Labour’s campaign pledged not to raise National Insurance, income tax, or VAT, yet it proposed significant tax reforms.

Labour secured a historic landslide victory in the general election, with Sir Keir Starmer’s Government setting the stage for the introduction of several new tax measures. The party, running on a platform promising change, achieved its largest-ever majority, allowing it to implement its policies, including Rachel Reeves becoming the first female Chancellor. Her predecessor, Jeremy Hunt, narrowly retained his seat with an 891-vote majority.

Labour’s campaign pledged not to raise National Insurance, income tax, or VAT, yet it proposed significant tax reforms. One notable policy is imposing a standard 20% VAT rate on private schools. Additionally, Labour plans to replace non-dom status with a “modern scheme for people genuinely in the country for a short period”. This includes ending offshore trusts to avoid inheritance tax (IHT).

Addressing tax avoidance is a key focus of Labour’s manifesto. The party aims to modernise HMRC and reform laws to combat tax evasion. In recent years, HMRC has faced heavy criticism for long waiting times and poor service standards, highlighting the urgent need for investment and improvement.

Labour now has the opportunity to implement its proposed changes, potentially marking a significant shift in British politics.

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Debt charity StepChange reports a 50% rise in the average debt among its clients, from £1,146 in 2019 to £1,726 in 2023.

As councils nationwide face financial constraints, council tax debt has surged by 9% in the past year. This represents a 71% increase since pre-pandemic levels, when the debt stood at £3.5bn, as more residents struggle with council tax bills.

StepChange has reported a 50% rise in the average debt among its clients. With most councils increasing taxes by the maximum 5%, some surpassing this due to bankruptcy, this trend will likely persist.

For the 2024/25 tax year, council tax increased by an average of 5%, with notable hikes in Woking (10%), Birmingham (9.94%), Slough (8.51%), Bolsover (8.32%), and Thurrock (7.98%). To collect overdue payments, councils often take stringent measures, including demanding the full amount in one payment and involving bailiffs. In extreme cases, this can lead to a three-month prison sentence.

StepChange’s research shows that 69% of people support banning the use of bailiffs for collecting council tax debt, especially for those in financial difficulty. Additionally, 84% advocate for a regulator to ensure bailiffs treat people fairly.

Moreover, 69% of respondents believe council tax rates should be reduced for those with the lowest incomes. Current regulations allow councils to demand full annual payments if a household misses one month’s payment, a practice opposed by 82% of people.

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Soaring rents and inflation have driven the price surge as London now ranks eighth in the global cost-of-living index, one spot higher than last year.

Soaring rents, inflation, and the cost-of-living crisis have pushed London up the rankings as one of the most expensive cities to live and work in. London now ranks eighth in the global cost-of-living index, one spot higher than last year, just behind New York.

Hong Kong remains the most expensive city for expats and global workers, followed by Singapore in second place. Switzerland holds the next three positions, with Zurich, Geneva, and Basel occupying the third, fourth, and fifth spots. Copenhagen is the only other European city in the top 20, while Paris and Berlin are ranked 29th and 31st, respectively.

UK cities outside of London fare much better. Edinburgh has dropped to 53rd from last year’s 33rd position, Glasgow is at 68th, Birmingham at 78th, and Aberdeen has fallen to 82nd from 37th.

The cost of housing significantly impacts the cost-of-living rankings. Between 2023 and 2024, there was notable volatility in housing rental prices worldwide, with significant variations between cities.

A key factor driving the cost of housing is the supply shortage relative to demand. This mismatch is pushing prices up, particularly for international assignments.

The index revealed that average rents in London increased by 4%, New York by 7%, and Dubai by 21%. These rising costs are putting additional pressure on businesses, which must consider these expenses when relocating staff.

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What you need to know before taking on the responsibility

 Deciding to become an employer is a significant milestone for any business. It marks a phase of growth and the need for additional support.

In this guide, we will explain what becoming an employer entails, the steps required, the key considerations, and the changes that come with this decision. We’ll also consider the pros and cons to help you make an informed choice.

What does becoming an employer entail?

For many businesses, the transition to an employer signals growth and expansion. However, it also introduces new challenges and responsibilities.

Becoming an employer means managing staff, including hiring, ensuring their wellbeing, handling wages and tax deductions, and complying with employment laws.

