RDP Newsletter August 2022

Q: My business has always used P11D forms for reporting benefits-in-kind. We don't payroll benefits currently. But I've heard the rules are changing. What does this mean for my business and what do I need to do to prepare? A: You're absolutely right, HMRC has confirmed that from April 2026, the requirement to submit P11D forms will be withdrawn. Instead, all reporting of benefits and expenses provided to employees will need to be done via payrolling in real time. So, what does this mean for your business? In short, it marks the end of the annual P11D ritual. Rather than waiting until the end of the tax year to report benefits, employers will need to process these through payroll on a monthly basis, ensuring tax is collected as the benefits are provided. For those already payrolling benefits, there's not much change - just a simplification ahead. However, in your case, as you're still using P11Ds, it's time to begin preparing for a shift in your internal processes. Here's what you should be thinking about now: Review your current benefits: make a list of all benefits you currently report via P11D (e.g. company cars, private medical insurance). Consider payrolling early: you don't have to wait until 2026. HMRC already allows voluntary payrolling, and many employers are making the switch ahead of the deadline to smooth the transition. Check your payroll software: make sure it can handle benefit processing correctly and provide the necessary employee breakdowns. Communicate with your employees: when you move to payrolling, employees need to understand that the tax on their benefits will now be collected in real time via PAYE, rather than showing up in a later tax code adjustment. Speak to us: this is a key change, and professional advice from our team can ensure a compliant and hassle-free implementation. In many ways, this change should simplify year-end reporting, but like all transitions, a bit of early planning will go a long way. If you'd like to discuss how your business can get ahead of the curve, we're here to help. Q: We run a business with a turnover of around £12.5 million for the last couple of years. Under the current rules, we've been classed as a medium-sized company. With the changes to the size thresholds from April 2025, will we be able to requalify as a small company again? And do the new rules apply to our 30 June 2025 accounts? We have a 30 June year-end. A: On 6 April 2025, new company size thresholds came into effect for UK companies. This is something that will affect many companies hovering around the various threshold limits. It's important to note that these thresholds don't' pertain to Corporation tax or tax filing or VAT rates etc. But they relate to financial reporting requirements, director reports and disclosure and, significantly, whether your company is exempt or not from statutory auditing. Under the reforms, the small company turnover threshold has increased from £10.2 million to £15 million, meaning some companies that previously fell into the medium category may now be able to reclassify as small. However, the timing of when these apply is key. The new thresholds apply to accounting periods beginning on or after 6 April 2025. Since your year-end is 30 June, your 2025 accounts (covering 1 July 2024 to 30 June 2025) began before the change, so you'll still need to use the old thresholds for that year. The new thresholds will apply from your 30 June 2026 year-end onwards. There is, however, a transitional provision within the new rules that you could potentially take advantage of. This means that when preparing your 2026 accounts, you can choose to apply the new thresholds retrospectively to both the 2026 and 2025 financial years—for the purpose of determining your company size. So, if you take up that option, and your turnover stays at £12.5 million, you'd fall within the new small company limits. This could allow you to requalify as a small company for both 2025 and 2026, even though under the old thresholds, you were classed as medium. That reclassification could reduce your reporting obligations, possibly remove the audit requirement, and simplify your filings. If you'd like to understand more or discuss your case in greater detail, please get in touch with our team. Q: I am thinking that I may incorporate my business by transferring it for shares. I am trying to understand how it works, the relief and also what I need to pay in Capital Gains Tax. Can you help? A: Incorporation means legally setting up your business as a limited company, making it a separate legal entity from you as an individual. This means the company can own assets, enter into contracts, and be held responsible for its own debts. The steps towards incorporation include choosing a company name, appointing at least one director, deciding on shareholders and how many shares they'll own, and preparing basic documents like the Articles of Association. And you need to register with Companies House. Incorporating your business can allow you to claim Incorporation Relief, which lets you defer paying Capital Gains Tax when you transfer your business to a company in exchange for shares. This means you won't have to pay tax on any gain until you sell those shares in the future. Let's imagine you go ahead and incorporate your business and you receive 1,000 £1 ordinary shares. Your company has a value of £100,000 on incorporation, and the shares had a market value of £100 each. The net assets transferred, excluding goodwill, total £40,000. If you didn't get Incorporation Relief, it would mean the 'chargeable gain', as it's called, would be £60,000. Normally, the cost of shares in a future disposal/ sale would be £100,000. But with the relief available, this gets reduced by the amount of the deferred gain (£60,000), leaving a base cost of £40,000, or £40 per share. This is a complex area of tax and we'd need to know all the key details of your business to be able to determine the impact for you and how much Capital Gains Tax you might be liable for. If you'd like to discuss your circumstances in full with our team, please do get in touch.

