Changes to Capital Goods Scheme for VAT: What UK Businesses Need to Know Posted on 19 July 202619 July 2026 by Rida Ahmed A client came to APEX last year partway through refurbishing a mixed-use building — offices upstairs, a partly exempt letting downstairs. The spend sat just above the old £250,000 capital goods scheme threshold, which meant ten years of annual VAT adjustments to track and defend. Under the rules that now apply, that same refurbishment would fall outside the scheme entirely. From 29 July 2026, HMRC will raise the Capital Goods Scheme threshold for land, buildings and civil engineering work from £250,000 to £600,000 and will remove computers from the scheme altogether. This is the biggest change to CGS since it was introduced in 1990, and it will pull thousands of smaller property transactions out of a notoriously complex compliance regime. Quick answer: The Capital Goods Scheme (CGS) threshold for land, buildings and civil engineering works rises from £250,000 to £600,000 (excluding VAT) from 29 July 2026. Computers and computer equipment are removed from the CGS entirely from the same date — the old £50,000 threshold no longer applies to them. The change only affects capital expenditure incurred on or after 29 July 2026; anything already committed under contract before that date follows the old rules. It’s made via secondary legislation amending regulations 113 and 114 of the VAT Regulations 1995 (SI 1995/2518) — this is a confirmed HMRC measure, not a consultation proposal. HMRC estimates the change will save affected businesses roughly £0.6 million a year in administrative costs, with negligible Exchequer impact. What is the Capital Goods Scheme for VAT? The Capital Goods Scheme for VAT is an adjustment mechanism that spreads the recovery of input tax on certain high-value assets over several years, rather than allowing a single claim at the point of purchase. It exists to stop businesses over- or under-claiming VAT when the taxable use of an asset changes after acquisition. Under current law, two categories of asset fall within CGS: Land, buildings and civil engineering works, where capital expenditure is £250,000 or more (excluding VAT) — adjusted over 10 successive intervals. Computers and computer equipment, where capital expenditure is £50,000 or more — adjusted over 5 successive intervals. Once an asset is inside the scheme, the business must revisit the VAT recovery percentage every year for the length of the adjustment period, comparing the asset’s actual taxable use against the baseline set in year one. If taxable use rises, HMRC repays more VAT; if it falls, the business repays VAT already claimed. A change of use on disposal within the adjustment period can trigger a single, larger reconciliation covering all the remaining years at once. Businesses that are fully taxable are not automatically exempt from this – a change from taxable to exempt use, such as an office building later let on an exempt basis, can still trigger a clawback even where the business recovers all its VAT elsewhere. Read: VAT on Online Marketplace Sales: What UK Sellers Need to Know About the New HMRC Consultation What’s changing under the Capital Goods Scheme simplification? HMRC is making two specific changes to CGS from 29 July 2026, confirmed in its policy paper on the simplification of the scheme. The threshold for land, buildings and civil engineering works increases, and computers leave the scheme completely. Higher property threshold: the £250,000 trigger for land, buildings and civil engineering works rises to £600,000 (excluding VAT). Expenditure below that level will no longer create a CGS item at all. Computers removed entirely: computers and items of computer equipment are taken out of the scheme’s scope. The old £50,000 threshold and 5-interval adjustment period for computer equipment cease to apply. The legal mechanism is an amendment to Part XV of the VAT Regulations 1995 (SI 1995/2518). Regulation 113(2) is amended to remove the reference to computers and computer equipment, and regulation 113(4) is amended to raise the property threshold, with consequential changes to regulations 113A and 114. When do the new CGS rules take effect? The changes take effect on 29 July 2026 and are not retrospective. Capital expenditure incurred before that date — meaning goods or services already received, or goods already imported or acquired — continues to be governed by the old £250,000 and £50,000 thresholds, even if the asset’s adjustment period runs on for years afterwards. In practice, this means: A property purchase or refurbishment where the tax point falls before 29 July 2026 is tested against the old £250,000 threshold, regardless of when the deal completes on paper. A property purchase or refurbishment where the tax point falls on or after 29 July 2026 is tested against the new £600,000 threshold. Assets already inside CGS under the old rules stay inside CGS and continue their existing adjustment period — the threshold change does not remove them from the scheme retroactively. Businesses part-way through a phased development that straddles the date should take advice before assuming which threshold applies, since the transitional rule is based on when expenditure is incurred, not when the wider project is signed off. How does the higher £600,000 threshold work in practice? A capital project only falls within CGS if its VAT-exclusive cost meets or exceeds the relevant threshold — everything below that line is recovered under normal partial exemption rules with no ongoing adjustment obligation. Here’s how that plays out for a typical partly exempt business. Example: A dental practice buys and fits out a new clinic building for £400,000 (excluding VAT), incurring £80,000 of VAT. Under the current £250,000 threshold, that expenditure falls within CGS, committing the practice to ten years of annual adjustment calculations as its mix of NHS and private (exempt/taxable) work shifts. Under the new £600,000 threshold, the same £400,000 spend falls outside the scheme entirely. The practice recovers VAT once, under its normal partial exemption method, with no ten-year tail of adjustments to monitor or defend at inspection. The same logic applies to refurbishments. A £900,000 refurbishment of an existing building still crosses the new threshold and remains a CGS item in its own right, tracked separately from the underlying property. Businesses working close to £600,000 should model the VAT position before committing to a build contract, since structuring the spend (or timing it either side of 29 July 2026) can determine whether ten years of adjustment obligations apply. Why is HMRC removing computers from the Capital Goods Scheme? HMRC says the computer category has become redundant because the cost of qualifying equipment has fallen well below the £50,000 threshold since the scheme was introduced in 1990, so it is very rarely triggered in practice. Removing it eliminates a compliance obligation that HMRC itself acknowledges delivers little practical benefit for the Exchequer. The wider reform follows a long consultation history. The government launched a Call for Evidence in July 2019, after the 2017 Office of Tax Simplification VAT review flagged CGS as unnecessarily burdensome for smaller businesses. A summary of responses was published in March 2021, and the specific threshold and computer changes were formally announced on 28 April 2025 as part of the government’s Tax Update: Simplification, Administration and Reform work. HMRC’s own impact assessment projects negligible Exchequer cost and estimates ongoing administrative savings for businesses of around £0.6 million a year, concentrated among smaller property owners who previously fell within scope simply because of rising property values. Who is affected by these changes to VAT on capital expenditure? The changes affect any VAT-registered business incurring capital expenditure on land, buildings, civil engineering works, or computer equipment. In practice, the businesses most affected fall into a few groups. Partly exempt businesses — including care providers, financial services firms, education providers and charities — who mix taxable and exempt income and have historically had to track CGS adjustments on modest property purchases. Property investors and developers carrying out refurbishments or fit-outs in the £250,000–£600,000 band, who will now fall outside the scheme altogether. SMEs buying or improving commercial premises, for whom the old threshold had become disproportionate as property values rose since 1990. Any business holding computer equipment previously caught by the £50,000 threshold, which will simply stop being a CGS consideration from 29 July 2026. Wholly taxable businesses are not exempt from the practical effects either — even a fully taxable business can find a change of use (for example, letting out surplus space on an exempt basis) crystallising a CGS liability, so the higher property threshold is a genuine simplification for that group too. Also Read: Getting Your Business Ready for the Summer’s Temporary VAT Cut What should businesses do to prepare? Businesses with capital projects planned for mid-to-late 2026 should establish now whether their expenditure will fall inside or outside CGS once the new threshold applies. Three practical steps matter most. Identify the tax point for any pending land, building or civil engineering spend, since that — not the completion date of the wider project — determines which threshold applies. Review existing CGS records for assets already inside the scheme under the old £250,000 or £50,000 thresholds; these continue on their original adjustment period regardless of the reform. Reassess partial exemption methods where CGS previously drove the choice of method, since removing an asset from CGS can change what special method (if any) is still worthwhile. FAQs About HMRCs Changes To Capital Goods Scheme Does the Capital Goods Scheme only affect partly exempt businesses? No. While partly exempt businesses are most exposed, a fully taxable business can still be caught if the use of an asset later changes — for example, letting out space that was originally used for taxable trading. The scheme is triggered by a change in use, not by a business’s overall VAT status at the time of purchase. What happens if I sell a capital item during the adjustment period? Selling a capital item during its adjustment period crystallises all the remaining years’ adjustments in a single calculation, made in the VAT return covering the sale. If the sale itself is a taxable supply, the remaining intervals are treated as 100% taxable use; if it’s exempt, they’re treated as 0% taxable use, which can produce a significant one-off VAT repayment or claim. Do the new thresholds apply retrospectively to buildings I already own? No. The higher threshold only applies to capital expenditure incurred on or after 29 July 2026. Assets that were already inside the Capital Goods Scheme under the £250,000 or £50,000 thresholds remain inside the scheme and continue their existing adjustment period unaffected. Is this confirmed law or still a proposal? This is confirmed government policy, implemented through secondary legislation amending the VAT Regulations 1995, with an operative date of 29 July 2026 set out in HMRC’s published policy paper. It is not a consultation or draft proposal at this stage, though businesses should always check GOV.UK for the final statutory instrument reference nearer the commencement date. Do I need an accountant for Capital Goods Scheme calculations? Most businesses benefit from professional support, particularly where a project sits close to the £600,000 threshold or where partial exemption percentages fluctuate year to year. Getting the baseline interval wrong, or missing a change-of-use trigger, can lead to VAT assessments and penalties several years after the original purchase. What if my capital expenditure is close to the £600,000 threshold? Where spend is close to the threshold, timing and contract structuring can determine whether the Capital Goods Scheme applies at all. It’s worth taking advice before committing to a build contract, since expenditure incurred just before 29 July 2026 is tested against the old £250,000 limit even if the wider project completes later. Next steps If you’re planning capital expenditure on property, refurbishment or equipment in the run-up to this change, it’s worth reviewing the VAT treatment before contracts are signed rather than after. Apex Accountants & Tax Advisors works with property owners, developers and partly exempt businesses across the UK to assess Capital Goods Scheme exposure, structure capital projects efficiently and manage existing CGS adjustment schedules. Book a consultation with our VAT team to review your position ahead of the 29 July 2026 change.
