Ranas Accountancy

09/05/2025

Understanding Taxable vs. Non-Taxable State Benefits in the UK

Not all UK state benefits are tax-free. Being aware of which benefits are taxable can help you manage your finances effectively and avoid unexpected tax liabilities.

✅ Taxable State Benefits

According to HMRC, the following benefits are subject to Income Tax:
• State Pension
• Carer’s Allowance
• Jobseeker’s Allowance (JSA)
• Contribution-based Employment and Support Allowance (ESA)
• Incapacity Benefit (after the 28th week)
• Bereavement Allowance (formerly Widow’s Pension)
• Widowed Parent’s Allowance
• Pensions from the Industrial Death Benefit scheme 

Reference: HMRC - Tax-free and taxable state benefits

❌ Non-Taxable State Benefits

The following benefits are generally exempt from Income Tax:
• Universal Credit
• Personal Independence Payment (PIP)
• Disability Living Allowance (DLA)
• Maternity Allowance
• Attendance Allowance
• Bereavement Support Payment
• Housing Benefit
• Pension Credit
• Winter Fuel Payments & Christmas Bonus
• Child Benefit (Note: may be subject to the High Income Child Benefit Charge if your income exceeds £60,000)  

Reference: HMRC - Tax-free and taxable state benefits

Understanding the tax implications of these benefits ensures compliance with HMRC regulations and aids in accurate financial planning.

23/04/2025

16/04/2025

The Furnished Holiday Letting (FHL) regime has been abolished effective 6 April 2025.
Previously, married couples or civil partners could split FHL income in any proportion, regardless of actual ownership shares.​
Now, income from jointly owned properties will default to a 50:50 tax split unless unequal beneficial ownership is declared.​
To maintain an unequal income split, couples must:​

1. Hold the property as tenants in common with unequal beneficial interests.​
2. Jointly submit Form 17 to HMRC within 60 days of signing.
3. Note: Form 17 cannot be backdated and only affects income from the date of the last signature.

Example Scenario

Mark and Jess, a married couple, own an FHL property equally.​

They previously split profits 90:10 in favour of Paul, a basic rate taxpayer.​

Post-abolition, without action, profits will be taxed 50:50, potentially increasing their overall tax liability.​

To retain the 90:10 split, they must adjust their ownership shares and submit Form 17 accordingly.​

📣 Takeaway

If you’re a married couple or civil partners with jointly owned FHL properties and wish to maintain an unequal income split, review your ownership structure and consider submitting Form 17 to HMRC promptly.

04/04/2025

The 2025/26 tax year, commencing on 6 April 2025, introduces several significant changes affecting both employers and employees in the UK. Here's an overview:​
The Gazette

1. Increase in Employer National Insurance Contributions (NICs)
Rate Change: The secondary Class 1 NIC rate for employers will rise from 13.8% to 15%. ​
The Gazette

2. Reduction in NIC Secondary Threshold
Threshold Adjustment: The point at which employers start paying secondary NICs will decrease from £9,100 to £5,000 annually. ​
Reuters

3. Increase in Employment Allowance
Allowance Boost: The maximum Employment Allowance will increase from £5,000 to £10,500, providing eligible employers with greater relief on their NIC liabilities. ​

4. Changes to Statutory Pay Rates
Statutory Maternity, Paternity, Adoption, Shared Parental, and Parental Bereavement Pay: These rates will increase from £172.48 to £180.00 per week.​

Statutory Sick Pay (SSP): The rate will rise from £109.40 to £113.50 per week. ​

5. Adjustments to Income Tax Personal Allowance and Thresholds
Personal Allowance: Remains at £12,570.​

Basic Rate Limit: Remains at £37,700.​

Higher Rate Threshold: Remains at £50,270. ​

6. National Minimum and Living Wage Increases
National Living Wage (for workers aged 23 and over): Increases from £10.42 to £12.21 per hour. ​

7. Making Tax Digital for Income Tax
Implementation Delay: Mandatory use of Making Tax Digital for Income Tax has been postponed to 6 April 2026. Voluntary sign-ups are available. ​
GOV.UK

8. Changes to Tax Return Requirements
Simplified Filing: Up to 300,000 taxpayers with income from self-employment or property below £30,000 will no longer be required to file a tax return. ​
GOV.UK

9. VAT Exemption Cap for Listed Places of Worship
Cap Introduction: A new cap of £25,000 on VAT exemptions for major repair and restoration works at listed places of worship has been introduced, potentially impacting funding for significant projects. ​

These changes underscore the importance of staying informed and planning accordingly for the upcoming tax year.

