Companies that may have miscalculated their corporation tax marginal relief may receive a letter from HMRC as part of a new campaign. The targeted errors could be due to ignoring associated companies.

Associated companies
Directors will be aware that the first £50,000 of their company’s profit benefits from a corporation tax rate of 19%, compared to the main rate of 25% applicable once profits hit £250,000. This means:

• Marginal relief eases the transition from the 19% rate to the main rate.
• Directors may not appreciate, however, that the £50,000 and £250,000 limits are shared across associated companies.
• For example, if a company has two associated companies, marginal relief will apply on profits between £16,667 and £83,333.

 
Essentially, companies are associated if one is under the control of the other, or if both are under common control. It doesn’t matter whether a company is associated for part of an accounting period, or where a company is resident. However, dormant companies are not treated as associated.
 
The associated company rules can be quite complex, and, in some circumstances, a company owned by a spouse, civil partner, parent, child or sibling can be treated as an associated company.
 
One-to-many letters
Any company receiving a letter only has 30 days in which to respond to HMRC, and, if necessary, make any amendment. HMRC could, of course, be mistaken, such as where an alleged associated company is, in fact, dormant.
What a director should definitely not do is ignore a letter. If HMRC were to follow up with a formal compliance check, the process would likely be time-consuming and costly.

Planning
If a company’s corporation tax is higher than it would otherwise be as a result of having associated companies, the overall company structure needs to be reviewed. For example, two companies under common control might have profits of £49,000 and £1,000 respectively. The total corporation tax bill could be reduced by £1,800 if the two companies were combined into one company.
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HMRC’s guidance on marginal relief can be found here.

It is once more the time to turn from sunny thoughts of summer holidays to dark contemplation of the Autumn Budget.
In July 2024, Rachel Reeves made her contentious House of Commons statement about the “£22 billion black hole” and, as one of the measures to fill it, severely restricted pensioner entitlement to the Winter Fuel Payment. One consequence of her ‘discovery’ was that the rest of that summer and the first part of autumn was full of speculation about what tax rises would be contained in the 2024 Autumn Budget.

Fast forward a year and there is a similar story playing out. The Winter Fuel Payment features again, but this time it is the £1.25 billion cost of the climbdown on means-testing that matters. To that can be added about the £5 billion expense of another reversal of policy, reform of disability benefits. This new black hole, alongside slowing economic growth, is generating a fresh round of speculation examining what taxes might be increased.

The Chancellor continues to rule out increases to income tax, national insurance and VAT for ‘working people’, leaving potential targets such as:

• A further freeze on income tax allowances and bands: The personal allowance and income tax thresholds were originally frozen for four years (2022/23–2025/26) by Rishi Sunak, to which another two years were added by Jeremy Hunt. Rachel Reeves could extend the freeze until April 2030.

 

• Pension contribution tax relief: A regular candidate for revenue-raising, so far, most Chancellors have merely nibbled this low-hanging fruit. Were Rachel Reeves to be bolder and, for example, introduce a flat rate of relief for all contributions, this could generate billions from the ever-growing number of higher and additional rate taxpayers.

 

• A wealth tax: This idea was resurrected recently by Neil Kinnock, a former Labour leader, and to date, the government has studiously refused to rule out the possibility. In practice, wealth taxes have proved difficult to administer and many countries have abandoned them. As if to underline the problems, according to a July 2025 report from the House of Commons Public Accounts Committee, “HMRC has no overview of an individual’s total wealth and faces challenges in getting all the data it needs to risk assess and target wealthy people”.

If your personal finances have not had a recent review, it could be a good move to take stock and make any necessary adjustments before autumn progresses too far. 

HMRC has tightened checks on pension relief after finding that a third of claims made by PAYE tax codes were incorrect.

The problem
Contributions into a personal pension are made net of basic rate tax, so only higher and additional rate taxpayers need claim relief. However, HMRC’s review found that many basic rate taxpayers were trying to claim. Claims were also made where relief had already been given through salary deduction

To make the situation worse, some claimants had simply guessed their paid pension contributions, rather than using the information provided by their pension provider.
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Claims going forward
From 1 September, it is no longer possible to make a claim over the phone; most claims must now be made online. Also:

• Previously, taxpayers only needed to upload or send proof of pension payments made if the payments were in excess of £10,000.      
• HMRC now require all claims to be backed up with supporting evidence each tax year.
• For personal pension contributions, this will mean a letter or statement from the pension provider showing the amount contributed.

