Stablecoins are currently taxed in the same way as other cryptoassets. However, this is set to change from April 2027, when eligible stablecoins are expected to be treated similarly to money for tax purposes.

Why stablecoins?
Stablecoins are currently dominated by US dollar-based products, with stablecoins worth over $300 billion in circulation. They are extremely convenient for investors who wish to park their funds while buying and selling other more volatile cryptoassets.

Stablecoins are a good way to pay for goods and services, avoiding most of the costs associated with traditional payment methods such as credit cards. This is especially the case with cross-border transactions. Around 1.2 million individuals engage in stablecoin transactions, and the changes will make the tax framework easier to understand. 

Eligible stablecoins
An eligible stablecoin will broadly be defined as a cryptoasset that maintains a stable value in relation to a fiat currency. Fiat currency or other assets will need to be held for the purposes of supporting the stable value. 

Cryptoasset disposals
Most disposals of cryptoassets are subject to capital gains tax (CGT). There is a disposal if an individual:

• sells a cryptoasset;
• exchanges one type of cryptoasset for a different type of cryptoasset;
• uses cryptoassets to pay for goods or services; or
• makes a gift of cryptoassets to another person (unless it is to their spouse or registered civil partner).

 
However, there is no disposal if, for example, an individual simply moves cryptoassets between different wallets.
 
Tax status changes
From 6 April 2027, the disposal of eligible stablecoins by an individual will be exempt from CGT. Although most stablecoins are non-interest bearing, should any interest-like returns be received from holding eligible stablecoins, this will be treated as savings income subject to income tax. The personal savings allowance of £1,000 or £500 will potentially be available.
 
The government’s policy paper on the taxation of stablecoins can be found here.

The law in England and Wales is moving a step closer to treating married and unmarried couples in a similar way.
“Over 3.5 million couples live together without getting married or entering a civil partnership, a number that has more than doubled over the past three decades. Despite this, cohabiting couples and their children have very limited financial protections should a relationship end.”

So says the foreword to A fairer end to relationships, a 100-page paper from the Ministry of Justice that makes proposals on divorce for married couples and civil partners, and separation and intestacy for unmarried couples in England and Wales. The most significant proposals are those affecting unmarried couples, for whom there is currently much less legal protection than for married couples. For example, while intestacy rules start with the surviving spouse as the main beneficiary, the survivor of an unmarried couple is ignored.

The new regime for unmarried couples would automatically apply to adults in “long-term, committed and interdependent relationships” who have lived together for at least three years or live together and share a child. However, there would be an option to opt out where both parties agree, subject to certain safeguards.

Under the proposed framework, the starting point would be that each person keeps what they legally own. The court would then consider the parties’ needs, with the aim that these should be met in a way that enables both parties to “transition to independence… as far as resources allow”. This limited definition of needs would mean that cohabitants cannot receive a more favourable outcome than spouses in comparable circumstances. Children’s welfare would be the primary consideration of the court, ensuring their welfare is protected where resources are limited.

While the settlement mechanisms would be similar to those currently applying on divorce, the goal would be to achieve a clean break wherever possible, with maintenance limited to exceptional circumstances, such as long-term ill health
.
On intestacy, the proposal is that rights of inheritance should be extended to ‘qualifying cohabitants’. The minimum duration for qualification would not necessarily be the same as applied on separation and might be longer.

If you are in an unmarried relationship, do not wait for the law to change, which could take years – if it happens at all. Make sure your legal and financial planning works within the existing legal framework, which does not recognise common-law marriage.
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The government’s proposal on reforms for unmarried couples can be read here.

Although no date for its introduction has yet been announced, the government has recently provided some details for the new first time buyer individual savings account (FTB ISA), which is set to replace the lifetime ISA (LISA).

Essential differences
The LISA never garnered a large take-up, so its replacement has some fundamental changes:

• Target: The FTB ISA is for first-time property purchasers only, whereas the LISA can also be used to save money for retirement.
• Age limit: To open a LISA, a saver must be 18 to 40, with no subscriptions allowed over age 50. With the FTB ISA, the only requirement is that a saver be 18 or over; there is no upper age limit.
• Bonus: With the LISA, the government bonus is paid monthly, so the saver benefits from interest or investment growth on bonus payments. However, with the FTB ISA, the bonus will only be paid when a property is purchased.
• Withdrawal penalty: The LISA comes with a withdrawal penalty of 25%, meaning a saver will end up with less than they paid in. There will be no penalty for withdrawing funds from the FTB ISA.