Scottish Tax Advice for High Earners and the 67.5% Tax Trap Posted on 14 July 202614 July 2026 by Farazia Gillani Scottish tax advice for high earners has become more important as Scottish taxpayers earning above £100,000 face one of the highest effective marginal income tax rates in the developed world. The figure is 67.5%. It does not appear in any legislation. It is not an official rate. But it is real; it is unavoidable unless planned around, and it is growing more relevant every year as frozen thresholds drag more earners into its range. What Is the 67.5% Tax Trap and Where Does It Come From? The trap is the product of two policies colliding. The first is a UK-wide rule. The Personal Allowance, currently £12,570, begins to taper once income exceeds £100,000. For every £2 earned above that threshold, £1 of the allowance is withdrawn. By £125,140, the allowance is gone entirely. This taper has long created a 60% effective marginal rate for higher earners in England and Wales because they pay 40% tax on the extra income and 40% on the allowance that disappears. The second is Scotland-specific. Scotland has its own income tax rates, set by the Scottish Parliament under powers devolved through the Scotland Act 2016. In Scotland, the income between £75,001 and £125,140 falls within the Advanced Rate band, which is taxed at 45%. The Scottish Government’s own tax-ready reckoners confirm the outcome directly: “Taxpayers earning more than £125,140 do not benefit from the Personal Allowance. These taxpayers face a marginal rate of Income taxation of 67.5% on earnings between £100,000 and £125,140.” The arithmetic works like this. On each £2 earned in this range, the Scottish taxpayer pays 45% income tax on that £2 and separately loses £1 of Personal Allowance, which is then also taxed at 45%. The result is a combined rate of 67.5% on each additional pound. Scotland’s Six-Band System in 2026/27 To understand where the trap sits, it helps to see the full rate structure. The Scottish Government confirmed the following bands for 2026/27 at the Scottish Budget on 13 January 2026: BandGross Income RangeRateStarter£12,571 to £16,53719%Basic£16,538 to £29,52620%Intermediate£29,527 to £43,66221%Higher£43,663 to £75,00042%Advanced£75,001 to £125,14045%TopAbove £125,14048% Source: gov.scot — Scottish Income Tax rates and bands 2026/27 In this Budget, the Higher, Advanced, and Top rate thresholds all remained unchanged. Only the Starter and Basic rate thresholds were raised, by 7.4%. Two things stand out. Scotland’s Higher Rate begins at £43,663, compared with £50,271 in England. Scottish earners, therefore, enter the 42% band nearly £7,000 earlier. The Advanced Rate of 45% interacts with the Personal Allowance taper to create the 67.5% trap, and it has no equivalent in England’s three-band structure. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Why Scottish tax advice for high earners matters more now Three years ago, the trap caught a narrower group of earners. Frozen thresholds have changed that. The UK government confirmed in the 2025 Autumn Statement that the personal allowance will remain frozen at £12,570 until at least 2030/31, as confirmed by the Scottish Government’s technical factsheet. The higher, advanced, and top-rate thresholds in Scotland will also remain frozen for the current Parliament. As wages rise with inflation, more workers are crossing £100,000 for the first time. Professionals in medicine, law, and financial services, as well as senior public sector employees and business owners drawing salary and dividends, are increasingly being pulled into the taper range without any change in the value of what they earn in real terms. The Institute for Fiscal Studies noted that Scotland’s marginal rate structure is “significantly more complex” than the rest of the UK, with seven effective rates once the taper is counted, and that the 67.5% rate in the £100,000 to £125,140 range exceeds England’s equivalent 60% by 7.5 percentage points. Who Is Caught The trap affects Scottish residents whose non-savings, non-dividend income falls between £100,000 and £125,140. This category includes: Employed professionals on salaries in this range Company directors drawing salary above £100,000 Self-employed individuals whose taxable profits cross the threshold Earners who receive a bonus that pushes them over £100,000 in a single year Those with combined income sources — salary, rental income, or self-employment — that together exceed the threshold It is worth noting that National Insurance and dividend income are reserved matters and do not follow Scottish income tax rates. The trap is specific to non-savings employment and self-employment income. Scottish income tax planning and adjusted net income The good news is that the 67.5% rate is avoidable. The mechanism is straightforward. Tax advice for Scottish taxpayers often starts with adjusted net income, the figure used to calculate the personal allowance taper. This is broadly gross income minus pension contributions and Gift Aid donations. If adjusted net income can be brought below £100,000, the full personal allowance is restored, and the 67.5% rate does not apply. Pension contributions are the most commonly used tool for achieving this. Contributing enough to bring adjusted net income to £100,000 avoids the taper entirely. For a Scottish taxpayer at £110,000, a £10,000 pension contribution achieves this goal. Because the contribution attracts 45% tax relief and restores the personal allowance, the effective rate of relief for a Scottish advanced rate taxpayer in this band is the 67.5% rate itself. Salary sacrifice is more efficient still. Contributions made through a salary sacrifice arrangement reduce gross pay before tax and National Insurance are calculated. This means both income tax and National Insurance are saved, rather than income tax alone. The employer will typically also save on employer National Insurance, and some employers pass this saving back into the employee’s pension. Carry-forward allows unused pension annual allowances from the three previous tax years to be used in the current year. This option can be valuable for an earner who has received an unusually large bonus or has seen income spike above £100,000 for the first time. Gift Aid donations also reduce adjusted net income. A qualifying donation of £10,000 under Gift Aid has the same effect as a pension contribution of the same amount in reducing the taper exposure. The current pension Annual Allowance is £60,000 for most taxpayers in 2026/27, as confirmed by HMRC’s pension scheme rates guidance. High earners with adjusted income above £260,000 face a tapered reduction in their allowance, which is relevant for those looking to use huge contributions to navigate the taper. What Happens If Nothing Is Done For an earner with no planning who moves from £99,999 to £125,140 of income, the effective rate on that entire additional slice is 67.5%. A pay rise of £25,141 yields just £8,171 in additional take-home pay. The remaining £16,970 goes to HMRC. This is not an avoidance scheme. It is the intended consequence of the Personal Allowance taper combined with Scotland’s Advanced Rate. Planning to reduce adjusted net income below £100,000 is lawful, HMRC-acknowledged, and widely recommended by professional bodies. How tax advice from Apex Accountants for Scottish taxpayers can help The 67.5% trap often creates demand for Scottish tax advice for high earners among people who are unaware of it until they receive their tax bill. It also catches earners who believe they have planned around it but have miscalculated their adjusted net income. Apex Accountants & Tax Advisors works with Scottish residents, professionals, and business owners to: Calculate adjusted net income accurately, including all relevant income sources and deductions Model pension contribution strategies to bring income below £100,000 efficiently Advise on salary sacrifice arrangements, including the interaction with employer National Insurance Review carry-forward positions from previous years to identify additional headroom Assess the impact of bonuses or one-off income events and plan for them in advance Structure dividend and salary remuneration for Scottish company directors to minimise exposure to the taper Advise on Gift Aid and other legitimate deductions that reduce adjusted net income Scottish income tax planning is most effective earlier in the tax year, when more options are available. If you review your position after the year has ended, you will limit what you can do. Contact Apex Accountants today for tax advice for Scottish taxpayers and a review of your Scottish income tax position. Book a free consultation with one of our specialist tax advisers. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Frequently Asked Questions What is the 67.5% tax trap in Scotland? It is the effective marginal income tax rate that applies to Scottish taxpayers earning between £100,000 and £125,140. It arises from the combination of Scotland’s 45% Advanced Rate of income tax and the UK-wide Personal Allowance taper, which withdraws £1 of the £12,570 allowance for every £2 earned above £100,000. The Scottish Government’s own ready reckoners confirm this rate. See gov.scot: Scottish Budget 2026/27 Tax Ready Reckoners. Does the 67.5% rate apply if I earn dividends or savings income above £100,000? No. The Scottish income tax rates apply only to non-savings, non-dividend income such as employment income, self-employment profits, and rental income. Dividend income and savings interest are taxed at UK-wide rates regardless of where you live. However, dividend income does count toward your adjusted net income, which determines whether the Personal Allowance taper applies. See GOV.UK: Scottish Income Tax. How do pension contributions help avoid the tax trap? Pension contributions reduce your adjusted net income, which is the figure HMRC uses to calculate the Personal Allowance taper. If a contribution brings your adjusted net income below £100,000, your full personal allowance of £12,570 is restored. The effective tax relief on contributions made within the taper range is 67.5% for Scottish Advanced Rate taxpayers, because the contribution both avoids the 45% charge and restores the tax-free allowance. What is the pension annual allowance in 2026/27? The standard annual allowance for most taxpayers is £60,000 for 2026/27, or 100% of earnings if lower. This figure covers contributions from all sources, including employer contributions. High earners with threshold income above £200,000 and adjusted income above £260,000 face a tapered reduction in their allowance. Unused allowance from the three previous tax years can be carried forward. See HMRC: Pension Scheme Rates. Does the trap affect Scottish taxpayers who work in England? Yes. Scottish taxpayer status is determined by where you live, not where you work. If your main residence is in Scotland, you pay Scottish income tax rates regardless of where your employer is based or where you work each day. Your employer should apply an S-prefix tax code to your PAYE. Were there any changes to the £100,000 threshold in the 2026/27 Scottish Budget? No. The Scottish Government confirmed at the Scottish Budget on 13 January 2026 that the higher, advanced, and top-rate thresholds would remain unchanged. Only the starter and basic rate thresholds increased. The UK government, not the Scottish Parliament, sets the £100,000 personal allowance taper threshold, which remains frozen.
