Making up for lost time with smart pension planning.

By your 50s, retirement planning often moves to the top of the financial agenda. If your pension pot isn’t where you’d like it to be, there are ways to increase contributions, take advantage of tax reliefs, and strengthen your long-term financial security. This guide outlines the latest pension rules, allowances, and strategies, helping you make informed decisions about your retirement savings. Whether you’re looking to top up your pension, explore additional investment options, or adjust your approach, having a clear understanding of your options can make a significant difference to your future financial stability.

The current outlook for retirement saving in the UK
Retirement savings in the UK typically include workplace, private, and state pensions. Automatic enrolment has significantly increased participation, with 88% of eligible employees enrolled in a workplace pension in 2023, covering approximately 20.8 million individuals.

Many people underestimate how much they need to save for retirement, with the Pensions Policy Institute highlighting a gap between expected and actual retirement income. By your 50s, earnings may be more stable, but financial commitments – such as a mortgage or supporting children – can still be a priority. However, with careful planning, higher earning potential offers a chance to boost pension contributions and strengthen retirement savings.

Tax relief and pension allowances for 2025/26
Annual allowance
The annual allowance is the maximum you can contribute to pensions each tax year while still benefiting from tax relief. From April 2023, it increased to £60,000 for most people.

Money purchase annual allowance (MPAA)
If you have started taking pension benefits flexibly (for example, using flexi-access drawdown), the MPAA might apply. This restricts contributions to £10,000 per year once triggered.

Lifetime allowance (LTA)
The Government abolished the Lifetime Allowance (LTA) on 6 April 2024, removing the previous tax charge for exceeding a set lifetime pension pot limit. This means that there is no LTA from the 2025/26 tax year onwards, and individuals can contribute to their pensions without facing additional tax penalties for breaching a lifetime cap. However, standard tax rules still apply to withdrawals, and certain lump sums remain subject to limits.

 
Personal allowance and tax thresholds
Income tax thresholds remain frozen until April 2028. The personal allowance is £12,570, with 20% tax up to £50,270, 40% tax up to £125,140, and 45% tax above £125,140. In 2025/26, you can expect these bands to remain the same unless new policies intervene.

Workplace pensions in your 50s
Review your contribution rate
Auto-enrolment sets a minimum total contribution of 8% of qualifying earnings, including at least 3% from your employer. Contributing more than the minimum is often beneficial if you want to catch up on retirement savings. Some employers match higher contributions, so find out if yours does.

Use salary sacrifice
A salary sacrifice agreement allows you to reduce your gross salary in exchange for higher employer pension contributions. This lowers your National Insurance liability and can increase pension funding. However, salary sacrifices may affect other benefits such as life insurance or bonuses.

Explore additional voluntary contributions (AVCs)
If your workplace offers a defined benefit (final salary) scheme, AVCs can boost your retirement income. Tax relief for AVCs works like it does for other pension contributions, so you usually receive relief up to your available allowance.

State Pension considerations
Understand your State Pension age
Your State Pension age may be 66 or 67, depending on your date of birth. Future increases are possible, but any changes must be passed into law.

Check your National Insurance record
To get the full new state pension, you need around 35 qualifying years of NI contributions. Review your NI record online, and if there are gaps, you may opt to make voluntary contributions to improve your State Pension.

Projected amount of the State Pension
The full new State Pension is £221.20 per week for 2024/25 and is set to rise to £230.25 per week from April 2025. This increase follows the triple lock mechanism, which ensures the State Pension rises by the highest of inflation, average earnings growth, or 2.5%. The 2025/26 increase is based on average earnings growth of 4.1%. Keep an eye on official updates for any further changes.

Increasing your pension contributions
Catch-up approach
In your 50s, higher earnings or lower expenses may allow you to increase pension contributions. If you pay 40% tax, a £12,000 gross contribution effectively costs £7,200 after tax relief. Ensure your contributions remain within the £60,000 annual allowance to avoid potential tax charges.

Carry forward rules
Carry forward lets you use unused annual allowance from up to three previous tax years if you had a pension in those years. This can allow significant one-off contributions. If you have enough earnings and capacity for tax relief, carry forward may help you catch up quickly.

Balancing other savings
At this stage in your life, you may also want to pay off a mortgage, build an emergency fund, or address high-interest debts. Compare your mortgage interest rate to the long-term growth of pension investments, and if the pension offers higher returns (especially with tax relief), extra pension contributions may be more appealing. However, reducing high-interest debts is often wise before stepping up pension savings.

Drawing benefits and avoiding early withdrawal pitfalls
When can you start drawing your pension?
The normal minimum pension age will rise to 57 in April 2028. By 2025/26, most individuals can access pensions from at least age 55. If you withdraw too early, however, you might deplete your funds before retirement.

Tax implications of early withdrawals
Taking pension benefits early can trigger the MPAA, lowering your future contribution limit to £10,000 a year. If you plan to keep contributing significantly, be aware of how early withdrawals might limit you.

Partial retirement
Some people choose to reduce work hours in their 50s and draw partial pension benefits. This can help you transition into retirement, but you should check if your overall pot can still grow or maintain its value; you might pay income tax on withdrawals, depending on your allowances.

Diversifying your retirement strategy
Consider ISAs and other savings
An Individual Savings Account (ISA) offers tax-efficient savings alongside pensions. You can invest up to the annual ISA allowance (currently £20,000). Withdrawals are free of income tax. In retirement, these funds can complement your pension and give you more flexibility.