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Q:I’m thinking about selling my business, which I’ve owned for five years. How will the upcoming tax changes affect me? A: You’re right to identify there are relevant upcoming rule changes for people in your position. These alterations mean people who sell their businesses will have to pay more tax than before. The reforms in question surround the Capital Gains Tax rate and Business Asset Disposal Relief. The latter is effectively a special discount on tax for people who sell their businesses. Instead of paying a high tax rate, they get to pay a lower tax rate on up to £1 million of their profits. From 6 April 2025, the CGT rate under BADR is increasing from 10% to 14% on the first £1 million of lifetime gains. This means you‘ll pay more tax when selling your business (assuming it qualifies under the rules). Part of eligibility is that you‘ve owned it for at least one year, which is clearly fine in your case. It sounds like your business will count as a qualifying business. It has to be one that you own and run yourself and must be trading - i.e. it sells goods or services to make money. It can‘t just be for investment, like renting out property. Some mixed-use businesses also qualify. That is to say, your business does both trading (selling goods or services) and providing rental income, like a shop with an apartment above it. The thing you should bear in mind is that, although the rules are less favourable now than if you‘d sold, for example, a year ago, you face paying even more if you delay a year. If you delay beyond April 2026, the rate looks likely to rise even further, bringing it closer to standard CGT rates of 18% or 24% for higher earners. In fact, it has already been stated in the Budget that it will rise again in April 2026 to 18%. If you‘re considering a sale, it may be worth reviewing your plans now to take advantage of the lower rate before it increases. If you‘d like to discuss the matter further, please get in touch with our team. Q:I’m a sole trader and currently paying 40% tax. My husband helps out with the business, but he’s a lower-rate taxpayer. We’re looking at ways we can reduce our overall tax bill. Can you give us any recommendations? A: It’s certainly worth exploring what could be relevant here in terms of effective tax planning strategies. Firstly, it would be beneficial to make your husband a partner. If your spouse or civil partner becomes a partner in your business, you can allocate some of the profits to them, potentially reducing the overall tax burden by using their lower tax rate. However, you must bear in mind that this should be a genuine business arrangement, and his share of profits should reflect his involvement in the business. For anyone else reading this with similar questions, but operating a limited company rather than being a sole trader, it‘s perhaps worth mentioning that if your spouse is a lower-rate taxpayer, you could gift them shares. This could allow dividend income to be taxed at their lower rate. However, it‘s worth noting that HMRC may scrutinise this arrangement under the "settlements legislation" if the shares were given purely to divert income and avoid tax. We should also consider that from April 2025, new rules will affect income allocation between spouses for jointly held property. While this doesn‘t directly impact business income, it highlights HMRC‘s ongoing focus on income splitting. It‘s certainly worth delving into the details of your business and tax arrangements in greater depth with a professional before diving into making any changes. Please give our team a call if you‘d like to discuss this. Q:I run a small business. Is there any way or means that I can pay PAYE less frequently to help with cash flow?  A: Yes, if your total monthly PAYE payments to HMRC are less than £1,500, you may be able to pay quarterly instead of monthly, which can help with cash flow. However, this isn‘t automatic; you need to contact HMRC to arrange it. Keep in mind that even though payments are less frequent, you must still submit your payroll information on time under Real Time Information (RTI) rules. If your PAYE liability increases above £1,500 per month, HMRC may require you to switch back to monthly payments. It‘s worth calling the HMRC payments line to discuss this in full.