The government has said that any change to the property price cap of £450,000 will apply to both products.

Interaction
A saver who already has a LISA, or opens one before the FTB ISA is introduced, will be able to continue to contribute to it indefinitely. Although it will not be possible to transfer a LISA into the FTB ISA, a saver will have the choice each tax year whether to save into a LISA or FTB ISA. It will then be possible to combine the funds held in both accounts when making a property purchase.

Although there is no withdrawal penalty for the FTB ISA, the timing of the government bonus would seem to give the LISA a distinct advantage, although full details of the new product have yet to be announced.
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The government’s guide to lifetime ISAs can be found here.

The tax gap for 2024/25 sets another record at £59.2 billion, with small businesses accounting for some 62% of the taxes not collected.

The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid.

Upward trend
The tax gap for 2024/25 represents around 6.4% of the total tax due. Although the tax gap has been higher historically, it has generally increased throughout recent years; for example, for 2021/22, it was 5.7%.
HMRC, as is normally the case, has revised figures for previous years. When figures were released for 2023/24, the tax gap was shown as generally declining. However, the latest figures show the tax gap for 2023/24 at 6.0%, rather than the previous 5.3%, an increase of £6 billion.

Small businesses under scrutiny
In 2024/25, small businesses accounted for 62% of the tax gap, an increase of four percentage points since 2020/21. Such firms are the main culprits here, with HMRC estimating that around 45% of the corporation tax owed was not collected. No surprise then that identity verification has recently been introduced for company directors and persons with significant control.
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Behaviour
The largest proportion of the tax gap comes from failure to take reasonable care. This is currently 35% – nearly £21 billion – increasing from 30% of the tax gap in 2020/21:

• HMRC blames failure to take reasonable care on a taxpayer’s carelessness, negligence, or poor record-keeping, but the increasing complexity of the tax system and the deterioration in HMRC customer service also play a part.
• Add in taxpayer errors and more than half of the tax gap is now down to taxpayers who probably regard themselves as tax-compliant.

 
Actual evasion of tax only accounts for 12% of the tax gap, with tax avoidance standing at just 1% of the total. HMRC’s summary details of the latest tax gap figures can be found here.

Owners of public houses have faced significantly higher bills for business rates from April 2026. To partly offset the increases, the government announced a 15% discount for the current year and has recently announced a 20% discount for 2027/28.
The higher business rates costs have been generated as a result of a business rates revaluation and the removal of Covid-era relief.
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Who qualifies?
For 2025/26, retail, hospitality and leisure businesses in England qualified for a 40% discount on their business rates:

• The 15% and 20% discounts are more restrictive, only applying for public houses, clubs and live music venues. The discounts are applied on top of any other available reliefs.
• Not surprisingly, owners of restaurants, cafés and hotels are disappointed about their exclusion from the latest discounts.
• Larger live music venues will not qualify for the 20% discount, with further details expected to be outlined in the Autumn Budget.

 
Almost 32,000 public houses, clubs and live music venues are likely to benefit from the 15% and 20% discounts, with the typical public house expected to save £1,100 in 2027/28.
 
For 2026/27, Scotland has given a 15% discount for retail, hospitality and leisure businesses, and Wales provides a similar discount for food and drink hospitality businesses.
 
Support for small businesses
For premises in England, 100% relief applies where the rateable value is less than £12,000, with tapered relief for properties valued up to £15,000.

Most English properties which have lost the retail, hospitality and leisure discount qualify for the Supporting Small Business Relief (SSBR) scheme. The calculations can be complicated, but, for example, the business rates rise for 2026/27 for a property with a rateable value between £20,001 (£28,001 in London) and £100,000 is capped at the higher of £800 and 15%. Caps also apply for 2027/28 and 2028/29.

However, for public houses, clubs and live music venues, their business rates bill will only increase by inflation for 2027/28 and 2028/29, with the newly announced 20% discount in addition to this cap.