24/08/2024

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07/04/2024

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29/03/2024

Criteria for new mortgage for FTB with just £5,000 deposit.

09/03/2024

Major changes announced in the spring budget 2024.

Personal Tax
• National Insurance contributions (NICs) – the government has announced a cut to the main rate of Class 1 employee NICs from 10% to 8% from‌‌‌ ‌‌6‌‌‌ ‌‌April 2024, and a further cut of 2 pence to the main rate of Class 4 self-employed NICs from 6‌‌‌ April‌‌‌ 2024, taking this to 6%. Alongside these cuts, the government announced that it will consult on Class 2 NICs abolition later this year
• Tax rules for non-UK domiciled individuals – from‌‌‌ 6‌‌‌‌‌‌ April‌‌‌ 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals. This will be replaced from 6‌‌‌ ‌‌April 2025 with a new 4-year foreign income and gains (FIG) regime for individuals who become a UK tax resident after a period of 10 years of non-UK tax residence
• High Income Child Benefit Charge (HICBC) – the government has announced it will raise the HICBC income threshold from £50,000 to £60,000 from 6‌‌‌ April‌‌‌ 2024, and the taper will be extended up to £80,000. The government intends to move to a system based on household rather than individual income by April‌‌‌ 2026, and will consult in due course
• Capital Gains Tax (CGT) – the government will legislate to reduce the higher CGT rate for residential property disposals from 28% to 24%. The change will take effect for disposals that take place on or after 6‌‌‌ April 2024. The lower rate of 18% will remain unchanged
• abolition of Furnished Holiday Lettings – the government will repeal the current rules for Furnished Holiday Lettings (FHL) for individuals and corporates from April 2025, and will publish draft legislation in due course
• UK Individual Saving Account (ISA) – the government has announced that it intends to introduce a UK ISA with a new £5,000 allowance, in addition to the existing ISA allowance, and has launched a consultation on its design and implementation
• improving Payment Options for Income Tax Self Assessment (ITSA) – the government will improve and simplify HMRC’s digital services to support Income Tax Self Assessment taxpayers seeking to pay tax in instalments

Business Tax
Tax reliefs – the government has announced measures related to tax reliefs which include:
• New permanent rates of relief (40% and 45%) for theatre, orchestra and museums and galleries exhibition tax, and additional support for independent film through a new UK Independent Film Tax Credit at a rate of 53% for films with budgets under £15 million that meet the conditions of a new British Film Institute test. In addition, the government is providing a 5% increase in tax relief for UK visual effects costs in film and high-end TV, under the Audio-Visual Expenditure Credit (AVEC)
• HMRC will establish an expert advisory panel to support the administration of research and development (R&D) tax reliefs

Excise and Duties
• Value Added Tax (VAT) – the government has announced a number of VAT related measures, including:
◦ the VAT threshold will increase to £90,000 from 1‌‌‌ April‌‌‌ 2024, and the level at which a business can apply for de-registration will increase from £83,000 up to £88,000
◦ following its commitment in Autumn Statement 2023, the government will consult in April 2024 on the VAT implications for the private hire vehicle sector
• Vaping Duty – the government will introduce a new duty on va**ng products in October 2026, and has launched a consultation on the detailed design and implementation of the duty, which will close on 29‌‌‌ ‌‌May 2024
• Stamp Duty Land Tax (SDLT) – a range of SDLT measures have been announced, including:
◦ First Time Buyers’ Relief will be extended to individuals who use nominee and bare trust arrangements when buying a new lease over a dwelling that they intend to use as their main or only residence
◦ the government has announced the abolition of Multiple Dwellings Relief, a bulk purchase relief within the SDLT rules available on the purchase of two or more dwellings. The government will engage with the agricultural industry to determine if there are any particular impacts for the sector that should be considered further