Investments outside of pensions
Some people choose to invest in property, shares, or bonds. These can yield returns but also carry risks. They are also likely to be less tax efficient. If you have limited time to rebuild savings, you may prefer investments that are less prone to volatility. Seek advice from your accountant or financial adviser if you need to decide on risk levels that suit your age and goals.

Self-employed considerations
If you are self-employed, auto-enrolment does not apply. You must set up your own pension, such as a personal pension or SIPP. In your 50s, you can still receive tax relief on contributions within your annual allowance. Increase contributions if your earnings allow, especially while you have the carry forward option.

 
Reviewing and adjusting your plan
Regular pension forecasts
Ask your pension provider for updated projections. This allows you to track progress toward your retirement target. If you find a shortfall, you can increase contributions or adjust your investments.

Adjust contributions when possible
If you receive a salary increase or bonus, direct a share of it to your pension. This approach ensures consistent growth and reduces the chance of spending extra earnings on non-essentials.

Monitor legislation changes
Pension policies can shift with Government budgets. Check official sources such as GOV.UK or HMRC for announcements. If changes affect the annual allowance or the MPAA, adjust your strategy accordingly.

Talk to your employer
Your employer might offer more generous matching or additional benefits. Also, they can explain any changes to workplace pensions that could affect your contributions for the 2025/26 tax year.

Potential risks and how to address them
1. Overexposure to certain assets: Relying on one type of investment can lead to higher risks. Diversify across different asset classes to reduce vulnerability.
2. Delaying contributions: Time in the market is important for compound growth. Contributing sooner, even if the amount is moderate, is generally beneficial.
3. Ignoring inflation: Rising living costs can erode the real value of your savings. Consider strategies or funds that aim to outpace inflation over the long term.
4. Accessing your pension too early: Early withdrawals reduce your pot’s ability to grow. Evaluate whether you truly need the funds and the possible tax implications.

Practical steps to boost your pension before retirement
1. Carry forward: Check your unused allowances from the past three tax years. You can make a large lump-sum contribution in 2025/26 if you have enough earnings and space for tax relief.
2. Increase regular contributions: Small monthly increases can add up significantly over the remaining years to retirement.
3. Review monthly outgoings: Identify unnecessary spending and redirect these funds toward your pension.
4. Maximise employer matching: If your employer offers to match above the minimum, contribute enough to claim the maximum match.
5. Track old pension pots: Consolidating older pensions might reduce fees and simplify management.

 
Key takeaways
You can still improve your retirement prospects in your 50s. By taking note of the current annual allowance, carrying forward opportunities and workplace pension benefits, you can raise your contributions. Watch for changes to pension legislation, tax thresholds, and State Pension rules, and make sure you understand the impact of early withdrawals.

Combine your pension with other savings vehicles like ISAs to give yourself more flexible options. Seek regulated professional advice if you need personalised guidance, and review your plan regularly to ensure it remains on track.

With active steps, you can catch up on retirement savings and strengthen your finances before you reach State Pension age.

Speak to us today to ensure you’re making the most of your pension allowances and tax reliefs.

Most UK businesses are optimistic about the start of 2025, with economic confidence surveys showing plans for growth following a difficult period. However, retail and hiring concerns linger.

According to Lloyds Bank, 70% of businesses expect turnover to rise over the next year, up from 62% in December 2023. Additionally, 73% anticipate greater profitability. Seven in ten leaders in the financial services sector believe Government initiatives will boost growth and competitiveness in 2025.

The survey, which consulted over 160 senior executives, revealed that 68% are confident the chancellor’s plans to “regulate for growth” and introduce a competitiveness strategy in spring will attract foreign investment.

However, these positive findings contrast with other recent reports. The Confederation of British Industry’s (CBI) growth indicator survey warns of a sharp decline in business activity as companies brace for reduced hiring and output in early 2025.

Retailers are also facing challenges, with the British Retail Consortium reporting a six-point drop in consumer spending forecasts for the new year. The Bank of England recently suggested that UK growth likely stalled in the final quarter of 2024, as inflation rose to 2.6%, the highest level in eight months.

While signs of optimism are evident in some sectors, conflicting data highlights the uncertain outlook for the broader economy.

Talk to us about your business.

A guide for contractors and subcontractors.

The Construction Industry Scheme (CIS) is a vital part of the tax system for workers in construction. Whether you’re a contractor managing subcontractors or a subcontractor working on various projects, understanding how CIS works is key to ensuring compliance and managing cashflow effectively. In this guide, we’ll break down the essentials of CIS, covering who it applies to, how it operates, and the key responsibilities involved.

What is the Construction Industry Scheme?

The CIS is a tax deduction system designed to ensure subcontractors in the construction sector pay the correct amount of tax. Under the scheme, contractors deduct money from subcontractors’ payments and pass it to HMRC. These deductions are advance payments towards the subcontractor’s tax and National Insurance.

CIS applies to a broad range of construction work carried out in the UK, including site preparation, building work, repairs, decoration, and demolition. However, it doesn’t cover all work, so it is important to confirm whether specific activities fall under the scheme.

Who does CIS apply to?

CIS applies to two primary groups within the construction industry:

1. Contractors
   Contractors are businesses or individuals who pay subcontractors for construction work. This includes companies or individuals who spend more than £3 million annually on construction projects, even if construction isn’t their primary business.
2. Subcontractors
   Subcontractors are businesses or individuals that carry out construction work for a contractor. This group includes sole traders, partnerships, and limited companies.

If you fall into either category, you need to be aware of your responsibilities under CIS and how it impacts your tax obligations.