Hiring and managing staff

When you decide to become an employer, one of your primary responsibilities is hiring the right people. This process involves advertising job vacancies, conducting interviews, and selecting suitable candidates. Businesses increasingly focus on hiring employees with the right skills who fit the company culture well. This approach helps reduce turnover and foster a positive work environment.

Ensuring employee wellbeing

Employee wellbeing has become a significant focus for UK employers. Recent legislative changes, such as the Employment Rights (Flexible Working) Act 2023, allow employees to request flexible working arrangements from day one. This flexibility can include part-time work, remote working, or compressed hours. Employers must respond to these requests within two months and provide valid reasons if they deny any request.

These changes highlight the importance of considering employee well-being and maintaining a supportive work environment.

Training and development

One critical consideration of becoming an employer that often gets overlooked is the importance of employee training and development. Investing in your employees’ growth enhances their skills and improves your business’s overall success.

According to a 2023 study by LinkedIn, companies that provide extensive training opportunities see a 24% higher profit margin than those that spend less on employee development.

Training can range from onboarding sessions that help new hires understand their roles and company culture, to ongoing professional development programs that keep employees up-to-date with industry trends and technologies. It’s essential to create a structured training plan that includes mandatory and optional courses catering to the different needs of your workforce.

Moreover, building a culture of continuous learning can improve employee engagement and retention. A report by the Chartered Institute of Personnel and Development (CIPD) found that 94% of employees would stay longer at a company if it invested in their career development. Therefore, as an employer, prioritising training and development boosts productivity and builds a loyal and skilled workforce, driving your business towards long-term success.

Handling wages and tax deductions

As an employer, you are responsible for calculating and distributing wages, including making the necessary tax and NI deductions. The Government has introduced significant changes to the National Minimum Wage (NMW) and National Living Wage (NLW) rates, effective April 2024. The top rate of NLW will now apply to workers aged 21 and over, representing the largest-ever cash increase to the minimum wage.

Ensuring compliance with these new rates is crucial to avoid legal issues and financial penalties.

Compliance with employment laws

Compliance with employment laws is a critical aspect of becoming an employer. The UK has seen a flurry of changes in employment legislation set to take effect in 2024. For instance, the Carer’s Leave Act 2023 entitles employees to one week of unpaid leave per year to care for a dependent, starting from April 2024.

Additionally, the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 extends redundancy protection for employees on family leave to 18 months.

Employers must stay updated with these changes to ensure they meet their legal obligations. Non-compliance can result in significant penalties and damage to the business’s reputation. Therefore, regular training for HR and management teams on the latest employment laws is essential.

Increased responsibilities

Taking on the role of an employer brings a host of new responsibilities. You must ensure a safe and productive work environment, manage payroll efficiently, and handle various aspects of employee relations. Effective management includes hiring the right people, providing necessary training, and addressing any issues promptly.

Becoming an employer involves significant responsibilities and challenges. However, the right preparation and understanding of your obligations can also drive business growth and success. Staying informed about the latest employment laws and maintaining a supportive work environment are key to becoming a successful employer.

Steps to becoming an employer

• Register as an employer with HMRC: The first step is registering with HMRC. This should be done before the first payday. You’ll receive an employer PAYE reference number and accounts office reference number, both of which are essential for managing payroll and reporting to HMRC.

• Set up payroll: Setting up a payroll system is crucial. This system will help you calculate and distribute wages and ensure correct tax and NICs. HMRC offers a free payroll tool called ‘Basic PAYE Tools’, but many businesses use payroll software which can significantly simplify this process.

• Check employment rights: Ensure you understand and comply with employment rights, including minimum wage, working hours, and workplace safety. This protects both you and your employees.

• Draft employment contracts: Every employee should have a written contract outlining their job role, salary, working hours, and other terms of employment. This document is a legal requirement and sets clear expectations for both parties.

• Consider pensions: Employers must provide a workplace pension scheme and automatically enrol eligible employees, although this can be deferred until the employee’s third month of employment. This is part of your responsibilities and is essential for UK law compliance. The employer also has an obligation to submit a ‘Declaration of Compliance’ to the Pensions Regulator.

• Maintain records: Keep accurate records of employee details, pay, and tax information. This helps in managing payroll, and it’s also a legal requirement.

Key considerations

• Legal obligations: Understanding and complying with employment laws is vital. This includes everything from fair hiring practices to ensuring a safe working environment. Noncompliance can result in legal issues and financial penalties. For instance, you must obtain Employers’ Liability (EL) insurance as soon as you become an employer. The policy must provide coverage of at least £5 million and be issued by an authorised insurer.

