Agricultural Property Relief and Business Property Relief
Also, the following groups will not be required to join MTD for Income Tax over the course of this Parliament: ministers of religion, Lloyd’s Underwriters and recipients of the Married Couples’ Allowance and Blind Persons’ Allowance. Finally, the government will increase late payment penalties for VAT taxpayers and Income Tax Self Assessment taxpayers as they join MTD for Income Tax from April 2025. The new rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more. Corporation Tax rates The government has confirmed that the rates of Corporation Tax will remain unchanged which means that, from April 2025, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.
From 6 April 2026, agricultural and business property will continue to benefit from the 100% Inheritance Tax relief up to a limit of £1 million. The limit is a combined limit for both agricultural and business property. Property in excess of the limit will benefit from a 50% relief, as will, in all circumstances, quoted shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM. BUSINESS Making Tax Digital (MTD) for Income Tax The rollout of MTD for Income Tax will be expanded to include a wider range of small businesses and will operate as follows: • It will start from April 2026 for sole traders and landlords with qualifying incomes over £50,000. • It will extend to those with qualifying incomes over £30,000 in April 2027. • It will extend again to those with qualifying incomes over £20,000 from April 2028. Comment Today’s decision to reduce the threshold to £20,000 will ensure that 900,000 sole traders and landlords, who will now join MTD for Income Tax from April 2028, have the time they need to prepare for the changes. As part of the ongoing rollout, the government will continue to explore how it can best bring the benefits of digitalisation to a greater proportion of the four million sole traders and landlords who have income below the £20,000 threshold. In addition, the following groups will not be required to use MTD for Income Tax: customers who have a Power of Attorney, non-UK resident foreign entertainers and sportspeople who have no other income sources that count as qualifying income for MTD for Income Tax and customers for whom HMRC cannot provide a digital service.
Comment The government has committed to capping the main rate of Corporation Tax at 25% for the duration of the Parliament. This is currently the lowest in the G7.
Capital allowances The Full Expensing rules for companies allow a 100% write- off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is new and unused. Similar rules apply to integral features and long life assets at a rate of 50%. The government will explore extending Full Expensing to assets bought for leasing or hiring, when fiscal conditions allow. The Annual Investment Allowance is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit remains at £1 million. The 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle charging points have been extended to 31 March 2026 for Corporation Tax purposes and 5 April 2026 for Income Tax purposes.
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