VAT on Online Marketplace Sales: What UK Sellers Need to Know About the New HMRC Consultation Posted on 13 July 202613 July 2026 by Farazia Gillani UK-based sellers trading on Amazon, eBay, Etsy and similar platforms could soon find themselves subject to a very different VAT system. A new joint consultation from HM Treasury and HMRC is looking at whether online marketplaces should become liable for VAT on domestic seller sales, not just on sales made by overseas traders. If this goes ahead, it would be one of the biggest shifts in UK marketplace VAT since the 2021 reforms. Here’s what’s actually being proposed, who it affects, and what sellers should be doing about it now. What Is the Online Marketplace VAT Liability Consultation? The consultation, titled Extending VAT Online Marketplace Liability to Combat Non-Compliance, opened on 23 June 2026 and runs for eight weeks, closing at 11:59pm on 18 August 2026. It’s a joint project between HMRC and HM Treasury, and it sits within a wider package of 40 tax measures announced by the Exchequer Secretary to the Treasury on the same date. At its core, the proposal would extend online marketplace VAT liability rules beyond overseas sellers and low-value imports, making platforms responsible for accounting for VAT on certain sales made by UK-established businesses too. No implementation date has been set. If the government decides to proceed, a further technical consultation on draft legislation would follow before anything becomes law. Why Is the Government Doing This? The short answer: money and fairness. HMRC estimates that tens of thousands of UK-based businesses trading through online marketplaces aren’t meeting their VAT obligations, with the resulting non-compliance running into the hundreds of millions of pounds each year. The concern isn’t really about VAT rates or new taxes. It’s about levelling the playing field. Sellers who dodge VAT can undercut competitors who charge it correctly, whether those competitors trade online or from a high street shop. The government has said any additional revenue raised would be channelled back into support for high street businesses through changes to the business rates system. This builds on the 2021 reforms, which made marketplaces liable for VAT on: sales by overseas sellers with goods already in the UK at the point of sale low-value imports of £135 or less, where the goods are outside the UK when sold Those changes worked well for overseas non-compliance. What they didn’t fix was VAT leakage among UK-based sellers, and that’s the gap this new consultation is trying to close. Read: The Complete Tax Guide for Online Sellers in the UK – Amazon, Vinted, eBay, and Etsy How Does Marketplace VAT Work Right Now? Before looking at what might change, it helps to understand the current rules. ScenarioWho accounts for VAT todayOverseas seller, goods already in the UK at saleThe marketplaceGoods outside the UK, consignment value £135 or lessThe marketplaceGoods outside the UK, consignment value over £135Normal import VAT and customs rules applyUK-established seller, goods in the UK at saleThe sellerSale to a UK VAT-registered business customer with a valid VAT numberThe business customer accounts for VAT in the relevant low-value import scenario A platform only counts as an “online marketplace” for VAT purposes if it does all three of the following: sets the terms of sale processes or enables payment is involved in ordering, delivery, or facilitating delivery Platforms that simply run adverts, process payments only, or redirect buyers elsewhere aren’t caught by these rules. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation What Would Actually Change for UK Sellers? This is the part that matters most to domestic sellers. Under the proposal, marketplaces would become liable for VAT on business-to-consumer sales made by UK-established sellers, where the goods are already in the UK at the point of sale. Technically, this would work through a deemed supply structure: the seller would make a zero-rated supply to the marketplace, and the marketplace would then charge VAT to the end customer and account for it on its own VAT return. A few things the proposal makes clear: It’s aimed at B2C sales only — business-to-business transactions are out of scope. It would not change VAT rates on any goods. Zero-rated items stay zero-rated. Sales through a seller’s own website or physical shop would be unaffected — the seller would keep accounting for VAT on those as normal. Input tax recovery would continue under the usual rules. For information on the trading allowance, do read: How to Use the £1,000 Trading Allowance When Selling on Vinted, eBay & Other Platforms Who Would Be Protected? The Threshold Question HMRC faces one of the trickiest challenges in this proposal: preventing the rules from affecting small sellers who do not need to register for VAT. HMRC is consulting on two main options: Option 1: A Minimum Platform Threshold A marketplace would only become liable for a seller’s VAT once that seller’s sales on that specific platform pass a set value. The lead suggestion is £90,000 — the same as the standard UK VAT registration threshold — though a lower figure is also being considered, since £90,000 per platform could still leave gaps for sellers who spread sales across several marketplaces. Option 2: A VAT rate relief Instead of a threshold, smaller UK businesses below the VAT registration threshold could get some form of rate relief on their marketplace sales. Neither option is confirmed. The consultation is genuinely asking for input on which approach works better in practice, and it’s a question sellers close to the threshold should watch closely. It’s also worth being clear about what stays the same: the standard UK VAT registration threshold remains more than £90,000 of taxable turnover across all sales channels combined. A platform-specific threshold, if introduced, wouldn’t replace that underlying obligation. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Who’s Excluded From the Proposed Rules? Private and casual sellers: Individuals selling personal possessions, not operating as a business, aren’t intended to be caught by any of this. Second-hand goods sellers — possibly: This one is still unresolved. UK businesses using the Second-hand Margin Scheme calculate VAT on the margin between purchase and sale price, which doesn’t fit neatly into a marketplace deemed-supply model. HMRC is weighing up whether to exclude second-hand sales entirely or find another way to handle them. Takeaway and Food Delivery Platforms Are Explicitly in Scope This isn’t just an e-commerce goods story. The consultation specifically names takeaway food delivery platforms, restaurants, fast food kitchens and takeaway outlets as relevant businesses. For platforms that only operate within the UK and haven’t previously had to deal with the overseas-seller marketplace rules, this could be a much bigger operational shift than for the likes of Amazon or eBay, which already run complex VAT logic for international sellers. What About the Flat Rate Scheme? The consultation directly asks about the impact on businesses using the VAT Flat Rate Scheme. If marketplace sales move to a deemed-supply model where the platform accounts for VAT, sellers on the Flat Rate Scheme could effectively lose the ability to apply their flat rate percentage to that portion of turnover. Businesses using the Flat Rate Scheme with a significant share of marketplace sales should review the impact early, as this remains an open issue rather than a confirmed rule. A detailed tax guide for eBay sellers: eBay HMRC UK Tax Rules Every Seller Should Know What Should Sellers and Their Accountants Do Now? There’s no new law yet — this is still a consultation, and the response period runs until 18 August 2026. But that’s exactly why now is the sensible time to check exposure, rather than waiting for the outcome. A practical short-term checklist: List every marketplace the business sells through Break down turnover by platform, not just as a single total Separate B2C sales from B2B sales Check how close turnover is to the £90,000 VAT threshold Review whether the business uses the Flat Rate Scheme Flag any second-hand goods activity Note which sales come through the business’s own website, since these stay outside the marketplace model Prepare for more marketplace onboarding checks and data requests going forward Review AreaWhy It MattersVAT registration statusBoth the standard threshold and the proposed platform threshold sit at £90,000Marketplace turnover by platformThe lead proposal is based on sales per platform, not combined turnoverSales channel splitWebsite and shop sales stay under the current model; marketplace sales could shiftB2C vs B2B splitOnly B2C marketplace sales are in scope of the proposalSecond-hand goodsTreatment is still undecided because of the Margin SchemeFlat Rate Scheme useDirectly flagged as an area HMRC wants evidence on How We Help You Deal With the VAT on Online Marketplace Sales and the Proposed Changes At Apex Accountants, we work with online sellers, e-commerce businesses and marketplace traders across Amazon, eBay, Etsy and food delivery platforms to keep their VAT position under control — including ahead of policy changes like this one. Our support covers: VAT registration reviews for e-commerce and marketplace sellers Turnover analysis broken down by platform and sales channel B2C and B2B VAT mapping for mixed-channel businesses Flat Rate Scheme impact reviews Second-hand goods and Margin Scheme reviews Marketplace VAT compliance checks for Amazon, eBay, Etsy and similar platforms Support with preparing and submitting responses to the HMRC consultation If you sell through an online marketplace, the sensible move isn’t to wait for the final rules — it’s to understand exactly where your VAT exposure sits today. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Conclusion This is still a consultation, not a finished piece of legislation, and the final shape of any changes won’t be clear until after 18 August 2026. But the direction of travel is unmistakable: HMRC wants marketplaces to take on more VAT responsibility for UK-based sellers, not just overseas ones and low-value imports. VAT-registered sellers may find that platforms, rather than sellers themselves, account for VAT on marketplace sales. Smaller sellers need to assess whether the final rules introduce a suitable threshold or relief. Sellers can strengthen their position by reviewing VAT registration status, platform-by-platform turnover, sales channel mix and Flat Rate Scheme use before the rules take effect. Common Questions From UK Marketplace Sellers Will this affect my Amazon, eBay or Etsy account? Potentially, yes. The proposal applies to qualifying online marketplaces that facilitate B2C goods sales. It is not limited to specific platforms and could affect sellers using major marketplace channels. Does this affect sales through my own website? No. The proposal currently focuses on marketplace sales only. VAT obligations for sales made through your own website, physical shop or direct channels would continue under existing rules. What if my turnover is under £90,000? This remains an important area under consultation. Possible protections include a Minimum Platform Threshold or VAT rate relief, but the final approach has not been confirmed. Will marketplaces ask for more information from sellers? Yes, sellers may need to provide more details. Platforms could review business location, marketplace turnover, seller status, and whether goods are new or second-hand. Are business-to-business sales included? No. The proposed changes focus on business-to-consumer sales of goods. B2B transactions are outside the main scope of the proposed marketplace VAT liability rules.
