Inheritance Tax nil-rate bands remain frozen until April 2030. Learn how this affects estates, the residence nil-rate band, and planning opportunities to maximise tax-free inheritance for loved ones.

The Inheritance Tax (IHT) nil-rate bands have been frozen for a number of years and had been set to remain at current levels until 5 April 2028. As part of the Budget measures, it was confirmed that the rates will remain at the same level for a further 2 years until 5 April 2030.

This means that:

• the nil-rate band will continue at £325,000;
• residence nil-rate band will continue at £175,000; and
• residence nil-rate band taper will continue to start at £2 million.

The residence nil rate band (RNRB) is a transferable allowance for married couples and civil partners (per person) when their main residence is passed down to a direct descendent such as children or grandchildren after their death. The allowance is available to the deceased person’s children or grandchildren.

Any unused portion of the RNRB can be transferred to a surviving spouse or partner. The RNRB is on top of the £325,000 nil-rate band. The allowance is available to the deceased person's children or grandchildren. Taken together with the current IHT limit of £325,000 this means that married couples and civil partners can pass on property worth up to £1 million (£325,000 x 2 plus £175,000 x 2) free of IHT to their direct descendants.

The transfer does not happen automatically and must be claimed from HMRC when the second spouse or civil partner dies. This is usually done by the executor making a claim to transfer the unused RNRB from the estate of the spouse or civil partner that died first.

There is a tapering of the RNRB for estates worth more than £2 million even where the family home is left to direct descendants. The additional threshold will be reduced by £1 for every £2 that the estate is worth more than the £2 million taper threshold. This can result in the full amount of the RNRB being tapered away.

From April 2026, Making Tax Digital for Income Tax (MTD for ITSA) will transform tax compliance for businesses, self-employed individuals, and landlords, mandating digital record-keeping and online submissions. Get prepared!

The mandatory signup for Making Tax Digital (MTD) for Income Tax is set to commence from April 2026. MTD for ITSA will fundamentally change the way relevant businesses, the self-employed and landlords interact with HMRC. The regime will require businesses and individuals to register, file, pay and update their information using an online tax account.

The rules will initially apply to businesses, self-employed individuals and landlords with an income of over £50,000 annually. MTD for Income Tax will then be extended to those with an income between £30,000 and £50,000 from 6 April 2027. A new system of penalties for the late filing and late payment of tax for ITSA will also apply.

It was announced as part of the recent Autumn 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.

HMRC states that, MTD for Income Tax is a new way of reporting income and expenses if you’re a sole trader or landlord. You’ll need to:

• use software that works with Making Tax Digital for Income Tax;
• keep digital records of your business income and expenses;
• send us quarterly updates; and
• submit a tax return and pay tax due by 31 January the following year.

If you have volunteered to test the MTD for Income Tax service then the new late submission penalties and late payment penalties will apply. If you are looking to volunteer now then you will be required to confirm that you agree that the new penalties will apply to you as part of the sign-up process.

The new penalties apply as following during the testing phase.

Over one million parents have now claimed Child Benefit online or via the HMRC app, with 87% of new claims using this speedy service. If you've recently had a baby or a child joins your family, applying online ensures you get support quickly—right when you need it most.

HMRC’s Director General for Customer Services, said:

"Having a baby is a busy and expensive time but claiming Child Benefit online or via the app means you’ll get cash in your bank account as soon as possible. Claim now and you could get your first payment in time for your baby’s first Christmas. Download the HMRC app today."

You can apply for Child Benefit starting the day after you register your child’s birth or when a child comes to live with you. Claims can be backdated up to 12 weeks. Applying online is usually the fastest way to complete your claim.

If you are unable to claim online, you can complete the Child Benefit form CH2 and send it to the Child Benefit Office. The address can be found on the form. If you are claiming for more than two children, you will need to complete the additional child form CH2(CS) and send it with your CH2 form. Alternatively, you can contact HMRC by phone if online or postal methods are not suitable.

Child Benefit is typically available for children who move to the UK. However, there are certain requirements that must be met to claim. If a child receiving Child Benefit moves permanently abroad, HMRC must be notified as soon as possible.

The child benefit rates for the only or eldest child in a family is currently £25.60 a week and the weekly rate for all other children is £16.95. The rates are set to increase to £26.05 and £17.25 respectively from April 2025.

Can’t pay your tax bill in full by 31 January 2025? HMRC’s online Time to Pay system lets self-assessment taxpayers spread the cost over monthly instalments. With plans available for tax bills up to £30,000, this flexible option can help you avoid late payment penalties.

 Those eligible for the self-serve option can arrange payments online without needing to contact an HMRC adviser. HMRC has revealed that more than 15,000 taxpayers have already set up a Time to Pay payment plan for the 2023-24 tax year.

To qualify for the online Time to Pay option, taxpayers must meet these conditions:

• No outstanding tax returns
• No other tax debts
• No existing HMRC payment plans

For taxpayers who do not meet these requirements or owe more than £30,000, other payment arrangements may be available. These are typically agreed on a case-by-case basis, tailored to individual circumstances and liabilities, allowing businesses and individuals to pay off their debt over time.

HMRC’s Director General for Customer Services, said:

We’re here to help customers get their tax right and if you are worried about how to pay your self-assessment bill, help and support is available. Customers can set up their online payment plan to suit their own financial circumstances and can spread those payments across a maximum of 12 months. It is a valuable option for someone needing extra flexibility in meeting their tax obligations.

Navigating tax obligations can be daunting for small business owners and sole traders. To make life easier, HMRC has introduced new interactive tools, including a Sole Trader Setup Guide and VAT Registration Estimator, helping businesses understand taxes step by step.

The new resources include:

Sole Trader Setup Guide: A step-by-step guide to help people who are self-employed understand when they need to register as a sole trader and how to do it. The interactive tool explains what records need to be kept, which taxes may apply, and includes other helpful information, such as how to pay a tax bill. The guide is broken down into 7 simple steps:

1. Check if being a sole trader is right for you
2. Choose your business name
3. Check what records you need to keep
4. Register as a sole trader
5. Check what taxes may apply to you
6. Plan for your tax bill
7. Get help and support

Additionally, HMRC has released a VAT Registration Estimator tool, which helps businesses assess whether they need to register for VAT based on their turnover. This tool was developed in response to feedback from small businesses who said an online resource would be helpful to understand when their turnover might require VAT registration and how it could affect profits.

These free online tools are expected to help small businesses make informed decisions about their business and tax obligations. The tools have been launched solely for informational purposes and using them will not register users for any taxes. HMRC will not collect or store any information entered through these tools.