Key responsibilities for contractors

As a contractor under CIS, you have several obligations to ensure compliance with HMRC’s requirements:

• Registration: Register with HMRC as a contractor before engaging subcontractors. Failing to do so could result in penalties.
• Verification of subcontractors: Before paying a subcontractor, you must verify their status with HMRC. This determines whether to deduct tax at the standard rate (20%), a higher rate (30%) for unverified subcontractors, or make no deductions for those with gross payment status.
• Deductions: Deduct the appropriate amount from payments for subcontractors and submit these to HMRC.
• Record-keeping: Maintain detailed records of payments, deductions, and verification checks.
• Monthly returns: Submit a monthly CIS return to HMRC detailing all payments and deductions made to subcontractors. Ensure accuracy to avoid penalties.

Key responsibilities for subcontractors

Subcontractors also have duties under CIS to ensure their tax affairs are in order:

• Registration: Register with HMRC as a subcontractor to avoid higher-rate deductions. Registration can be done online or by phone.
• Gross payment status: If you meet the criteria, you can apply for gross payment status, allowing you to receive full payments without deductions. This is particularly beneficial for subcontractors with significant expenses.
• Record-keeping: Under CIS, keep track of all income and deductions. This helps with tax returns and ensures you don’t pay more tax than necessary.
• Filing tax returns and offsetting CIS deductions:
• If you’re self-employed, you’ll typically offset CIS deductions against your personal tax liability on your self assessment tax return.
• If you operate through a limited company, you can offset CIS deductions against your PAYE liabilities or corporation tax.

CIS rates and how deductions work

CIS deductions are calculated on the labour portion of a subcontractor’s invoice, excluding materials, VAT, and specific equipment hire. The current deduction rates are:

• 20% for verified subcontractors
• 30% for unverified subcontractors
• 0% for those with gross payment status

For example, if a verified subcontractor invoices £1,000 for labour and £200 for materials, the deduction applies only to the £1,000 labour charge. The contractor deducts £200 (20% of £1,000) and pays £800 to the subcontractor, passing the £200 deduction to HMRC.

Common pitfalls and how to avoid them

CIS compliance can be complex; even small errors can lead to penalties. Here are some common pitfalls and how to avoid them:

1. Incorrect registration: Ensure you’re correctly registered as a contractor or subcontractor. Late registration can result in fines.
2. Misclassification of workers: Accurately classify individuals as subcontractors or employees. Incorrect classification can result in additional tax liabilities and penalties.
3. Missed deadlines: Submit monthly returns and payments to HMRC on time. Late submissions can attract penalties starting at £100 and increasing with delays.
4. Inaccurate deductions: Verify subcontractors’ status with HMRC to ensure you apply the correct deduction rate. Over- or under-deducting can cause issues for both parties.

Benefits of gross payment status for subcontractors

Gross payment status allows subcontractors to receive their payments in full without CIS deductions. To qualify, subcontractors must meet specific criteria, including:

• Operating within the construction industry
• Maintaining a good compliance record with HMRC
• Meeting a turnover threshold (excluding materials)

While gross payment status offers cashflow advantages, it also requires disciplined tax management to ensure you can meet your liabilities at the end of the tax year.

CIS and VAT reverse charge

The introduction of the VAT reverse charge for building and construction services in 2021 added another layer of complexity to the industry. Under the reverse charge, subcontractors no longer charge VAT to contractors for certain services. Instead, contractors account for VAT on their behalf.

If you’re both a CIS contractor and subcontractor, you’ll need to manage this process alongside CIS deductions. Ensure your invoices clearly indicate when the reverse charge applies, and stay informed on the latest VAT rules.

CIS compliance tips

To make managing CIS smoother, consider these practical tips:

1. Use accounting software: Many accounting platforms offer features tailored to CIS compliance, simplifying record-keeping, deduction calculations, and monthly returns.
2. Stay organised: Keep detailed records of all transactions, including invoices, deduction statements, and HMRC correspondence.
3. Seek professional advice: If you’re unsure about any aspect of CIS, working with a knowledgeable accountant can save you time and avoid costly mistakes.
4. Regularly review your processes: CIS rules and thresholds can change, so staying up-to-date is essential.

Recent statistics and trends

According to HMRC data, CIS tax receipts for 2022/23 exceeded £6.3bn, reflecting the scheme’s importance in maintaining tax compliance within the construction industry. With over 1.2 million businesses registered under CIS, the scheme continues to play a crucial role in ensuring fair tax collection.

The industry has also seen increased adoption of digital tools for managing CIS. Accounting software with integrated CIS features is helping contractors and subcontractors improve accuracy and save time on compliance tasks.

The importance of CIS compliance for business growth

While CIS compliance may seem like an administrative burden, getting it right can significantly impact your business’s growth and reputation. For contractors, ensuring timely and accurate deductions builds trust with subcontractors, reinforcing professional relationships. Subcontractors who handle their CIS obligations efficiently are more likely to secure contracts with reputable contractors who value compliance.

Failing to comply, however, can damage your business’s reputation and lead to financial setbacks. HMRC penalties for non-compliance can range from late return fines to significant charges for underpaid deductions. For subcontractors, incorrect handling of CIS could lead to overpaid tax or refund delays, affecting cashflow and operational stability.

Preparing for CIS audits

HMRC has the right to carry out CIS compliance checks to ensure businesses are meeting their obligations. Preparing for these audits involves keeping organised and detailed records, including:

• Subcontractor verification details
• Copies of invoices and deduction statements
• Monthly CIS returns and payment confirmations

Regularly reviewing your records and processes can help identify potential issues before they escalate. Contractors should ensure all subcontractors are properly verified and that deductions are calculated correctly. On the other hand, subcontractors should cross-check payments and deductions against their own records to ensure accuracy.

