HMRC has launched a letter campaign for companies that may have miscalculated corporation tax marginal relief on their returns.

Any business receiving a letter must reply within 30 days, even if it believes its return is correct. Ignoring the letter could lead to a compliance check and potential penalties.

The campaign focuses on companies with ‘associated companies’, where ownership or control links reduce the profit limits for claiming marginal relief. HMRC’s letter states: “We have information that shows your company has associated companies, but hasn’t declared them when claiming marginal relief. Having associated companies reduces the taxable profit limits for claiming marginal relief. This means your company may owe more corporation tax.”

Marginal relief applies to taxable profits between £50,000 and £250,000. Since April 2023, earnings above £250,000 have been taxed at 25%, those below £50,000 at 19%, with marginal relief easing the transition between the two rates. The £50,000 and £250,000 thresholds must be divided proportionately where associated companies exist.

Businesses should review all corporation tax returns for periods including and following 1 April 2023. If a return is incorrect and within 12 months of the statutory filing date, it should be amended online. Where the error falls outside this window, HMRC advises making a voluntary disclosure.

Letters will continue to be issued until October 2025, so affected companies are strongly advised to speak with a qualified tax adviser or accountant to ensure all filings are accurate.

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How to ensure financial success

Selling or passing on your business is one of the biggest financial events you will ever face. The decision to step away from a company you have built carries significant cash, tax and lifestyle consequences. With the right groundwork, you can structure the deal to meet your goals, move funds into vehicles that match your risk appetite and leave enough liquidity for life after work.

Early preparation also gives you time to resolve any compliance issues, strengthen your accounts and present a track record that attracts the highest possible price. By modelling different deal options now, you can see how each one affects your net proceeds, pension limits and inheritance-tax position. Planning ahead lets you use reliefs that are still available – such as business asset disposal relief and the frozen income tax thresholds – before any future Budget changes them. It also allows your family to understand the financial shape of the transaction and to update wills, trusts and insurance where needed.

This guide explains the practical steps to follow, from setting objectives to investing the proceeds, and highlights the tax rates, allowances and valuation trends that apply in the 2025/26 UK tax year. We hope it gives you a clear starting point and prompts the conversations that will lead to a smooth, profitable exit.

Set clear objectives long before you market the company

Most owners think first about headline price, but three other factors deserve equal weight.

1. Deal structure: Will you accept staged payments, an earn-out or a loan-note element? Earn-outs featured in more than 60% of UK small or medium-sized enterprise (SME) transactions reported by BDO during 2024, mainly to bridge price expectations in a volatile market. Staged payments shift risk: you may pay less tax up front, but you rely on the buyer’s future performance.
2. Post-sale income: Draw up a personal cashflow forecast that covers at least 20 years. Include inflation and remember that the full new state pension is £230.25 a week in 2025/26.
3. Legacy: Decide whether you want the business to remain independent, merge with a larger group or become employee-owned. More than 2,250 UK companies are now employee-owned, up from fewer than 150 in 2014, showing the model’s growing appeal.

Putting these goals on paper early gives your advisers a clear brief and avoids late-stage disagreements among shareholders.

Understand how buyers will value you

Private-company acquirers usually apply an earnings multiple – most often applied to EBITDA (earnings before interest, taxes, depreciation and amortisation) – adjusted for non-recurring items. The median EBITDA multiple for UK SMEs rose to 5.4 × in 2024, up from 5.0 × the year before, reflecting stronger buyer confidence. A robust valuation exercise should:

• normalise earnings (for example, remove one-off Covid grants or founder salaries above market rate)
• highlight growth drivers, such as recurring revenue or protected intellectual property
• benchmark the resulting profit against sector peers so that buyers focus on performance, not perception.

In certain instances where EBITDA is not deemed the most appropriate metric, turnover or discounted future cashflows may instead be used.

Put your records in order and pre-empt due diligence questions

Buyers usually ask for five years of data. Common stumbling blocks include deferred VAT, undocumented research and development (R&D) claims and missing employment contracts. Tackling these in advance avoids price chips later and signals professionalism.

A written “data-room index” that lists every file, folder and version helps keep the sales process on track and reduces professional-fee overruns.

Know your personal tax bands and allowances for 2025/26

Note: Different figures apply for Scotland.

All thresholds are frozen until at least April 2026, which means fiscal drag is pushing more income into the 40% and 45% bands each year. If you expect part of the sale consideration to be paid across two tax years, you may be able to use two sets of allowances.