Details of the 15% discount for 2026/27 can be found here.

There is no financial limit on the value of cycles that can be provided to employees under the cycle-to-work scheme. Therefore, it was something of a surprise when the Chancellor did not impose a cap in the November 2025 Budget, especially as some cycles can cost over £5,000.

The cycle-to-work scheme has become extremely popular, which should be no surprise given the tax savings.

Typical scenario
After registering with a cycle-to-work scheme provider, the employer purchases the cycle and hires it to the employee, probably under a salary sacrifice arrangement. The hire period will normally be between 12 and 18 months.

• The cost of the cycle is repaid by the employee by gross monthly salary deductions.
• If the monthly salary deductions are, say, £400, this will save an employee paying tax at the higher rate of some £160 in tax each month – plus a small amount of national insurance contributions (NICs).
• The employer saves NICs of £60 each month.

 
The cycle-to-work scheme must be offered across the whole workforce (although this does not necessarily have to be through a salary sacrifice arrangement).
 
At least 50% of the cycle’s use must be for qualifying journeys – generally meaning the employee’s commute to work.
 
End of the hire period
At the end of the hire period, the employee can return the cycle to the provider, or they can extend the hire agreement; extension comes with a nominal payment. Therefore:

• Many employees will go for a third option, which is to take immediate ownership of their cycle by paying a fair market value to the employer.
• For a cycle just a year old and costing over £500, HMRC will accept a disposal value of 25% of the cycle’s original price.

 
The percentage is lower for older cycles and those costing less than £500.
 
Detailed guidance on the cycle-to-work scheme for employers can be found here (note that the rates of NICs in the guidance are out of date).

More than 580,000 traders were penalised for late payment of VAT last year, representing a quarter of businesses registered for VAT. A sure sign that the tougher penalty regime introduced in 2023 is hitting cash-strapped businesses.
Penalty regime

Each late payment of VAT is considered separately, with penalties charged as follows:

Days late
Penalty

Up to 15
None

16 to 30
3% of outstanding VAT

More than 30
A further 3% penalty, plus a daily penalty at a rate of 10% p.a. on the outstanding VAT (charged beginning after the initial 30-day period)

• A penalty is not charged if a trader has a reasonable excuse. Illness and domestic problems do not count as valid excuses unless really serious. Lack of funds also does not count, nor does reliance on a third party or a lack of a reminder from HMRC.
• A trader can, however, avoid any further penalties accruing by entering into a time to pay (TTP) arrangement with HMRC. For example, penalties are avoided if a business secures an arrangement before a VAT payment is 15 days late.

 
Traders struggling to pay a VAT liability should avoid ignoring the overdue bill. Instead, try to negotiate a TTP arrangement to provide a breathing space.
Regardless of whether any late payment penalties are incurred, late payment interest is charged from the due date until the date that a VAT liability is paid. The rate charged is currently set at 7.75%.

Penalty increases in 2027
From April 2027, the 3% late payment penalty charged after day 15 will increase to 4%, as will the penalty charged after day 30.

Currently, if a business is, say, 50 days late paying a VAT liability of £50,000, the total penalties charged amount to £3,273. The total will increase to £4,273 from April 2027; a stark warning that businesses need to get on top of their cash flow management.
​
HMRC’s guidance on how late payment penalties work can be found in the guidance.

The number of property valuations challenged by HMRC has risen by more than a fifth over the past year. No surprise given that frozen inheritance tax (IHT) thresholds and higher property prices have pushed more people into the IHT net.

With residential property accounting for not far off 50% of the net value of estates, challenging valuations is an easy way for HMRC to boost tax revenues, especially as AI can now be used to identify inconsistencies.
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Advice from experts
There can be significant financial consequences if an executor understates the value of property in an IHT return:

• Apart from the additional IHT payable, late payment interest – currently set at 7.75% – will be due on the underpayment.
• A penalty can also be charged if the underpayment results from a return containing an inaccuracy due to reasonable care not being taken.

 
Best advice is for executors to instruct a professional valuer, rather than just relying on an estimate from a high street estate agent. However, taking the average from three estate agent valuations will mean reasonable care has been taken.
 