Emerging trends and future changes in CIS

The construction industry is constantly evolving, and changes to tax rules or digital processes can directly impact CIS. For example, HMRC has been promoting the use of digital tools for tax compliance, and future updates to the Making Tax Digital (MTD) programme may further streamline CIS management.

Another potential development is increased scrutiny of employment status. HMRC’s focus on correctly classifying individuals as employees or subcontractors could lead to stricter enforcement measures. This makes it vital for contractors to regularly review their contracts and engagement processes.

How we can help

Understanding and managing CIS can be time-consuming and challenging, but it’s essential for contractors and subcontractors to get it right. If you’re looking for support with CIS registration, compliance, or tax planning, our team of experts is here to help. We provide tailored advice and services to keep your business running smoothly while ensuring you meet your tax obligations.

Get in touch to learn more.

Savings strategies for your child’s education.

Paying for higher education can be one of the largest financial commitments families face. By planning in advance, you can reduce the need for costly borrowing and help your child start adulthood on a strong financial footing.

This guide explains current tuition fees, student finance arrangements, and tax-efficient ways to save for university costs in the United Kingdom. The aim is to provide a resource that supports parents, guardians, and anyone involved in preparing a child for university.

Introduction

Higher education expenses include more than tuition fees. Daily living costs, learning materials, travel, and accommodation can add up quickly. The largest share of expenses usually consists of tuition fees, which remain capped at £9,250 per year for full-time undergraduate programmes in England. Wales, Scotland, and Northern Ireland have their own fee structures, although many of the general principles in this document will still apply across the UK.

While there have been calls to review the current tuition fee cap, it remains in place for the 2024/25 academic year for institutions that meet certain criteria in England. Many students pay for these costs with the help of student finance, but that might not cover all living expenses. It is, therefore, valuable to understand how you can set money aside in advance. This will support your child’s financial security when they begin their studies.

Overview of current university fees and costs

The current fee limit for most full-time undergraduate programmes in England is £9,250 a year. Some universities charge less for certain courses, but parents and guardians should still assume that the maximum fee will apply to popular programmes. In Wales, for the 2024/2025 academic year, tuition fees for undergraduate students were capped at £9,250 per year. For courses starting on or after 1 August 2025, the fee cap will increase to £9,535. In Northern Ireland, tuition fees for Northern Ireland residents are approximately £4,710 a year at local universities, while those from outside Northern Ireland (including the rest of the UK) may face fees of up to £9,250. There are no tuition fees in Scotland for eligible Scottish students studying their first degree at Scottish universities, but students from other parts of the UK pay up to £9,250.

Aside from tuition, living costs can vary depending on the location of the university and personal circumstances. Some estimates place average annual living costs for full-time students between £9,000 and £12,000, including accommodation, food, and transport. Students in large cities, such as London, may find that they need a higher budget to cover rent and daily necessities.

When you add tuition fees and living costs together, total annual expenses often range from around £18,000 to £21,000 for students in England. Over a typical three-year course, that can climb to more than £60,000, and this figure can rise further if a student needs four or five years to complete a programme, such as in certain science or medical degrees.

Student finance: Loans and maintenance support

The Student Loans Company (SLC) provides tuition fee and maintenance loans to eligible students. These loans cover tuition fees upfront and offer a means-tested living cost loan, with the exact amount depending on your household income, the university’s location, and whether your child lives at home or away.

For students beginning their course on or after August 2023, Plan 5 sets a repayment threshold (the income level above which repayments start). The threshold and interest rates may change each academic year, so it’s important to check official government or SLC sources for the latest figures. Repayments are taken at a rate of 9% of earnings over the threshold, and they begin from the April after the student finishes or leaves the course.

Even with these loans, parents and guardians often choose to save in advance. Doing so can reduce the amount your child needs to borrow and cover costs not included in maintenance loans, such as study materials or unforeseen expenses.

Tax allowances and benefits for families

In the 2024/25 tax year, the Personal Allowance remains at £12,570. Families who save for university should consider how tax allowances can shape their savings. Some families may consider transferring assets or income to the spouse or partner with a lower income to make full use of their Personal Allowance or to stay within a lower tax band. This can also help if you want to gift money directly to your child once they reach 18. However, parents must pay attention to relevant tax rules and any asset transfer implications.

If grandparents or other relatives want to contribute, they may consider their own gifting allowances. UK inheritance tax rules allow an annual gift allowance of £3,000 per individual, and this can be doubled if no gifts were made in the previous tax year. Additionally, gifts from normal expenditures out of income can be exempt from inheritance tax. Although these allowances do not directly refer to university fees, they can still help families plan for big life events such as education costs.

Saving strategies: accounts and investment vehicles

Different savings options can help you grow a fund for your child’s future education in a tax-efficient way. Below are some popular methods used by UK families.

Junior ISAs (JISAs)

A Junior ISA allows you to save or invest up to £9,000 per year for each child, with no tax on interest, dividends, or capital gains. Funds remain locked until the child turns 18, at which point they gain full access. Options include Cash JISAs (lower risk, modest returns) or Stocks & Shares JISAs (potentially higher returns, but with investment risk).

Child Trust Funds (CTFs)

CTFs were issued to children born between 1 September 2002 and 2 January 2011. Although new CTFs are no longer set up, existing ones remain tax-free. Depending on the terms, you can transfer a CTF to a Junior ISA or keep it.

