Accountants Newcastle | London

❓ FAQ OF THE WEEK ❓

Will my pension be subject to Inheritance Tax from 2027?

Potentially, yes.

From 6 April 2027, most unused pension funds and pension death benefits will be included when calculating the value of an estate for Inheritance Tax purposes.

This is a significant change because pensions have often formed an important part of estate planning, with many unused pension funds historically falling outside the estate for IHT purposes.

💷 Does that mean my pension will automatically suffer 40% tax?

No.

Inheritance Tax will still depend on the overall value of your estate, the available nil-rate bands, exemptions and reliefs, and who ultimately receives the assets.

However, adding a substantial pension fund to the calculation could push more estates into the IHT net or increase the tax payable.

The standard nil-rate band remains £325,000, with a potential additional £175,000 residence nil-rate band where the qualifying conditions are met.

For couples, transferable allowances and the spouse or civil partner exemption can also materially affect the position.

📅 What should I be doing now?

If you have accumulated significant pension wealth, particularly alongside property, investments or a valuable business, it is worth reviewing your estate planning before the new rules take effect.

That could include looking again at pension nominations, your Will, lifetime gifting and how your assets are structured overall.

The important point is that pensions should no longer automatically be viewed as an IHT-free pot to leave untouched for the next generation.

At Accounting Inc., we can help you understand your potential Inheritance Tax exposure and identify areas where sensible lifetime planning could make a difference.

#InheritanceTax #pensionplanning #taxplanning ... See MoreSee Less

📊 Profitable on paper, but always short of cash?

It's a situation many business owners will recognise.

Sales are coming in, the accounts show a profit, but the bank balance tells a different story.

There can be several reasons. Customers taking too long to pay, VAT and corporation tax liabilities building up, loan repayments, stock purchases or simply taking more money out of the business than cash flow can comfortably support.

The problem is that annual accounts alone don't always provide the information needed to manage these pressures.

At Accounting Inc., we help business owners understand what's happening behind the numbers.

Through management accounts, cash-flow forecasting, tax planning and practical business advice, we help clients make more informed decisions and plan ahead.

💡 A profitable business should also understand where its cash is going.

If your business is performing well but cash flow remains a constant concern, get in touch to discuss how#smallbusinessukS#CashFlowManagementh#businessadvisoryusinessAdvisory ... See MoreSee Less

💡 TAX TIP OF THE WEEK 💡

🏠 Form 17: Splitting Rental Income Between Spouses

If a married couple or civil partners living together jointly own a rental property, the rental income is normally taxed 50:50, even where their underlying ownership is unequal.

But that isn't always the most tax-efficient result.

📋 Form 17 allows couples with genuinely unequal beneficial ownership to ask HMRC to tax the income in those same proportions.

For example, where a property is beneficially owned 90:10, a valid Form 17 can allow the rental income to be taxed 90:10 rather than automatically 50:50.

⚠️ However, Form 17 doesn't let you simply choose a convenient tax split.

The income split must match the couple's actual beneficial ownership of the property. Evidence, usually a declaration or deed of trust, must be provided to HMRC.

⏰ Timing matters too. Both spouses must sign the Form 17 and it must reach HMRC within 60 days. A late declaration is invalid and it cannot be backdated.

📜 Form 17 itself doesn't change who owns the property. If the beneficial ownership needs to be changed first, the wider tax consequences should be considered.

For transfers between spouses, Capital Gains Tax will generally benefit from the no gain/no loss rules, but Stamp Duty Land Tax can still arise, particularly where responsibility for a mortgage is transferred.

✅ Form 17 can therefore be a useful planning tool where spouses have different income levels, but the ownership, documentation and tax treatment all need to align.

At Accounting Inc., we help property owners structure jointly owned investments and rental income correctly an#taxtipf#PropertyTax##Form17#PropertyTax #Form17 ... See MoreSee Less

❓ FAQ OF THE WEEK ❓

Did the Budget change the tax relief available if I sell my business?

Yes, and it could be significant for business owners planning an exit.

One of the changes announced in last week’s Budget was a reduction in the lifetime limit for Business Asset Disposal Relief, commonly known as BADR.

BADR can apply when you sell all or part of a qualifying business, or shares in your personal trading company, and allows qualifying gains to be taxed at a reduced Capital Gains Tax rate.

💷 The current lifetime limit is £1 million.

From 6 April 2027, this will reduce to £500,000.

Importantly, this is a lifetime allowance, so any BADR you have claimed on previous business disposals will also count towards the new £500,000 limit.

For many smaller business owners this may make no difference. But if you are building a business with a view to selling it, already have significant value in your company, or have previously claimed BADR, the change could materially affect the tax payable on a future sale.

📅 Does that mean I should sell before April 2027?

Not necessarily.

The commercial decision should come first. But if a sale, restructuring or succession is already being considered, the timing is now more important and should form part of the tax planning well before a transaction is agreed.

There are also specific anti-forestalling rules around transactions designed simply to secure the existing £1 million limit before the rules change, so this is not an area for last-minute planning.

At Accounting Inc., we help business owners plan ahead for business sales, succession and extracting value from their companies in the most tax-efficient way available.

If you are considering selling your business in the next few years, now is a sensible time to understand what the Budget changes could mean for you.

#BusinessAssetDisposalRelief #CapitalGainsTax #BusinessTax ... See MoreSee Less

💡 TAX TIP OF THE WEEK 💡

📉 Budget 2026: Business Asset Disposal Relief Cut in Half

Last week’s Budget included an important change for business owners planning to sell their company or business.

From 6 April 2027, the lifetime limit for Business Asset Disposal Relief will reduce from £1 million to £500,000.

💷 BADR allows qualifying business disposals to benefit from a reduced 18% Capital Gains Tax rate.

The change means that someone making a qualifying gain of £1 million could potentially have only the first £500,000 taxed at the BADR rate from April 2027, rather than the full £1 million under the current rules.

⚠️ Previous BADR claims also count towards the lifetime limit. So, if you have already used £300,000 of your allowance, only £200,000 would remain once the new £500,000 limit takes effect.

📅 Timing could therefore matter. Business owners already considering a sale, retirement or succession in the near future should review their position before 6 April 2027 rather than assuming the current relief will remain available.

There are anti-forestalling provisions around transactions entered into before the change, so simply signing an agreement early will not necessarily secure the existing £1 million limit.

✅ The key is to plan ahead. BADR has detailed qualifying conditions covering areas such as share ownership, employment or office-holder status and the company’s trading activities.

At Accounting Inc., we help business owners plan ahead for disposals, succession and extracting value from their companies tax-efficiently.

#TaxTip #BusinessAssetDisposalRelief #Budget2026 ... See MoreSee Less