Capital Gains Tax and entrepreneurial support or not
From 6th April 2027, the government will introduce changes to capital gains tax reliefs for business owners and founders.
- Business Asset Disposal Relief (BADR): The lifetime limit on gains eligible for BADR will be reduced from £1 million to £500,000.
HMRC Powers
The Chancellor has pledged to increase the number of HMRC compliance officers and modernise its information and inspection powers. New statutory requirements will be placed on taxpayers from 1 April 2028 to correct identified inaccuracies, although no details have been provided as to what this will look like.
From July 2029, HMRC will be able to recover lower-value unpaid tax debts through regular instalments directly from taxpayers’ bank accounts where they can afford to pay but repeatedly fail to do so. In short, HMRC’s compliance powers and resources are increasing, and now is the time to make sure your tax affairs are up to date.
Income tax from property and savings income to rise
Income tax from property and savings income will be increased by a further 2% from April 2027, on top of the 2% already announced, making a total rise of 4% from existing rates. Income Tax rates for property rental income for taxpayers (excluding Scottish taxpayers) will go up to 24%, 44% and 49% respectively for the basic, higher and additional rates.
ISAs and Savings
The annual £20,000 Cash ISA allowance will remain, with the Government deciding not to proceed with a reduction in the amount that can be invested. A new ‘Starter’ ISA is also planned to encourage first-time investors.
Mileage rate rises
The mileage rate allowances from April 2027 will be 55p for the first 10,00 miles (as it is now) and anything over 10,000 miles will be at 35p.
Minimum wage rates from April 2027
- National Living Wage: £13.21 per hour for workers aged 21 and over, up from £12.71
- 18 to 20-year-olds: £11.27 per hour, up from £10.85.
- Apprentices: £12.71 per hour for apprentices aged 21 and over, up from £12.00.
- Under-18 apprentices: £8.31 per hour, up from £8.00.
MTD Income Tax
Clients who join MTD for Income Tax in April 2027 will not receive late filing penalties if they file any of their 2027/28 quarterly updates late.
From April 2029, taxpayers who are within Self Assessment (which includes MTD for Income Tax) will have to make smaller, more regular contributions towards their tax bill throughout the year. This will replace the current system whereby taxpayers make two large lump-sum payments on 31st January and 31st July.
Parental pay for self-employed
From April 2029, self-employed dads, partners and adopters will qualify for a parental allowance for the first time. They will be eligible for two week’s support worth up to £194 a week.
Pension taxation
There is no income tax liability for pensioners with total income up to the value of the new State Pension from 6 April 2027, until 5 April 2030. This ensures pensioners whose total income is up to the value of the full new State Pension do not have the administrative burden of paying small amounts of income tax. HMRC publishes a full-relief income threshold of £13,037 for 2027–28. Above that, the tax reduction is withdrawn by £1 for each £3 of additional income. People with a little additional private income may receive partial protection.
Thresholds for Small Business Rates Relief increased
The threshold for businesses to qualify for 100% will be increased from £12,000 to £18,000 from April 2027. The threshold for businesses to qualify for tapered relief will also increase from £15,000 to £21,000.
Trading allowance tripled from £1k to £3k
In a boost to freelancers and side-hustlers, the trading allowance will be tripled from £1,000 to £3,000, starting from 6th April 2027.
Winter energy support
If your home is in council tax bands A-D, you will be entitled to a £100 winter energy support which should be received from January 2027 onwards.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the contact us page on our website: www.champconsultants.co.uk
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