EL insurance assists in covering compensation costs if an employee is injured or becomes ill due to their work for you.

Failure to have proper insurance can result in a fine of £2,500 for each day you are uninsured. Additionally, you can be fined £1,000 if you do not display your EL certificate or if you refuse to make it available to inspectors upon request.

• Financial impact: Becoming an employer has financial implications. You’ll need to budget for wages, NICs, pensions, and possibly additional costs like recruitment and training.

• Management skills: Effective people management is essential. This includes hiring the right people, training, and handling issues. Good management fosters a positive work environment and improves employee retention.

• Time commitment: Managing staff takes time. From payroll processing to addressing employee concerns, be prepared for an increased time commitment.

What changes when you become an employer?

Increased responsibilities: You’ll be responsible for your employees’ welfare, including ensuring a safe and productive work environment.

Regulatory compliance: You must stay current with employment laws and regulations. This includes keeping records, filing returns, and ensuring workplace compliance.

Payroll management: Managing payroll becomes a significant part of your routine. This includes calculating wages, deducting taxes, and handling employee benefits.

Employee management: You’ll need to manage various aspects of employee relations, from recruitment to performance appraisals and conflict resolution.

Pros and cons of becoming an employer

Pros:

• Business growth: Hiring staff allows you to scale your business and take on more work, potentially increasing revenue. • Skill diversity: Bringing in new employees can introduce fresh skills and ideas, enhancing your business’s capabilities.

• Workload distribution: Delegating tasks to employees can free up your time, allowing you to focus on strategic planning and growth.

• Employee loyalty: Providing jobs can build loyalty and a strong team culture, which is beneficial for long-term success.

Cons:

• Increased costs: Hiring staff means additional costs, including wages, taxes, and benefits. This can be a significant financial commitment.

• Administrative burden: Managing payroll, compliance, and employee relations adds to your administrative tasks.

• Risk of disputes: Employment relationships can sometimes lead to disputes, which can be time-consuming and costly.

• Training and development: Investing in employee training and development requires time and resources.

Help is available

Managing staff, ensuring compliance with ever-evolving employment laws, and handling payroll are just a few of your many responsibilities. This is where the expertise of an accountant or professional advisor becomes invaluable.

Professionals can set up and manage your payroll system, ensuring that wages, tax deductions, and NICs are accurately calculated and compliant with current laws.

They provide essential guidance on legal requirements, such as drafting employment contracts and setting up workplace pensions, and help you stay updated with legislative changes, such as those coming into effect in 2024.

Additionally, accountants offer strategic financial planning, advising on budgeting for new expenses like wages and benefits and optimising tax efficiency. Their insights can help you make informed decisions that align with your business growth objectives.

By leveraging their expertise, you can focus on your core business activities, confident that your employer responsibilities are managed professionally and efficiently. This support fosters a thriving work environment and ensures your business’s long-term success.

Wrapping up

Becoming an employer is a major step in driving business growth and success. However, it comes with significant responsibilities and challenges.

By understanding the steps, legal requirements, and considerations, you can make an informed decision that aligns with your business goals. Balancing the pros and cons will help ensure you are ready for the transition and can manage the new responsibilities effectively.

Remember, thorough preparation and understanding of your obligations are key to becoming a successful employer.

If you’re considering becoming an employer, contact us for support to ensure a simplified transition.

Capital gains tax explained

Capital gains tax (CGT) is the tax on the profit you make when you sell or ‘dispose of’ an asset that has increased in value during your ownership. It is important to note that the tax is levied only on the gain made from the sale, not the total sale price.

CGT is important whether you’re selling property, shares or valuable personal items, as each type of asset has different rules and rates. For example, selling a second home or investment property can attract a higher rate of CGT than other assets. Certain allowances and exemptions can also make a big difference to the amount of tax you pay.

This guide will examine CGT in-depth, covering everything from how it is calculated to the allowances, exemptions, and reliefs available. By understanding these subtleties, you can plan better, be tax-compliant, and potentially save a lot of money.

An overview of capital gains tax

CGT is typically payable when you sell or dispose of an asset for more than you purchased it for. The tax is levied on the profit (gain) made from the sale, not the total sale price. For instance, if you purchase artwork for £10,000 and sell it for £50,000, CGT is calculated based on the £40,000 gain, not the full £50,000.