Capital gains tax on a share sale

From 6 April 2025 the CGT rates on most assets are 18% within the basic-rate band and 24% above it. Residential property sales attract the same rates.

Business asset disposal relief (BADR)

• Lifetime limit: £1m
• Rate: 14% for disposals on or after 6 April 2025
• Qualifying period: two years of 5% shareholding and voting rights.

If you expect to make several qualifying disposals, consider whether accelerating one or more completions before 6 April 2026 could save tax. Gains that complete up to 5 April 2026 are taxed at 14%; from 6 April 2026 the Business Asset Disposal Relief rate on qualifying gains within your £1 million lifetime allowance is scheduled to rise from 14% to 18%. Gains that exceed the £1 million limit will instead be taxed at the standard CGT rates (currently 18%/24%). If you expect to realise more than £1 million of qualifying gains, consider whether accelerating part of the sale before 6 April 2026 could reduce the tax on the first £1 million.

Corporation tax steps before you advertise the sale

The main corporation tax rate is 25% for profits above £250,000. Companies with profits of £50,000 or less still pay 19%, with marginal relief in between. Practical ways to reduce the effective rate include the following.

• Full expensing: A £500,000 qualifying plant purchase made now saves £125,000 in tax at 25%. The cash benefit shows up in headline EBITDA and, by extension, in the deal multiple.
• Pension contributions: Company payments cut profits and are exempt from employer national insurance contributions (NICs). A £60,000 contribution costs the company £45,000 net after tax, but credits your pension with the full amount.

Watch associated-company rules if you have more than one trading or property subsidiary; grouped profits can push you into the 25% bracket earlier than expected.

Optimise remuneration and pensions in the past two trading years

• Annual allowance: The allowance is £60,000. A taper starts at adjusted income of £260,000 and can reduce the allowance to £10,000.
• Lump-sum allowance: You can normally take up to £268,275 tax free after the lifetime allowance was abolished in April 2024.

Bonus or dividend?

The more tax-efficient route depends on your exact circumstances:

• Corporation tax rate: A bonus reduces taxable profits, saving corporation tax at up to 25% – but it also incurs employer National Insurance at 15%.
• Personal tax band: Above the £50,270 upper-earnings limit, employee NIC falls to 2%; below it, the 8% rate often tips the balance in favour of dividends.
• Dividend allowance: The first £500 of dividends in 2025/26 is tax-free, slightly improving the dividend outcome.
• Cashflow needs and pension strategy: Salary can be sacrificed into pensions NIC-free; dividends cannot.

Consider a holding company or a family investment company

A UK holding company can receive the sale proceeds free of CGT under the substantial shareholding exemption if it has held at least 10% of the trading subsidiary for one year. You then control the pace at which cash comes out – either as dividends over several years or as a capital reduction subject to CGT at your marginal rate. The structure is also helpful if you want to reinvest part of the proceeds in a new venture without paying tax twice.

A family investment company (FIC) lets you:

• gift non-voting shares to adult children while keeping control of voting shares
• ring-fence growth outside your estate for inheritance tax (IHT)
• pool family wealth in a single, professionally managed portfolio.

IHT after the sale

Business property relief (BPR) at 100% applies to shares in an unquoted trading company held for two years, but it falls away once you hold cash. To reinstate protection you can:

• buy AIM shares that qualify for BPR (higher risk)
• invest in enterprise investment scheme (EIS) shares or a venture capital trust (VCT)
• settle cash into a discretionary trust and survive seven years.

The Autumn Budget 2024 confirmed that from 6 April 2026 the 100% rate of BPR will be limited to the first £1m of combined business and agricultural property. Anything above that limit will qualify for relief at 50%. If your estate includes trading shares or other qualifying assets worth more than £1m, consider completing transfers or restructuring before 5 April 2026 while full relief is still available.

Manage the proceeds safely and efficiently

1. Bank security: The Financial Services Compensation Scheme covers £85,000 per person per banking licence. Split large balances across several institutions and consider National Savings & Investments for further protection.
2. Quick diversification: Move surplus cash into short-dated gilt funds or Treasury bills while you design a long-term portfolio. Gains on gilts are CGT-free for individuals.
3. Tax shelters: Fund ISAs (£20,000 each per tax year) and top up pensions if you still have annual allowance space.

Keep an eye on market activity

• The Office for National Statistics recorded 316,000 business births and 309,000 deaths in 2023, the slowest net creation since 2010.
• Buy-side appetite remains strong for established, profitable firms, reflected in the 5.4 × median EBITDA multiple noted earlier.

