Home-To-Work Travel
Sean Rustrick • 23 July 2024
Is your home your workplace? Will this affect your right to tax relief?
Travel costs are not tax deductible if they are for an ordinary commute between home and a permanent workplace (usually your employer’s premises!). But travelling between home and a temporary place of work (e.g. a customer’s premises) would be tax deductible!
HMRC are now saying that there are some circumstances when travel could be deductible from one workplace to another (e.g. from your home to your employer’s workplace).
What matters is whether you’re required by your employer to work at home!
So, if an employer agrees to you working from home some of the time, make sure it is written into the contract that you will receive tax relief when travelling between workplaces!
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If you sell a property for more than you paid for it, the difference is liable to Capital Gains Tax (CGT). In 2025/26, you will be liable to 18% CGT when your income and gains fall in the basic rate band. You will be charged up to 24% if it is over the basic rate band. This actually works out as you paying a mixed rate, i.e 18% and 24%, and the difference in these rates can reduce the CGT bill on the sale of assets. Before your CGT exemption is deducted from your gains, any capital losses you’ve made in the same year are deducted alongside any capital losses from earlier tax years (that you haven’t already used against gains). In addition, the first £3,000 of any capital gains you make in 2025/26 is exempt. Remember, this renews every tax year and is the allowance per person, so if the asset you’re selling is joint with your spouse, the exemption increases to £6,000. Before any sale, a married couple or civil partners can change the proportion of the property they own to double up on these annual exemptions, reduce tax rates and use available capital losses to minimize the tax payable on gains from property. This can get complicated, give the team at Rustrick Accountants a call today to chat through things on 01622 738165 and see if you can save today!
MRC is now demanding that small companies and their owners will have to report all income; not just a single total figure for all dividend income. If you receive dividends from a close company in your tax return for 2025/26, you must indicate whether you were a director of it at any point in the tax year and you must now provide the company’s full name and registration number. You must also disclose details of the director’s highest percentage of share capital held in the year. Directors are not limited to just those registered at Companies House, it also includes shadow directors and if you control more than 20% of the company’s ordinary share capital. From 6th April 2025, directors of close companies must make sure they are making detailed records of dividends, changes to the company’s shareholdings and the rights attaching to every class of issued shares. If these details aren’t accurate you may face a penalty of £60 for each error. If you have alphabet shares or if your class rights/shareholdings have changed, give us a call on 01622 738165 as this could complicate things.
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Interest rates have risen and the personal savings allowance (PSA), the amount on which 0% tax applies to savings income, has frozen at £1,000 and £500 per tax year for basic rate and higher rates. If in 2023/24 you received interest exceeding the PSA, you don’t normally submit a self-assessment tax return, you haven’t received a P800, you should contact HMRC now to notify them you may owe tax. This also applies for 2024/25, but you have until 5th October 2025 to tell HMRC.
A trivial benefit is something that costs the employer little, which they give to their employees as a perk of their job. A perk counts as trivial and is exempt from income tax and NI as long as it costs the employer no more than £50 and meets other conditions. This £50 includes both the price of the item/service and all the related costs. If a gift is shared by employees and you can’t work out the exact cost, you can use the average to determine if the exemption applies. It would not be counted as trivial (even if it is less than £50) if it is part of a salary sacrifice, paid in cash or a voucher that can be converted to cash, part of the employee’s contractual earnings or if it is in recognition for services performed as part of employment duties. The trivial benefits exemption exists to allow employers to reward employees tax and NI free and to reduce paperwork and admin for both employers and HMRC. So give us a call on 01622 738165 and let us help you today!
Did you know that contributing to a registered pension scheme qualifies for income tax relief? You can pay into a workplace pension or set up your own, but either way you will be entitled to relief dependent on the rate of income tax you pay. If you are a higher (40%) or additional (45%) rate taxpayer you can claim further income tax relief on personal pension contributions (this includes contributions to workplace pension that is deducted from your pay!). If you are not in self-assessment (only have PAYE income) you can claim this extra tax relief through HMRC’s new online form. You can access this by logging into the Government Gateway and then supply proof that you’ve paid contributions (your pension company can give you this). HMRC will then make an adjustment to your tax code so you receive the income tax relief. If you are registered for self-assessment, you can simply claim it on your tax return. Remember you will have to wait until the end of the year to do this! If you have PAYE income, you can get the tax relief faster by logging into your HMRC personal tax account and updating your tax code (remember to report the pension contributions on your tax return!). Not sure if you are entitled to the extra tax relief or how to get it? Give us a call on 01622 738165 and the team will help you out.
High Income Child Benefit Charge (HICBC) uses the income tax system to get back child benefits from couples when one or both of them have an annual income of over £60,000. HMRC has announced that from August 2025 if you pay tax through PAYE and are liable to HICBC you have to report it through a new online service. So if you were previously filling out a self-assessment form, ask HMRC to remove you from the self-assessment system and collect the HICBC from your PAYE income. This is a new system so there is a high risk of over or underpayments and will be under review for a period of time. Not sure how this will affect you? Give us a call on 01622 738165 and we can talk you through the change.
Can you reduce your tax and NI bill if you give your spouse shares in your company? Usually this would be the case, however it isn’t always guaranteed! If your spouse has other income that places them in a higher tax bracket it would increase the bill! To get around this you can use alphabet shares. Alphabet shares are “ordinary shares” but they have a different designation. For example ordinary A shares, ordinary B shares etc. This means that the company can declare a dividend at one rate for A shares and another for B shares. So if one shareholder in a company has more income than another, the first shareholder can be paid a lower dividend to keep their income within the income tax basic rate band. These shares must be issued correctly. They must be sent to Companies House within 15 days with a Form SH01 within 30 days of issuing the new shares. HMRC aren’t always a big fan of alphabet shares, so make sure your paperwork is in order when declaring a dividend- it will either be a director’s resolution for an interim dividend or a shareholders’ resolution for a final dividend. First time you have heard of alphabet shares? Worried about issuing them yourself? Give us a call on 01622 738165 and Rustrick Accountants will sort it out for you.
The government wants to build over 1m new homes by 2029. They need land to do this and have decided to start to clean up brownfield sites. But where does Land Remediation Relief (LRR) come into this? At the moment, the government is deciding whether LRR should be continued, so if you do qualify- time could be of the essence! LRR is a corporation tax (CT) deduction of 150% when a company cleans up contaminated land and buildings in which they have a major interest (freehold/leasehold interest of at least seven years). The CT relief depends on whether the company holds the land as stock or a capital asset and which band of CT is applicable. Loss-making companies can only access a maximum tax credit of 24% of the LRR spend. But watch out for the exclusions! Contamination due to living organisms, air or water does not qualify (apart from Japanese knotweed, radon and arsenic). This means that any costs relating to drainage, mine shaft grouting and protection of land from soil, gases or flood waters is excluded. Any contributor to the contamination (including a connected party!) is also ineligible, this also includes any failure to act (even if the pollution was accidental!). As long as the work either prevents or mitigates the effects of harm (this could be removal, containment or treatment of contamination) there is no “prescribed” method of how to do it. However, only the additional costs incurred to carry out the remediation work will qualify for CT relief. Any costs must be borne by the company and not subsidised (i.e land was discounted due to the contamination). LRR offers a maximum tax relief of 37.5% of the qualifying spend (including capital costs) but it must be submitted within two years of the accounting period end. This is a tricky topic so give us a call on 01622 738165 to make sure it is done properly!