A Complete Guide on Hair and Beauty Tax Rules in the UK Posted on 10 July 202621 September 2026 by Farazia Gillani Hair and beauty businesses often use flexible working models. A salon may have employees, chair renters, mobile stylists, freelance beauty therapists, and room renters working under one roof. That flexibility can work well, but it also creates tax risk. The key issue is not just what a contract says. The real working arrangement matters too. As per the hair and beauty tax rules, workers in this industry are either employed or self-employed, and that status affects income tax, national insurance, and VAT responsibilities. For salon owners, barbers, nail technicians, beauty therapists, and chair renters, this is now a good time to review contracts, payment flows, client ownership, and VAT treatment. At Apex Accountants, we help hair and beauty businesses get these areas right before small issues become expensive problems. What is the new tax guidance for hair and beauty services? The latest focus is on how people actually work in salons, barbershops, and beauty studios. There is no special new tax rate for hair and beauty services. The real change is clearer guidance on employment status and VAT treatment. This matters because the wrong setup can affect the following: AreaWhy it mattersEmployment statusIt affects who pays Income Tax and National Insurance.Chair rentalIt can create VATable income for the salon.Client paymentsIt affects who reports sales and VAT.Self-AssessmentFreelancers may need to file tax returns.Making Tax DigitalSome sole traders now need digital records. The main lesson is simple. A business model must match daily working practice. HMRC employment status guidance for the hair and beauty industry – employment or self-employed Employment status is one of the biggest tax issues in hair and beauty. A person may be called ‘freelance’, ‘self-employed’ or a ‘chair renter.’ That label is not enough. The actual working pattern must support it. The contract and the daily setup both matter. Working pointMore like employedMore like self-employedHoursSalon sets hoursWorker chooses hoursDays workedSalon decidesWorker decidesClientsSalon provides clientsWorker finds own clientsProductsSalon provides productsWorker buys or chooses productsTasksSalon controls dutiesWorker manages own workPayFixed wage or rateWorker sets own pricesTime offSalon controls leaveWorker chooses leave Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation When a worker is likely to be employed A worker is more likely to be employed if the salon controls their working day. This may include: setting start and finish times deciding which days they work booking clients for them setting prices providing products assigning tasks monitoring performance paying a fixed hourly rate or salary Employees have income tax and national insurance deducted through PAYE. Apprentices in salons will normally fall into this employed category. When a worker is likely to be self-employed A worker is more likely to be self-employed if they run their work like their own business. This may include: choosing when and where they work finding their own clients keeping their own client records buying products and equipment setting their own prices taking payments from clients paying rent or commission to the salon working at more than one salon only earning money when they have appointments Chair renters, mobile stylists, and beauty therapists who visit clients at home can fall into this category, but only where the facts support it. Mixed work is common Some people work in more than one way. For example, a stylist may be employed by a salon during the week and also have private clients outside those hours. In that case, they may have employment income and self-employed income. This means the tax treatment may be split. The PAYE income is handled by the employer. The private client income may need to be reported through self-assessment. Why getting employment status wrong is risky Wrong status can lead to unpaid tax, National Insurance, interest, and penalties. The risk is higher where a salon treats someone as self-employed but still controls their work like an employee. Salon owners should review: contracts rotas pricing control client ownership product supply booking systems payment handling rent or commission agreements The aim of the HMRC employment status guidance for the hair and beauty industry is to make the paperwork match the business model. VAT rules for chair rental Chair rental is one of the most important VAT areas for salons. Where a salon rents chair space to self-employed stylists, the supply to those stylists is subject to VAT. This rule can apply even if the stylist has a licence to occupy the chair space. This is because chair rental often includes more than space. It may include access to washbasins, reception areas, waiting areas, and other salon facilities. A VAT-registered salon must treat this income correctly on its VAT return. Read: Zero-Rated VAT on Hair Loss Treatments: Mark Glenn Ltd v HMRC Explained Who accounts for VAT on client takings VAT treatment depends on who supplies the service to the client. Business modelVAT treatmentStylists are employeesThe salon supplies the service and accounts for VAT on gross takings.Self-employed stylists supply services to the salonThe salon accounts for VAT on gross takings. The stylist may also have VAT duties if registered or required to register.Stylists supply services direct to their own clientsVAT depends on the stylist’s own takings and VAT position. Payments passed to the salon are payment for the salon’s own supplies, such as chair rent. This is why the payment flow matters. The answer changes depending on whether the client belongs to the salon or the self-employed worker. Signs that a stylist supplies clients directly A self-employed model is stronger when the stylist is genuinely trading on their own account. Useful indicators include: Stylists keep their own books and records they set their own prices they have their own clients client pays the stylist stylist handles complaints the stylist controls bookings stylist carries business risk salon charges rent or commission the written agreement reflects the real setup If the salon controls the client relationship, prices, and payments, the tax position may be different. VAT registration for salons and beauty businesses A beauty and hair business must register for VAT if taxable turnover goes over £90,000 in the last 12 months. Registration is also needed if taxable turnover is expected to go over £90,000 in the next 30 days. For salons and beauty businesses, taxable turnover may include: hair services beauty treatments nail services barbering product sales chair rental income room rental income commission from self-employed workers A business can also register voluntarily if turnover is below £90,000. Once registered, VAT must be charged on taxable supplies from the date of registration. Also Read: Do Hairdressers Charge VAT in the UK? Flat Rate Scheme for Hair and Beauty Some smaller VAT-registered businesses may use the Flat Rate Scheme. For hairdressing or other beauty treatment services, the flat rate percentage is 13%. A business may pay 16.5% if it is classed as a limited-cost business. This scheme can be useful, but it is not always the best choice. Before using it, salon owners should check: expected turnover product costs equipment costs VAT on purchases chair rental income whether the limited cost business rule applies A quick VAT review can help avoid choosing a scheme that costs more than expected. Self-Assessment for freelancers Self-employed stylists, barbers, nail technicians, and beauty therapists may need to file a tax return. A sole trader must usually send a self-assessment tax return if they earn more than £1,000 before deducting expenses. Untaxed tips and commission can also create a filing requirement. Self-employed workers should keep records of: client payments chair rent room rent stock and product costs equipment costs travel costs training costs insurance phone and booking software costs business bank transactions Tax is paid on profit, not sales. Good records help show the real profit figure. Tips in hair and beauty Tips need careful handling. Income tax applies to tips. Whether National Insurance applies depends on how the tips are paid and managed. Tip typeTax treatmentDirect tip kept by the workerThe worker must report it. Income Tax applies. National Insurance is not usually due.Tip paid through the employerTax is deducted through wages. National Insurance may apply depending on the setup.Tips paid through a troncTax is handled through the Tronc system. National Insurance depends on employer involvement.Compulsory service chargeTreated like wages if paid to the worker. Cash tips should not be ignored. They still form part of taxable income. Under the Employment (Allocation of Tips) Act 2023, which took effect on 1 October 2024, employers must allocate qualifying tips, gratuities and service charges fairly and transparently between workers and may not make any deductions from them except those required or permitted by law (for example, income tax). Workers can request access to the employer’s written tipping policy and to their own tipping records, and employers must keep those records for three years and respond within four weeks. For tax, HMRC’s guidance (Booklet E24) explains that cash tips paid directly by a customer to a worker belong to that worker and are taxable on them, but no PAYE or NICs are due via the employer. Tips distributed via a genuinely independent tronc are subject to PAYE by the troncmaster but normally have no NICs, whereas tips received and paid out by the employer are treated as earnings subject to both PAYE and employee and employer NICs. In all cases, tips are taxable income to the worker who ultimately receives them. Making Tax Digital for Income Tax Making Tax Digital for Income Tax now affects some sole traders. It applies in stages based on qualifying income from self-employment and property: Qualifying incomeStart dateOver £50,000 in 2024 to 20256 April 2026Over £30,000 in 2025 to 20266 April 2027Over £20,000 in 2026 to 20276 April 2028 This can affect freelance stylists, mobile beauty therapists, nail technicians, and barbers who trade as sole traders. Those in scope need compatible software and digital records. This is important because many hair and beauty businesses still use notebooks, spreadsheets, or booking apps that are not linked to tax records. Business rates for salon premises Physical salons in England may also need to review business rates. Retail, hospitality, and leisure relief can no longer be newly claimed. From 1 April 2026, business rates are calculated using rate multipliers. Hair and beauty salons are listed among service businesses that can fall within the retail, hospitality, and leisure multiplier rules, where the property meets the conditions. This can affect: hair salons nail bars beauty salons tanning shops salons offering non-surgical cosmetic procedures piercing salons This applies to England only. Common mistakes to avoid Hair and beauty businesses should avoid these errors: treating all freelancers as self-employed without checking the facts using chair rental agreements that do not match daily practice missing VAT on chair or room rental counting only profit when checking VAT registration ignoring cash tips mixing personal and business payments failing to keep client payment records waiting too long to prepare for Making Tax Digital assuming a contract is enough on its own Good tax compliance in this sector starts with clear records and a working model that makes sense. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation How We Help Businesses Stay Compliant with HMRC’s New Tax Guidance for Hair and Beauty Services At Apex Accountants, we support hair and beauty businesses with practical tax and accounting advice. Our services include: employment status reviews for salons and barbershops chair rental and room rental tax checks VAT registration advice VAT return support Self-assessment for stylists and beauty therapists bookkeeping for salons and freelancers payroll for salon employees Making Tax Digital setup year-end accounts business structure advice We help salon owners and freelancers build a tax setup that reflects how they actually work. Conclusion Hair and beauty tax rules are not just about filing returns on time. The real risk sits in the business model. Salon owners need to know whether workers are employed or self-employed. They also need to check VAT on chair rental, client takings, tips, self-assessment, and digital reporting. Freelancers need to know when to register, what records to keep, and how their income should be reported. Apex Accountants can help hair and beauty businesses review their contracts, VAT position, payment flows, and tax records so the business stays compliant and is easier to manage. Frequently Asked Questions About Hair and Beauty Tax Rules Am I self-employed if I rent a chair? Renting a chair does not automatically make you self-employed for UK tax purposes. Your status depends on whether you control clients, prices, hours, bookings, and payments and operate independently. HMRC’s CEST tool and hair-and-beauty guidance should be used to confirm status. Does chair rental include VAT? If the salon is VAT-registered, chair rental to self-employed stylists is normally standard-rated for VAT, especially when facilities like reception, washing, or bookings are included. Pure land/property rent can be exempt, but most salon “chair rentals” are included as taxable. Do beauty therapists need to register for VAT? Beauty therapists must register for UK VAT if their taxable turnover exceeds £90,000 in any rolling 12-month period or if they expect to exceed it. Voluntary registration is allowed below the threshold and may help a month-long period reclaim input VAT on business costs. Do mobile hairdressers need a tax return? Self-employed mobile hairdressers must file a self-assessment tax return if their gross trading income exceeds £1,000 in a tax year, after using the £1,000 trading allowance. Below this, no return is needed unless they have other reportable income or gains. Are tips taxable? All tips and gratuities are subject to UK Income Tax. How they are reported depends on whether customers pay you directly or via the salon; National Insurance may also be due where the employer allocates or manages the tips under PAYE or a tronc. Does Making Tax Digital apply to beauticians? MTD for Income Tax applies to self-employed beauticians with qualifying business or property income over £50,000 from April 2026, with the threshold falling to £30,000 in 2027 and £20,000 in 2028. They must use compatible software and send quarterly updates to HMRC. Do hairdressers pay tax on tips? Yes — tips are taxable income for whoever ends up receiving them, whether they come in cash, by card or through a tronc. Cash tips handed straight to a stylist are declared by the stylist on their Self Assessment or through payroll, while tips distributed through a tronc are taxed through PAYE when the troncmaster allocates them. Since October 2024, employers must also allocate tips fairly and keep tipping records that workers can ask to see. What can a hairdresser claim on tax? Self‑employed hairdressers can deduct the ordinary costs of the trade so long as they are incurred wholly for the business: scissors, clippers, electricals and other tools, products and colours, insurance, chair rent, continuing professional development, laundry of towels and gowns, business use of a mobile phone, and travel between salons or to clients — but not ordinary commuting. If you work from home, you can claim a reasonable proportion of utilities or use HMRC’s simplified working‑from‑home rates; alternatively, if your costs are small, you may use the £1,000 trading allowance instead of itemising actual expenses. When does Making Tax Digital apply to salon owners? Making Tax Digital for Income Tax starts on 6 April 2026 for sole traders and landlords with qualifying annual income over £50,000 (based on the 2024/25 tax year), followed by a threshold of over £30,000 from 6 April 2027 (based on 2025/26). Affected salon owners must keep digital records and send quarterly income and expense updates through MTD‑compatible software, alongside an end‑of‑period statement, instead of only filing one annual Self Assessment return. Limited companies and employers are unaffected — MTD for VAT already applies to VAT‑registered businesses.