Adult ISAs

Parents can use their own annual ISA allowance of £20,000 to build a savings pot and later contribute those funds to university costs. Gains and income remain tax-free. Unlike JISAs, you keep control until you choose to gift the money.

Regular savings accounts

Many banks offer child-focused savings accounts with competitive rates, at least initially. They can encourage regular saving and avoid stock market fluctuations. However, interest may be lower than inflation, and you should keep an eye on your Personal Savings Allowance (£1,000 for basic rate taxpayers and £500 for higher rate taxpayers).

Planning for living costs

Even if tuition fees are covered by a loan or early savings, living costs can create a challenge. Maintenance loans often do not stretch far enough in areas like London or major university towns with higher accommodation expenses. Some parents choose to buy property near the university for their child to live in and possibly rent spare rooms to other students. This arrangement might create an additional income stream, but it also involves property purchase costs and tax obligations, such as Stamp Duty Land Tax.

Another approach is to set aside a dedicated monthly sum in a separate account, building a living cost fund that your child can access term by term. You can top it up regularly and keep an eye on how the money is spent, ensuring your child learns practical money management skills. Some families also encourage children to find part-time work during term-time or the holidays. While part-time work can help finance living expenses, students must balance employment with study commitments.

Scholarships and bursaries

Many universities offer scholarships or bursaries based on academic achievement, financial need, or other criteria. Parents and students may overlook these opportunities, missing out on free or reduced-cost benefits.

The amounts vary and can be as modest as a few hundred pounds per year or as large as a full tuition fee waiver. It is worth checking individual university websites well before the application process. Professional bodies, charities, and some businesses also sponsor students in specific subject areas. Even if a scholarship only covers part of the living costs, it can ease the overall financial burden.

Practical steps to get started

1. Set a clear goal
   Estimate the likely cost of tuition and living expenses for the length of your child’s course. Decide whether you want to fund all, part, or none of these costs. Setting a specific target helps you gauge how much to save each month.
2. Review your budget
   Look at your current household income, outgoings, and cashflow. Determine how much you can spare each month or year to put into a savings or investment vehicle.
3. Use available tax allowances
   Consider Junior ISAs, your own ISA allowance, or pensions if relevant. Explore whether splitting assets or income with a partner makes sense, staying within the rules set by HMRC.
4. Compare account options
   Check interest rates, account fees, and features. If you are considering an investment option (such as Stocks & Shares JISA), read about the underlying funds or assets to see if they match your tolerance for risk.
5. Keep track of student finance changes
   Monitor announcements regarding tuition fee caps, maintenance loan amounts, and loan repayment thresholds. This helps you adjust your savings plan if required.
6. Investigate scholarships and bursaries
   Encourage your child to research these opportunities before they apply to universities. They should also check any awards offered by professional organisations or charities linked to their intended subject area.
7. Regularly revisit your plan
   Schedule an annual review of your savings progress, your child’s changing needs, and any shifts in government rules. Adapting your plan early on can prevent shortfalls later.

Closing thoughts

Planning for university costs takes time, but proactive steps can ease pressure on both parents and students. Tuition fees, living expenses, and other study-related costs can sum up to a significant financial commitment. By looking at your options for saving and investing, using tax allowances, and keeping track of official guidance, you will build a more secure foundation for your child’s educational journey.

If you need further assistance choosing the right mix of accounts, investments, and tax strategies, consider consulting a qualified financial adviser or accountant specialising in personal taxation. They will be able to examine your individual circumstances and provide tailored guidance while ensuring you remain compliant with the latest tax regulations. Planning in advance puts you one step closer to helping your child pursue their academic goals with confidence and financial stability.

Need further guidance? We’re here to help.

According to HMRC, nearly 92,800 people spent part of their Christmas break completing their tax returns.

With the self assessment deadline fast approaching, HMRC is urging those who have yet to file to avoid penalties by submitting on time.

On Christmas Eve, 23,731 returns were submitted, with 1,108 people filing between 11am and midday. On Christmas Day, 4,409 people filed their returns, including 368 between 3pm and 4pm, likely as many enjoyed their festive lunch.

Boxing Day remained busy, with 11,932 taxpayers opting to complete their forms and 1,108 filing between 4pm and 5pm. Over the three days from Christmas Eve to Boxing Day, 40,072 returns were filed.

The trend continued into New Year’s Eve when 38,000 people took the opportunity to submit their tax returns. Between 11pm and midnight, 310 last-minute filers rushed to beat the clock. On New Year’s Day, 24,800 individuals tackled their forms – possibly clearing their heads from the celebrations the night before.

In total, 52,800 returns were filed between 31 December and 1 January.

Last year, over 97% of tax returns were completed online by the 31 January self assessment deadline. With penalties in place for late submissions, HMRC encourages those yet to file to act now and avoid unnecessary charges.

Myrtle Lloyd, HMRC’s Director General for Customer Services said:

“We know completing your tax return isn’t the most exciting item on your New Year to-do list, but it’s important to file and pay on time to avoid penalties or being charged interest.

“The quickest and easiest way to complete your tax return and pay any tax owed is to use HMRC’s online services.”

Talk to us about your tax return.

In 2024, over 400 estates donated at least £1 million to charities, contributing to a record-breaking total.

Gifts exceeding £1m rose by 33% from the previous year, increasing from £850m in 2023 to £1.1bn.

These high-value donations accounted for 54% of the £2.1bn gifted to charities through wills in 2024. A total of 440 estates made significant charitable contributions, reducing their exposure to inheritance tax (IHT).

