New rules mean late VAT filings and payments now trigger points, fines and interest charges.

The VAT late filing penalties regime changed for accounting periods beginning on or after 1 January 2023. Under the new system, there are now distinct and separate penalties for late filing of VAT returns and for the late payment of VAT liabilities.

The revised system operates on a points-based approach. A taxpayer receives one penalty point for each VAT return that is submitted late. Once a specific threshold of points is reached, a financial penalty of £200 is charged and the taxpayer is notified.

The penalty thresholds based on VAT return frequency are as follows:

• For monthly VAT returns, the threshold is five penalty points.
• For quarterly VAT returns, the threshold is four penalty points.
• For annual VAT returns, the threshold is two penalty points.

For example, a business that files VAT returns on a quarterly basis will receive a £200 penalty once it accumulates four late submission points. To remove the penalty points and return to a clean compliance record, the taxpayer must submit all VAT returns on time for a continuous period of twelve months. There are also statutory time limits after which a penalty point cannot be issued for a particular late return.

Late payment penalties are applied separately. If VAT remains unpaid between 16 and 30 days after the due date, a first penalty of 2% of the outstanding tax is charged. If the VAT is still unpaid 31 days or more after the due date, a second penalty of 4% of the outstanding amount applies.

In addition, late payment interest is charged from the day payment becomes overdue until it is paid in full.

From 2024, platforms like eBay, Vinted and Airbnb must report seller data to HMRC, so check your tax responsibilities.

If you sell goods or services on a digital platform it is important to understand your tax responsibilities. This can apply whether your sales are a part-time income source or your main income. Even casual selling online may mean you need to report earnings and potentially pay tax.

You may need to pay tax if you engage in activities on digital platforms like:

• Buying and reselling items online or making things to sell (even as a hobby).
• Providing services online, such as tutoring, repairs, food delivery, dog walking, or equipment hire.
• Creating digital content, like podcasts, YouTube videos, or social media influencing.
• 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.

Since 1 January 2024, digital platforms (such as eBay, Vinted, Etsy and Airbnb) have been required to collect and report seller data to HMRC. The first reports covered the period from 1 January to 31 December 2024, with information submitted to HMRC by 31 January 2025.

The same rules apply in 2025, meaning income earned this calendar year (January to December 2025) will be reported by 31 January 2026.

Platforms must report your information if either of the following applies:

• You made 30 or more sales in the year.
• You earned over €2,000 (about £1,700).

The digital platforms will also give you a copy of the data they send to HMRC, which can help when completing your self-assessment return.

If you are earning money online you should ensure you check your tax responsibilities. The rules are clear, and platforms are now required to report many types of earnings directly to HMRC.

The letters in your tax code indicate whether you are entitled to the annual tax-free personal allowance. These codes are updated each year and help employers calculate how much tax should be deducted from your salary.

For the current tax year, the basic personal allowance is £12,570. The tax code corresponding to this amount is 1257L, which is the most common tax code used for those with a single job, no untaxed income, and no unpaid tax or taxable benefits (such as a company car).

HMRC updates your tax code when your circumstances change, and your taxable income is affected. Some common reasons why your tax code may change include:

• Starting a new job. If you begin working for a new employer, HMRC may issue a new tax code based on your earnings, especially if they haven’t yet received your full income details.
• Receiving taxable state benefits. Certain state benefits are taxable. If you start receiving them, HMRC may adjust your tax code to account for the additional income.
• Taking on an additional job or receiving a pension. If you begin earning from another job or start drawing a pension, your tax code may be updated to reflect this extra income.
• A change to your weekly State Pension amount. If your weekly State Pension payments change, HMRC may revise your tax code to ensure the right amount of tax is collected.
• Changes to job-related benefits. If your employer informs HMRC that you have started or stopped receiving benefits like a company car or private healthcare, your tax code will likely change to reflect this.
• Claiming Marriage Allowance. If you transfer part of your Personal Allowance to your spouse or civil partner, or they transfer it to you, HMRC will adjust your code to reflect the change in allowances.
• Claiming tax-deductible expenses. If you claim tax relief on work-related expenses (like uniforms, tools, or mileage), your code might change to reduce the tax you pay during the year.

It is important to check your tax code is correct. If you have any questions, we would be happy to help.

Employers must ensure they are paying staff at least the National Minimum Wage (NMW) or National Living Wage (NLW). The NMW and the NLW are the minimum legal amounts that employers must pay their workers. The latest NMW and NLW rates took effect on 1 April 2025. The current hourly rate for the NLW is £12.21. For those aged 18 to 20, the NMW is £10.00 per hour. Workers aged 16 to 17 and apprentices are entitled to £7.55 per hour.

The minimum wage is calculated as an hourly rate, but it applies to all eligible workers however they are paid. This means that even if someone is paid an annual salary, and it is paid by the piece or in other ways, they must still calculate their equivalent hourly rate to check whether they are receiving at least the minimum wage.

To do this correctly, it is also important to understand what counts as working time under NMW rules.

According to HMRC guidance, for all types of work, this includes time spent:

• at work and required to be working, or on standby near the workplace (but do not include rest breaks that are taken);
• not working because of machine breakdown, but kept at the workplace;
• waiting to collect goods, meet someone for work or start a job;
• travelling in connection with work, including travelling from one work assignment to another;
• training or travelling to training;
• at work and under certain work-related responsibilities even when workers are allowed to sleep (whether or not a place to sleep is provided).

Working time does not include time spent:

• travelling between home and work;
• away from work on rest breaks, holidays, sick leave or maternity leave;
• on industrial action; and
• not working but at the workplace or available for work at or near the workplace during a time when workers are allowed to sleep (and you provide a place to sleep).

Gift Hold-Over Relief is a form of Capital Gains Tax (CGT) relief that allows you to defer paying CGT when certain assets, such as qualifying shares, are given away or sold for less than their market value, typically to benefit the recipient.

Instead of paying tax at the time of the gift, the gain is "held over" and passed on to the person receiving the asset. This reduces their base cost for CGT purposes, meaning the tax is only due when they eventually sell or dispose of the asset.

The individual making the gift will not usually have to pay CGT, as long as the transfer qualifies. However, CGT may still apply if the asset is sold at an undervalue rather than gifted outright. Transfers between spouses or civil partners are generally exempt from CGT.

A joint claim for the relief must be submitted by the giver and the recipient of the business asset gift.

To claim Gift Hold-Over Relief on business assets, you must meet all of the following:

• Be a sole trader, a business partner, or hold at least five percent of the voting rights in a company (your personal company).
• The assets must have been actively used in your business or in your personal company.

If the asset was only partly used for business purposes, partial relief may still be available.

To qualify for the relief when giving away shares, the shares must be in a company that is either:

• Not listed on any recognised stock exchange, or
• Your personal company.

In addition, the company must be primarily involved in trading activities, such as supplying goods or services. Companies that are mainly engaged in non-trading activities, such as investment, will generally not qualify.