Fewer startups and the higher cost of new debt mean strategic buyers often prefer to acquire rather than build, which supports pricing for well-run companies.

Exit timetable: Suggested milestones

Next steps

An exit is not just a transaction; it is the point at which years of effort turn into capital that must support the next stage of your life. By starting the process two to three years out, you give yourself time to optimise tax reliefs, improve valuation metrics and build a post-sale investment plan that matches your goals. If you are even thinking about a sale within that horizon, please contact us for an exit-readiness review. We will map out key dates and make sure every pound of value ends up where you want it – working for you and the people who matter to you.

Contact us for help securing a straightforward sale and a strong financial future.

Effective hedging strategies

Inflation may have retreated from the double-digit heights of 2022, but at 3.4% on the CPI measure for May 2025 it still erodes the real value of every pound you hold. Put another way, if prices keep rising at the current pace, an item that costs £1,000 today will set you back about £1,034 this time next year. That silent loss affects personal savings, business reserves and long-term plans alike.

As your accountants, our job is to help you keep more of what you earn and to deploy cash and investments where they work hardest. The good news is that the UK tax code still provides several shelters – ISAs, pensions and targeted allowances – capable of outpacing inflation when used thoughtfully. Add a disciplined approach to cash management and a measured mix of inflation-linked or real-asset investments, and you can preserve, and even grow, purchasing power despite the current backdrop.

This guide sets out practical, tax-year-specific steps so you can act with confidence.

Know the numbers that affect you

Inflation reduces spending power, but tax reliefs can offset a large part of the damage when you use them fully. The table below lists the allowances most readers rely on. We have added two that seldom appear in headline summaries – the personal savings allowance and the marriage allowance – because both can make a material difference to net returns at current interest-rate levels.

How the allowances interact

A higher-rate taxpayer with spare cash might:

1. use their own ISA for equity trackers (capital growth sheltered). To help an adult child with their first-home deposit, gift cash into a Lifetime ISA opened in the child’s own name – only the account holder can use the 25% bonus at purchase.
2. fund a pension up to the £60,000 limit, gaining 40% relief today and tax-free growth thereafter
3. keep the family’s rainy-day cash efficient. Place deposits in the lower-earning (basic-rate) spouse’s name first to use their £1,000 Personal Savings Allowance. After that, hold up to £500-worth of annual interest in the higher-rate taxpayer’s own name to use their £500 allowance. Any surplus beyond those limits can then move into ISAs or joint accounts to avoid taxable interest altogether. (Note: additional-rate taxpayers have no Personal Savings Allowance, so all interest in their name is taxable).
4. realise £3,000 of gains each year to bed-and-ISA shares, resetting the capital gains tax (CGT) base cost without paying tax.

Taken together, those moves put £84,260 under shelter before a single pound of normal taxable investing begins.

Make every tax wrapper work harder

ISAs – front-load where possible

Funding the ISA in April rather than March adds 11 months of tax-free growth. At a 4.5% return that timing difference alone is worth about £825 over five years on the maximum £20,000 allowance. Stocks & shares ISAs remain the long-term growth engine, but cash ISAs still suit the following.

• Short-term targets: A wedding deposit or school fees due inside three years.
• Risk-averse clients: Who would otherwise breach the savings allowance and face tax on interest.

Beware a policy change: media reports suggest ministers are considering capping the cash component of the ISA to £4,000, although no draft legislation yet exists. Monitoring the Autumn Statement will be essential.

Pensions – relief now, inflation-proof income later

Every employee can ask their employer to pay a personal contribution via salary sacrifice. Doing so saves both employee and (usually) employer national insurance (NI); many firms share part of their NI saving, boosting the total invested.

Carry-forward offers a second lever. If you paid only £25,000 into your pension in each of the last three tax years, you have £85,000 of unused relief; add the current £60,000 allowance and, assuming sufficient earnings and no tapering, you could invest up to £145,000 in 2025/26 without breaching the annual allowance rules. That lump sum shelters far more from inflation-driven tax drag than drip-feeding alone.

Lifetime allowance replacement

Since April 2024 the lifetime allowance has been abolished and replaced by two lump-sum limits. That reform removes the fear of an unexpected 55% charge for many savers, so clients who froze contributions earlier can reconsider. We recommend a review for anyone whose fund sat near £1m in 2023/24.