Tackling the Tax Gap
• Cryptoasset Reporting Framework (CARF) – the government has launched a consultation to seek views on how best to implement the Cryptoasset Reporting Framework and Amendments to the Common Reporting Standard

Agents and intermediaries
• Strengthening the regulatory framework in the tax advice market – the government has published a consultation on 2 potential changes to raise standards in the tax advice market, including:
◦ strengthening the regulatory framework, by exploring a proposal to require tax advisers to join a professional body
◦ requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. The government will also explore making it quicker and easier for tax advisers to register with HMRC

13/02/2024

As National Apprenticeship Week comes to a close, AAT President Kevin Bragg reiterates the power of apprenticeships in cultivating talent and benefiting businesses

07/02/2024

Company directors suspected of earning dividends without declaring their taxable income are being contacted by HMRC

Company directors suspected of earning dividends without declaring their taxable income are being contacted by HMRC

06/02/2024

A director of a non-existent courier business from London has been sentenced after using a £50,000 bounce-back loan for his own personal use.

A director of a non-existent courier business from London has been sentenced after using a £50,000 bounce back loan for his own personal use

07/12/2023

If you are looking for help to file your Self Assessment Return, we can help you to successfully file the return on your behalf.

19/04/2023

What are the two methods of accounting?

Cash Accounting
Accrual Accounting

Let’s look at this example; Muller LTD sold goods worth £500 on 2 Dec 2021 on credit
but the cash of £500 was received on 22 Jan. 2022.

If the transaction was recorded on the day the money was received i.e. 22 Jan 2022, this is called CASH ACCOUNTING. It is the method of accounting where revenues are recorded in the period they are made and expenses recorded in the period they are paid. This method is straightforward but does not give a true view of operational activities, therefore GAAP does not require companies to use CASH ACCOUNTING.

If the sale was recorded on the day the transaction actually occurred i.e. 2 Dec 2021, this is called ACCRUAL ACCOUNTING. It is a method where transactions are recorded when they actually occur as against when payments or receipts were made. This is the method mostly corporations are required to use.

ACCRUAL CONCEPT leads to RECEIVABLES and PAYABLES.

RECEIVABLES are the monies an organization is expected to receive on a later date. RECEIVABLES are also called DEBTORS (Assets of the organisation)

For example, Muller LTD sold goods worth £500 on 2 Dec 2021 on credit, the cash of £500 was received on 22 Jan 2022. The year-end of Muller LTD was 31 Dec 2021.

The accounting transaction On 2 Dec 2021 will be

Dr Receivables: £500.
Cr Sales: £500

Receivables are assets because they are the monies owned by the company and yet to be received. They are shown on BALANCE SHEET.

Examples of Receivables:
-Sales made on credit while the money is not yet received
-Services rendered while the payment hasn’t been made
-Short term loan given to an employee or a third party
-Multiple deductions on a single bank transfer that have not been returned. Etc

PAYABLES are payments an organization needs to make on a later date. Payables usually occur when expenses are due but not yet paid.

For example, Muller LTD pays monthly office rent of £1,000 before the end of the month, but at the year end of the company 31 Dec 2021 Muller LTD has not yet paid the rent for Dec 2022.

As at 31 Dec 2021 £4,000 of rent was unpaid.

Dr Expense: £4000
Cr Payables: £4,000

Payables are liabilities because they are amounts owed by the company and therefore, they are Balance Sheet items. Payables are also called CREDITORS

Examples of Payables:

-Expenses due but not yet paid
-Unpaid invoices received from suppliers
-Bank overdraft
-Sales return whose refunds have not been made
-Tax due etc

10/04/2023

Attention all freelancers, self-employed individuals, and sole traders! It's that time of the year again where we need to start submitting our individual self-assessment tax return.

Don't forget that the deadline for submitting your tax return for the previous tax year is 31st Jan 2024. So, make sure you've got everything in order and ready to go.

Remember, filing your tax return accurately and on time is crucial to avoid any penalties or legal consequences. If you're unsure about how to complete your tax return, seek professional advice to ensure you're doing it correctly.

Let's get this done and dusted, and start the new tax year with a clean slate!

30/12/2022

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