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Q: I’ve started a new business this year selling my hand-made craft items. At this stage it’s only earning me a relatively modest income. Up until now my profits are just £600 but I do have a big order that is set to earn me £3,500 in the next two months. I’m slightly confused about what I should be declaring in a tax return. A: Starting a new business brings many questions and complexities around tax. Although you haven't said it for certain, it sounds like you haven't had to file a Self-Assessment Tax Return before. So, to take you through the essentials, based on the information you have provided, this is what you need to know. If you are earning less than £1,000 in a tax year from self-employment, you don't need to submit a tax return and there is no income tax to pay. However, as it sounds like this is a venture you intend to pursue longer term and to grow into a bigger business, you probably will need to eventually. The Self-Assessment deadline that is just elapsing – i.e. January 31, 2025, covered the tax year 2023-24. If you'd made more than £1,000 in profit from self-employment income between April 2023 and April 2024, you'd have needed to declare this to HMRC by the latest deadline. But as you did not, that is not relevant in your case. It sounds like the £600 you earned came between April 2024 and January 2025. If the money you're expecting does come in before April 2025, that means all of the earnings – a total of £4,100 – would then need to be declared for the 2024/25 tax year. The deadline for filing your tax return for 2024/25 will be 31 January 2026. A key detail that you haven't made clear is how much of the £3,500 you're expecting will be profit. If your overall profits for the 2024/25 tax year period remain below the £1,000 threshold or 'trading allowance', as it's also known, then you won't have to declare it to HMRC in January 2026 either. Of course, it's very important to understand how to file your tax return correctly to fully comply with the rules and avoid any penalties. It's also important to completely understand your expenses and other costs that are part of filing the Self-Assessment forms. It's always wise to consult an accountancy professional, especially when you're doing it for the first time. Please contact our team if you'd like further information on how we can help. Q: I recently tied the knot with my long term partner and we’re now in a civil partnership. A friend mentioned that there’s a possible tax relief my partner and I could take advantage of. She is the higher earner, earning £40,000 per year. I earn £11,500. What’s the position? How much relief, if any, can we benefit from? A: Firstly, congratulations on your good news! You are correct that you and your partner now qualify for a tax relief called Marriage Allowance. Civil partnerships are also included within this – despite the somewhat misleading title in this case. The fact you earn £11,500 puts you below the income tax threshold of £12,570 – otherwise known as the Personal Allowance. This is the amount you're allowed to earn in a tax year before paying income tax. Your partner's income being £40,000, with the same Personal Allowance of £12,570, means she has taxable income of £27,430. So that's the total amount you pay tax on as a couple. When you claim Marriage Allowance you can transfer £1,260 of your unused Personal Allowance to her. Your Personal Allowance becomes £11,310 and your partner gets what's known as a 'tax credit' on £1,260. This means you will now pay tax on £190, but she will only pay tax on £26,170 rather than £27,430. So that's a combined £26,360 of taxable income between you. The result is £1,070 less of your combined earnings is taxed. Without Marriage Allowance, you pay nothing and she pays tax on £27,430 at 20% which amounts to £5,486 of tax owed. With Marriage Allowance, you pay a small sum of tax – just £38 but she pays 20% on £26,170 which means the tax she pays has gone down to £5,234. So, when you put the combined figures together (£38 and £5,234), that's £5,272 owed, rather than £5,486. So, ultimately you save £214 in total as a couple. Q: Last year I earned £4,500 approximately from making interest on my savings. I’ve never come close to earning anywhere near that much previously so I’m not sure about the rules. I realise that there are potential tax implications but I’m not sure exactly what I need to do. Can you please explain? A: There are a few things to mention here for yourself and others who want to understand about the tax implications on interest made from savings. Firstly, there's something called the Starting Rate for savings. But it depends on your circumstances – specifically what you are earning – whether you're eligible for it or not. For those of you who are eligible, you can earn up to £5,000 in savings interest and not have to pay tax on it. In your case, we won't be able to say for sure whether this applies or not as we don't know what you currently earn per year – or if you are still in work or retired. Essentially, the higher your income – be that your salary from a job or a pension or something else, the less you are eligible to claim on the Starting Rate. In fact, you will not be eligible for the Starting Rate if your total income per annum is £17,570 or more. But if it is lower, then the maximum is £5,000. And for every £1 of income above your annual Personal Allowance of £12,570, your Starting Rate goes down by £1. For example, say you earn £15,000 per year in terms of a salary. To calculate what your Starting Rate is you'd subtract the Personal Allowance, giving you £2,430. This is the figure by which you would reduce your Starting Rate. So, the left over amount - £2,570 – is the Starting Rate you qualify for. In your case, therefore, having earned £4,500 in savings interest, you are over the limit. So, you'd have £1,930 in savings interest that you need to pay tax on. However, that is only taking the Starting Rate into account. There's also the Personal Savings Allowance. For basic rate taxpayers that is £1,000. And it can be added to the figure for the Starting Rate for savings. In the scenario outlined above, this extra allowance would reduce the amount of savings interest that you need to pay tax on to £930. As alluded to, we'd need to know more about your personal situation to provide a full and accurate answer on your tax obligations in regard to your question, but please give our team a call and we'd be happy to help.