Keep cash competitive

High-street current accounts still pay close to zero, but competition among challenger banks has raised top easy-access rates to 5% AER (Chase saver with boosted rate). Several other providers pay 4.4-4.8%. If you prefer the security of Treasury backing, NS&I’s products remain solid, though the Premium Bond prize-fund rate will trim to 3.60% from August 2025.

A simple three-bucket model works.

1. Immediate access (1-3 months of spending) – keep this in the highest-paying easy-access or current account.
2. Known outgoings (3-12 months) – ladder one-year fixed bonds. The best Moneyfacts-listed bonds pay 4.5-4.6% today.
3. Reserve (1-5 years) – use British Savings Bonds (three-year term now 3.84% AER) or a gilt-backed money-market fund yielding around 4.4%.

Tip for business owners: Corporate treasury portals such as Flagstone and Insignis let limited companies spread deposits across many banks while keeping within the £85,000 FSCS cap.

Add inflation-linked assets

Index-linked gilts

The Debt Management Office issues gilts indexed to the Consumer Prices Index (CPI). Both coupon and principal adjust, so although the running yield is low (-0.3% real on a 2037 linker at the time of writing), the bonds guarantee purchasing-power preservation if held to maturity.

Investors often prefer funds or exchange-traded funds (ETFs) because they:

• remove single-bond risk
• simplify reinvestment of accrued indexation
• qualify for bond-fund exemptions on capital distributions, reducing paperwork outside wrappers.

Remember, indexation lag means gilt cashflows reflect CPI eight months earlier, not the month of payment.

Inflation-linked corporate bonds

National Grid, Network Rail and major utilities have issued bonds linked to the retail prices index (RPI). When held through an inflation-linked corporate bond fund they can improve yield by 0.5-0.8 percentage points versus gilts, but credit risk rises, so keep exposure modest (perhaps 10% of a fixed-income sleeve).

NS&I index-linked savings certificates

These are still the “holy grail” for long-term cash savers thanks to tax-free, RPI-linked returns. No new issues have appeared since 2011, but do not cash in old tranches unless an urgent need arises – any comparable product today sits well below them.

Equities: The long-run inflation hedge

Stocks have beaten UK inflation in 17 of the last 20 rolling 10-year periods. A widely used global all-cap tracker delivered an annualised 6% dividend growth over the past decade, according to MSCI data.

Constructing a resilient share portfolio

Investors who dislike day-to-day volatility can split the equity sleeve between accumulation (reinvested dividends) and income share classes. Reinvested income historically accounts for more than half the FTSE 100’s total return.

Real assets: Property, infrastructure and commodities

Property

Despite higher mortgage costs, the UK House Price Index shows average prices 5.3% higher in the year to April 2025. Direct buy-to-let now faces:

• 20% limit on finance-cost relief
• additional 5% stamp duty surcharge
• Making Tax Digital quarterly reporting from April 2026.

Shares in a real estate investment trust side-step all three and can sit in an ISA. Look for funds with low loan-to-value ratios and inflation-linked commercial leases.

Infrastructure

Many listed infrastructure trusts own roads, schools or renewable-energy assets on government-style concession agreements that uplift revenue each year by CPI or RPI. Discount volatility has widened – some trade 15% below net asset value – offering a margin of safety to income seekers.

Commodities

Broad-basket exchange-traded commodities give exposure to energy, metals and agriculture in one line. Commodities can spike when inflation shocks appear, but they do not produce cashflow, so keep to a single-digit percentage allocation and rebalance annually.

Business owners: Preserve corporate cash and profits

• Shop for better deposit rates: Specialist business accounts now pay up to 4.8% on 95-day notice.
• Consider treasury funds: Short-dated gilt and T-bill money-market funds usually qualify as “cash equivalent” on the balance sheet, providing daily liquidity.
• Use pension contributions tactically: An employer pension contribution is fully deductible, so it saves corporation tax at the company’s rate – 19% on profits up to £50,000, 26.5% on profits between £50,000 and £250,000, and 25% above £250,000 – plus employer National Insurance.
• Salary-dividend mix: Once the £500 dividend allowance is used, compare the net benefit of extra dividends with company-paid pension or a modest salary that triggers NI credits for state pension entitlement.

According to the British Chambers of Commerce Q2 2025 survey, 52% of small and medium-sized enterprises (SMEs) still list inflation as a top concern, confirming that cash-management advice remains highly valued.

Review borrowing strategy

With the Bank Rate currently at 4.25% (as of July 2025), typical five-year fixed residential mortgages hover around 5%. Before fixing, do the following.