Effective Tax Strategies for Managing Rental Property Purchases and Sales Posted on 2 July 20263 July 2026 by Farazia Gillani Buying or selling a rental property can be one of the most financially rewarding moves a landlord makes, but it can also trigger a surprising number of tax obligations if you’re not properly prepared. From Stamp Duty Land Tax at the point of purchase to Capital Gains Tax when you sell, understanding how to manage rental property purchases and sales efficiently can save you thousands of pounds over the lifetime of an investment. This guide walks through the key tax considerations UK landlords need to know, along with practical strategies to keep your tax bill as low as legally possible, whether you’re growing a portfolio or planning an exit. Understanding Tax on Rental Income Before getting into buying and selling, it’s worth understanding how property income tax works day to day, since this shapes many of the decisions you’ll make around acquisitions and disposals. Rental income is added to your other earnings and taxed at your marginal Income Tax rate – 20%, 40% or 45% depending on your total income for the year. You can deduct allowable expenses before working out your taxable profit, including: Letting agent and management fees Landlord insurance General maintenance and repairs (not improvements) Council tax and utility bills paid on the tenant’s behalf Accountancy fees Since the phased withdrawal of full mortgage interest relief, individual landlords now receive a 20% tax credit on mortgage interest rather than deducting it fully from profits. This has pushed many landlords to consider whether buying through a limited company structure makes more sense, particularly for higher-rate taxpayers, as company profits are taxed at Corporation Tax rates rather than personal Income Tax rates. Tax Considerations When Buying a Rental Property Every purchase decision has tax consequences that extend well beyond the purchase price. Stamp Duty Land Tax (SDLT) Landlords buying additional residential property in England and Northern Ireland pay a surcharge on top of standard SDLT rates. This applies whether you’re buying your first buy-to-let or your tenth, and it’s calculated on the full purchase price using a banded system. Getting your SDLT calculation right at completion avoids costly amendments later, and in some cases, claiming back overpaid SDLT (for example, on mixed-use or multiple dwellings purchases) can be a legitimate way to reduce upfront costs. Choosing the Right Ownership Structure Deciding whether to buy as an individual, jointly with a spouse or partner, or through a limited company is one of the most important tax decisions you’ll make. Each route affects: How profits are taxed annually Mortgage interest relief treatment Future Inheritance Tax planning The tax due when you eventually sell A limited company structure can be attractive for landlords planning to reinvest profits and build a larger portfolio, while personal ownership may suit those wanting simpler access to rental income. Best Tax Strategies for Rental Property Purchases and Sales Getting the timing and structure right across purchases and sales of rental property is where genuine tax savings are made. Some proven approaches include: 1. Spreading purchases and sales across tax years If you’re disposing of more than one property, selling them in different tax years allows you to use more than one capital gains tax annual exempt amount, rather than wasting it in a single year. 2. Transferring ownership shares between spouses or partners Transfers between spouses or civil partners are exempt from capital gains tax, so shifting ownership before a sale can help utilise both individuals’ tax bands and allowances. 3. Offsetting gains with losses Capital losses from other investments or previous property disposals can be carried forward and used to reduce a taxable gain in the year of sale. 4. Timing improvements before a sale Capital expenditure on genuine improvements (not repairs) can be added to your cost base, reducing the taxable gain when you sell. 5. Considering incorporation for long-term portfolios Some landlords with substantial portfolios incorporate their holdings into a limited company, though this needs careful planning around Capital Gains Tax and SDLT on the transfer itself. Tax on Property Sales: Capital Gains tax Tax Explained When you sell a rental property, property sales tax typically forms capital gains tax (CGT) on any increase in value since you bought it. Key points to know: UK residential property sales by landlords must be reported to HMRC, and any CGT owed paid, within 60 days of completion. The gain is calculated as the sale price minus the original purchase price, allowable buying and selling costs (such as solicitor and estate agent fees), and the cost of qualifying improvements. Basic-rate taxpayers and higher/additional-rate taxpayers pay CGT at different rates on residential property gains, so your overall income level in the year of sale matters. Everyone has an annual CGT exempt amount, which has been significantly reduced in recent years, making early planning more important than ever. Read: Capital Gains Tax for landlords reshapes the buy-to-let sell-off Strategies to Reduce Tax When Selling A second area where tax efficiency matters is, again, tax on property sales, particularly around how and when you structure a disposal. Use your annual exemption wisely – don’t let it go unused if you’re planning multiple disposals. Deduct every allowable cost – legal fees, agent fees, and even costs of establishing the property’s value at purchase can all reduce the taxable gain. Consider part-disposals – selling a share of a jointly owned property over more than one tax year can spread the gain. Keep meticulous records – HMRC may ask for evidence of improvement costs, so retain invoices and receipts from day one of ownership. Seek professional advice before exchanging contracts – once a sale is agreed, your tax planning options narrow considerably. Common Mistakes Landlords Make Forgetting the 60-day CGT reporting deadline after completion Confusing repairs (deductible against income) with improvements (deductible against capital gains) Not accounting for the SDLT surcharge when budgeting for a purchase Failing to plan ownership structure before exchange, when changes are harder and costlier to make Overlooking how rental income tax bands interact with CGT bands in the year of sale Final Thoughts Managing the tax side of rental property well comes down to planning ahead rather than reacting after the event. Whether it’s choosing the right ownership structure before you buy, keeping thorough records throughout your ownership, or timing a sale to make the most of allowances, small decisions made early can have a significant impact on your overall tax position. Given how frequently property tax rules change in the UK, it’s worth speaking to a qualified accountant or tax adviser before any major purchase or sale to ensure your strategy reflects current legislation. Contact Apex Accountants today for expert guidance on rental property purchases and sales and property tax compliance. Our team of tax relief for landlords offers tailored solutions to manage your rental property purchases and sales effectively. Let us help you navigate the complexities and secure your financial future. Frequently Asked Questions Do I pay tax on rental income if I make a loss overall? No, if your allowable expenses exceed your rental income, you have no taxable profit for that property in that year. However, you must still report the figures on your self-assessment tax return, and losses can often be carried forward to offset future profits. How soon after selling a rental property do I need to pay capital gains tax? UK residents must report and pay any CGT owed on residential property within 60 days of completion, using HMRC’s online CGT reporting service. Can I avoid Capital Gains Tax by reinvesting the proceeds into another rental property? Unlike some business assets, there’s no general rollover relief for residential rental properties, so reinvesting proceeds does not automatically avoid CGT. Specific reliefs may apply in limited circumstances, so professional advice is recommended. Is it better to own rental property personally or through a limited company? It depends on your income tax band, long-term plans, and how you intend to use rental profits. Limited companies can offer tax advantages for larger portfolios but come with additional administrative responsibilities and different rules around extracting profits. What expenses can reduce tax on rental income? Allowable expenses include letting agent fees, insurance, repairs, ground rent, service charges, and a portion of mortgage interest (via the 20% tax credit). Capital improvements aren’t deductible against income but can reduce a future capital gains tax bill instead. Does buying a second rental property always mean paying the SDLT surcharge? In most cases, yes, additional residential properties attract the SDLT surcharge in England and Northern Ireland, regardless of whether it’s your second or your tenth. There are some exceptions, so it’s worth checking your specific circumstances with a conveyancer or tax adviser.
