Author: Glenn

Owning more than one property? You can claim Capital Gains Tax (CGT) relief on just one at a time. By formally electing your main residence within two years of property changes, you can optimise your CGT exemption and make the most of key tax benefits.

Taxpayers who own more than one property should be aware of a number of important considerations. An individual, married couple, or civil partnership can only claim Capital Gains Tax (CGT) relief on one property at a time. However, it is possible to designate which property will benefit from the CGT exemption at the time of sale by making a formal election.

To nominate a property as the main residence, a letter must be sent to HMRC specifying the full address of the property being nominated. This nomination must be signed by all owners of the property and the election must be made within two years of any change in the combination of properties owned. Additionally, the property must have been occupied as the main or only residence at some point in the past.

There are specific rules governing overseas properties and for non-UK residents. It is important to carefully consider the timing and frequency of making such elections. Notably, if a property has been used as a private residence at any time, the final nine months of ownership are disregarded for CGT purposes even if the individual was not residing in the property when it was sold.

Navigating financial challenges can be daunting, but understanding the tools available can make a significant difference. One such tool is a Debt Management Plan (DMP), designed to help individuals regain control over their finances.

What is a Debt Management Plan?

A DMP is an informal agreement between you and your creditors to repay your non-priority, unsecured debts at an affordable rate. This plan is particularly useful if you can only manage to pay a small amount each month or if you're facing temporary financial difficulties but expect your situation to improve soon.

How Does it Work?

You can set up a DMP through a licensed debt management company authorised by the Financial Conduct Authority (FCA). The process typically involves:

1. Assessment: Providing details about your financial situation, including assets, debts, income, and creditors.
2. Proposal: The company calculates a monthly payment based on what you can afford.
3. Negotiation: They contact your creditors to seek agreement on the proposed plan.

Once in place, you'll make regular payments to the debt management company, which will then distribute the funds to your creditors. It's important to note that while many creditors may agree to freeze interest and charges, they are not obligated to do so.

Costs Involved

Some debt management companies may charge:

• A setup fee.
• A handling fee for each payment made.

Ensure you understand any costs involved and how they will affect your repayments.

Eligibility Criteria

DMPs are suitable for managing 'unsecured' debts, such as:

• Credit card debt.
• Personal loans.
• Overdrafts.

They are not applicable for 'secured' debts like mortgages or car finance agreements.

Advantages of a DMP

• Single Monthly Payment: Simplifies your finances by consolidating multiple debts into one payment.
• Professional Negotiation: The debt management company negotiates with creditors on your behalf.
• Flexibility: Payments can be adjusted if your financial situation changes.

Disadvantages of a DMP

• No Legal Protection: Creditors are not legally bound to agree to the plan and may still contact you or take legal action.
• Impact on Credit Rating: Entering a DMP can negatively affect your credit score.
• Potential Costs: Fees charged by some companies can extend the time it takes to repay your debts.

Your Responsibilities

It's crucial to maintain the agreed-upon payments. Missing payments can lead to the cancellation of the plan, and creditors may resume collection actions.

Seeking Free Advice

Before committing to a DMP, consider seeking free, impartial advice from organisations like MoneyHelper, which can guide you through your options and help you make an informed decision.

Making a significant investment in new equipment can be a transformative step for a business, improving efficiency, productivity, and competitiveness. However, such a decision requires careful planning and analysis to ensure the investment aligns with the business's long-term goals.

1. Cost and Financing

The upfront cost of new equipment can be substantial, so businesses must assess their budgetary constraints. Consider whether the purchase will be financed through cash reserves, loans, or leasing arrangements. Compare interest rates and tax implications of each option and ensure the business can comfortably manage the repayment terms if borrowing is required.

2. Return on Investment (ROI)

Evaluate how the new equipment will impact productivity and profitability. Will it enable cost savings through greater efficiency, reduce downtime, or enhance product quality? A detailed ROI analysis should include all associated costs, such as installation, training, and maintenance.

3. Suitability and Scalability

The equipment must meet current operational needs and be flexible enough to adapt to future requirements. Consider whether the investment aligns with projected business growth and whether it can integrate with existing systems and processes.