Newsletter issue – January 2025 Q: I use various online marketplaces to sell my unwanted items - from clothes to old phones and various other things. I'm a bit concerned though by stories I've read in the media that rules are changing and I may have to start filing a tax return. That's not something I've ever had to worry about before. Can you help me understand if my fears are justified? A: There has been a lot written in the papers over the last year or so about this issue and, with the angle that we see often taken in these reports, it's understandable that people like yourself could feel worried about the implications. Millions of people do what you do. It's become an everyday activity to sell second hand things online. However, HMRC has become so concerned itself about what it feels are misleading stories in the press, that it's recently issued a long statement to try to reassure and clarify the matter. The HMRC website stated: 'People selling unwanted items online can continue to do so with confidence and without any new tax obligations.' The reason these concerns have arisen is due to the fact that a new process is taking effect in January. It means online platforms have to share certain sales data with HMRC. These new measures 'generated inaccurate claims that a new tax was being introduced,' officials said, adding that 'absolutely nothing has changed for online sellers'. However, you and others do need to be aware that if you're buying goods for re-sale or make things with the intention of selling for profit and you garner a total income from this activity of over £1,000 in one tax year (before deducting expenses), you may need to register for Self-Assessment and fill out a tax form. HMRC stated: 'Those who sold at least 30 items or earned roughly £1,700 (equivalent to €2,000), 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, had this to say: '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.' So, whilst it's worth looking again at the criteria above that may mean you're in need of registering, it sounds as though, as for many people around the country, you don't need to be concerned or change your habits in this regard. Q: I have recently started a business which offers consultancy for building and engineering. I'm running the business side for my new partner, who is the building consultant. So, I'm not the expert in the field and I'm trying to get a fuller understanding of our potential obligations with regard to the Construction Industry Scheme (CIS) and the need for registration. Can you provide any guidance? A: For most people in the building and construction industry, the CIS is a key piece of regulation that is very important to understand and comply with. It is mandatory for constructors to register for the CIS. However, there are a number of exceptions, depending on certain roles and types of function. The work of certain professionals may be excluded, meaning they do not have to be registered for the scheme. However, this is the case 'only if they are acting purely as consultants', according to the HMRC guidelines, which adds: 'Typically, this would include the production of designs, plans, technical assessments and reports relating to construction projects including site testing.' Furthermore, under 'operations excluded', HMRC lists 'professional work of architects, surveyors or consultants in building, engineering, decoration (interior or exterior) or landscaping.' Looking at these guidelines, it would appear your new venture would fall outside of the requirements of the CIS and you and your partner would not need to register. However, it is wise to be cautious because the guidelines also state the following: 'Any work that goes beyond a consultative or advisory role and becomes the supervision of labour or the co-ordination of construction work using that labour is not excluded from the scheme.' So, if your partner feels their work is broader, at any time or to any extent, than simply consultancy, it's certainly worth seeking more detailed advice. Please give our team a call if you'd like to explore the regulations and compliance more deeply. And for anyone else in a similar position, it's worth noting that there are a few other examples of exceptions in the CIS where you do not have to register if you only do certain jobs. These include: architecture and surveying scaffolding hire (with no labour) making materials used in construction including plant and machinery delivering materials carpet fitting work on construction sites that's clearly not construction - for example, running a canteen Q: I'm in the process of starting a new business and want to ensure I'm fully prepared for upcoming compliance changes. I'm aware requirements for reporting benefits in kind (BiKs) are changing, but how will it affect small businesses like mine? Specifically, do I need to report loans or accommodation benefits immediately? A: There was