• Check early-repayment charges – some lenders cap them at 3% in year two, giving flexibility if rates fall.
• Stress-test affordability at +3% to protect future cashflow.
• Line up overpayment capacity: paying down a 6% unsecured loan is an after-tax “return” that beats many investments.

Keep your plan on track

1. Automate contributions: Standing orders into ISAs or pensions turn saving into a monthly bill you pay yourself first.
2. Calendar key dates: Dividend and CGT allowances reset on 6 April; interest on bank accounts may be paid gross at tax year-end.
3. Rebalance with discipline: Set a ±5% band around target weights. When equities rally, trim back; when they fall, top up using cash or bond proceeds.
4. Harvest taxable losses: A quick “bed-and-breakfast” sale cannot repurchase the identical holding within 30 days, but buying a similar ETF keeps exposure while resetting the base cost.
5. Document decisions: A simple spreadsheet noting date, trade, rationale and after-tax return helps if HMRC queries share identification rules and also reinforces good habits.

Final thoughts

Inflation of 3-4% may feel modest beside the price spikes of recent memory, yet over a decade it halves purchasing power if left unchecked. By filling tax-efficient wrappers early, shopping around for competitive savings rates, adding assets with explicit or implicit inflation linkage, and weighing the cost of borrowing against secure debt-repayment “returns”, you can keep the real value of your wealth intact.

The allowances outlined – £20,000 for ISAs, £60,000 for pensions, £500 for dividends and £3,000 for capital gains – form the backbone of an effective hedge. Layered on top, a sensible asset mix and periodic rebalancing provide both resilience and growth potential.

Contact us for personalised projections, a review of your current allocations or guidance before making major contributions or disposals.

Energy bills are falling for around 21 million households in England, Scotland and Wales, with typical household bills down £11 a month.

Energy bills are falling for around 21 million households in England, Scotland and Wales. Regulator Ofgem has lowered the price cap, cutting the typical dual-fuel bill by 7%, or £11 a month. This brings the average annual bill for a household using a standard amount of gas and electricity to £1,720.

However, this drop comes with caution. With colder, darker months ahead, households still face the risk of higher winter bills. Ofgem and energy analysts encourage people to consider fixed tariffs, which can provide payment certainty and save around £200 a year.

Currently, 35% of households are on fixed deals – up from 15% a year ago – but these only lock in the unit rate. Actual bills still depend on how much energy you use.

Under the new cap, gas prices fall from 6.99p to 6.33p per kilowatt hour (kWh), and electricity from 27.03p to 25.73p. Daily standing charges have also dropped slightly, averaging 51.37p for electricity and 29.82p for gas.

The price cap doesn’t apply in Northern Ireland, which has a separate energy market. Customers on pre-payment meters will now pay a typical annual bill of £1,672, while those paying by cash or cheque face £1,855.

Although another small drop is forecast for October, energy consultancy Cornwall Insight warns of “significant uncertainty”, particularly with global pressures affecting wholesale prices. Ofgem is currently reviewing standing charges, which continue to spark debate.

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Bank of England governor Andrew Bailey has warned that the UK jobs market is showing signs of slowing as employers react to higher national insurance contributions (NICs).

Speaking at a London British Chambers of Commerce event, Bailey said businesses are beginning to scale back hiring and curb pay rises in response to the increased costs.

The Bank’s Monetary Policy Committee (MPC) will consider the impact of lower employment and weaker wage growth when it meets in August to decide on the interest rate, which currently stands at 4.25%. Bailey, who voted to hold rates steady earlier this month, said he had seen “a bit more evidence” of employers adjusting pay and staffing levels following NIC changes in the last budget.

Recent data highlights a fragile economy. GDP grew by 0.7% in the first quarter but fell by 0.3% in April. PAYE figures show more than 100,000 jobs were lost in May – the largest monthly decline since the first COVID lockdown in 2020.

Private sector wage growth has also eased, falling to 5.1% in the three months to April, down from 5.9% earlier in the year. A split vote at the Bank’s June meeting – with three members backing a cut to 4% – suggests growing momentum for a rate reduction. Markets now expect rates to fall to 3.75% by the end of the year.

Bailey concluded that underlying economic growth remains weak and will likely stay subdued as firms face global uncertainty, including US trade measures.

Get in touch to discuss your business.

Under a proposed change to UK employment law, employers will no longer be allowed to use non-disclosure agreements (NDAs) to prevent workers from speaking out about sexual misconduct or discrimination in the workplace.

