Author: Glenn

Homeowners can earn up to £7,500 tax-free under the rent-a-room scheme, with simple reporting and flexible tax options.

This set of special rules is designed to encourage individuals to make use of spare space in their property by providing a tax exemption on rental income of up to £7,500 per tax year.

If the total rental income from lodgers does not exceed the £7,500 threshold, the exemption applies automatically, with no need to file a tax return or report the income to HMRC. This makes the scheme particularly appealing for those seeking a simple way to supplement their income without added paperwork. However, if you prefer, you can opt out of the scheme and instead declare property income and expenses in the usual way.

The relief is only available for furnished accommodation and typically applies when a homeowner rents out a bedroom to a lodger within their main residence. One of the key benefits of the scheme is that it not only allows for tax-free earnings up to the threshold but also reduces the overall tax and administrative burden for participants. If the property is jointly owned and both parties receive rental income, the £7,500 limit is halved to £3,750 per person.

It is important to note that the rent-a-room limit covers not just rent, but also any additional payments received for meals, laundry, or cleaning services provided to the lodger. If your gross receipts exceed the threshold, you have a choice: you can either pay tax on the actual profit (gross rents minus allowable expenses and capital allowances) or choose to be taxed on the total gross receipts minus the £7,500 allowance, with no deduction for expenses or allowances. This flexibility helps taxpayers to choose the most tax-efficient method depending on their specific circumstances.

Businesses over £90,000 turnover must register for VAT, but HMRC may grant exceptions if the increase is temporary.

A business must register for VAT if either of the following applies:

1. At the end of any month, its taxable turnover in the previous 12 months has exceeded £90,000; or
2. At any point, it is reasonable to expect that taxable turnover in the next 30 days alone will exceed £90,000.

If a business temporarily exceeds the VAT registration threshold, they may be able to apply for an exception from VAT registration with HMRC. This applies if their taxable turnover has gone over the threshold in the last 12 months, but the business can show it will not go over the deregistration threshold (£88,000) in the next 12 months. This exception must be applied for by contacting HMRC to request and complete forms VAT1 and VAT5EXC. It’s important to note that this is different from a full VAT exemption.

Once an application is submitted, HMRC will respond within 40 working days to confirm approval or refusal. If approved, the business will not be registered for VAT at that time but will remain required to monitor their turnover monthly in case their circumstances change, and VAT registration is required. If the exception is denied, HMRC will register a business based on the information provided, and the business will be required to account for VAT from the date their liability began.

During the State Visit by President Trump, the UK secured a record-breaking £150 billion of inward investment from US firms. The package is intended to boost jobs, support growth, and advance the UK’s key industrial sectors, especially life sciences, advanced manufacturing, clean energy, biotech, AI and other future-facing industries under the UK’s Modern Industrial Strategy.

Key components of the deal

Here are some of the flagship commitments:

• Blackstone pledged around £100 billion over the next decade into the UK.
• Prologis will invest £3.9 billion, including use in the Cambridge Biomedical Campus and upgrading Daventry Rail Freight Terminal.
• Palantir agreed to invest up to £1.5 billion to help make the UK a defence innovation leader and create up to 350 jobs.
• Amentum will invest £150 million, creating over 3,000 jobs across areas like Glasgow, the Midlands and Warrington.
• Boeing committed to converting two 737 aircraft in Birmingham for the USAF, bringing about 150 high-skilled jobs.
• STAX, a US engineering firm, will commit around £37 million to expand UK operations, especially in emissions-reducing technology at ports.

Where the jobs and benefits are headed

The investment is forecast to create more than 7,600 high-quality jobs throughout the UK, covering not just London and the South East, but also Belfast, Glasgow, the Midlands and the North East. It includes major commitments in research and development and support for start-ups, particularly in biotech, AI and clean energy sectors.

Why it matters

This is the biggest commercial investment package ever secured during a UK state visit. It signals confidence from US firms in the UK’s economic strategy and global competitiveness. For business, tax, infrastructure, jobs, and innovation policy, it gives strong backing to the government’s plans.

For many business owners, a vehicle is an essential tool. Whether it is for visiting clients, delivering goods, or simply keeping things moving, choosing how to finance a vehicle can have a big impact on cash flow and tax planning. There are several routes to consider, each with its own advantages.

Buying outright

The simplest option is to purchase the vehicle in full. This means your business owns it from day one. Buying outright avoids ongoing finance costs, but it does tie up capital. The tax advantage is that you may be able to claim capital allowances on the cost, reducing taxable profits. Cars with low CO₂ emissions attract more generous allowances, while commercial vehicles such as vans can often qualify for the full Annual Investment Allowance.

Hire purchase

Hire purchase spreads the cost of the vehicle over a fixed term. You make monthly instalments and become the legal owner once the final payment is made. Interest will be payable, but this option gives certainty over repayments and allows you to claim capital allowances on the vehicle as if you had bought it outright.

Finance lease

With a finance lease, your business pays to use the vehicle but never actually owns it. Instead, you may be able to extend the lease at a reduced cost or sell the vehicle on behalf of the finance company and keep part of the sale proceeds. The rentals are tax deductible, which helps to reduce taxable profits.

Contract hire

Contract hire is often called leasing. You agree to use the vehicle for a set period and mileage, paying fixed monthly rentals. At the end of the agreement, the vehicle is returned. This option keeps vehicles off your balance sheet and helps with budgeting, as servicing and maintenance can be included. The rentals are usually deductible for Corporation Tax, but restrictions apply if the car has high emissions.

Personal contract purchase (PCP)

Some directors use PCP agreements through the company. These combine monthly payments with the option to buy the vehicle at the end for a lump sum. The tax treatment is similar to hire purchase if the business owns the agreement, but careful thought is needed if it is held personally.

Final thought

There is no one best option. The right choice depends on cash flow, tax position, and how long you intend to keep the vehicle. Speaking with your accountant before committing can ensure the vehicle is financed in the most efficient way for your business.

Bereaved spouses who lost service pensions before 2015 have until 15 October 2025 to claim a one-off £87,500 recognition payment.

This scheme was launched in October 2023 to help war widows and widowers who lost their service-attributable pensions due to remarriage or entering new relationships before 2015. Since the scheme was launched, over £21 million has been paid out to more than 240 eligible individuals who had previously received no financial recognition for their sacrifice.

The scheme provides a one-off, tax-free payment of £87,500 to those who forfeited their service-attributable pensions prior to 2015 due to remarriage or cohabitation under the old pension rules and were in receipt of no other payments to recognise the loss of their partner.

The scheme applies to widow(er)s, including civil partners and unmarried cohabiting partners, of regular and reservist members of the Army, Navy or Royal Air Force.

The Minister for Veterans said,

‘The War Widows Recognition Payment Scheme has provided vital redress to those who have sacrificed so much for our country. With the scheme closing on 15 October, I urge anyone who believes they may be eligible to apply.’

Applications have slowed recently, but the Ministry of Defence believes there may still be eligible individuals who have not yet applied, and no extensions are planned.

Full details, eligibility criteria, and application forms are available at War Widow(er)s Recognition Payment – GOV.UK