some news around this topic at the beginning of 2024, with the Government releasing proposals to make it compulsory to do this type of reporting by using software. The announcement at that time stated employers will be required to report and pay Income Tax and Class 1A NICs on most BiKs in real-time on the 'Full Payment Submission'. However, don't fret; it's not immediate. The intention was to begin in April 2026, giving everyone some breathing space. But an update from the new Government means that it now looks like there should be a further cushion before compliance becomes strictly enforced. The mandatory use of payroll software will now be phased in from April 2026. And, pertinent to your question on loans, you won't have to payroll loans and accommodation at that stage. For those who want to on a voluntary basis, you'll be able to report employment-related loans and accommodation through payroll software from April 2026. As to when payrolling loans becomes mandatory, HMRC had this to say in a December bulletin: 'no decision has been made as to when we will mandate the reporting of loans and accommodation through payroll software - careful consideration will be given to make sure sufficient notice of any change will be provided.' In the meantime, if employers do not wish to payroll these, there will be a modified P11D and P11D(b) available. There is likely to be further news in the new year, with officials promising information on plans to publish draft legislation and technical specifications.

Q: I earn £62,000 and have been offered a bonus that would increase my total income to £95,000. How will this affect my tax, and are there any higher tax bands I should be aware of? Am I right that bonuses are taxed more than normal income A: No, bonuses are taxed just like your regular salary. It's not taxed at a higher rate but neither is there an exemption for them. So, if you get a bonus, it's added to your total income and taxed at the same rates. When your income rises to £95,000, here's how it will affect your tax: You'll pay no tax on the first £12,570 due to the personal allowance. You'll then pay 20% tax on the next £37,700 (the portion of income between £12,570 and £50,270). Any amount between £50,270 and £95,000 will be taxed at 40%. Since your income is under £100,000, you won't lose any of your personal allowance. If your income were to exceed £100,000, you would start losing your personal allowance, thereby increasing your effective tax rate. The additional 45% tax rate applies only to income over £125,140. Q: I'm a long-term non-domiciled resident in the UK - how will the 2025 changes impact my tax status? A: Firstly, you're right to say there are changes coming next year that will affect you and any others who are classified as non-domiciled. The issue of 'non-doms' - referring to a person's tax status, not nationality, citizenship or resident status - has been highlighted politically for several years. Former Chancellor Jeremy Hunt surprisingly announced changes at the Budget earlier this year, in an attempt to steal Labour's thunder after they had signalled they would scrap the status. The new Government is going ahead with the plans Mr Hunt laid out, with a few changes. The existing system will be replaced by a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non-UK residence. The rule changes set for April 2025 will significantly alter your tax situation. Currently, you may be taxed only on UK income and any foreign income you bring into the UK (remittance basis). However, from 2025, you will only be able to use this remittance basis for the first four years of UK residence. After that, all your worldwide income will be taxed, regardless of whether it's remitted to the UK. This will likely increase your tax liability substantially, so it's important to review your financial arrangements now. It's also worth noting that the previous Government's plan offered a 50% reduction in foreign income subject to tax for individuals who lose access to the remittance basis in the first year of the new regime. But the new Government has axed that element. And for any UK resident individuals ineligible for the new scheme or who choose not to make a claim for a tax year will be 'subject to Capital Gains Tax (CGT) on foreign gains in the normal way', the Government has said. Q: My company is considering paying me in cryptocurrency. What are the tax implications for me? A: If your employer pays you in cryptocurrency, it's treated as taxable income by HMRC. This means you'll owe Income Tax and National Insurance Contributions (NICs) just as you would for regular salary payments. However, the type of cryptocurrency is important because it can be either classified as a 'readily convertible asset' (RCA) or not. It will be deemed RCA if the crypto can be easily exchanged for cash. In this case, it will be subject to Income Tax and National Insurance Contributions (NICs) via PAYE, just like regular salary. The value of the cryptocurrency at the time of payment will be calculated in GBP, and tax will be deducted via PAYE. However, if the cryptocurrency is not considered an RCA, the responsibility to report and pay the appropriate tax to HMRC may fall to you rather than your employer. PAYE deductions might not apply. So, tax is still owed, it's just a question of how and when it is paid. It's a question of the method of collection (PAYE vs. self-reporting) that differs. Later, if you decide to sell or convert the cryptocurrency, you may also be liable for Capital Gains Tax (CGT) if its value has increased. Cryptocurrency's volatility means it's important to carefully consider how these tax liabilities may fluctuate before agreeing to be paid this way.