4. Technology and Innovation

With technology evolving rapidly, it's important to choose equipment that won’t quickly become obsolete. Assess whether the purchase includes future-proof features, software updates, or warranties that extend its useful life.

5. Compliance and Environmental Impact

Ensure the equipment complies with industry regulations and health and safety standards. Additionally, businesses should evaluate its environmental impact, as eco-friendly investments can lead to cost savings and improve corporate responsibility.

6. Training and Maintenance

Factor in the time and resources needed to train staff to use the equipment effectively. Ongoing maintenance and repair costs should also be included in the financial analysis.

By thoroughly considering these factors, businesses can make informed decisions that maximise the benefits of their investment while minimising risks.

Selling online? Whether it’s a hobby or a business, you may need to pay tax if your earnings exceed £1,000. From services to content creation, it’s vital to understand self-assessment rules and new reporting obligations for online platforms starting in 2024.

If you are selling anything through an online marketplace, it is important to know that you might be liable to pay tax, whether it is your main source of income or just something a part-time hobby. This applies to a range of activities, so it is worth understanding when you need to register for self-assessment and pay tax.

You may need to report your earnings and pay tax if you are doing any of the following:

• Buying goods to resell, or making things to sell (even if it’s just a hobby that you sell items from);
• Offering services online, such as dog walking, gardening, repairs, tutoring, food delivery, babysitting, or hiring out equipment;
• Creating online content, whether that's videos, podcasts, or even social media influencing; or
• Earning income by renting out property or land, like letting a holiday home, running a bed and breakfast, or renting out a parking space on your driveway.

There is a Trading Allowance you can claim that allows you to earn up to £1,000 a year from self-employment without having to pay tax or register as self-employed. But if you go over that £1,000 threshold, you will need to register with HMRC as self-employed and submit a self-assessment tax return.

If you are just selling personal items, such as second-hand clothes or unwanted electrical goods, you typically do not need to worry about registering for tax. This is not considered a business activity, so it does not count as trading in the eyes of HMRC.

For those using online platforms to sell goods or services, there are new reporting obligations. Any relevant information about your sales may be reported to HMRC by the platform you use. There is a new requirement for online platforms to report pertinent information collected about online sellers between 1 January 2024 to 31 December 2024 to HMRC by 31 January 2025. This will only happen if you have sold 30 or more items or earned £1,700 (or €2,000) in the calendar year. The platform will also provide you with a copy of the information they send to HMRC, which can be helpful when you need to submit your own tax return.

HMRC reports over 63,000 taxpayers filed their returns over the New Year, but 5.4 million still need to act before the looming 31 January 2025 deadline. File now to avoid penalties, pay your 2023-24 tax, and set up payment plans if needed to stay compliant.

The deadline for submitting your 2023-24 self-assessment tax return online is fast approaching—31 January 2025. This date is not just for filing your return; you also need to pay any tax due by this time. This includes settling any remaining tax from the 2023-24 tax year, plus the first payment on account for the 2024-25 tax year. It’s crucial to remember this deadline to avoid penalties.

If you miss the deadline, be aware of the penalties that can arise. The first penalty is an automatic £100 charge, which you will incur even if you do not owe any tax or if you have paid on time. If your return is still late after 3 months, you will face daily penalties of £10 per day, which can add up to a maximum of £900. After 6 months, another penalty kicks in, which is either 5% of the tax you owe or £300, whichever is greater. Then, if you are still late after 12 months, you will face another penalty of 5% of the tax due or £300, whichever is greater.

On top of these filing penalties, there are also penalties for late payment. If you do not pay your tax bill on time, HMRC charges 5% of the unpaid tax at 30 days, 6 months, and again at 12 months. Interest will also be charged on any outstanding amount.

If you are struggling to pay your tax, there is an option to set up a payment plan online, where you can spread the cost of what’s due by 31 January 2025 over up to 12 months. This option is available for debts up to £30,000, but you will need to set up the plan no later than 60 days after the due date. It is a good idea to set it up sooner rather than later because if your tax is still outstanding on 1 April 2025 and you have not made arrangements, you will face an additional 5% late payment penalty.

If you owe more than £30,000 or need longer than 12 months to pay, you can still apply for a time to pay arrangement, but you will not be able to do this through the online service. Make sure to file your return and pay on time to avoid these costly penalties.