 
Postal claims are only possible for those unable to claim online.
 
The changes have no impact on individuals who complete a self-assessment tax return. Claims for pension relief will continue as normal on the tax return.
 
Who can claim
 
Higher and additional rate taxpayers (in Scotland, taxpayers paying the intermediate rate or higher) paying into a personal or workplace pension can make a claim for the additional amount of tax relief for which they are entitled. For example, an additional rate taxpayer will receive a further 25% in relief.
 
Taxpayers can also make a claim if tax relief is not given automatically on their pension contributions.
 
HMRC’s guidance on claiming tax relief on pension payments can be found here.

An important consideration when selling your business is whether business asset disposal relief (BADR) will be available to minimise the capital gains tax (CGT) cost. BADR will be less advantageous from April 2026, so company owners may be looking to sell sooner rather than later.
BADR is currently at a flat rate of 14%, which is 10% lower than the higher rate of CGT. The rate will go up to 18% from 6 April 2026.

Calculating the gain
In many cases, the gain will just be the difference between the selling price and the nominal value of the shares sold. However, establishing the base cost will be more problematic if shares were inherited or received as a gift. Any further amounts invested in the business as share capital will also increase the base cost.
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Capital gains tax
There are various conditions attached to BADR, which are basically:

• The company has to be a trading company;
• A 5% shareholding test must be met; and
• You must be a director (or employee) of the company being sold.

 
These conditions have to be met for a minimum of two years before the sale, so it may be worth postponing a sale where the two-year ownership condition is not met.
 
BADR has a lifetime limit of £1 million of qualifying gains. This will not be an issue for many company owners, but it might be a problem if relief has been claimed previously.
 
Other considerations
 
While it will suit most company owners to sell their shareholding in return for cash, the buyer might prefer to purchase the assets of the company instead; this complicates the tax situation.
 
Furthermore, rather than a straight cash sale, the buyer will often want the seller to accept shares or loan notes as part of the consideration. Such an arrangement will keep the outgoing owner involved once the business has been sold. To the same end, the buyer may propose a phased payment plan, with an initial amount upfront, followed by further payments linked to future business performance.
 
Professional advice is essential when selling a business, so please contact us well in advance of any planned disposal.
 
HMRC’s guide to BADR can be found here.

From 1 January 2026, crypto investors will face new reporting requirements when buying, selling, transferring or exchanging cryptoassets, such as Bitcoin. This means HMRC will be able to link cryptoasset activity to your tax record.
The latest figures show that seven million people in the UK own some form of cryptoasset, with the value of Bitcoin having increased significantly over the past year.

Capital Gains Tax (CGT) treatment
For CGT purposes, cryptoassets are treated similar to shares, with each type of cryptoasset pooled. There will be a CGT disposal if you:

• Sell cryptoassets (even if the proceeds are not withdrawn from the exchange);
• Exchange one type of cryptoasset for a different type of cryptoasset;
• Use cryptoassets to pay for goods or services; or
• Make a gift of your cryptoassets to another person (unless it’s to your spouse or civil partner).

 
There is no disposal if, for example, you simply move cryptoassets between different wallets.
 
Reporting requirements
 
Individual investors will have to provide their name, date of birth, home address and either their national insurance number or their unique tax reference.

Using a non-UK based cryptoasset service provider will not avoid the reporting requirements if the provider is based in a country following the same rules. However, several countries that host providers have not yet signed up to the reporting requirements, and the use of a decentralised exchange might also circumvent the new rules.

Failing to disclose information to a cryptoasset service provider, or submitting an inaccurate or incomplete report, will be subject to a £300 fine.

HMRC
Cryptoasset service providers will report the collected cryptoasset data to HMRC. The first reports covering 2026 will be reported by May 2027, making it easier for HMRC to see if disposals have not been reported on an investor’s self-assessment tax return. Previously, compliance has relied largely on voluntary disclosure.
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Tax returns from 2024/25 onwards now include a dedicated section for gains made on cryptoassets in the CGT pages.
HMRC’s detailed guidance on the new cryptoasset reporting requirements can be found here.