An amendment to the Employment Rights Bill would render confidentiality clauses void if they attempt to stop individuals from disclosing allegations of harassment or discrimination. The Government says the measure is designed to protect victims and ensure workplace cultures do not allow serious misconduct to be hidden.

NDAs are legally binding agreements used to protect confidential information between two parties. While they can serve legitimate purposes – such as protecting intellectual property or sensitive business data – they have increasingly been used to suppress reports of inappropriate behaviour, particularly in employment disputes.

The proposed reform follows similar legal changes in countries including Ireland, the United States, and parts of Canada. Those jurisdictions already prevent NDAs from being used to silence victims of sexual harassment or discrimination.

The amendment will be debated in the House of Lords on 14 July. If peers approve, the Bill will return to the House of Commons for final approval before becoming law later this year.

The Government says the change strikes a balance between legitimate confidentiality and protecting individuals’ rights to speak out about unacceptable treatment. It is expected to offer greater protection and transparency for workers while encouraging more open and accountable workplace cultures.

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Early HMRC information shows UK payrolled employment fell by 109,000 (-0.4%) in May 2025, the sharpest monthly decline for four years. The drop pushed the unemployment rate up to 4.6%, its highest level since April 2021.

Economists have highlighted the 1.2 percentage point rise in employer National Insurance – from 13.8% to 15% on 6 April – as a key factor. But arguably just as significant is the drop in the threshold at which employer National Insurance kicks in, from £758 a month to £500, widening the impact for many businesses. Hospitality shed 5.6% of roles, IT and telecoms 3.4%, and retail 2.4%, contributing to an overall 0.9% fall in employment.

London recorded the steepest regional contraction, with payroll numbers down 2.3%, while the Scottish Borders and parts of East Anglia also suffered marked losses. Vacancies slipped by 63,000 to 736,000, yet shortages persist in accountancy, construction and health, keeping competition for skilled staff intense.

Average regular pay grew 5.2% in the three months to April, only marginally slower than March’s 5.5%, leaving the Bank of England alert to wage-pressure risks as it considers further interest rate cuts later this year.

The Office for National Statistics cautioned that the payroll figures remain provisional and could be substantially revised when additional real-time submissions arrive next month.

Kate Nicholls, chief executive of UKHospitality, said: “Losing more than 100,000 jobs across the economy in a month goes far beyond the worst-case scenario predicted by the government’s own fiscal watchdog, major banks and countless business groups.”

Daniel Herring, head of economic and fiscal policy at the Centre for Policy Studies, added: “The provisional employment data confirms our concerns about Labour’s job tax. When you make it 11% more expensive to hire minimum-wage workers, businesses simply stop hiring.”

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UK sickness absence edged closer to pre-pandemic norms last year, according to new Office for National Statistics (ONS) figures.

Workers took an average of 4.4 days off for sickness or injury in 2024, amounting to 148.9m lost working days, or 2% of all possible days. That is 0.2% lower than 2023 but still above the 1.9% recorded in 2019, adding the equivalent of 9.9m extra lost days.

Absence remained highest in the public sector at 2.9%, although this has fallen from 3.6% in 2022. Private-sector absence stood at 1.8%. Senior management and professional services, including accountancy firms, recorded even lower rates of 1.8% and 1.3% respectively.

Minor ailments, such as colds, continued to dominate reasons for absence (30%), followed by musculoskeletal issues (15.5%) and mental-health conditions (9.8%). The ONS notes that statutory sick-pay (SSP) rules partly explain the public-private gap: many private-sector staff are unpaid for the first three days away. The forthcoming Employment Rights Bill will make SSP payable from day one, potentially increasing costs for smaller employers.

Regionally, sickness absence was highest in the South West (2.4%) and lowest in London and the East (both 1.5%), patterns linked to younger, more highly skilled workforces.

James Cockett, senior labour market economist at the Chartered Institute of Personnel and Development, said: “Many frontline roles in the public sector – particularly in healthcare, education, social care and policing – not only increase exposure to illness but are often physically and emotionally demanding, leading to greater rates of stress-related ill health and absence. There’s also growing demand on our public services and limited resources, which is leading to an increase in the number of people who feel they’re consistently working under excessive pressure.”

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Chancellor Rachel Reeves has reversed last year’s decision to restrict winter fuel payments, confirming that pensioners in England and Wales with taxable incomes of £35,000 or less will again receive the benefit from this autumn.

