Author: Glenn

Many small business owners turn to family members when looking to fill roles in their team. It can seem like a natural choice, offering trust, loyalty, and a shared sense of purpose. However, employing family in your business is not without its challenges, and it is worth considering the potential pitfalls before making that commitment.

One of the main risks is a lack of objectivity. Family relationships can cloud judgement when it comes to performance, discipline, or promotion. It may be harder to have honest conversations about underperformance or to apply the same standards as you would to non-family staff. This can lead to resentment among other team members and undermine morale.

There is also the risk of blurred boundaries. If work disagreements spill into personal life, or vice versa, it can strain family relationships. When personal loyalty and business interests conflict, it can create tension that affects both the family and the business.

Tax and payroll rules must also be followed carefully. HMRC requires that family members employed in a business must be paid a commercial rate for actual work done, and they must be treated in line with employment laws. Inflated pay, unclear job roles, or token positions can lead to problems with tax compliance and potentially trigger enquiries.

Succession planning can also become difficult. If some family members are involved and others are not, questions may arise about ownership, leadership, or fairness in the long term. This can be particularly sensitive when passing the business to the next generation.

In short, employing family can work well when there is clear structure, professional standards, and open communication. But it is essential to treat family members like any other employee, with roles, responsibilities, and expectations clearly defined from the start.

Making Tax Digital for Income Tax (MTD for IT) will become mandatory in phases from April 2026. If you are self-employed or a landlord earning over £50,000 you need to be prepared for digital record keeping including making quarterly updates and for a new penalty system.

You will need to use MTD for IT if all of the following apply:

• You are a sole trader or landlord registered for self-assessment.
• You receive income from self-employment, property or both.

When you must start using MTD for IT:

• If your qualifying income is over £50,000 in the 2024–2025 tax year:
  • You must start using MTD for IT from 6 April 2026
• If your qualifying income is over £30,000 in the 2025–2026 tax year:
  • You must start using MTD for IT from 6 April 2027
• If your qualifying income is over £20,000 in the 2026–2027 tax year:
  • The government has confirmed that MTD for IT will apply to sole traders and landlords with income over £20,000 starting in April 2028 but further details are awaited.

You are currently exempt from MTD for IT if:

• You meet specific limited conditions that automatically exempt you from the service (e.g., for reasons such as age, disability, or location).
• You have applied for an exemption, and it has been approved by HMRC.
• Your qualifying income is £20,000 or less in a tax year.

If you do not use MTD for IT, you must continue to report your income and gains in a self-assessment tax return if required.

Before probate begins, you must estimate the estate's value to see if Inheritance Tax applies. This includes valuing the deceased person's money, property and belongings in order to determine if Inheritance Tax (IHT) is due. This process is important even if you are not sure that any tax will be due.

There is usually no IHT to pay if the estate is valued under £325,000 or if anything above this threshold is left to a spouse, civil partner, charity or amateur sports club. If the person was widowed or passed on their home to children or grandchildren, the threshold may be higher.

To estimate the estate's value, you'll need to account for:

• All assets owned at death (homes, bank accounts, valuables, vehicles, investments etc).
• Any gifts made in the 7 years before death.
• The value of any trusts where the person had a beneficial interest.

You can estimate values yourself or use HMRC’s Inheritance Tax Checker to guide you. The checker helps identify whether IHT is likely to be due, but it does not calculate how much tax is due or notify HMRC.

When valuing assets, include joint property, pensions, or overseas items and assess their market value on the date of death. For gifts, consider their value when given, especially if the deceased still benefited from them (e.g., living rent-free in a gifted home).

You will also need to consider debts and check whether full reporting of the estate to HMRC is required.

New digital services have been launched that aim to make filing and managing tax returns quicker and less stressful.

These improvements are part of HMRC’s Transformation Roadmap, which sets out over 50 projects to modernise the UK’s tax system by 2030.

Among the new features are:

• improvements to the digital self-assessment registration and opt out processes;
• introducing enhanced on-screen messages to reassure taxpayers and reduce the need for them to chase progress on enquiries; and
• improving the late filing and late payment penalties online appeals process.

Commenting on the changes, the Exchequer Secretary to the Treasury, said:

The government is modernising the service that HMRC offers for British people and businesses. Our new payment plans for self-assessment will save people time and effort with their tax affairs and help them avoid making mistakes.

This new service forms part of our recently published HMRC Transformation Roadmap. We are going further and faster to reform HMRC, to make life easier for taxpayers and help deliver the economic growth at the heart of the Plan for Change.

More than 12 million individuals are expected to file a tax return this year. HMRC is encouraging early filing and flexible payment plans, including monthly or weekly Budget Payment Plans for taxpayers that need help to spread the cost of their tax bills. 

Taxpayers are also urged to update personal details, stay alert to scams, register for self-assessment or notify HMRC if they no longer need to file before key deadlines.

Shared home ownership offers a more accessible route to owning a home for those who cannot afford the full deposit or mortgage on a property that suits their needs. Under this scheme, buyers purchase a share of a property, typically between 10% and 75% of its market value and pay rent on the remaining portion to a housing provider.

The initial purchase can be funded through a mortgage or savings, along with a deposit usually ranging from 5% to 10% of the share. Over time, owners have the option to buy additional shares in the property through a process known as "staircasing," reducing the amount of rent paid to the landlord.

Shared ownership lets buyers get on the housing ladder with a smaller deposit and a part-rent, part-buy model.

Shared ownership properties can be new builds or resales and are often available through housing associations or local councils. For individuals with long-term disabilities, adapted homes may also be available through the scheme.

All shared ownership homes are leasehold, and buyers are typically responsible for service charges and ground rent.

Different rules apply in Northern Ireland, Scotland and Wales where alternative schemes, such as Right to Shared Ownership, may apply if you are currently renting.

Shared ownership can help individuals get on the ladder towards full home ownership making it a valuable option to consider.