company or being appointed as a director or a person with significant control (PSC) will be legally required to complete identity verification.

Authorised Corporate Service Providers (ACSPs)

Since 18 March 2025, any ACSP that is defined as an individual or organisation conducting Anti-Money Laundering (AML) supervised activities must verify their identity before they can register as an authorised agent with Companies House.

Since 8 April 2025, ACSPs that are registered as authorised agents are permitted to carry out identity verification on behalf of their clients. This means that only those registered as authorised agents will be allowed to submit filings on behalf of other businesses.

Directors and Persons with Significant Control (PSCs)

Also, since 8 April 2025, directors and PSCs are able to verify their identity voluntarily. Over time, this step will move from optional to mandatory, forming a required part of compliance when forming or managing a company.

Individuals Filing with Companies House

At present, identity verification is not compulsory for individuals submitting filings to Companies House. However, this will also change in due course, with verification becoming a statutory obligation in the future.

Use your own vehicle for work? You could be entitled to a tax-free mileage allowance. Make sure you are not missing out on HMRC-approved rates.

If you use your own car, van, motorcycle, or bicycle for business journeys, you may be entitled to a tax-free mileage allowance from your employer. This is known as a Mileage Allowance Payment (MAP) and is designed to cover the costs of using a personal vehicle for work-related travel. Many employees routinely claim this allowance when driving their own vehicle to visit clients, travel between temporary work locations, or attend off-site meetings.

It’s important to understand that MAPs do not apply to ordinary commuting, that is, travelling to and from your regular place of work. However, where travel is genuinely work-related and qualifies as a business journey, the allowance can be a valuable tax-free benefit.

Employers typically reimburse employees using HMRC’s approved mileage rates, which are designed to reflect reasonable running costs. These rates are as follows:

• Cars and vans:
  • 45p per mile for the first 10,000 business miles in a tax year
  • 25p per mile for each mile over 10,000
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

Where an employee carries a colleague as a passenger during a business journey, an additional 5p per mile per passenger can be claimed provided the journey is for business purposes. This extra allowance is also tax-free when paid by the employer.

If an employer pays less than the approved HMRC rates (excluding the passenger allowance), you may be able to claim the shortfall from HMRC utilising Mileage Allowance Relief.

If one partner in a marriage or civil partnership earns under £12,570, you could save up to £252 a year, and up to £1,260 if you backdate your Marriage Allowance claim for the past four years.

The Marriage Allowance can be claimed by married couples and civil partners where one partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one partner must earn less than the £12,570 personal allowance for 2025-26).

If claimed, the lower-earning partner can transfer up to £1,260 of their unused personal tax-free allowance to their spouse or civil partner. The transfer can only be made if the recipient (the higher-earning partner) is taxed at the basic 20% rate, which typically means they have an income between £12,571 and £50,270. For those living in Scotland, this would usually apply to an income between £12,571 and £43,662.

By using the allowance, the lower-earning partner can transfer up to £1,260 of their unused personal allowance, which could result in an annual tax saving of up to £252 for the recipient (20% of £1,260).

If you meet the eligibility criteria and have not yet claimed the allowance, you can backdate your claim for up to four years. This could provide a total tax saving of up to £1,260 and would include the tax years 2021-22, 2022-23, 2023-24, 2024-25 and the current 2025-26 tax year. Applications for the allowance can be submitted online at GOV.UK.