There are specific rules regarding the liability to Inheritance Tax (IHT) on gifts made during a person's lifetime. In most cases, gifts made during a person’s life are not taxed at the time they are given.

These lifetime gifts are referred to as "potentially exempt transfers" (PETs). The gift becomes exempt from IHT if the giver survives for more than seven years after making the transfer, commonly referred to as the seven year rule. There were expectations that this rule might have been changed as part of the Budget measures, but no changes were made.

If the giver dies within three years of making the gift, the IHT treatment is as if the gift was made upon death. If death occurs between three and seven years after the gift, a tapered relief applies.

The IHT rates on the amount exceeding the IHT nil-rate band are as follows:

• 0 to 3 years before death: 40%
• 3 to 4 years before death: 32%
• 4 to 5 years before death: 24%
• 5 to 6 years before death: 16%
• 6 to 7 years before death: 8%

If you give away an asset but continue to benefit from it, this is considered a “gift with reservation,” and the value of the asset will still count towards your estate. Examples of gifts with reservation include:

• Giving your home to a relative but continuing to live in the gifted property.
• Giving away a caravan but still using it for holidays without charge.
• Donating a valuable painting but still displaying it in your home.

There are special rules in place for taxpayers who make gifts of land and buildings to charity. This can include Income Tax and Capital Gains Tax (CGT) relief provided all the necessary conditions are met. There are also reliefs available where taxpayers sell a property to a charity for less than its market value. Tax relief may also be available if a lease is granted to a charity that is rent-free or below a market rent.

When qualifying assets are donated, the market value of the asset is deducted from the taxpayer’s total taxable income for the tax year (6 April to 5 April) in which the gift or sale to charity occurs.

Taxpayers are exempt from paying Capital Gains Tax (CGT) on land, property, or shares given to charity. However, if the taxpayer sells the asset for more than its original cost but less than its market value, they may owe tax. In such cases, the gain should be calculated based on the actual amount the charity pays, rather than the market value of the asset.

If a taxpayer donates land or buildings, the charity may ask them to sell the asset on its behalf. Taxpayers can still claim tax relief for the donation, but they must keep detailed records of both the gift and the charity’s request. Without these records, they may be liable for CGT.

The rate of Capital Gains Tax (CGT) for Investors’ Relief will rise from 10% to 14% for disposals made on or after 6 April 2025. It will then increase further to 18% for disposals made on or after 6 April 2026. Additionally, the lifetime limit for Investors' Relief has been reduced from £10 million to £1 million for qualifying disposals occurring on or after 30 October 2024.

Investors’ Relief reduces the amount of CGT on a disposal of shares in a trading company that is not listed on a stock exchange.

To qualify for Investors’ Relief, you will need to subscribe for shares that meet the relevant qualifying conditions throughout the period you have owned them and that you have owned them for at least 3 years. The main conditions that must be met are:

• they are ordinary shares in the company;
• you subscribed for them in cash, and they were fully paid up when issued;
• the company is a trading company or the holding company of a trading group;
• none of the company’s shares are listed on a stock exchange; and
• neither you nor any person connected with you is an employee of the company or of a company connected with it.

A claim should be made by the first anniversary of the 31 January following the end of the tax year in which the qualifying disposal takes place. For a qualifying share disposal in the current 2024-25 tax year (ending on 5 April 2025) a claim for Investors’ Relief must be made by 31 January 2027. A claim to Investors’ Relief may be amended or revoked within the time limit for making a claim.

To calculate your Council Tax, you need to know the following:

• The valuation band of your property in England, Wales, or Scotland
• The amount your local council charges for that band
• Whether you qualify for a discount or exemption from the full bill

If you are on a low income or receive benefits, you may be eligible for Council Tax Reduction (formerly known as Council Tax Benefit).

Your property may be put in a different band in some circumstances, for example if:

• you demolish part of your property and do not rebuild it;
• you alter your property to create 2 or more self-contained units, for example an annexe – each unit will have its own band;
• you split a single property into self-contained flats;
• you convert flats into a single property;
• you start or stop working from home;
• the previous owner made changes to your property;
• there are significant changes to your local area, like a new road being built; or
• a similar property in your area has its Council Tax band changed.

A full Council Tax bill is based on at least two adults living in a home. Spouses and partners who live together are jointly responsible for paying the bill.

Certain people are not counted (‘disregarded’) when working out how many people live in a property. Your Council Tax bill may be reduced if there are disregarded people living in your property. There are also discounts that may be available for households where everyone is a full-time student or if someone living in the property is disabled.

If you think you have overpaid your Council Tax bill you need to contact your local council to discuss a refund.

When approaching the VAT registration threshold there are important matters to consider. The VAT registration threshold is the point at which businesses must register for VAT with HMRC.

A business must register for VAT if:

• their total VAT taxable turnover for the previous 12 months is more than £90,000 – known as the ‘VAT threshold’;
• they expect their turnover to go over the £90,000 VAT threshold in the next 30 days; or
• they are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT taxable turnover.

With traditional VAT registration, businesses are required to collect VAT on their sales and pay it to HMRC even if customers have not paid their invoices. This can create cash flow issues, as the business must remit the VAT before receiving full payment from customers. This means that small businesses may struggle with cash flow due to VAT liabilities, especially if they do not have enough working capital to cover tax obligations while waiting for customer payments.

We would be happy to help businesses approaching the VAT registration threshold understand their options. There are a number of VAT registration options available. Making the wrong choice could have significant cash flow consequences. It may be possible to alleviate these difficulties by adopting the VAT Cash Accounting Scheme or VAT Flat Rate Scheme but take advice before making a decision as registration criteria apply; not all businesses would qualify.