Disposal includes selling the asset, giving it away as a gift, transferring it, exchanging it, or receiving compensation for it, such as an insurance payout. Understanding what constitutes a disposal is essential to ensure compliance with CGT regulations.

Current CGT allowances

You only pay CGT on gains exceeding your Annual Exempt Amount (AEA). For the 2024/25 tax year, this threshold is set at £3,000. This means that if your total gains within a tax year are below £3,000, you won’t have to pay CGT. This threshold was reduced from £6,000 in April 2024, making it more likely that individuals will incur CGT on their gains.

It’s also worth noting that these allowances are not transferable between spouses or civil partners. Each individual has their own allowance, and any unused allowance cannot be carried forward to future tax years. However, assets can be transferred between spouses/civil partners with no CGT implications, thus allowing a couple to utilise one another’s allowances.

CGT rates

The rate of CGT you pay depends on your overall taxable income and the type of asset sold. Here’s a detailed look at how the rates apply:

• Basic Rate Taxpayers: If your annual income is under £50,270, you will pay 10% on most gains and 18% on gains from residential property.

• Higher Rate Taxpayers: If your annual income exceeds £50,270, the rates increase to 20% on most gains and 24% on gains from residential property.

The rates are structured to align with income tax bands, ensuring that those with higher incomes pay a higher rate on their capital gains. This progressive structure aims to provide a fair tax system where the wealthier contribute more.

Assets that fall under CGT

Personal possessions

Personal possessions such as artwork, jewellery, and antiques are subject to CGT if their value exceeds £6,000. Therefore, if you plan to sell a valuable heirloom or an art piece that has appreciated in value, it’s crucial to consider the potential tax implications. However, some personal possessions are exempt from CGT, such as:

• Cars: Almost all cars are exempt from CGT, regardless of their value.

• Wasting assets: Items with a useful life of 50 years or less, such as certain machinery and equipment, are not subject to CGT as long as they are not used for business purposes.

Understanding which items are taxable and which are not can help you make informed decisions when selling personal possessions

Property

CGT primarily applies to properties that are not your main home. This includes:

• Second homes: Properties used as holiday homes or secondary residences.

• Rental properties: Real estate held for rental income.

• Business premises: Properties used for business purposes.

Your primary residence is generally exempt from CGT due to Private Residence Relief (PRR). Jointly owned properties are taxed only on your share of the gain, so it’s important to understand your ownership percentage.

Shares

Share investments are usually subject to CGT when sold for a profit. However, shares held in tax-efficient accounts such as Individual Savings Accounts (ISAs) or Personal Equity Plans (PEPs) are exempt. Specific employee share schemes, like the Enterprise Management Incentive (EMI), also offer exemptions.

Business assets

If you own a business, certain business assets are liable for CGT. This includes:

• Machinery: Equipment used in business operations.

• Intellectual property: Patents, trademarks, and other intangible assets.

When selling a business or restructuring, understanding the CGT implications is crucial for effective financial planning.

CGT exemptions

Main residence

Private Residence Relief (PRR) exempts your primary home from CGT. To qualify, the property must be your main residence for the entire period of ownership. However, there are specific rules and conditions:

• Letting Relief: If part of the property was let out, you might still qualify for partial relief.

• Periods of absence: Certain periods when you were not living in the home may be exempt, provided specific criteria are met.

Gifts

Gifts to your spouse or civil partner and gifts to charities are exempt from CGT. This can be a strategic way to transfer assets without incurring tax liabilities.

Tax-efficient investments

Interest from ISAs, PEPs, and specific share sales are outside the scope of CGT. These tax-efficient investment vehicles can help grow your wealth without triggering CGT.

Investing in the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs) can also provide significant CGT exemptions. These schemes offer attractive tax reliefs, including the potential for CGT exemption on gains from investments held for a specified period, making them highly beneficial for investors looking to minimise their CGT liabilities.

Capital losses and reliefs

If you incur a loss on the sale of an asset, you can offset this loss against any gains, reducing your overall CGT liability. Here are some key points to consider:

• Claiming losses: You must claim the loss in your tax return to offset it against gains.

• Carry forward: Unused losses can be carried forward to future tax years, providing flexibility in tax planning.

Professional advice can help ensure you maximise the benefit of these reliefs.

When must CGT be reported and paid?

Reporting and paying CGT must be done by specific deadlines, which vary depending on the type of asset and the nature of the disposal. Adhering to these deadlines is crucial to avoid penalties and interest charges.