Many individuals choose to leave large portions of their estates to charity for personal and philanthropic reasons, often supporting organisations they value. However, there are financial incentives as well. Those who donate more than 10% of an estate to charity benefit from a reduced IHT rate of 36%, compared to the standard 40%.

The trend of large charitable donations has grown steadily over recent years. In 2018/19, £760m in gifts over £1m were left to charities through wills, rising to £930m in 2019/20.

By donating to charities, individuals can support meaningful causes while mitigating tax liabilities, reflecting both generosity and strategic estate planning.

Talk to us about your tax matters.

Public and Commercial Services Union (PCS) members have announced strike action affecting HMRC’s Benton Park View offices in Newcastle.

The strikes, scheduled across eight days from 23 December 2024 to 14 February 2025, aim to reinstate three sacked union representatives.

The industrial action involves approximately 0.5% of HMRC’s workforce and takes place during the height of the self assessment filing season. The strikes will last three hours on specified mornings, disrupting HMRC phone helplines, particularly those assisting employers and Construction Industry Scheme (CIS) users.

HMRC advises avoiding these phone lines during strike hours, as delays are expected. Webchat and phone lines will remain operational, but customers may face longer wait times. To mitigate disruptions, HMRC plans to redeploy 100 staff from its surge and rapid response team (SRRT) to support affected services.

Picket lines will be held from 7am to 10am on the following days:

• 23 January: Ainsthorpe Garden entrance
• 29 January: Main gates
• 5 February: Main gates
• 6 February: Ainsthorpe Garden entrance
• 14 February: Main gates

HMRC has updated its employer enquiries page and will provide notices on its website and helpline recordings to inform users about potential delays.

The PCS claims the strike action directly responds to the dismissal of union reps over trade union activities.

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Take control of your money

Managing finances can feel overwhelming, but it’s essential for your financial health and long-term success. Whether you’re a small business owner or an individual, staying on top of your accounts ensures you can plan effectively, avoid unnecessary costs, and meet your tax obligations.

Cloud accounting is one of the most accessible and efficient tools available to simplify financial management. With features that save time, increase accuracy, and provide better insights into your money, it’s a solution worth considering – especially with the opportunities and challenges of the current tax year.

This guide explains how cloud accounting works, its benefits for individuals and businesses, and how to get started. If you’re already working with an accountant, cloud accounting can make your collaboration even more efficient.

What is cloud accounting?

Cloud accounting software lets you manage your finances online. Unlike traditional accounting systems tied to a single computer or requiring manual updates, cloud solutions work via the internet. This means you can check your financial information or share it with your accountant anytime, anywhere.

For example, you can record expenses, issue invoices, or track your bank balance all from your smartphone. Cloud accounting also makes it easier to stay organised because everything is stored digitally, saving you from sorting through piles of paper.

How cloud accounting benefits you

If you’re not already using cloud accounting, here are some key reasons to consider it:

1. Access to up-to-date financial information:
   Cloud accounting gives you a clear, real-time view of your finances. Whether you’re checking how much you’ve earned, seeing what’s due to go out, or preparing for tax deadlines, having accurate data at your fingertips is a game-changer.
2. Time-saving automation:
   Manual tasks like calculating VAT, chasing invoices, or organising receipts take time. Cloud systems automate much of this work. For example, you can scan receipts with your phone, and the software automatically updates your accounts.
3. Easier collaboration with your accountant:
   Cloud accounting makes it simple to share financial data securely. Your accountant can access your accounts directly, making it easier for them to offer advice, prepare tax returns, or spot potential savings.
4. Cost savings:
   Instead of paying for expensive accounting software or dedicating hours to manual tasks, you can focus on what matters most – growing your business or managing your personal goals. Many cloud platforms offer affordable subscription plans.
5. Better tax compliance:
   Staying compliant with tax rules can be stressful, but cloud accounting tools are built with this in mind. They help you stay organised, ensure you don’t miss deadlines and are often updated to reflect the latest HMRC requirements, including Making Tax Digital (MTD).

How does it work with your accountant?

If you’re working with an accountant, cloud accounting doesn’t replace their expertise – it enhances it. The software takes care of many routine tasks, allowing your accountant to focus on giving you tailored advice and finding opportunities to save you money.

For example:

• They can access your data in real time, helping you make better decisions when opportunities or challenges arise.
• You’ll spend less time gathering paperwork because much of the information they need will already be in the system.
• Cloud accounting tools make staying prepared for tax deadlines easier, avoiding last-minute scrambles.

Choosing the right cloud accounting platform

If you’re new to cloud accounting, choosing the right platform is an essential first step. Popular options in the UK include Xero, QuickBooks, and Sage. Here’s what to consider:

1. Features:
   Start by evaluating what you need the software to do. Basic bookkeeping tools such as income tracking, expense categorisation, and bank reconciliation may be sufficient for individuals and small businesses. However, if you run a more complex operation, look for advanced features like invoicing, payroll management, VAT calculations, inventory tracking, or financial reporting. Some platforms also offer industry-specific features, such as property management tools for landlords or project tracking for freelancers. Make a list of your priorities to help you compare providers and ensure you’re not paying for tools you don’t need.
2. Ease of use:
   The best cloud accounting software is easy to navigate, even for those unfamiliar with technology. Look for a platform with a clean, intuitive interface and minimal jargon. Many providers offer free trials or demo videos – use these to test whether the software feels straightforward to use. If you’re not comfortable entering transactions or generating reports after a short trial, it might not be the right fit. Simple navigation and mobile-friendly apps are especially important if you plan to manage your finances on the go.
3. Cost:
   Budget is a key factor for most users. Cloud accounting platforms generally use subscription models, with plans that range from basic (around £10-£15 per month) to premium options (£30 or more per month). While the cheapest plan may seem appealing, make sure it includes everything you need. For example, a basic plan might not offer payroll services or multi-currency support. Watch for hidden fees, such as charges for additional users or advanced features. Balancing affordability with functionality ensures you’re getting value for your money.
4. Integration:
   When choosing a cloud accounting platform, consider how well it integrates with your existing tools and systems. Strong integrations reduce manual work and improve accuracy by allowing your financial data to flow seamlessly between systems. Common integrations include eCommerce platforms like Shopify, payment gateways such as PayPal or Stripe, and inventory management tools.

