Client Update December 2024

HMRC has warned landlords to disclose their earnings on Self Assessment tax returns.

The tax authority has clarified the guidance on who can participate in the Let Property Campaign, which is targeted at landlords who owe tax through letting out residential property in the UK or abroad.

Landlords can report previously undisclosed taxes on rental income to HMRC under the Let Property Campaign if they are an individual landlord renting out residential property.

The campaign covers landlords who rent out single or multiple properties, rent out a room in their main home that exceeds the Rent a Room Scheme threshold and holiday lettings.

It is also important to note that, for those living abroad or intending to live abroad for more than six months and renting out a property in the UK, those earnings may still be liable to UK taxes.

Tax must be paid on any profit made from renting out property. The profit is calculated based on the amount left once claims for expenses or allowances have been deducted.

HMRC warned:

‘If you’re a landlord and have undisclosed income, you must tell HMRC about any unpaid tax now. You’ll then have 90 days to work out and pay what you owe. If you do not do this now, and HMRC finds out later, you could get higher penalties or face criminal prosecution.’

Internet link: GOV.UK

Import and export businesses are frustrated by the government’s decision to pause work on the digital trade platform, according to the Institute of Directors (IoD).

When fully operational, the Single Trade Window will provide a gateway between businesses and UK border processes and systems, allowing users to meet their import, export and transit obligations by submitting information once and in one place.

However, the government now says that in the context of financial challenges, it is pausing delivery of the UK Single Trade Window in 2025/26.

Emma Rowland, Trade Policy Advisor at the IoD, said:

‘It is frustrating to see the government’s decision to halt the development of the Single Trade Window due to financial constraints following the Budget, particularly given extensive industry engagement and the project’s proximity to completion.

‘According to our own data, paperwork remains the largest obstacle for organisations involved in international exports. The Single Trade Window, designed to streamline border processes through a unified platform, has the potential to significantly ease this administrative burden on firms, making importing and exporting more efficient. Additionally, it could enhance data collection to better monitor and understand UK trade flows.

‘We urge the government to prioritise the Single Trade Window in the upcoming Spring Spending Review to facilitate trade for all UK companies.’

Internet link: IoD website

The government has published draft legislation to permanently cut business rates for retail, hospitality and leisure properties from 2026.

The tax cut will be funded by a tax rise for the very largest business properties, such as online sales warehouses, the government added.

Until then, 250,000 retail, hospitality and leisure (RHL) properties will receive 40% relief off their business rates bills up to £110,000 per business to help smooth the transition to the new system.

This support is alongside the Budget announcement to freeze the small business multiplier, together with Small Business Rates Relief protecting over a million properties.

James Murray, Exchequer Secretary to the Treasury, said:

‘For too long the business rates system has been working against our high streets.

‘[This] is a major step towards our new system that will support retail, hospitality and leisure businesses on our high streets to succeed.

‘This Bill paves the way for a permanent cut to their tax rate, helping to level the playing field between them and online and out-of-town businesses.’

Internet link: GOV.UK

HMRC is warning of scam attempts targeting Self Assessment taxpayers in the run up to the 31 January deadline.

Last year, concerned taxpayers reported nearly 150,000 scam referrals to HMRC.

Around half of all scam reports in the last year were fake tax rebate claims, says the tax authority.

There has been a 16.7% increase in all scam referrals to HMRC – 144,298 were received between November 2023 and October 2024, up from 123,596 in the previous 12-month period, it added.

If communication claiming to be from HMRC asks for personal information or offers a tax rebate, check the advice on GOV.UK to help identify if it is scam activity.

HMRC says it will never leave voicemails threatening legal action or arrest or ask for personal or financial information over text message – only fraudsters and criminals will do that.

Kelly Paterson, Chief Security Officer at HMRC, said:

‘With millions of people filing their Self Assessment return before January’s deadline, we’re warning everyone to be wary of emails promising tax refunds.

‘Being vigilant helps you spot potential scams. And reporting anything suspicious helps us stop criminal activity and to protect you and others who could have received similar bogus communication.

‘Our advice remains unchanged. Don’t rush into anything, take your time and check ‘HMRC scams advice’ on GOV.UK.’

Internet link: GOV.UK HMRC press release

HMRC has reduced late payment and repayment interest rates following the cut to the base rate.

The Bank of England cut the base rate to 4.75% on 7 November, the second reduction this year.

This has triggered a cut in HMRC interest rates which are pegged to the base rate.

From 26 November, the late payment interest rate was cut to 7.25% from 7.5%. The repayment interest rate was also reduced to 3.75% from 4.0% from 26 November.

HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.

Corporation Tax Self Assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 5.75% from 6.0% from 18 November.

The interest paid on overpaid quarterly instalment payments and on early payments of Corporation Tax not due by instalments is down by 0.25% to 4.5% from 5% from 18 November.

Internet link: GOV.UK

People selling unwanted items online can continue to do so without any new tax obligations, HMRC has confirmed.

The reminder comes as online platforms start sharing sales data with HMRC from January 2025 – a new process that, when announced last year, generated inaccurate claims that a new tax was being introduced.

But whether selling last year’s festive jumper, getting some money back for a child’s outgrown baby clothes, or quietly offloading an unwanted Christmas present or two – absolutely nothing has changed for online sellers.

The new reporting requirements for digital platforms came into effect at the start of 2024. HMRC says that it is not a new tax and whether people are selling personal items on eBay, renting homes out on Airbnb or delivering takeaways through Just Eat – no tax rules have changed.

Those who sold at least 30 items or earned roughly £1,700 or provided a paid-for service, on a website or app in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive Officer, said:

‘We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due.

‘As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for Self Assessment.’

Internet link: HMRC press release

New company car advisory fuel rates have been published and took effect from 1 December 2024.

The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2024 are:

HMRC guidance states that the rates only apply when you either:

• reimburse employees for business travel in their company cars
• require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 7p per mile.

If you would like to discuss your company car policy, please contact us.

Internet link: GOV.UK AFR

The bank details for the following tax regimes have changed:

• Plastic Packaging Tax
• Biofuels or gas for road use — Fuel Duty
• Economic Crime Levy
• Soft Drinks Industry Levy
• Trust Registration Penalty

Taxpayers who have the previous banking information stored on their banking apps will need to change the details to reflect the new sort code, account number and account name.

Any customers who pay by Direct Debit do not need to take any action as the changes will be made automatically.

For new details and further information contact HMRC direct or get in touch with your Old Mill adviser.

The Official Rate of Interest (ORI) is used to calculate the Income Tax charge on the benefit of employment-related loans and the taxable benefit of some employment related living accommodation.

The government announced at the Autumn Budget that the previous public commitment, made in January 2000 to not increase the rate during the tax year, will no longer be applicable. As of 6 April 2025, the ORI may increase, decrease, or be maintained throughout the year.

The rate will continue to be reviewed on a quarterly basis. Any changes in the rate will occur following a quarterly review, where appropriate. If there are any in-year changes to the rate, these will take effect on 6 July, 6 October and 6 January. Any future changes to interest rates will be published on GOV.UK.

This change will increase fairness across the tax system by enabling the ORI to increase in-year where appropriate, ensuring employment-related beneficial loans and living accommodation are correctly valued.