The mandatory rollout of Making Tax Digital (MTD) for Income Tax is set to begin in April 2026. MTD for ITSA will bring substantial changes to how businesses, self-employed individuals, and landlords interact with HMRC. The system will require them to register, file, pay, and update their details through an online tax account.

To prepare for the launch of MTD for Income Tax in April 2026, it is essential to start considering the use of accounting software that is compatible with sending updates to HMRC.

You will need to use MTD for Income Tax from 6 April 2026 if all of the following apply, you:

• are an individual registered for self-assessment;
• get income from self-employment or property, or both, before 6 April 2025; or
• have a qualifying income of more than £50,000 in the 2024 to 2025 tax year.

MTD for Income Tax will then be extended to those with an income between £30,000 and £50,000 from 6 April 2027.

It was announced as part of the Budget measures that MTD for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of the current Parliament. The precise timing of this change has yet to be confirmed.

Securing funding for a new startup is one of the most critical steps in ensuring the success of a business venture. However, obtaining financing can often be challenging. For instance, traditional bank loans may not always be an option, or they might require security conditions like a personal guarantee.

One alternative is the government-backed Start Up Loan scheme, which offers personal loans to individuals aiming to start or grow a business in the UK. Those approved for the loan are also matched with a business mentor for a 12-month period. Importantly, this loan is unsecured, meaning there is no need to provide assets or a guarantor to support the application.

Business owners or partners can each apply for loans ranging from £500 to £25,000, with a maximum total loan of £100,000 per business. The typical loan amount is between £5,000 and £10,000. The scheme offers a fixed interest rate of 6% per year, with flexible loan repayment terms of 1 to 5 years. There are no application fees or early repayment penalties.

To apply for the loan, you must meet the following criteria:

• You live in the UK
• You are 18 years of age or older
• You own (or plan to start) a UK-based business that has been trading for less than 36 months.

The 18% and 28% Capital Gains Tax (CGT) rates currently applied to carried interest gains remain unchanged for the current tax year. This charge applies to individuals who provide investment management services to funds and receive carried interest on which they are liable to pay CGT.

However, as announced in the recent Budget, these CGT rates will increase to a single, unified rate of 32% starting on 6 April 2025. Additionally, from April 2026, carried interest will be subject to a broader set of policy changes, with further details to be announced at a later date. These changes are part of a wider reform package targeting the tax treatment of carried interest.

The new Labour Government has committed to reforming this area of taxation. They believe that the current tax regime does not appropriately reflect the economic characteristics of carried interest and the level of risk assumed by fund managers.

According to HMRC, around 3,100 individuals in the investment management sector who receive carried interest and are subject to CGT will be affected. Those impacted will need to ensure they are aware of the new CGT rates on carried interest going forward.

As part of the Autumn 2024 Budget measures, the government introduced new anti-avoidance provisions to prevent the abuse of the existing close company anti-avoidance rule. The measure will have effect for any tax avoidance arrangements falling within the scope of the announcements that are made on or after 30 October 2024.

The government has said they are introducing this new measure as they have become aware of arrangements using a group of companies or amongst associated companies, so that new loans are made and then repaid in a chain such that no s455 charge arises on the increasing amounts extracted. Chapters 3A and 3B cannot catch the behaviour.

It will be clear under new legislation in Finance Bill 2024-25, that where the TAAR applies (where companies and their shareholders are attempting to avoid the s455 charge on any extractions), tax is payable whether or not there has apparently been a repayment, or a repayment is subsequently made. Section 464B of the CTA 2010, which currently provides relief from the charge in cases where a return payment is made (even if the payment is made for avoidance purposes), will be repealed and relevant amendments will be made to Section 464D.

A trust is an obligation that binds a trustee, an individual or a company, to deal with assets such as land, money and shares and which form part of the trust. The person who places assets into a trust is known as a settlor and the trust is for the benefit of one or more ‘beneficiaries’. The trustees make decisions about how the assets in the trust are to be managed, transferred or held back for the future use of the beneficiaries.

IHT planning can involve the careful use of trusts. There are a number of types of trusts which are subject to different tax rules. The main types to be aware of are bare trusts, discretionary trusts, interest in possession trusts and mixed trusts.

A discretionary trust is a type of trust where the trustees have some authority to decide how to distribute income and capital among the beneficiaries. Unlike fixed trusts, where beneficiaries have a set entitlement, discretionary trusts allow trustees to exercise their discretion based on various factors, such as the trust deed, the beneficiaries' needs and circumstances. Trustees must act in the best interest of the beneficiaries and follow the terms of the trust deed

Discretionary trusts are sometimes set up to put assets aside for:

• a future need, like a grandchild who may need more financial help than other beneficiaries at some point in their life; or
• beneficiaries who are not capable or responsible enough to deal with money themselves.