One of the most essential integrations, especially for small businesses and individuals, is bank feeds. Bank feeds automatically connect your accounting software to your bank accounts, importing transactions in real time. This feature simplifies reconciliation, ensures your financial data is always up to date, and significantly reduces the risk of errors from manual data entry. If you’re juggling multiple accounts, bank feeds can save hours of work and help you maintain an accurate view of your finances.

Whether you’re connecting a CRM system, point-of-sale tools, or your bank account, integrations ensure smoother workflows and better financial management. Prioritise a platform with strong integration capabilities to make managing your money as straightforward as possible.

1. Support:
   Reliable customer support is crucial, especially if you encounter issues during tax season or when you’re new to the platform. Look for software providers that offer multiple support options, such as live chat, email, or phone assistance. Many platforms also have extensive knowledge bases, video tutorials, and user communities where you can find answers to common questions. Before committing to a provider, read reviews to see how responsive and helpful their support team is. A strong support system can save you time and frustration when you need guidance.

By considering these factors, you can choose a cloud accounting platform that fits your needs, budget, and level of expertise. Working closely with your accountant during this process can also help you select a solution that complements their work and benefits your overall financial management.

Getting started with cloud accounting

Making the switch to cloud accounting doesn’t have to be complicated. Here’s how to get started:

1. Speak to your accountant:
   Your accountant can recommend the best software for your situation and guide you through setup. They’ll also ensure the platform meets HMRC requirements.
2. Set up your account:
   Once you’ve chosen a platform, follow the setup process. This may include connecting your bank accounts, uploading financial records, and setting up invoicing templates.
3. Learn the basics:
   Most cloud accounting tools offer tutorials or guides. Spend time getting familiar with key features, such as creating invoices or tracking expenses.
4. Use it regularly:
   Make updating your accounts a routine. This will save time in the long run and ensure you always have accurate data to share with your accountant.

Addressing common concerns

If you’re hesitant about moving to cloud accounting, you’re not alone. Here are some common concerns and how to address them:

• “I’m not tech-savvy”
  Many platforms are designed to be user-friendly. Your accountant can also help you get started, and most providers offer excellent customer support.
• “Is my data safe?”
  Cloud providers prioritise security. Features like encryption and two-factor authentication protect information from unauthorised access.
• “What if I lose internet access?”
  Most platforms save your data automatically so that you won’t lose anything. While you’ll need an internet connection to use the software, you can still access information offline through certain features.

Why it’s worth the switch

Cloud accounting isn’t just about keeping up with the latest technology. It’s about making financial management easier, saving time, and working more effectively with your accountant. Whether you’re running a business, managing rental properties, or simply staying on top of personal finances, cloud accounting can help you take control of your money.

By combining the power of cloud accounting with your accountant’s expertise, you can simplify your financial management, stay compliant with tax rules, and make informed decisions about your money.

Talk to us about your options and see how cloud accounting could transform how you manage your finances.

Steps to smooth business transitions

Planning for the future of your business is one of the most critical responsibilities of an owner. Business succession planning ensures your enterprise can transition smoothly to new ownership or leadership, safeguarding its continuity and success. Whether you’re passing the reins to a family member, selling to a third party, or considering other options, taking proactive steps can protect the legacy you’ve built.

Here’s what you need to know about business succession planning, why it matters, and how to make the process seamless.

What is business succession planning?

Business succession planning involves preparing to transfer ownership, leadership, or control of your business. The aim is to ensure the company thrives after your departure, whether due to retirement, illness, or unforeseen circumstances.

It’s not just about selecting a successor – it’s about creating a roadmap that includes financial, legal, and operational considerations to help the transition run smoothly.

Why is business succession planning important?

Failing to plan can lead to disruption, financial instability, and even the closure of your business. Research by the Federation of Small Businesses (FSB) shows that around 40% of UK business owners still need a succession plan. With over five million small businesses in the UK, this lack of preparation poses a significant economic risk.

Additionally, succession planning can:

• Protect business value: With a plan, your business could retain value during a transition. A clear strategy helps maintain operations and client trust.
• Minimise tax liabilities: Proper planning can help mitigate inheritance tax or capital gains tax liabilities, which can otherwise create a financial burden.
• Ensure continuity: Planning reduces the risk of operational disruption and preserves relationships with clients, suppliers, and employees.
• Prepare for the unexpected: Life is unpredictable. Having a plan means your business is better equipped to weather sudden changes.

Exploring succession options

Deciding how to transition your business is as important as preparing for the process. Here are the most common paths for business succession, along with their pros and cons:

Family succession

Handing your business to a family member can be a natural choice, especially in family-run enterprises. It allows the business to remain within the family and continue a legacy. However, assessing whether the family member is interested and capable of taking on the role is essential. Misalignment in goals or an unprepared successor can lead to conflict or instability.

