January 2025 Tax News

**Scotland** The key tax takeaways from the Scottish Budget, held on 4th December, concerned the Scottish Rate of Income Tax (SRIT) and Land & Buildings Transaction Tax (LBTT). _Scottish Rate of Income Tax_ If a taxpayer’s main residence is in Scotland or they are otherwise classed as a ‘Scottish taxpayer’, their non-savings/non-dividend income is subject to the SRIT. Cabinet Secretary for Finance & Local Government, Shona Robinson, announced that the SRIT will not be increased and no new bands will be introduced for the remainder of this parliament. From 6 April 2025, the Basic and Intermediate rate thresholds will however increase by 3.5%, meaning more income of a Scottish taxpayer can be taxed at the lower 20% and 21% rates, before moving into the higher 42%+ rates. _Land & Buildings Transaction Tax_ Rates and bands of residential and non-residential LBTT will remain at their current levels, although the Additional Dwelling Supplement (ADS) increased from 6% to 8% from 5 December 2024. The increase does not apply to transactions for which legal missives were signed on or before 4 December. **Wales** The Welsh Budget took place on 10th December 2024. There were no changes announced to the Welsh Rate of Income Tax (WRIT). For 2025/26 the rates and bands remain the same as those applicable in England and Northern Ireland.

The Government published a ‘Corporate Tax Roadmap’ as part of Autumn Budget 2024. The Roadmap is designed to give corporate businesses (and, in some areas, non-corporate businesses) certainty about the tax framework ahead to give confidence in business decisions being made now. The Roadmap sets out the areas in which the Government intends to maintain the status quo for the duration of this parliament, as well as areas in which change is expected. Starting with corporation tax rates, the Government have committed not to increase the rates of corporation tax paid by small or larger companies and to keep the rates under review to ensure they remain competitive. This means that small companies (those with profits below £50,000 a year) will continue to pay at 19% and larger companies (with profits above £250,000 a year) will continue to pay at 25%, with marginal relief given from the 25% rate for companies with profits between the two thresholds. No changes have been made to the ‘associated company’ regime so, to ensure the correct rate of corporate tax is applied, it remains crucial to fully identify group companies and those under the control of the same individual(s). Turning to capital allowances and of interest to unincorporated businesses as well as companies, the Government have committed to maintaining the rates of writing down allowances in the main and special rate plant and machinery pools, as well as the availability of the very valuable 100% annual investment allowance for up to £1 million of qualifying expenditure each year. For companies, the unlimited ‘full-expensing’ regime will also be maintained for expenditure on brand-new and otherwise qualifying plant and machinery, with a continued hope of seeing the qualification criteria expanded. For companies, the two mechanisms for obtaining tax relief for revenue research and development (R&D) expenditure that have been in place since 1 April 2024 will also be maintained. This remains a very complex area so please do reach out to us if you need support in this area or are considering whether you may be able to make a claim.

Payrolling benefits in kind’ means that employee benefits in kind (e.g. company cars and medical insurance) are reported to HMRC through the employer’s payroll. Employees’ tax codes are amended so that any income tax due on the benefits is paid throughout the tax year. If a benefit has been payrolled, it does not need to be included on form P11D. Payrolling is possible for all benefits in kind, except for employer-provided living accommodation and beneficial (interest-free or low-interest) loans; these must still be reported on the P11D. If an employer wishes to payroll benefits, they must register with HMRC before the start of the tax year in which they plan to start. Regardless of whether benefits are included in the payroll or on a P11D, the employer must still include them in summary form P11D(b) and pay Class 1A National Insurance Contributions on the total taxable benefit value across the workforce. The deadline for filing the P11D(b) and paying the Class 1A NIC due is 6 July following the end of the tax year. From 6 April 2026, payrolling benefits in kind will become mandatory for all employers for all benefits except for beneficial loans and living accommodation, although these will be able to be included in the payroll on a voluntary basis. It is hoped that this will bring simplification and clarity for employers and employees. As mentioned above, it is possible to choose to enter the regime one year early, from 6 April 2025, on a voluntary basis. Please talk to us if you are considering this or otherwise have any questions about future obligations.

With the 31 January self assessment deadline fast approaching, HMRC has warned taxpayers to be alert to fraudsters. In the past year, there has been a 16.7% increase in scam referrals to HMRC, with almost 150,000 received in the year to November 2024. A significant proportion of those referrals were fake tax rebate claims. HMRC say that they never ask for personal or financial information via text message, nor will they leave voicemails threatening legal action or arrest. If you receive communication claiming to be from HMRC that asks for your personal information or is offering a tax rebate, check the advice on GOV.UK to help identify if it is scam activity (https://www.gov.uk/guidance/identify-hmrc-related-scam-phone-calls-emails-and-text-messages).