How to Reduce Capital Gains Tax in the UK: 2026/27 Guide Posted on 19 June 20262 October 2026 by Talha Zubair Knowing how to reduce capital gains tax matters more than ever now that the tax-free allowance has shrunk to just £3,000. Capital Gains Tax (CGT) catches more people than before, whether you’re selling a rental property, cashing in shares, or offloading other assets. If you’re an investor, you’re probably also asking how to avoid capital gains tax on shares specifically, since portfolios can trigger a tax bill even when you haven’t touched the money itself. The good news is there are still plenty of legitimate ways to bring your CGT bill down, whatever you’re selling. This guide covers everything you need to know, from the current rates to specific strategies for property and shares. UK Capital Gains Tax Rates and Allowance for 2026/27 Before diving into strategies, here’s a quick snapshot of where things stand right now: Item2026/27 DetailAnnual Exempt Amount (tax-free allowance)£3,000 per personBasic rate CGT (all assets)18%Higher/additional rate CGT (all assets)24%Business Asset Disposal Relief (BADR)18% (up from 14% in 2025/26)BADR lifetime limit£1 millionBasic rate Income Tax bandUp to £50,270 total taxable incomeISA allowance£20,000 per year (fully CGT-free) Since October 2024, property and shares have been taxed at the same rates — 18% or 24%, depending on your income. Your CGT rate depends on how much “room” you have left in your basic rate income tax band once your other income is accounted for. Fill that remaining space first at 18%, and anything above it is taxed at 24%. How to Reduce Capital Gains Tax When Selling a Property Selling a second home, buy-to-let, or inherited property? If you’re looking to cut your capital gains tax on property, here’s how to legally reduce the bill: Claim Private Residence Relief (PRR) – If the property has been your only or main home at any point, you get relief for that period, plus the final 9 months of ownership automatically. Deduct all allowable costs – Estate agent fees, solicitor fees, stamp duty paid on purchase, and costs of major improvements (like an extension or new kitchen, not routine repairs) all reduce your taxable gain. Offset capital losses – Losses from other asset sales (shares, other property) in the same tax year or carried forward from previous years can be deducted from the gain. Transfer part-ownership to your spouse or civil partner before selling – Transfers between spouses are CGT-free, so splitting ownership before the sale lets you use two £3,000 allowances and potentially two basic rate bands instead of one. Time the sale around your income – If you expect a lower-income year (redundancy, retirement, or career break), selling then can keep more of the gain in the 18% band rather than 24%. Split the disposal across tax years – If it’s a large gain and structurally possible (e.g., selling in stages or completing just either side of 6 April), you can use two years’ worth of allowances. Letting relief (in limited cases) – If you let out a property that was previously your main home, some relief may still apply depending on your specific circumstances — this area has been tightened considerably, so check current rules carefully. Report and pay on time – UK residential property gains must be reported and paid within 60 days of completion via HMRC’s “Capital Gains Tax on UK property” service, separate from Self Assessment. Missing this triggers penalties on top of the tax itself. How to Avoid Capital Gains Tax on Shares If you’re selling shares, funds, or a portfolio, these are the main levers available: Use your ISA allowance (“Bed and ISA”) – Sell shares outside an ISA and immediately repurchase them inside a Stocks and Shares ISA, using up to £20,000 of your annual ISA allowance. Future gains inside the ISA are then completely CGT-free. Use your pension allowance (“Bed and SIPP”) – A similar trick works with a Self-Invested Personal Pension: selling and rebuying inside a pension shelters future growth and also earns tax relief on the contribution. Spread disposals across tax years – Selling part of a holding in March and the rest in April uses two separate £3,000 exemptions instead of one. Harvest losses – Sell underperforming shares to crystallise a loss, then offset it against gains elsewhere. You can even sell and buy back a different but similar fund to stay invested (buying back the exact same shares within 30 days doesn’t count for tax purposes — this is the “bed and breakfasting” rule). Transfer shares to a spouse or civil partner – This is CGT-free and can double your combined allowance to £6,000, or shift shares to whichever partner pays a lower tax rate. Consider EIS, SEIS or VCT investments – These offer Income Tax relief and, in some cases, the ability to defer CGT on other gains by reinvesting proceeds — though they carry higher investment risk and are not suitable for everyone. Use Business Asset Disposal Relief where eligible – If you’re selling shares in your own trading company (holding 5% or more and having been an officer or employee for at least two years), gains up to £1 million can be taxed at just 18% instead of the standard rates. Gift Hold-Over Relief – Gifting (rather than selling) shares in a trading company can defer the CGT charge until the recipient eventually disposes of them. How to Reduce Capital Gains Tax on Any Asset: General Strategies These tips apply no matter what you’re selling: Never let your £3,000 allowance go to waste – It doesn’t carry forward, so if you’re planning multiple disposals, spreading them across tax years is often the single easiest way to save tax. Double up with your spouse – Combined, a couple has £6,000 of annual allowance and can use both people’s basic rate bands. Keep meticulous records – Purchase price, sale price, fees, and improvement costs. Good records mean you claim every deduction you’re entitled to. Reduce your taxable income in the disposal year – Larger pension contributions reduce your taxable income, which can push more of your gain into the 18% band rather than the 24%. Each £1,000 of income moved below the higher rate threshold can save up to £60 in CGT. Consider gifting to charity – Gifts of shares or property to a registered charity are exempt from CGT entirely. Don’t forget losses carry forward indefinitely – If you made a loss years ago and never used it, it can still be offset against gains today as long as it was reported to HMRC. Get professional advice for large or complex gains – Business sales, inherited property, or non-UK residency situations all have extra rules (like Overseas Workday Relief) that a specialist can help you navigate. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Quick Reference: CGT Reduction Strategies at a Glance StrategyBest ForKey BenefitUse annual exemption across yearsAny large gainExtra £3,000 tax-free per yearSpousal transfer before saleCouplesDoubles allowance, may lower rateBed and ISAShares/fundsFuture gains CGT-freeBed and SIPPShares/fundsShelter growth + pension reliefLoss harvestingInvestment portfoliosDirectly offsets gainsPrivate Residence ReliefProperty that was your homeRemoves/reduces gain entirelyBusiness Asset Disposal ReliefBusiness owners/directors18% rate vs 24%Pension contributionsAnyone with taxable incomeShifts gain into 18% bandGift to charityAny appreciating assetFull CGT exemption How Apex Accountants Can Help With Capital Gains Tax Capital gains tax planning should begin before you sell, transfer or gift an asset. Apex Accountants can review your circumstances, estimate the potential gain and identify any available reliefs or allowable costs. Our team can help you with: Calculating gains on property, shares and other taxable assets Reviewing Private Residence Relief and other property reliefs Using capital losses and annual exemptions effectively Planning transfers between spouses or civil partners Checking eligibility for Business Asset Disposal Relief Preparing and submitting accurate CGT reports Meeting the 60-day reporting deadline for UK residential property Planning the timing of disposals across different tax years Early advice can reduce costly mistakes and help you make informed decisions before completing a sale. Frequently Asked Questions About Reducing Capital Gains Tax Do I have to pay CGT on my main home? Usually not, thanks to Private Residence Relief, provided it’s been your only or main residence throughout ownership. Can I carry forward my unused CGT allowance? No. The £3,000 Annual Exempt Amount is use-it-or-lose-it each tax year. Is crypto treated the same as shares? Yes. Crypto disposals, including swapping one coin for another, are taxable events under the same 18%/24% rates. How long do I have to report property gains? UK residential property gains must be reported and paid within 60 days of completion, separately from Self Assessment. How long do I have to report capital gains tax on property? UK residential property gains must be reported and paid within 60 days of completion, separately from Self Assessment. Final Thoughts With the CGT allowance now just a quarter of what it was a few years ago, proactive planning matters more than ever. Whether it’s using both spouses’ allowances, sheltering gains in an ISA or pension, or timing a property sale around a lower-income year, small decisions made before you sell can add up to meaningful savings. If you’re still unsure how to reduce Capital Gains Tax when selling a property or want a strategy tailored to your own portfolio, it’s always worth getting a second opinion before you commit to a disposal. Contact Apex Accountants today to speak with a specialist and make sure you’re not paying a penny more CGT than you need to.
Getting Your Business Ready for the Summer’s Temporary VAT Cut Posted on 4 June 20264 June 2026 by Farazia Gillani A temporary VAT cut of 5% will apply from 25 June 2026 to 1 September 2026 on certain children’s meals, children’s and family tickets, and admission to qualifying family attractions. Preparing your systems, menus, ticket types, and records before 25 June will make summer trading smoother and autumn VAT returns easier to manage. At Apex Accountants, we treat the task as a sales-mapping job first and a VAT-return job second. Knowing exactly which items qualify makes a busy summer manageable. What You Need To Know About The Summer VAT Cut The 5% VAT cut replaces the standard 20% rate for qualifying sales during the relief window and applies across the UK. The 5% VAT relief covers three main areas: Children’s meals sold only as children’s meals and eaten on the premises Children’s tickets for cinemas, theatres, concerts, exhibitions, and shows Admission to attractions suitable for families, including adult admissions when part of a qualifying family package A theme park ticket for adults can fall within the temporary 5% rate, but an adult-only cinema ticket does not; for cinemas and theatres, the relief focuses on children’s tickets and family packages. Examples of possible reductions if the full saving is passed on include: £20 off family theme park tickets £11 off family aquarium tickets £2 off children’s meals If your business is not VAT-registered, this is not a rate change you can apply in the usual way. Read: Everything About VAT Return Deadlines in the UK Temporary VAT Cut – Which Sales Qualify and Which Do Not Sale TypeTemporary RateNotesChildren’s meal on a dedicated menu, on site5%Must be held out for sale only as a meal for childrenFixed-price children’s meal including drink/dessert5%Whole package qualifies if sold as one mealSmaller adult portion sold cheaplyNormal rateNot eligibleTakeaway children’s mealNormal rateTakeaways do not qualifyChildren’s cinema/theatre ticket5%Must be marketed, priced, and presented as a children’s ticketAdult cinema/theatre ticket sold on its ownNormal rateAdult-only admissions stay standard-ratedFamily cinema/theatre ticket including at least one child5%Whole family package can qualifyGeneric group ticket not sold as family ticketNormal rateDoes not qualifyZoo, soft play, museum, or theme park admission5%Applies to the right of admission onlyFood, merchandise, or upgrades sold separatelyNormal rateOnly admission charge is reducedSports event entry, facility use, or participationNot coveredExcludedSeason/repeat-entry passes beyond relief periodUsually not coveredOnly fully qualifying passes within period count The key is not who buys the item, but how it is sold. Items must be marketed, priced, and presented as intended for children. A proper children’s menu is stronger than simply offering “small plates” from the adult menu A clear “family ticket” is safer than a vague multi-buy group ticket Non-alcoholic drinks included in a children’s meal can qualify. Meals including alcohol or separately priced extras from the standard menu remain standard-rated. Admission is only reduced where it would otherwise be standard-rated. Exempt admissions are not affected. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation How to Prepare Pricing, Tills, and Records Start with your stock codes and ticket codes rather than marketing. Your point-of-sale system must separate 5% sales from standard-rate sales. Staff should operate the system correctly, even during busy periods. Keeping daily gross takings by rate, adjustments, and working papers will help manage VAT efficiently. Practical Steps List every potentially affected item — children’s meals, child tickets, family tickets, adult attraction tickets, bundles, and passes Rename anything unclear to match eligibility Program separate codes for 5% and standard-rate sales Test mixed baskets such as adult ticket + child ticket + merchandise, or children’s meal + extra standard-menu item Check website wording and online booking flows to ensure descriptions match tax treatment Decide your pricing approach now to avoid mid-summer changes Diary the switch-back date so rates return to normal after 1 September Ensure receipts and VAT invoices show tax points, item descriptions, and rates VAT-inclusive pricing fractions: 1/6 for 20% and 1/21 for 5%, which affects the tax element inside a gross price. Also Read: VAT on Car Hire in the UK – What Businesses Need to Know Summer VAT Cut on Booking and Bundle Considerations Tickets bought for dates after 1 September remain standard-rated Prepaid tickets for dates within the relief window can be adjusted; credit notes may be needed Bundles (admission + meal + merchandise) must be split; only the qualifying portion can get 5% Season passes covering dates outside the relief period usually do not qualify How We Help Small Businesses Take Advantage of The 5% VAT Relief Apex Accountants helps small businesses implement clean processes for VAT changes. We assist with: Reviewing menus, ticket types, and family packages for eligibility Mapping 5% and standard-rate items in tills, EPOS, and booking systems Checking advance bookings, prepayments, and credit-note adjustments Reviewing invoices, receipts, and bookkeeping records for mixed-rate sales Preparing supporting schedules for VAT returns Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Conclusion The summer relief is useful, but it is narrow. The main focus is on how items are sold, whether the sale is really a qualifying meal or admission, and when the right of admission actually falls, so small businesses should prepare around those three tests first. The best plan is this: sort your qualifying items, fix your till and online checkout, test mixed transactions, and set a reminder for the switch back after 1 September. Done early, this is manageable; left late, it becomes a front-desk problem in the middle of your busiest weeks. FAQs on 5% VAT Cut Does the temporary 5% VAT rate start on 25 June 2026? Yes. The official relief window runs from 25 June 2026 to 1 September 2026 inclusive. Is the relief available across the whole UK? Yes. The official fact sheet states that it applies in England, Wales, Scotland and Northern Ireland. What counts as a children’s meal? It must be held out for sale only as a meal for children and supplied by a restaurant, café or similar establishment for consumption on the premises. The key test is how it is marketed, presented and priced, not simply who eats it. Does takeaway food qualify for a temporary VAT cut? No. The detailed brief is clear that takeaway meals do not qualify for this temporary reduced rate. If I sell a smaller adult portion, can I treat it as a children’s meal? Not automatically. Smaller portions, lower-calorie options and discounted adult meals are specifically excluded unless they are genuinely sold as children’s meals. Do adult cinema or theatre tickets qualify for 5% VAT? Not when sold on their own. For cinemas, theatres, concerts, exhibitions and shows, the relief applies to children’s tickets, and adult admissions remain standard-rated unless they are part of a qualifying family ticket. Do family tickets qualify even if they include adults? Yes, where the ticket is sold as a family admission that includes one or more children. In that case, the whole family package can qualify. Which attractions are covered? The official list includes attractions such as theme parks, fairs, circuses, adventure parks, museums, zoos, aquariums, wildlife parks, farm visitor attractions, soft play and observation attractions. The reduced rate applies only to the right of admission, not to separately sold food, merchandise or upgrades. Are sports events or sports facilities included? No. The relief does not apply to admission to sports events, use of sports facilities, or participation in recreational sport. What if customers booked early or bought a pass? For admissions, what matters is the date of admission within the relief window. Advance sales can use the lower rate under the existing change-of-rate rules, but tickets for admission on or after 2 September 2026 stay standard-rated, and many season or repeat-entry passes running beyond the relief period will not qualify.