Unfortunately, it’s all bad news. The government has confirmed that most unused pensions will fall within the scope of inheritance tax (IHT), and that it will review the State pension age (SPA).
On top of this comes the news that almost half of working-age adults are not making any provision for a private pension.

Unused pensions
The government has published draft legislation to take effect from 6 April 2027. The change will see most unused pension death benefits brought into charge for IHT purposes, although one change has been made in response to industry feedback. All death-in-service benefits will now be excluded from the charge to IHT.

State pension age
By March 2028, the SPA will have increased to 67. The next planned increase to age 68 is set to take place between 2044 and 2046, impacting those born on or after 6 April 1977. There have been recommendations that this timeline be brought forward, but any further changes have until now been shelved due to recent uncertainty about life expectancy.

However, with the government’s recent announcement of the next review of the SPA, further increases are possible.
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Lack of pension provision
The government – not surprisingly – is very concerned about the number of people not saving privately for a pension:

• Low earners and the self-employed are less likely to be contributing to a pension, with more than three million self-employed people without such savings.
• The situation is worse among women and some ethnic groups.
• Overall, some 40% of people are currently not saving enough for their retirement.

 
For a moderate lifestyle, it is estimated that a single person currently requires nearly £32,000 a year, with nearly £44,000 required for a couple; the full State pension is just under £12,000.
 
These latest findings come despite employees being automatically enrolled into pension saving. The relaunched pensions commission will therefore look at what is preventing greater pension saving, reporting back in 2027.
 
The currently legislated timetables for SPA can be found here.

Starting 1 September 2025, two separate advisory fuel rates apply to fully electric cars depending on whether charging is at home or using a public charger.
HMRC’s advisory fuel rates can be used to reimburse employees for business travel in their company cars, or where employees are required to repay the cost of fuel used for private travel.

Rates
The electric car rate was previously 7p per mile, regardless of where charging took place. Reimbursement at this rate meant company car drivers could be faced with a substantial shortfall if they made extensive use of public charging networks.

Advisory rates are now 8p for home charging, with 12p for public charging. Although the previous single rate can continue to be used until 30 September, from 1 October only the new rates can be applied. This means:

• The change to two separate rates reflects the higher cost of using public charging locations.
• However, the public charging rate is based on the typical cost of a slow or fast charge. It will, therefore, normally be less than what a driver would pay to use an ultra-fast charger.
• If this is the case, reimbursement can reflect the higher, actual, cost provided the rate can be substantiated.

 
As long as business mileage is reimbursed at an acceptable rate – the advisory rate or a substantiated higher rate – employees will not face a taxable fuel benefit, and there are no national insurance contribution implications for either the employer or employees.
 
In addition, having rates for different charging locations means more complicated record-keeping requirements for employers.

Hybrids
The change only impacts on fully electric cars. Hybrids are treated as either petrol or diesel cars, so the advisory rates for these types are relevant. There are no changes to the petrol rate from 1 September, but two of the diesel rates have increased by 1p per mile.
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HMRC guidance on its advisory fuel rates can be found here.

Recently published statistics show that the company car is making something of a comeback, with the number of recipients for 2023/24 up 80,000 from the previous year.
From a high of 960,000 company car recipients in 2015/16, the number dropped to 720,000 by 2020/21. The level has now picked up to 840,000, with the increase due to the beneficial tax treatment of cars with CO2 emissions of 75 grams per kilometre or less, especially fully electric cars.

Salary sacrifice
With tax thresholds frozen, sacrificing salary in return for the use of a low-emission company car can mean a significant tax saving. For example, an employee with an income of £120,000 – well within the personal allowance trap – who sacrifices £6,000 of salary to cover the employer’s lease cost of a mid-priced, fully electric company car, will save around £2,800 in tax and National Insurance Contributions. With this in mind:

• It is therefore not surprising that the number of zero-emission company car recipients has risen six-fold between 2020/21 and 2023/24, with the number now standing at over 340,000. This is 41% of all company car benefit recipients.
• It also explains why the average CO2 emission of company cars for 2023/24 was 56 g/km, compared to 71 g/km in the previous tax year.
• A further advantage of an employee making use of a fully electric company car is that there will be no fuel benefit even if a charging point is provided at the employer’s premises.

