In the 2024 to 2025 tax year, an estimated £41.2 billion of tax breaks existed for smart investors to utilise – seven per cent higher than the previous year.

Taking advantage of the wide range of investment reliefs and benefits could significantly reduce your tax liability.

Here are some of the key benefits and tax reliefs available to you in the new tax year.

Individual Saving Accounts

Individual Savings Accounts (ISAs) are a significant contributor to tax relief.

You can invest a maximum of £20,000 per year tax-free into an ISA.

If you utilise this and invest before 5 April, you can enjoy the benefit of a full tax year with your tax-free growth that can then be utilised either later in the year or in the future as you require it.

Do not forget to invest more at the start of the next year to further optimise the utility of your ISA.

Pension contributions

While pensions are soon to be less tax-efficient than they once were, given the changes to Inheritance Tax (IHT), smartly investing in pensions may still be a useful way to offset Income Tax.

By using a salary sacrifice scheme, you can prevent yourself from entering higher Income Tax brackets and move funds into your pension pot instead.

As the access to your pension is still not as culpable for tax as a salary, this remains a smart investment strategy.

Be mindful, however, that your unspent pension pot will be considered part of your estate for IHT purposes from April 2027.

Changes to Capital Gains Tax

Capital Gains Tax (CGT) has recently undergone notable changes to reduce its tax efficiency.

Where once the tax-free threshold was £6,000, it is now £3,000.

While disappointing for those seeking it as a viable way to offset tax payments, the fact remains that some relief is better than none.

Combining CGT relief with other forms of smart investment can be a vital part of a tax-efficient investment strategy.

Venture capital schemes

If you have the capacity, Venture Capital Schemes (VCTs) can be an extremely tax-efficient way to invest.

VCTs offer 30 per cent Income Tax relief on invested amounts up to £200,000, and these can also yield tax-free dividends with the added benefit of there being no CGT on gains.

If your investment budget stretches to it, an Enterprise Investment Scheme (EIS) offers 30 per cent relief on investments up to £1 million.

These can be combined with other forms of relief to provide a network of tax-efficient investment options.

Limited companies for investment property

If you own investment property, a limited company structure can offer a way to reduce tax liabilities and improve long-term financial planning.

If you own a rental property as an individual, your rental profits are subject to Income Tax at your personal rate – 20 per cent, 40 per cent, or even 45 per cent for higher earners.

In contrast, rental profits in a company are taxed at Corporation Tax rates, which currently stand at 19 per cent for profits up to £50,000 and 25 per cent for profits above £250,000.

Additionally, while individual landlords are restricted to a 20 per cent tax credit on mortgage interest, companies can deduct mortgage interest as a business expense, making company ownership more attractive for those with significant borrowing.

Furthermore, if you do not need to withdraw rental income for personal use, leaving profits in the company can be tax efficient.

Unlike personal ownership, where all rental profits are taxed annually, a company can retain profits and reinvest them into further property purchases or other investments.

Holding property in a company may also provide greater flexibility for estate planning.

Shares in a company can be passed down more easily than physical property, and, if structured correctly, it may allow for more efficient IHT planning.

Capitalise on investment, minimise on tax

With a range of options available to make your investments as tax efficient as possible, there is huge scope for minimising your tax liability.

However, you must always seek professional advice before deciding where to invest your hard-earned cash.

At Rotherham Taylor, we provide a comprehensive personal tax planning service, specifically tailored to the needs of each individual client.

We are ideally placed to provide impartial advice on tax efficient strategies for your savings, pensions, and investments.

To make the most of tax relief on your investments, contact our expert team today.

There’s been a lot of confusion, uncertainty, and stress surrounding Making Tax Digital for Income Tax (MTD for IT).

From difficulty understanding the new reporting requirements to fears over implementing new technology.

Many business owners, landlords and accountants have expressed concerns over the phasing in of MTD for IT from April 2026.

However, it is important not to forget that MTD for IT will bring crucial benefits to your business.

Growth opportunities

The requirement to use MTD-compatible software for quarterly reporting may be a cause of anxiety for those who find it difficult to get to grips with new technologies.

However, looking at things the other way round – thinking about how software could help rather than hinder your business – could be a revelation.

Accounting software is a valuable asset that supports your business in real-time decision-making, streamlines processes, and helps you keep a clear view of your financial health.

MTD-compatible software will make record-keeping and tax administration more efficient, freeing up more time for you to focus on growing your business.

Digital record-keeping and sending quarterly reports to HMRC will provide you with a real-time view of your finances.