Pensioners aged 67-79 will be paid £200, while over-80s will receive £300. Scotland and Northern Ireland run separate schemes.

The Treasury estimates the change will put about £1.25bn into pensioners’ pockets, after recovering around £450m by clawing back payments from wealthier recipients. Payments will be issued automatically by the Department for Work and Pensions and, where income exceeds the £35,000 threshold, HMRC will recover the full amount via PAYE or self assessment, mirroring the high-income child benefit charge. No registration is required, though an opt-out will be offered later this year.

The move brings nine million households back into scope after only 1.5m qualified last winter when eligibility was tied to pension credit. Tax specialists welcome the broader support but warn that the new means test could add administrative complexity and fresh inequities between single- and dual-income households.

Reeves said: “Targeting winter fuel payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means test this payment so that it is targeted and fair, rather than restoring eligibility to everyone, including the wealthiest.”

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Making the most of eco-friendly tax breaks.

The policy push for a net-zero economy is now hard-wired into the UK tax system, with many businesses investing in lower-carbon equipment, property upgrades and greener vehicles. The tax system offers a range of permanent and time-limited reliefs that can cut the headline cost of those projects by up to 25%. We have summarised the main opportunities below, together with the deadlines and practical steps we recommend you take during the rest of the 2025/26 tax year.

The financial case for sustainable investment

• UK businesses active in the low-carbon and renewable energy economy generated £69.4bn of turnover and supported 272,400 full-time jobs in 2022 (according to the Office for National Statistics).
• Environmental taxes raised £52.5bn in 2023, three-quarters of which fell on energy use. This accounted for 5.5% of total tax revenue.
• Battery-electric car registrations in May 2025 rose 25.8% year on year and took a 21.8% share of all new cars sold (Society of Motor Manufacturers and Traders data, 5 June 2025).

These figures show that green investment is no longer niche. It is mainstream economic activity that attracts both customer demand and significant tax support.

Capital allowances you can claim this year

Full expensing – permanent 100% relief

Companies subject to corporation tax can deduct the full cost of qualifying plant and machinery purchased in 2025/26 against taxable profits. The deduction is worth 25p for every £1 spent at the main 25% corporation tax rate or 19% for companies paying at the small profits rate. Cars are excluded, but production equipment, electric vans, solar panels and heat-pump systems installed at commercial premises qualify.

What to do now

• Keep supplier quotations that prove the environmental specification (for example, “MCS-certified heat pump”).
• Review project budgets before you place orders so you can confirm which items are eligible.

Annual investment allowance (AIA) – £1m for all businesses

Unincorporated businesses, and companies that have used up their full-expensing capacity, can claim 100% relief under the AIA. We will normally use the AIA for integral features (lift shafts, lighting, wiring) that would otherwise go into the 6% special-rate pool.

Zero-emission vehicles and charging infrastructure

The Chancellor has extended the 100% first-year allowance for new zero-emission cars, vans and workplace charge-points to expenditure incurred up to 31 March 2026 for companies (5 April 2026 for other businesses).

Benefit-in-kind (BiK) position

• Zero-emission company cars are taxed at 3% of list price in 2025/26.
• The rate then rises by one percentage point a year, reaching 7% in 2028/29, still far below the 37% rate that applies to high-emission models.

Salary-sacrifice EV schemes remain a cost-effective staff benefit. If you operate or intend to launch one, tell us as soon as you have indicative orders so we can model the employer’s Class 1A national insurance saving and any cashflow implications.

Reliefs linked to property and land

Land remediation relief

Companies that clean up contaminated or long-term derelict land may deduct 150% of qualifying costs or exchange a loss for a cash credit worth 16% of the spend. Typical qualifying work includes removing asbestos, treating Japanese knotweed and demolishing unsafe structures. The claimant must not have caused the contamination.

Structures and buildings allowance (SBA)

The SBA offers a 3% straight-line deduction for new non-residential buildings and major renovations. You’ll still qualify if your project includes low-carbon features such as green roofs or high-performance insulation – making it easier to build sustainably without losing relief.

Freeports and investment zones

If your site sits within a designated “special tax site”, you can claim:

• 100% first-year allowance for plant and machinery used primarily in the zone
• 10% SBA for new commercial buildings
• Stamp Duty Land Tax relief on qualifying property purchases
• Business rates relief (available in many zones for up to five years)

All reliefs apply to qualifying expenditure incurred up to 30 September 2026. Please contact us well before contracts are signed so we can confirm boundary maps and the tests that the asset must meet during its first five years of use.