HMRC v M R Currell Ltd [2026] – Genuine Loan via EBT Not Taxable as Salary Posted on 26 May 202626 May 2026 by Farazia Gillani In HMRC v M R Currell Ltd [2026] EWCA Civ 445, the Court of Appeal held that an £800,000 payment routed through an Employee Benefit Trust (EBT) was a genuine loan, not taxable employment income, because it carried a real obligation to repay. In April 2026, the court confirmed that Mr Currell received a loan, not extra pay, so he did not gain taxable earnings from the transaction. This clarifies that simply using a trust to channel funds does not automatically turn money into a salary – the substance of the transaction matters. Disguised remuneration (DR) rules have long targeted schemes that shift pay into loans or benefits via third parties. In 2011 the government enacted Part 7A of ITEPA 2003 to catch such schemes involving intermediaries. Later, the controversial Loan Charge (2019) aimed to tax old loan arrangements. However, under general law, a payment is only taxed as earnings if it arises “from the employment”. As HMRC’s own manuals note, a profit or payment “arose from something else” than employment if it did not truly come as a reward for services. In Currell’s case, the money was a loan – a debt Mr Currell had to pay back – not an additional salary. Background: Disguised Remuneration & EBT Loans Disguised Remuneration Rules (Part 7A ITEPA 2003): Introduced in 2011 to target third-party schemes avoiding income tax. They tax “relevant steps” (like making a loan through a trust) as if they were paid. Loan Charge (2019): Further rules will tax old disguised remuneration loans. Importantly, changes after a 2025 review limit the charge to loans made on/after 9 Dec 2010. General Tax Law: Under s.62 ITEPA (formerly s.19 ICTA), only payments “from the employment” are earnings. Courts ask, ‘Did the benefit come in return for work or from some other source?’ Example: HMRC’s own guidance says that a gift (e.g., a wedding present) from an employer is not taxed because it’s not “from the employment” but from a personal occasion. By analogy, a genuine loan made to an employee – especially through a trust – may not be “from” the job and thus not automatically considered earnings. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Facts of the Currell Case DateEventNov 2010Company Contribution: M R Currell Ltd (a small painting business) pays £800,000 into a newly created EBT.Nov 2010 (same day)Loan to Director: The EBT trustees immediately lend £800,000 to Mr M. Currell (a director) at 0% interest for 5 years, secured on the company shares he buys.2010 (shortly after)Share Purchase: Mr Currell uses the loan to buy shares (A shares) from his wife. Mrs Currell then loans the money back to the Company.2011 onwardsTax Challenge: HMRC investigates and assesses the £800k as if it were Mr Currell’s earnings, seeking income tax and NICs. The key points of the arrangement were that the loan was fully documented, secured by Mr Currell’s shareholding, and he clearly intended (and was able) to repay it. The First-tier Tribunal (FTT) initially treated the payment to the trust as taxable pay, essentially calling it a reward for Mr Currell’s services. On appeal, the Upper Tribunal (UT) found the opposite: the contribution to the EBT was made solely to enable the loan, and since the loan had a real repayment obligation, the payment was not considered earnings. FTT (201X): Viewed the £800k contribution (the “Payment”) as remuneration for Mr Currell’s work, relying on previous cases like RFC 2012 Plc v Advocate General for Scotland (“Rangers”) that held payments to a trust could be earnings when they were agreed upon as part of salary. UT (2024): Ruled that the FTT made an error. It held that the loan itself was genuine and repayable, so the contribution was not Mr Currell’s pay. The UT “remade” the decision in HMRC’s favour (legally speaking) and concluded that the £800k was not taxable as earnings because of the loan’s bona fide nature. Court of Appeal Decision The Court of Appeal (CA) upheld the Upper Tribunal. It firmly agreed that the loan was genuine and properly characterised. Key principles from the judgement include the following: Characterisation Over Purpose: The court stressed that the character of a payment must be determined before applying tax law. Money spent on employee benefits does not automatically become “earnings” simply because of the purpose. In Currell’s case, the money went into the trust and then became a loan. The CA emphasised that one must look at what the transaction actually was, not just at why it happened. Genuine Loan ≠ Earnings: A loan with a real promise to repay is not earnings. The court noted that an employee receiving a genuine loan with repayment terms is not getting a benefit worth money in the sense of pay. Instead, any fiscal “benefit” (like zero interest) is taxed under the special loan/beneficial loan charge rules, not as salary. As the CA aptly put it, “In truth, what Mr Currell got was the loan. This was not a case of diverting remuneration to the EBT.” Read: Everything You Need to Know About Director’s Loan Write-Off and the Douglas Boulton Case Distinguishing Rangers: In Rangers (the 2017 Supreme Court case), it was already common ground that the monies were remuneration; the only question was whether a trust could receive them. Here, by contrast, the very nature of the payment was in dispute. The CA highlighted a “fundamental distinction”: unlike Rangers, in Currell it was not agreed the money was due as salary in the first place. Because the loan was secured and had to be repaid, the Court found it was incorrect to equate it with Mr Currell’s pay. Limited Circumstances for Taxing Loans: The Court noted that only in limited cases – for example, a sham loan or arrangement – could a loan be treated as earnings. On Currell’s facts, there was no sham. The suggestion that a borrower’s control over a lender (e.g., via share ownership) could turn the loan into pay was dismissed; no legal authority supported that idea. Caution Against Overreach: In its concluding remarks, the CA warned that HMRC’s broad approach could have unintended consequences. It gave examples: if every loan through a third party were taxed as pay, ordinary loans (like directors withdrawing loan account balances or loan season-ticket schemes via payroll) might wrongly be caught. This “close inspection of the trees” could miss the bigger picture. The court thus signalled that normal commercial loans should not be swept up as disguised salaries. In summary, the Court of Appeal agreed that the Upper Tribunal’s conclusion “was the only one that could have been reached” and expressly adopted its view that the £800k was not part of Mr Currell’s earnings. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Practical Implications for Businesses and Advisers The Currell ruling offers important guidance for businesses, directors and accountants dealing with trust-based benefits. Genuine loans must be clear: Any loan from a company (even via a trust) should be well-documented, with a realistic repayment schedule and security. The court noted Mr Currell’s loan was properly secured on his shares and he had independent means to repay them. Companies should “confirm loans from EBTs/trusts are properly documented, secured, and carry a realistic repayment obligation”. Characterise the transaction: Focus on the substance over the formal route. If an employee receives money that they must repay, it is more logically a loan than extra salary. As HMRC’s rules (and this case) emphasise, one must decide if the benefit came “from the employment”. In practice, explain in writing that the payment is a loan for a commercial purpose (e.g., a share purchase), not a payment for work. Trustees’ independence: Ensure that trustees genuinely make trust decisions, rather than merely rubber-stamping them as the company or director would. The CA pointed to the importance of true trustee control. If trustees simply do what the employer directs, HMRC may argue the trust is a sham conduit. Use Currell in disputes: If HMRC challenges a loan from EBT as disguised remuneration, this case is strong authority (for pre-2011 schemes) to insist the loan is taxed as such, not as salary. Advisers should request that HMRC confirm the character of the payment (loan vs remuneration) and cite Currell’s reasoning on s.62 analysis. Beware modern DR rules: Currell was a pre-2011 loan (Part 7A came into force in Oct 2011) and a pre-loan charge. After 2011, the law expanded to treat many third-party loans as income immediately. The Court acknowledged that Parliament later closed this gap. So do not assume that post-2011 or Loan Charge-era loans can avoid tax; new anti-avoidance rules will often apply. In short, Currell vindicates older arrangements, but “for post-2011 structures, Currell does not provide a free pass.” Review legacy schemes: This decision is an opportunity to re-check any old EBT or loan arrangements. Where a loan was truly made and intended to be repaid (even if it was tax-advantaged), Currell suggests it was not income at the time. Conversely, any sham or purely circular schemes should be unwound or settled. Seek expert advice: The line between a legitimate loan and a disguised salary can be fine. Specialist tax advice (or even HMRC clearance) is prudent for complex arrangements. The Currell judgement itself recommends getting professional opinions and structuring “defensively” under Part 7A rules. How We Help As chartered accountants and tax specialists, Apex Accountants can help you navigate EBT schemes and employee tax: Tax planning & compliance: We advise on structuring loans, share purchases or benefits so they meet legal requirements and minimise tax risk. Disguised remuneration & EBT advice: Our team stays up to date on cases like Currell. We can review any trust-based arrangements and ensure they pass the correct legal tests. HMRC dispute support: If you face an enquiry or need to appeal an HMRC decision, we can help develop your case (for example, using Currell to argue your loan was not taxable earnings). Loan Charge guidance: We assist clients with historic loan schemes to check if and how the Loan Charge or new rules apply. Tailored accounting services: From company accounts to payroll taxes and beyond, we provide practical support to UK businesses of all sizes. With our expertise, you’ll get clear, practical advice grounded in the latest laws and court decisions. We aim to protect your interests and help you stay compliant without paying more tax than necessary. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Conclusion The HMRC v M R Currell Ltd [2026] case is a reminder to look at the true nature of payments. A bona fide loan – even one routed through an EBT – should be treated as a loan for tax purposes, not as hidden earnings. This means thorough documentation and honest substance are vital. While later legislation (Part 7A, Loan Charge) has tightened the rules, Currell restores balance for older arrangements. It shows that legitimate trust arrangements with real loans won’t automatically trigger income tax just because a trust is involved. For specific situations, always seek tailored advice. Contact Apex Accountants for expert support on employment taxes, EBT schemes and any HMRC issues. We’ll help you understand how cases like HMRC v Currell Ltd may affect your affairs and ensure you comply with tax law. FAQs About HMRC v M R Currell Ltd [2026] What was the main point of the Currell judgement? The Court of Appeal confirmed that when a company’s contribution to a trust is used to fund a loan to an employee, this loan – if genuine and repayable – is not automatically taxable as earnings. In Currell’s case, the £800k he received was treated as a loan (with a real obligation to repay), not as salary. How is this different from the Rangers’ case? Rangers (2017) held that if an employee contracts to have part of their salary paid to a trust, it is taxable when it enters the trust. In Currell, by contrast, the court found that the parties disputed whether any salary was ever deferred; here, the arrangement was purely a loan. The Court emphasized that, unlike Rangers, it did not agree that Mr Currell had earned this money as pay. Does this mean EBT loans are tax-free? Not always. Currell specifically involved a loan made in 2010, before new anti-avoidance rules (Part 7A ITEPA, Loan Charge) took effect. The Court’s logic focused on that time. Today, many loans via trusts fall under strict DR legislation. However, Currell shows that if a loan was genuinely commercial and was entered into before 2011, it may not have been considered “earnings,” even if it was routed through a trust. What should employers do now? Companies should ensure any employee loans (direct or through trusts) are bona fide: documented, secured, and repaid. If using an EBT or similar vehicle, trustees must act independently. In case of HMRC enquiries, use the Currell case to argue that the loan should be taxed under the loan rules, not as salary, by highlighting the legal distinction. Always keep clear records of the purpose (e.g., a share purchase) to show the commercial rationale. Will this case affect employees and tax appeals? Yes. Individuals or employers who took loans from trusts (especially before 2011) can reference this ruling. It may overturn earlier assumptions that “trust = tax avoidance”. For appeals, lawyers and accountants will likely cite Currell when challenging HMRC assessments on genuine loans.
