Author: Glenn

From April 2025, the Capital Gains Tax rate on Business Asset Disposal Relief rises from 10% to 14%, increasing to 18% in 2026. Business owners planning to sell may benefit from acting before these changes take effect.

Currently, Business Asset Disposal Relief (BADR) provides a reduced Capital Gains Tax (CGT) rate of 10% on the sale of a business, shares in a trading company, or an individual's interest in a trading partnership. This relief can lead to significant tax savings for those selling their business.

However, as part of the Autumn Budget 2024 measures, the CGT rate for BADR gains will from 6 April 2025, rise to 14% for disposals made on or after that date. Furthermore, the rate is set to increase again to 18% for disposals made on or after 6 April 2026.

Currently, the lifetime limit for claiming BADR is £1 million, allowing business owners to qualify for the relief multiple times. There have been no changes to this limit in the recent Budget, although the lifetime limit may have been higher for assets sold before 11 March 2020.

In contrast, Investors’ Relief has already undergone changes: the lifetime limit has been reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. The CGT rates for Investors' Relief align with those of BADR.

Given these planned increases, business owners considering an exit strategy may wish to act sooner rather than later, as selling before April 2025 could help lock in the current 10% CGT rate.

Using business goods instead of selling them is usually VAT-free, but some cases require VAT payments. These "taxable self-supplies" include cars taken from stock and certain buildings. Read on to see how to stay compliant.

If your business makes products or buys and sells them, you might end up using some goods in your own business instead of selling them.

Usually, you do not have to pay VAT on goods used this way, because you are not actually making a VAT taxable supply. However, there are some exceptions. These exceptions are called “taxable self-supplies.” You will need to keep track of these goods you use in your business for VAT purposes.

Self-Supply of Cars

If you are a motor manufacturer or dealer and take a car from your stock for your own use, that is a taxable self-supply. In this case, you will need to pay VAT on the car.

Other Taxable Self-Supplies

There are some other situations where goods you use in your business are treated as taxable self-supplies. These include:

• Certain non-domestic buildings you build or extend using your own labour.
• Cars on which you reclaimed VAT because they were meant for use as a taxi, hire car, or driving school car, but you actually used them for a non-qualifying purpose.

Selling Goods Bought for Your Business

If you buy something for the business but later sell it to a customer (even if it’s to one of your employees), you will need to charge VAT on the sale price.

A salary sacrifice scheme lets employees swap cash salary for non-cash benefits, saving tax and National Insurance. But earnings must not fall below the National Minimum Wage, and life events may impact eligibility. Learn how to navigate these rules.

If an employee wants to join or leave a salary sacrifice arrangement, the employer must update their contract to clearly reflect the changes in cash and non-cash entitlements. Additionally, significant life events—such as marriage, divorce, a partner's redundancy, or pregnancy—may require adjustments to the arrangement, providing employees the option to opt in or out.

Certain benefits are currently exempt from Income Tax or National Insurance contributions and do not need to be reported to HMRC. These include:

• Contributions to pension schemes
• Employer-provided pension advice
• Workplace nurseries
• Childcare vouchers and employer-provided childcare contracted before 4 October 2018
• Bicycles and cycling safety equipment (including cycle to work schemes)

In some cases, for example, when a salary is exchanged for an employer contribution to a pension scheme, the reduction in salary may also reduce the employer's National Insurance contributions liability.

If your spouse or civil partner has passed away, you may inherit part of their State Pension, depending on when you reached pension age. Find out what you could claim, from basic pension boosts to deferred benefits and top-ups.

If you reached State Pension age before 6 April 2016, you might be able to inherit some of your spouse or civil partner’s State Pension when they pass away.

To find out what you are entitled to, contact the Pension Service.

If you are not already receiving the full State Pension of £169.50 a week (increasing to £176.45 from 6 April 2025), you may be able to boost your basic State Pension by using their qualifying years.

You might also be able to inherit part of their Additional State Pension or Graduated Retirement Benefit.

If You Reached State Pension Age After 6 April 2016

If you reached State Pension age on or after 6 April 2016, different rules apply to you. You can check what you could inherit based on your spouse’s or civil partner’s National Insurance contributions.

If Your Spouse or Civil Partner Deferred Their State Pension

If your spouse or civil partner deferred their State Pension and built up extra benefits, you could claim this additional amount or receive a lump sum—provided you have not remarried or entered into a new civil partnership.

If they deferred for less than 12 months, you could only receive the extra State Pension, not a lump sum.

You can only claim this extra amount once you have reached your State Pension age.

State Pension Top-Up

If your spouse or civil partner topped up their State Pension between 12 October 2015 and 5 April 2017, you might be able to inherit some or all of the top-up.

A well-structured credit control system is crucial for small businesses to maintain cash flow and reduce the risk of bad debts. Without proper controls, late payments can disrupt operations and put financial strain on the business.

Clear Credit Terms
Setting clear credit terms at the outset ensures customers understand their payment obligations. This includes defining payment deadlines, interest on overdue invoices, and the consequences of non-payment. Offering different terms for new and repeat customers can help mitigate risk.

Creditworthiness Assessment
Before extending credit, assessing a customer’s financial stability is essential. Checking credit reports, trade references, and previous payment history can help determine whether a customer is likely to pay on time. Establishing credit limits based on risk assessments reduces exposure to bad debts.

Efficient Invoicing Process
Timely and accurate invoicing encourages prompt payments. Using electronic invoicing systems ensures invoices reach customers quickly and reduces the risk of disputes. Clearly stating payment terms, due dates, and bank details on invoices makes it easier for customers to process payments without delay.

Proactive Payment Monitoring
Tracking outstanding invoices and following up on late payments is vital for maintaining cash flow. Automated reminders, personal follow-ups, and structured escalation procedures help ensure payments are received on time. A disciplined approach to chasing overdue invoices prevents accounts from falling into arrears.

Flexible Payment Solutions
Offering multiple payment methods, such as direct debit, online payments, and instalment plans, makes it easier for customers to pay on time. Flexibility can improve customer relationships while ensuring steady cash flow.

A well-managed credit control system not only reduces financial risks but also strengthens business stability. By implementing clear policies and proactive follow-ups, small businesses can maintain a healthy cash flow and build long-term customer relationships.