Author: Glenn

For high net worth individuals (HNWIs), tax planning is not simply a compliance activity, it is a strategic tool to preserve and grow wealth. With rising scrutiny from HMRC, frozen allowances, and increasingly complex legislation, the value of well-structured planning has never been higher.

HNWIs typically have multiple sources of income: from employment, dividends, property, pensions, or overseas investments. This complexity brings opportunities, but also risk. Without active tax planning, much of that income can be lost to inefficient structuring or missed reliefs.

Using allowances such as the personal allowance, dividend allowance, and savings allowance is key. Where income exceeds £100,000, tapering of allowances becomes relevant. Income splitting between spouses and the use of family investment companies or trusts can help manage liabilities.

The capital gains tax (CGT) annual exemption is now only £3,000 (2025–26). Disposals must be timed carefully, with use of spousal exemptions or crystallising gains across tax years considered.

HNWIs are most exposed to inheritance tax (IHT), which charges 40% on estates above £325,000 (plus any residence nil-rate band). Making lifetime gifts, using trusts, and taking advantage of the exemption for gifts from surplus income can significantly reduce exposure.

Global families must manage UK tax residency and domicile status carefully. The remittance basis may apply to foreign income, but this often requires payment of the remittance basis charge. Changes to domicile treatment post-April 2025 make planning in this area even more important.

Pensions, ISAs, and offshore bonds can provide valuable tax sheltering. For HNWIs, using the annual and lifetime pension allowances efficiently, especially while they remain available, is a core planning task.

In summary, proactive tax planning is about more than saving money. It gives HNWIs confidence, control, and the ability to plan for the future. With HMRC increasing its focus on high earners, reviewing tax affairs annually is no longer optional, it makes good financial sense.

Gross profit margin
This measures the profitability of your core operations by comparing gross profit (sales minus cost of goods sold) to total revenue. A stable or improving gross margin indicates pricing, production, or service delivery is efficient. A declining margin may signal rising costs or pricing issues.

Formula: (Gross Profit ÷ Revenue) × 100

Cash flow
Positive cash flow ensures a business can meet its obligations, pay suppliers and staff, and invest in growth. Even profitable businesses fail without adequate cash. Tracking cash flow (operating, investing, and financing activities) helps prevent liquidity crises.

Monitor: Monthly net cash inflow/outflow and rolling 3-month cash forecast

Customer acquisition cost (CAC)
This shows how much it costs to acquire a new customer. If CAC is rising without a corresponding increase in customer value or retention, it can drain profitability. Ideally, CAC should be lower than the revenue generated by each customer over their lifetime.

Formula: Total Sales and Marketing Costs ÷ Number of New Customers

Net profit margin
This is the bottom line—what remains after all costs, taxes, and interest. It reflects overall efficiency and financial viability. A strong net margin gives room for reinvestment and debt servicing, and signals long-term sustainability.

Formula: (Net Profit ÷ Revenue) × 100

1 July 2025 – Due date for corporation tax due for the year ended 30 September 2024.

6 July 2025 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2025 – Pay Class 1A NICs (by the 22 July 2025 if paid electronically).

19 July 2025 – PAYE and NIC deductions due for month ended 5 July 2025. (If you pay your tax electronically the due date is 22 July 2025).

19 July 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2025. 

19 July 2025 – CIS tax deducted for the month ended 5 July 2025 is payable by today.

1 August 2025 – Due date for corporation tax due for the year ended 31 October 2024.

19 August 2025 – PAYE and NIC deductions due for month ended 5 August 2025. (If you pay your tax electronically the due date is 22 August 2025)

19 August 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2025. 

19 August 2025 – CIS tax deducted for the month ended 5 August 2025 is payable by today.

Small business? The VAT Flat Rate Scheme could cut paperwork and improve cash flow. Pay VAT as a set percentage of turnover and enjoy simpler admin, budgeting ease, and even a 1% discount in year one of your registration for VAT.

The VAT Flat Rate Scheme is designed to simplify the process of VAT accounting for small businesses. Rather than calculating VAT on every sale and purchase, eligible businesses pay VAT as a fixed percentage of their turnover including VAT. The percentage applied depends on the type of business activity and is set by HMRC.

This scheme helps reduce the complexity of VAT compliance by minimising the need for detailed calculations and record-keeping of input VAT on purchases.

To join the scheme, a business must expect its annual taxable turnover (excluding VAT) to be no more than £150,000 in the next 12 months.

The advantages of the VAT Flat Rate Scheme include the following:

1. Simplified VAT Administration
   You don’t need to calculate VAT on every sale or claim back VAT on most purchases, which greatly reduces the time and effort involved in VAT reporting.
2. Predictability of VAT Payments
   Knowing your flat rate percentage makes it easier to predict and budget for VAT payments, enhancing cash flow management.
3. Potential Financial Savings
   If your business has relatively low VATable expenses, you may pay less VAT overall under the scheme compared to the standard VAT accounting method.
4. Ideal for Service-Based Businesses
   Businesses with few goods purchases—such as consultants, IT professionals, and freelancers often benefit especially if they don't fall into the limited cost trader category.
5. 1% First-Year Discount
   The introductory discount provides a temporary boost to cash flow, particularly useful for new or growing businesses.

The scheme can be a valuable option for small businesses looking to simplify VAT reporting and reduce administrative workload. However, its suitability should be carefully assessed and regularly reviewed to ensure it remains beneficial as a business grows or its circumstances change.

Expecting lower profits 2024-25 compared to 2023-24? You can ask HMRC to reduce your 31 July 25 tax payment on account. Act early to manage cash flow. Use your online account or we can handle it for you.

Self-assessment taxpayers normally pay their income tax in three instalments each year. The first two payments on account are due on 31 January during the tax year and 31 July after the tax year ends. These are each based on 50% of the previous year’s net income tax liability.

This means that the 31 January 2025 (now passed) and upcoming 31 July 2025 payments are both based on your 2023–24 tax liability.

A final balancing payment is due on 31 January 2026, once your actual tax bill for 2024–25 has been confirmed through your submitted tax return.

If you expect your income or profits for 2024–25 to be lower than for 2023–24, you can ask HMRC to reduce your 31 July 2025 payment on account. This can be done through your HMRC online account or by submitting form SA303 by post. You must provide a reasonable estimate of your expected tax liability.

If we are your registered tax agent we can undertake this election for you.

There is no limit to how many times you can apply to adjust your payments. However, if you reduce your payments too far and underpay, HMRC may charge interest or penalties on the shortfall.

You are not required to make payments on account if:

• Your net Income Tax liability for 2023–24 was less than £1,000, or
• At least 80% of your 2023–24 tax liability was collected at source (e.g. through PAYE).

If your taxable profits are likely to increase in 2024–25, there’s no need to notify HMRC in advance, but you should be prepared for a higher balancing payment in January 2026.