R&D tax relief – merged scheme now live

Since 1 April 2024, the small and medium-sized enterprise (SME) and research and development expenditure credit (RDEC) regimes have been replaced by a single credit equal to 20% of qualifying research and development (R&D) spend. After corporation tax, the net benefit is 15% for companies paying the main rate, and 16.2% for those on the small profits rate. A higher rate still applies where at least 30% of total costs are R&D (“R&D-intensive” relief).

Green innovation often qualifies: recyclable packaging, low-carbon cement, advanced energy-monitoring software or waste-heat recovery systems are just a few examples we have seen this year. Keep a short monthly log of project aims, technical uncertainties and staff time; it cuts down claim preparation time at year-end and provides the evidence HMRC requests in compliance checks.

Cutting running costs with climate change levy reliefs

Businesses that sign a climate change agreement can cut the climate change levy by 92% on electricity and 89% on gas throughout 2025/26. Manufacturing trade bodies handle much of the paperwork, so set up a short call with us if you are a heavy energy user and have not yet assessed the saving.

Coming change – Spring Statement 2025 confirmed that electricity used to produce green hydrogen will be exempt from the levy once the Finance Bill 2025/26 passes. If you are planning on-site electrolysis, we will help you model the expected discount once the draft legislation is published.

VAT savings on energy-saving materials

Installations of solar panels, heat pumps, insulation and other energy-saving materials in domestic or qualifying charitable buildings attract a zero rate of VAT until 31 March 2027. This applies throughout Great Britain and, from 1 May 2023, also to Northern Ireland under the Windsor Framework. If you own residential or charitable property through the business or personally, check quotations to ensure the zero rate has been applied before signing.

Grants and other support worth noting

Below are the main grant schemes our clients are drawing on this year. Each scheme opens and closes funding “windows”, so let us know early if you plan to apply.

• Industrial energy transformation fund (phase 3) – capital grants covering 30% to 70% of energy-efficiency or fuel-switching projects that cost at least £100,000.
• Boiler upgrade scheme – £7,500 off the upfront cost of air-source or ground-source heat pumps in small commercial or domestic properties. Now extended to 2028.
• Local net-zero accelerator programmes – region-specific grants and match funding for electric-vehicle infrastructure, retrofit projects and training. Local enterprise partnerships publish calls several times a year.

Where a grant meets part of the cost, the capital allowances claim must be reduced by the funded amount. We will adjust the figures automatically when we prepare your corporation tax or income tax computation.

Year-end planning actions for 2025/26

• June to July 2025 – finalise orders for zero-emission cars, vans and workplace charge-points; delivery lead times are stretching and the 100% first-year allowance ends on 31 March/5 April 2026.
• August 2025 – start collating 2024/25 R&D project records. We will draft claim packs early to avoid the surge in HMRC inquiries we have seen close to filing deadlines.
• Autumn 2025 – map planned construction and equipment purchases against freeport or investment-zone boundaries. Moving a project a short distance can unlock the 100% plant allowance and 10% SBA.
• January 2026 – ask us to run a pre-year-end profit forecast if your company is near the £50,000 or £250,000 profit thresholds. Pulling forward or deferring spend by a few weeks can shift the tax rate from 26.5% to 25% or 19%.

Record-keeping and compliance checklist

1. Maintain a detailed fixed-asset register with a simple code (“FE”, “AIA”, “SBA”, etc) showing which allowance you have claimed for each item.
2. Store invoices and specifications that confirm energy ratings or zero-emission status; photos of serial plates and EPC certificates are acceptable digital evidence.
3. Tie grant agreements to spend – HMRC will ask whether any third party funded part of the project.
4. Minute board decisions that refer to environmental impact; this demonstrates commercial motivation as well as tax planning.
5. Monitor asset location – removing plant from a freeport site within five years can trigger a clawback.

Next steps

Tax reliefs for sustainable investment are generous but deadline-driven. If you are considering capital expenditure, fleet renewal or green R&D during 2025/26, please contact your accountant as early as possible to:

• confirm which allowances apply and model the cashflow benefit
• check interaction with grants, freeport rules and corporation tax thresholds
• draft any advance assurance or CCA paperwork
• ensure the claim is processed smoothly in your next tax return.

The sooner we discuss your plans, the more options we can keep open. We look forward to helping you make the most of the available incentives while supporting the wider transition to a low-carbon economy.