How Starbucks UK Tax Credit Reached £13.7m Despite Higher Sales Posted on 17 April 202623 July 2026 by Farazia Gillani Starbucks UK’s tax credit situation highlights that sales growth does not necessarily lead to tax liabilities. Despite reporting a turnover of £525.6 million for FY2024, the company posted a loss before tax of £35.2 million, resulting in no current corporation tax charge. This loss was driven by deductible costs such as royalty payments and finance costs, which pushed the company into a tax-loss position. UK tax guidance allows businesses to carry forward or carry back trading losses against future profits. The £13.7 million corporation tax credit reported in subsequent filings is most likely due to loss relief and deferred-tax accounting, rather than sector-specific credits. Starbucks’ primary business in the UK involves the retail and wholesale of coffee, tea, and related products. This case demonstrates how even profitable businesses can report a tax credit through strategic tax planning, leveraging available relief. Starbucks UK Tax Strategy: A Strategic Overview Starbucks UK’s tax strategy focuses on optimising loss relief and deferred tax accounting to manage its tax obligations efficiently. Loss Relief: Starbucks UK offsets trading losses against future profits, reducing tax liabilities in profitable years. Deferred Tax: By recognising deferred tax based on temporary differences, Starbucks adjusts its tax line to reflect future taxable profit, contributing to the £13.7 million tax credit. Royalties and Fees: Payments for brand and intellectual property use are treated as operating costs, reducing taxable profit and potentially creating a tax loss. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation What the Latest Official Filings Show The relevant filing path is straightforward. The FY2023 full accounts were filed on 4 April 2024, the FY2024 full accounts were filed on 14 April 2025, and the latest FY2025 full accounts were filed on 8 April 2026. That gives a clear official timeline for the story. These dates come directly from the Companies House filing history for Starbucks Coffee Company (UK) Limited. The table below combines the latest FY2025 headline figures tied to the 8 April 2026 filing with the FY2024 figures visible in the prior-year statutory accounts filed on 14 April 2025. The FY2024 figures are directly visible in the official accounts. The FY2025 headline figures are the figures associated with the latest filed accounts. Key figureFY2025 latest filingFY2024 filed comparatorYear-on-year changeSales / turnover£556.3m£525.6m+5.8%Corporation tax line in the accounts£13.7m credit£1.0m charge£14.7m swingCurrent UK corporation tax lineCheck note 11 in the FY2025 filing before quoting separatelyNiln/aLoss before tax£41.3m loss£35.2m lossLoss widened The official FY2024 accounts also show that the business earned £321.4m from company-operated stores and £203.4m from licensing and franchising, with total turnover of £525.6m. That matters because it shows the group’s revenue mix is broader than counter sales alone. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Why a Tax Credit Can Appear Even When Sales Rise Corporation Tax Is Based on Taxable Profits, Not Sales Corporation tax is levied on taxable profits, not revenue. A business can increase its turnover but still report a tax loss after accounting for deductible trading costs, finance charges, capital allowances, and other tax adjustments. GOV.UK confirms that tax is calculated on profits, not sales. Loss Relief UK tax rules allow trading losses to be carried forward to offset future profits or carried back to earlier periods. This means a company can receive a tax credit even in a loss-making year if it has sufficient future profits to offset the losses. Accounting and Deferred Tax Starbucks UK’s FY2024 accounts mention deferred tax recognition on temporary differences. A tax credit is reflected in the accounts when there is an expectation of future taxable profits, allowing the company to recognise a deferred tax asset. Corporation Tax Rates The current UK corporation tax rate is 25% for profits above £250,000, with a 19% rate for small profits and marginal relief in between. A company making a large loss is not subject to current tax but still must account for temporary differences and deferred tax balances at the higher rate. Specialised reliefs like R&D or creative industry credits do not seem relevant to Starbucks UK’s activities, as its primary business is the retail and wholesale of coffee and tea. What the Filed Accounts Already Point To The FY2024 strategic report reveals that Starbucks UK is licensed by Starbucks EMEA Ltd to use the Starbucks brand in the UK, for which it pays royalties. The company’s principal activities are described as the retail and wholesale trade of gourmet coffee, tea, and related products in the UK. This is important because the FY2024 accounts show significant operating costs, such as: Royalties and licence fees: £40.368 million Staff costs: £118.6 million Net impairment: £28.4 million These large charges explain why high sales figures don’t automatically lead to taxable profit. The FY2024 profit and loss statement outlines: Turnover: £525.6 million Operating loss: £27.5 million Finance costs: £6.6 million Loss before tax: £35.2 million Tax charge: £1.0 million Loss after tax: £36.2 million This confirms the business was already in a loss-making position before the FY2025 filing. The FY2024 tax note provides additional insight, showing: No current UK corporation tax charge A prior-year UK tax adjustment of £455k Deferred tax of £522k A total tax charge of £977k It also highlights the tax effects from fixed asset differences and movements in deferred tax assets. The balance sheet shows a deferred tax asset of £37k, down from £559k the year before, further confirming the tracking of deferred-tax balances due to losses and timing differences. The FY2025 filing, which reports a much larger tax credit, can be understood in the context of these prior-year details. The accounts already indicated the potential for such a change. How Tax Planning Help Businesses in UK At Apex Accountants, we help businesses read the tax line properly, not just the sales line. For companies facing similar issues, our work usually focuses on: Corporation tax reviews to reconcile accounting profit, taxable profit and the tax note. Loss relief planning so carried-forward and carried-back claims are used efficiently and correctly. Deferred tax support to test whether recognition is appropriate and defensible in the accounts. R&D and specialist relief screening so businesses do not miss legitimate reliefs or claim the wrong ones. Accounts and filing support for Companies House filings, tax-note drafting and year-end documentation. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Conclusion Under UK rules, tax is driven by taxable profit, not turnover, and the prior-year Starbucks UK retail business accounts already show the ingredients that can produce a tax-loss position: royalty charges, finance costs, impairment and deferred-tax movements. That is why a £13.7m corporation tax credit in the latest filing is not inconsistent with sales growth. It is a tax-accounting outcome, not a contradiction. FAQs About Starbucks UK Tax Credit Why Did Starbucks UK Receive a Tax Credit Despite Increased Sales? Sales growth and taxable profit are not the same. UK corporation tax is based on taxable profit, which is calculated after deductible costs and tax adjustments. If expenses such as impairments, finance charges, and other adjustments lead to a tax loss, it can result in a tax credit being recorded. Does a Tax Credit Mean Starbucks UK Received Cash from HMRC? Not necessarily. A tax credit in statutory accounts typically refers to an accounting entry related to loss relief or deferred tax recognition. It does not automatically indicate that cash was paid out to the company. Did Starbucks UK Pay Corporation Tax in the Previous Year? In the FY2024 accounts, the current UK corporation tax charge was nil. However, the total tax line included a £977k charge, which accounts for prior-year adjustments and deferred tax. Could the £13.7 Million Tax Credit Be R&D Relief? While it’s possible for a company to claim R&D relief for qualifying science or technology projects, Starbucks UK’s filed principal activity is the retail and wholesale of coffee, tea, and related products. The public filings do not suggest R&D as the primary reason for the tax credit. Could the £13.7 Million Tax Credit Be a Creative Industry Relief? Unlikely. Creative industry reliefs are aimed at production companies in sectors such as film, TV, theatre, and games. As Starbucks is a coffee retail business, it doesn’t fall into this category. What Should Readers Look for in the Accounts to Understand the Tax Credit? To understand the tax credit, readers should refer to the FY2025 full accounts filed on 8 April 2026. Key sections to review include the strategic report, the profit and loss account, and the taxation note. Additionally, the FY2024 accounts, filed on 14 April 2025, show how royalties, impairments, finance costs, and deferred-tax movements impacted the tax position.