 
The rise in fully electric company car recipients is mirrored in the percentage of company car drivers with diesel cars, which is down to 13%, having been nearly 50% back in 2020/21.
 
The future                            
While fully electric company cars currently attract a benefit percentage of just 3%, this percentage is set to increase to a much less beneficial 9% by 2029/30. For the taxpayer in our example, this will cut the overall tax saving to around £1,000. The company car comeback may be short-lived after all.
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The tax cost of having a company car can be calculated starting here using HMRC’s company car and car fuel benefit calculator.

HMRC has scrapped plans for Making Tax Digital (MTD) to include corporation tax. However, new digital services will be rolled out over 2025/26, as outlined in its recently published transformation roadmap.

MTD for corporation tax
HMRC had not confirmed a date for introducing MTD for corporation tax, which has now been officially abandoned; the introduction of MTD for income tax from April 2026 also pushed the corporation tax element further down the priority list.
That leaves the question of how HMRC will modernise corporation tax administration in other ways, especially as the tax gap for corporation tax is now estimated at nearly 16%.

Digital services
The transformation roadmap sets out more than 50 information technology projects, services and measures, including:

• A new online service for Pay As You Earn taxpayers, which will make it simpler and easier for employees to check and update their income, allowances and reliefs. The new service will be available through an employee’s personal tax account or through the HMRC app.
• The launch of a new expenses service, which will enable employees to submit claims for tax relief on their allowable expenses and to upload the supporting evidence all in one place.
• The expansion of digital services for the self-employed, which will improve the registration service and also streamline the exit process for those who no longer need to file a self-assessment tax return.

 
A biometric voice system is already being used to verify taxpayers’ identities when contacting HMRC, and this system will be expanded throughout the remainder of 2025/26.
 
HMRC’s long-term aim is to end reliance on phone lines, which will come as no surprise given the long wait times and number of calls going unanswered. By 2030, HMRC intends for 90% of taxpayer interaction to be digital, either through personal tax accounts or using the HMRC app.

HMRC’s transformation roadmap can be found here.

Shortly before Parliament closed for its summer holidays, the government announced a review of the State pension age (SPA).
Pensioners are a sensitive topic for the government. Not only has it been forced to make a U-turn on winter fuel payments, but it has also had to stand firm against the Women Against State Pension Inequality who were affected by the increases in the SPA in the 2010s. So it likely did not relish the requirement inherited from the previous government to undertake a fresh review of the SPA within two years of being elected.

In mid-July, as part of a bring-out-your-dead pile of announcements made just before the summer recess, the Department for Work and Pensions (DWP) revealed two fresh SPA reviews. As was probably hoped, the news was swamped by other government statements, such as the relaunch of the Pensions Commission, which appeared on the same day. Nevertheless, the SPA review will have significant impacts, both for individual and government finances.

The current situation is:

• SPA is 66 for men and women.
• It will gradually rise to 67 over two years from next April.
• Currently, the SPA increase to 68 is legislated to be phased in over two years from April 2044.
• The first review, published in 2017, proposed that the SPA should rise to age 68 from 2037–39.
• A second review (in 2022) proposed 2041–43 for the move to 68.
• Both reviews prompted the government to promise another review before the final decision is made.
• At least ten years’ notice will be given of any change to SPA.

 
The original 2037–39 proposal now looks unlikely to go ahead, not least because it would be hard to meet the ten-year notice requirement. However, there is another reason for delaying further change. Since 2037 was proposed, projections for UK life expectancy have fallen significantly. At the time of the first report, a man aged 68 in 2037 was projected to live 21.1 years and a woman, 23.0 years. The latest figures are 18.4 years and 20.9 years respectively, which would point to abandoning any increase to SPA. Government finances inevitably pull in the oppositedirection, as the annual savings run to billions. 

Arguably the DWP has won its last two battles with the Treasury (over winter fuel and disability benefits). SPA is unlikely to be a third victory.
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You can check your projected SPA on the you.gov site here and State pension forecast here.