This up-to-date financial information is crucial for helping you understand your cash flow better – enabling you to make better business decisions.

Secure digital record storage

MTD for IT will enable you to replace paper-based systems and upgrade your record-keeping.

Storing your records digitally keeps them more secure and avoids the risk of losing paper receipts and invoices.

This helps reduce the risk of errors and saves valuable time. You can also transfer data more easily between digital systems.

Fewer errors, better compliance

With regular quarterly reporting and the ability to automatically categorise bank transactions, MTD for IT software is designed to help you make fewer errors when reporting information to HMRC.

This saves time and helps with tax compliance, thereby reducing the risk of having to pay costly penalties.

By keeping regular digital records and reporting tax data quarterly using compliant software, MTD for IT will also make end-of-year Self-Assessment process simpler.

Additionally, by providing an in-year estimate of how much tax you owe, MTD for IT will also help you reduce the risk of under or overpaying tax.

MTD for IT support with Rotherham Taylor

While MTD for IT presents challenges, the new digital tax reporting system comes with many benefits for businesses.

With the right support, you’ll be able to use the new digital and quarterly reporting requirements to your advantage.

At Rotherham Taylor, we’re here to give you the support you need to make MTD for IT work for you.

We have already helped a wide range of businesses with the initial stages of MTD and can assist you by putting the necessary software, apps and procedures in place.

We provide comprehensive access and support with accounting software such as Xero, Sage or Quickbooks through our RT Clarity software service.

By constantly keeping up to date with legislative requirements, we provide proactive advice on MTD for IT and will make sure your business is compliant with all MTD requirements#.

Make MTD for IT work for you. Contact our experts today.

If you claim research and development (R&D) tax relief for your business, it is time to prepare for submitting claims under new schemes that have come into effect.

Applying to accounting periods starting on or after 1 April 2024, the two new schemes are:

• The merged scheme – also known as the “new RDEC” – is for companies of all sizes that are not R&D intensive.
• The Enhanced R&D Support Scheme (ERIS) is for loss-making small and medium-sized enterprises (SMEs) that are R&D intensive – meaning they spend more than 30 per cent of expenditure on R&D.

The aim of bringing in these two schemes is to simplify the R&D tax relief claims process.

However, due to the phased-in nature of these new schemes, there are three “old” schemes still in play:

• The SME scheme.
• The “old” RDEC scheme.
• The R&D Intensive scheme – for loss-making SMEs spending more than 40 per cent of expenditure on R&D.

The R&D Intensive scheme applies to expenditure from 1 April 2023 and accounting periods starting before 1 April 2024.

Although the last claims that can be made through the SME and old RDEC schemes are for accounting periods starting in March 2024, it is possible to amend these claims until February 2027.

This can be very confusing for businesses, who may not know which scheme applies to them.

New guidance for subcontracted and subsidised R&D

There are some clear differences in the new schemes from the old schemes – the biggest of which revolve around subcontracting and subsidised expenditure.

Previously, expenditure incurred by a company in carrying out activities contracted to it by another person was not treated as qualifying expenditure by HMRC.

This intended to prevent both parties from claiming relief for the same activities.

However, this meant that customers were able to claim R&D tax credits while subcontractors were left without vital relief.

Under the new merged scheme, HMRC guidance states that “whether the activities were contracted to the company is a question of fact and each case should be looked at individually.”

Factors to determine this include whether or not R&D was incidental to the contracted work, the degree of autonomy held by the contractor, and Intellectual Property (IP) ownership.

Determining which party is eligible for R&D is likely to be difficult to achieve in practice.

However, the new guidance does recognise the legitimate claim to R&D relief that subcontractors have.

Additionally, grants and subsidies will no longer affect R&D claims under the merged and ERIS schemes.

Preparing for the new schemes

To prepare for the new R&D schemes, make sure you familiarise yourself with the new rules about making claims.

Remember, if you have never submitted a claim before or in the last three years, you will need to notify HMRC in advance of submitting any new claims for R&D tax relief by using an Advanced Notification Form. If this is not submitted, your claim will be rejected.

If you’ve never submitted an R&D claim under the new merged and ERIS schemes, you may be concerned about adapting to the new rules.

At Rotherham Taylor, we have extensive experience in claiming R&D tax relief for businesses like yours across a wide variety of sizes and sectors.

We can help you get to grips with the new schemes, amend claims under the old schemes, and make sure you’re claiming the maximum amount of relief.

For further guidance on the new merged and ERIS schemes, contact our R&D tax relief specialists today.