Selling to a third party

Selling your business to an external buyer can maximise financial returns, especially if your business has significant market value. Preparing for a sale involves ensuring clean financial records, demonstrating consistent profitability, and presenting growth opportunities. The challenge lies in finding the right buyer who aligns with your values and ensuring the transition doesn’t disrupt operations.

Management buyouts (MBOs)

An MBO allows key employees or management team members to purchase the business. This option ensures continuity since the buyers already understand the business. However, funding an MBO can be complex, requiring the management team to be financially capable of taking ownership.

Employee ownership trusts (EOTs)

EOTs are becoming increasingly popular in the UK. This structure allows employees to collectively own the business collectively, fostering a sense of shared responsibility and commitment. EOTs can also provide tax advantages, such as exemption from capital gains tax on qualifying sales. However, transitioning to an EOT requires careful planning and financial structuring.

The steps to effective succession planning

Step 1: Define your goals

Start by thinking about your objectives. Do you want to pass the business to a family member, sell to a third party, or transfer ownership to employees? Your decision will influence the entire plan, so it’s crucial to have clarity from the outset.

Step 2: Assess the value of your business

Understanding your business’s worth is essential, especially if you plan to sell. A professional valuation will provide a clear picture of its financial standing and potential market value.

When valuing your business, consider intangible assets like your brand reputation, customer loyalty, and intellectual property. These elements often hold significant value but can be overlooked in traditional valuations.

Step 3: Identify potential successors

Choosing the right successor is one of the most critical decisions in the process. If you’re transferring to a family member, consider their skills, interests, and readiness to lead. Identify suitable buyers who align with your company’s values and goals for external sales.

Developing a shortlist of successors and investing in their leadership development may also be helpful. For example, enrolling them in external training programs or providing mentoring can ensure they’re prepared to take on the role.

Step 4: Develop a transition plan

Once you’ve identified your successor, create a detailed transition plan. This should include:

• Training and mentorship: Ensure your successor has the skills and knowledge needed to lead effectively.
• Operational handover: Define how and when responsibilities will transfer.
• Financial arrangements: Outline the structure of the sale or transfer, including any payment terms or retained interests.

Step 5: Review legal and tax implications

Succession planning involves complex legal and tax considerations. Work with professionals to ensure compliance and minimise liabilities. Key areas to address include:

• Inheritance tax: Transfers of business assets may qualify for relief under Business Property Relief (BPR).
• Capital gains tax: The sale of your business could trigger CGT. While Entrepreneurs’ Relief (now Business Asset Disposal Relief) currently reduces the rate to 10% for qualifying individuals, this is set to increase to 14% from 6 April 2025 and 18% on 6 April 2026. Factoring in these changes is crucial to optimise your tax position.
• Shareholder agreements: If your business has multiple owners, ensure agreements are in place to manage ownership changes.

Step 6: Communicate the plan

Transparency is vital. Share your plan with key stakeholders, including family members, employees, and advisers. Clear communication reduces misunderstandings and ensures everyone is on the same page.

Step 7: Monitor and update the plan

Succession planning is not a one-time task. You should regularly review and update your plan to reflect changes in your business, industry, or personal circumstances.

The benefits of starting early

Procrastination often leads to rushed decisions and missed opportunities. Starting early offers significant advantages:

Improving successor readiness

By planning well in advance, you can dedicate time to training your successor. Leadership coaching, on-the-job experience, and professional development programs contribute to their readiness for the role.

Attracting better buyers

If you’re selling your business, a well-prepared succession plan increases its appeal to buyers. A structured plan demonstrates professionalism, minimises risks, and can even boost the sale price.

Tax advantages over time

Tax planning benefits from longer timelines. For example, spreading the ownership transfer across multiple years can reduce tax liabilities or provide more opportunities to take advantage of reliefs like Business Property Relief or Entrepreneurs’ Relief.

Common challenges in succession planning

Many business owners need more time for succession planning due to its complexity or emotional nature. However, addressing these challenges early can make the process easier.

• Cultural shifts during leadership transitions: A new leader may change company culture or operations. Establish clear communication channels and support during the adjustment period to avoid disruption.
• Resistance to change: Employees, clients, or stakeholders may resist the transition due to uncertainty or fear of disruption. Clear communication and reassurance, alongside visible support from the outgoing leader, can ease this resistance.
• Economic uncertainty: External factors, such as market downturns or industry changes, can affect succession timing and execution. Building flexibility into your plan allows you to adapt as needed.
• Inadequate planning timeline: Rushing succession planning can result in oversights, such as missing opportunities for tax relief or failing to prepare the successor adequately. Starting early provides time to address these challenges methodically.
• Balancing immediate needs with long-term goals: Business owners often focus on short-term operational demands at the expense of long-term planning. Delegating daily responsibilities to trusted team members can free up time to focus on succession.

The cost of delaying succession planning

Delaying succession planning can have serious consequences. The FSB reports that many businesses without a plan face closure after the owner’s departure, putting employees’ livelihoods at risk.

Additionally, unplanned transitions can lead to disputes among family members, client loss, and a drop in business value.

How we can help

We understand that business succession planning can feel daunting. That’s why we’re here to guide you through the process, offering tailored advice considering your goals and circumstances.

Whether you’re just starting to think about succession planning or need help refining an existing plan, we’re ready to help. Our team can assist with valuations, tax planning, legal considerations, and transition strategies to ensure your business’s future success.

Let’s secure your business’s future together – with expert accounting advice to guide every step.