What the future holds
 
Unfortunately, the situation is unlikely to improve over the next few years. IHT thresholds are set to remain frozen until 5 April 2031, while the property market, although subdued as a result of the inflationary impact of the Middle East conflict, remains resilient and is unlikely to see falling values, except for London and the South East of England.
 
The inclusion of most unused pension pots within the IHT net from April 2027 (unless inherited by a spouse or civil partner) will increase the number of estates subject to IHT.
 
Planning for your estate
 
Wills should be up to date, taking into account realistic property values and the coming inclusion of pension pots. Make sure that, where possible, the residence nil rate band is fully utilised as this can save IHT of £140,000 for a couple.
 
Lifetime gifts are becoming increasingly popular as a means to mitigate potential IHT liabilities. One problem is that the main residence might be the only sizeable asset, but downsizing could be a way of releasing funds for lifetime gifting.
 
The government’s guide to how to value an estate for IHT and report its value can be found here.

Directors of close companies will have to provide more details than previously when completing their self-assessment tax returns for 2025/26. In the longer term, close companies themselves will also be required to provide significantly more detailed information.

The problem of dividend income
Unlike savings income, where financial institutions report details to HMRC, it has previously been difficult for HMRC to check whether a taxpayer has correctly reported dividend income; particularly if this comes from a close company and the dividends are credited to the director’s current account rather than being paid out.
The latest tax gap is estimated to be over £45 billion, with small businesses representing the largest proportion of the shortfall.

HMRC has previously run a targeted campaign directed at directors whom they suspected – based on a review of company accounts – had not declared dividends.

More details required of close companies
There is now a requirement for self-assessment tax returns to include a separate employment page for each directorship of a close company, even if no salary or dividends are received. The following has to be provided:

• The name of the close company;
• The company’s registration number;
• The amount of dividend income received from the company; and
• The percentage shareholding in the company.

 
Once the close company itself is required to provide more detailed information, it will be a simple matter for HMRC to cross-check the two sets of data.

Close company reporting under consultation
Currently at the consultation stage, HMRC’s proposals could see close companies having to report not just dividends, but also details of cash withdrawals, loans, debts and transfers of assets between the company and its director(s).
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The tax cost of operating from a limited company has increased over recent years, and using an unincorporated structure has generally become a more attractive proposition. The new reporting requirements are likely to simply reinforce this decision.

Self-assessment tax return notes (7.1 to 7.4 relate to the new reporting requirements) for the employment section can be found here.

Making Tax Digital (MTD) is now live, but given the low numbers registered with HMRC, many sole traders and landlords affected are still looking at how to comply, keep the administrative burden to a minimum and will probably be looking for inexpensive – or even free – software to use.

Low sign-up
At the start of April, nearly 80% of those required to register for MTD had not done so. The problem is that many do not see any upside to keeping digital records and having to report figures to HMRC quarterly:

• A number of individuals will find getting records together for the annual self-assessment tax return difficult enough, and will not relish complying with tight quarterly reporting deadlines.
• Because the MTD compliance threshold is based on income, there will be some who have to comply but will not even have a tax liability. They will almost certainly not want to incur additional agent fees for MTD compliance.

 
For many individuals, the best option might be to keep the minimum required records using a standard spreadsheet and then use free bridging software to deal with the quarterly reporting requirement. With the first quarterly update due on 7 August, now is the time to get organised.
 
Software
 
HMRC has created a software finder tool to direct taxpayers towards suitable software, including a number of free options. However, several of the available options are still at the development stage.
Software that imports information directly from the taxpayer’s bank account may be the perfect solution for many sole traders and landlords, but not for those who are putting their business and/or letting income and expenditure through their personal bank account.

Exit options
The £50,000 MTD threshold from 6 April 2026 is based on income for 2024/25. There will be some individuals whose income has since fallen to below £50,000, and HMRC has now clarified when it is possible to apply to opt out of MTD.
Unfortunately, opting out is only possible where all sources of qualifying income have ceased; not the case if, for example, self-employment ceases, but there is still property income. Opting out of MTD can be done via HMRC’s webchat, by telephone or by writing to HMRC.
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The start point for finding software that works with MTD for income tax can be found here.