Ross Martin Tax: SME Tax Update 6 February 2025

Hello,

Just when we thought Self Assessment was safely behind us for another year comes news of late filing penalty concessions from HMRC and new updates on Making Tax Digital for Self Assessment. We have further updates on the new non-domicile regime and links to a new talk on Family Investment Companies (FICs) too.

SME tax news 3

HMRC's new late filing penalty concessions apply if you are within Self Assessment and affected by Basis Year Reform. If that applies to you and you cannot change your accounting period end for whatever reason, then the rules make life complicated, and you have our sympathies. Once we have completed one Self Assessment cycle things will become clearer.

We are starting the count down into Making Tax Digital for Income Tax Self Assessment (MTD ITSA). HMRC have extended their pilot. We are updating our planner and guidance and we see that HMRC's guidance is slightly misleading. In passing, I am still on the lookout for a cost-effective solution for self-employed clients who normally present their annual figures on a simple spreadsheet; I genuinely would like recommendations if anyone can make one.

We feature one case write-up this week: a claim for home working costs during COVID-19. This might be of interest to anyone who has a home working requirement.

Please do come and join me for a talk on Family Investment Companies (FICs) next week (see below for details). This topic has something for everyone and combines a good refresher in general tax planning for any type of company with some valuable and practical insights.

More news and practical updates below.

Nichola and the team

Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

Quick News

MTD for Income Tax pilot expanded from April 2025
HMRC have confirmed the expansion of the Making Tax Digital (MTD) for Income Tax pilot. Taxpayers with High-Income Child Benefit Charge (HICBC) and income from jointly let property can now sign up for testing under the pilot for 2025/26

MTD ITSA guidance, tread carefully
We note a few issues with HMRC’s latest guidance, 'Find out if and when you need to use Making Tax Digital for Income Tax' which was updated this week. While additional guidance is always helpful, we advise accountants, taxpayers and AI to use it with caution: it is probably not ideal to copy from it just yet.

Late filing penalty easement for 2023-24
HMRC have announced a late filing penalty relaxation for some taxpayers affected by Basis Period Reform, where details of overlap profits remain outstanding.

Welsh Taxes: What's new 2025?
What’s new for Welsh taxes in 2024-25? What updates have occurred this year? What changes must be implemented for 2025/26?

HMRC's operational activity during loan charge review
HMRC have issued a briefing on operational activity during the recently announced loan charge review. The loan charge review is underway and expected to conclude by summer 2025.

Tax Cases

COVID 19 working from home allowance not allowed
In Mr Opoku-Anokye v HMRC [2025] TC09416, the First Tier Tribunal (FTT) found that the working-from-home allowance available during the COVID-19 pandemic was not allowed as no evidence supported the claim.

Editor's Choice

Family Investment Companies
CPD: Come and join Nichola Ross Martin for a webinar on tax planning and Family Investment Companies (FICs). This is a great way to get a good understanding of the pros and cons of creating an FIC. We look at wider advantages and planning points.

We're hiring: Tax Adviser/Consultant
We are recruiting for a Tax Adviser to come and join our friendly team at 2020 Innovation and work in the Virtual Tax Partner (VtaxP) advisory service and on rossmartin.co.uk. The Job Description and links are below.

What's in your 2025 training program?

20:20 Innovation Tax Product Review (CPD)
Join Sharon Cooke and Nichola Ross Martin for a webinar in which we look at ways in which accountants can obtain timely and relevant tax knowledge, resources and support from the 20:20 Innovation portfolio of products and services. When? February 27th 2025 ...More

Guides & Updates

Self-employed

Compare software for Making Tax Digital for Income Tax
UPDATE: On 4 February 2025, HMRC added two new software suppliers to the compatible software list.

MTD: Income Tax Pilot Tool
UPDATE: Are you eligible to take part in the Making Tax Digital (MTD) for Income Tax Pilot?

Woodlands: Overview
Woodlands and forestry ownership carry significant tax reliefs, including Income Tax, Capital Gains Tax (CGT) and Inheritance Tax (IHT).

Directors & Companies

Directors: Tax planning toolkit for 2024/25
What tax planning opportunities and strategies are available to directors? What's the optimum way to extract profits in 2024/25? What tax reliefs and tax deductions are handy to consider? This planner looks at a range of director tax issues.

Employers

Childcare: Employer provision
What support can employers give to parents? Are childcare vouchers still available? Can employers pay for nursery costs for their staff? What are the tax implications of employer-provided childcare?

Non-Domicile changes

Non-Domicile: Rules from 5 April 2025
UPDATE: What are the changes to the 'non-dom' regime? What does this mean for non-doms currently using the remittance basis? How will Income Tax, Capital Gains Tax and Inheritance Tax be affected by the changes?

Non-Domicile: Definitions, deemed domicile & tax
UPDATE: Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

Private Client & Estate Planning

Negligible value claims
What is a negligible value claim? When and how can a claim be made?

Partnerships

Partnership agreements: What should be considered?
Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement? Why are they important?

Partnerships: What's new 2024/25
What's new for partnerships in 2024-25? What are the issues on Basis Year reform? What is the fuss about hybrid structures? Where are we on partnership tax appeals?

VAT News & Cases

Abuse of rights: VAT
What does 'abuse of rights' or 'abuse of law' mean? How does this impact VAT planning? What are the primary cases?

Tax Tools & Calculators

Tax tools & calculators
UPDATE: 2024/25 versions available now. We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.

Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax-significant events.

CPD

CPD for lunch: Byte-sized chunks of lunchtime CPD (free for our Subscribers)

CPD: Pay as you go:

How to run the most tax-efficient business 2024/25.
Purchase of Own Shares: all the details.
Anti-money Laundering Update and Firm-Wide Risk Assessment ...More...

Tax Queries?

UK Agent for registration of Overseas Entities
Do you require assistance in the registration and verification of an overseas entity that owns UK land or property?

Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.

Missed the Last Tax Update?

Ross Martin Tax: SME Tax News 30 January 2025

Chancellor's plans to kickstart economic growth
Independent review of the loan charge
Defined benefit pension scheme surplus reform
CCO investigation numbers static... again
PAYE Settlement Agreement nudge letters
Proposed RTI reporting changes dropped
Significant influence test narrowed for salaried members rule
£28 million ruling overturned for Scottish Power
Group member 'party to' arrangements for EIS purposes ...More

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