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 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.

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.

Not all casual payments are tax-free; HMRC’s miscellaneous income rules may apply depending on the circumstances.

The special miscellaneous income rules sweep-up provisions that seek to charge tax on certain income. This unusual provision, which is broad in scope, catches income that would not otherwise be charged under specific provisions to Income Tax or Corporation Tax.

A casual payment may be considered taxable miscellaneous income when it is received as a reward for a service that was performed under some form of agreement, arrangement, or common understanding that payment would be made.

This is different from a genuine gift or token of appreciation given voluntarily after a service, where there was no agreement, arrangement or common expectation for such a reward. These gifts are not taxable under the same provisions.

The distinction can be difficult to define. For example, in Brocklesby v Merricks (1934), the court highlighted the importance of an arrangement or entitlement to a share of earnings to make a receipt taxable. As a result, it is essential to review the specific circumstances of each case to determine whether a payment qualifies as taxable income or a non-taxable gift.

The standard tax treatment for couples living together, whether married or in a civil partnership, is that income from jointly held property is split equally (50:50) between them, regardless of their actual ownership shares.

However, if the ownership is unequal and the couple wishes to have the income taxed in proportion to their respective beneficial interests, they must formally notify HMRC. This is done by submitting HMRC’s Form 17, which declares the true beneficial ownership split of the property and the associated income.

A Form 17 declaration can only be submitted by spouses or civil partners who are living together and jointly own property in unequal shares. It does not apply to unmarried couples, those who are separated, or other relationship types.

The declaration must be agreed upon and signed by both parties. If one partner does not consent, the income will continue to be taxed on a 50:50 basis, regardless of how the property is actually owned.

Once accepted by HMRC, a Form 17 declaration remains effective until there is a change in the couple’s relationship status (e.g., separation or divorce) or in the ownership structure of the property. In such cases, the default 50:50 split will be reinstated.

It is important to note that Form 17 cannot be used in certain situations—for example, when property is owned as beneficial joint tenants, or where the income derives from shares in a close company or a business partnership.

Where applicable, submitting Form 17 can provide valuable tax advantages by aligning the taxation of property income with the actual economic ownership.

We would be happy to help you ensure you are making the most of your property income structure, please call if you would like to discuss your options.