Reporting and payment deadlines for UK residential property

For disposals of UK residential property, the reporting and payment deadlines have been updated recently to ensure timely compliance. The key deadlines are:

• For disposals completed on or after 27 October 2021: You must report the sale and pay any CGT due within 60 days of the completion date. This applies to the sale, gift, or transfer of the property.

• For disposals completed between 6 April 2020 and 26 October 2021: The reporting and payment deadline was 30 days from completion. These tighter deadlines aim to ensure that tax liabilities are settled promptly and reduce the risk of non-compliance.

Reporting and payment deadlines for other assets

For other types of assets, such as shares, personal possessions, and business assets, the CGT reporting and payment process is slightly different:

• Self assessment tax return: If you are already filing a self assessment tax return, you should include your CGT calculations in your annual return. The deadline for submitting your self assessment tax return online is 31 January, following the end of the tax year in which the disposal occurred. If you file a paper return, the deadline is 31 October of the same year.

• Real-time capital gains tax service: HMRC offers a ‘real-time’ CGT service for more immediate reporting. This allows you to report gains and pay any CGT due before the end of the tax year, providing a convenient option for those who prefer not to wait until their annual tax return.

Reporting using the ‘real-time’ capital gains tax service

The ‘real-time’ Capital Gains Tax service allows individuals to report and pay CGT liabilities promptly. This service is particularly useful for those who prefer not to wait until the end of the tax year to include their CGT calculations in their self assessment tax return. By using the real-time service, you can ensure that your CGT obligations are met efficiently, reducing the risk of penalties and interest charges for late payment. This service also simplifies the process, allowing for immediate reporting and payment, which can be advantageous in managing your tax affairs effectively.

 The importance of timely reporting

Failing to report and pay CGT on time can result in significant penalties and interest. HMRC imposes these penalties to encourage timely compliance and accurate reporting. For instance, if you miss the 60-day deadline for a residential property sale, you could face initial penalties and daily charges until the tax is paid.

Non-residents and CGT reporting

Non-residents disposing of UK property must also comply with reporting requirements, regardless of whether they owe any CGT. If selling residential property, they must report the disposal within the same 60-day window. For other types of assets, the general rules for CGT reporting and self assessment apply.

By understanding these deadlines and methods, you can ensure compliance with CGT regulations, avoid penalties, and manage your tax liabilities efficiently.

How accountants can assist with capital gains tax

CGT can be daunting, but professional accountants can provide invaluable assistance in managing and mitigating your CGT liability. Here are some key ways accountants can help:

Accurate calculation of gains: Accountants ensure precise calculation of capital gains by identifying deductible expenses and applying all available reliefs and allowances. This minimises your taxable gain and maximises the benefits of tax exemptions.

Strategic tax planning: Professional accountants offer strategic advice on the timing of asset sales to maximise tax allowances and offset losses against gains. They also help utilise specific reliefs like Entrepreneurs’ Relief to reduce CGT rates on qualifying business assets.

Compliance and reporting: Accountants ensure compliance with HMRC regulations by preparing and submitting accurate tax returns and reports. They help maintain comprehensive records, meet all reporting deadlines, and avoid penalties and interest charges.

Advice on complex transactions: For complex transactions such as business asset sales, mixed-use properties, and jointly held assets, accountants provide expert guidance on accurately calculating CGT liability and applying for relevant reliefs.

Estate planning and inheritance: In estate planning, accountants develop strategies to minimise CGT on inherited assets. They advise on gifting strategies and using trusts to reduce tax liabilities for heirs.

Ongoing support and advice: Accountants provide ongoing support by keeping up with changes in tax legislation and offering proactive advice to adjust strategies and minimise future CGT liabilities. Professional accountants play a crucial role in managing capital gains tax efficiently. Their expertise in tax planning, compliance, and strategic advice helps optimise financial outcomes and ensure full compliance with tax regulations. For personalised CGT assistance, contact us; our expert team is dedicated to helping you achieve your financial goals while managing your tax obligations effectively.

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£46.9 billion was lent during Covid under the scheme. While nearly three-quarters of borrowers are on track to repay, a significant £40.9bn remains outstanding.

The amount of bounce-back loans fully repaid is just 13% of the £46.9bn handed out to companies during the pandemic.

Despite £46.9bn being handed out in bounce back Loans during the pandemic, only 13% have been fully repaid. While nearly three-quarters of borrowers are on track to repay, a significant £40.9bn remains outstanding. Across all three Covid loan schemes, totalling £76.9bn, £21.5bn has been fully repaid.

The Government has banned 831 company directors for fraudulent Covid loan applications, an 80% increase from the previous year. Banks refused £2.2bn worth of loans due to concerns about repayment, preventing further potential losses.

While bounce back loans accounted for most of the loans, fraud was more prevalent in smaller business loans. Larger businesses utilising the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruptions Loan Scheme (CLBILS) saw less fraud. Of the £25.8bn lent through CBILS, 38% has been repaid, with 1.49% in arrears and 1.2% defaulted. CLBILS, with £4.5bn lent, saw no reported fraud.

Dean Beale, chief executive at the Insolvency Service, said:

“Tackling bounce back loan misconduct is a key priority for the Insolvency Service, and we are determined to use all our available powers to remove rogue company directors from the corporate arena.”

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The average cost of a home now stands at £264,249, marking a 1.3% increase year-on-year.

The housing market is showing signs of resilience, with Nationwide reporting a 0.4% rise in house prices in May compared to April. The average cost of a home now stands at £264,249, marking a 1.3% increase year-on-year. According to Nationwide’s index, this rebound follows month-on-month price drops of -0.4% in April and -0.2% in March.

Other lenders have also observed modest falls in recent months, reflecting concerns over subdued demand due to higher mortgage rates. Despite these worries, the recent figures indicate a potential stabilisation in the market.

Inflation fell to 2.3% in April, the lowest level in nearly three years. However, this rate was higher than anticipated by economists and the Bank of England, leading analysts to suggest that an interest rate cut is now less likely in June or August.

Nationwide’s chief economist, Robert Gardner, said:

“The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the recent rise in longer-term interest rates.

“Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”

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A survey by RSM revealed that 40% of media firms had filed an R&D claim in the past year, but only 24% of these were approved without dispute.

A recent crackdown on the abuse of the research and development (R&D) tax relief regime has significantly impacted the media sector, with HMRC questioning three out of four claims. A survey by RSM revealed that 40% of media firms had filed an R&D claim in the past year, but only 24% were approved without dispute.

One-third of these claims were eventually approved after an initial challenge by HMRC, while another third were outright refused in the last 12 months. This contrasts sharply with the overall statistic that only 20% of R&D claims are challenged by HMRC, compared to 55% in the media sector.

The media industry encompasses various sectors, including audio, music, film and TV companies, marketing, advertising and communications agencies, publishers, and gaming companies.

In the 2021/22 tax year, 90,315 R&D claims resulted in £7.6 billion in tax relief. However, less than 1,000 R&D claims came from the entire arts, recreation, and recreation sector, totalling approximately £100 million. In comparison, the manufacturing sector had around 21,000 claims and received over £1.5bn in tax relief.

Notably, 95% of media industry respondents reported making a claim for some form of tax relief.

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Provisional claimants are urged to make a valid claim by 31 January 2025.

 HMRC is writing to taxpayers who made a provisional business asset roll-over relief (ROR) claim on asset sales in 2020/21 and haven’t replaced it with a valid claim. The deadline for making a valid claim is 31 January 2025. If a valid claim isn’t made by then, HMRC will withdraw the provisional claim, making the deferred capital gains tax (CGT) payable.

Taxpayers may claim ROR when selling a business asset if they buy a qualifying asset within a set period. This claim defers CGT on the sale. If taxpayers intend to buy a qualifying asset but haven’t done so when needing to claim ROR, they can make a provisional claim. They must replace this with a valid claim once they buy the asset.

HMRC advises taxpayers to respond if they have bought or will buy a qualifying asset by 31 January 2025 and notify HMRC by completing form HS290 for 2020/21. If unable to use the form, they should reply to HMRC’s letter with the requested information.

HMRC has also urged claimants to contact HMRC now if they haven’t bought a qualifying asset and don’t intend to by 31 January 2025. HMRC will withdraw the provisional claim and send an assessment for any owed tax and interest. Prompt action will reduce the interest payable.

HMRC may extend the period to acquire the qualifying asset, with conditions outlined in their letter. Claims made after 31 January 2025 will be considered on a case-by-case basis.

Later in the year, HMRC will write to taxpayers who haven’t replaced provisional claims for 2021/22. The deadline for valid claims for 2021/22 is 31 January 2026.

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