Q: I earn £62,000 and have been offered a bonus that would increase my total income to £95,000. How will this affect my tax, and are there any higher tax bands I should be aware of? Am I right that bonuses are taxed more than normal income A: No, bonuses are taxed just like your regular salary. It's not taxed at a higher rate but neither is there an exemption for them. So, if you get a bonus, it's added to your total income and taxed at the same rates. When your income rises to £95,000, here's how it will affect your tax: You'll pay no tax on the first £12,570 due to the personal allowance. You'll then pay 20% tax on the next £37,700 (the portion of income between £12,570 and £50,270). Any amount between £50,270 and £95,000 will be taxed at 40%. Since your income is under £100,000, you won't lose any of your personal allowance. If your income were to exceed £100,000, you would start losing your personal allowance, thereby increasing your effective tax rate. The additional 45% tax rate applies only to income over £125,140. Q: I'm a long-term non-domiciled resident in the UK - how will the 2025 changes impact my tax status? A: Firstly, you're right to say there are changes coming next year that will affect you and any others who are classified as non-domiciled. The issue of 'non-doms' - referring to a person's tax status, not nationality, citizenship or resident status - has been highlighted politically for several years. Former Chancellor Jeremy Hunt surprisingly announced changes at the Budget earlier this year, in an attempt to steal Labour's thunder after they had signalled they would scrap the status. The new Government is going ahead with the plans Mr Hunt laid out, with a few changes. The existing system will be replaced by a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non-UK residence. The rule changes set for April 2025 will significantly alter your tax situation. Currently, you may be taxed only on UK income and any foreign income you bring into the UK (remittance basis). However, from 2025, you will only be able to use this remittance basis for the first four years of UK residence. After that, all your worldwide income will be taxed, regardless of whether it's remitted to the UK. This will likely increase your tax liability substantially, so it's important to review your financial arrangements now. It's also worth noting that the previous Government's plan offered a 50% reduction in foreign income subject to tax for individuals who lose access to the remittance basis in the first year of the new regime. But the new Government has axed that element. And for any UK resident individuals ineligible for the new scheme or who choose not to make a claim for a tax year will be 'subject to Capital Gains Tax (CGT) on foreign gains in the normal way', the Government has said. Q: My company is considering paying me in cryptocurrency. What are the tax implications for me? A: If your employer pays you in cryptocurrency, it's treated as taxable income by HMRC. This means you'll owe Income Tax and National Insurance Contributions (NICs) just as you would for regular salary payments. However, the type of cryptocurrency is important because it can be either classified as a 'readily convertible asset' (RCA) or not. It will be deemed RCA if the crypto can be easily exchanged for cash. In this case, it will be subject to Income Tax and National Insurance Contributions (NICs) via PAYE, just like regular salary. The value of the cryptocurrency at the time of payment will be calculated in GBP, and tax will be deducted via PAYE. However, if the cryptocurrency is not considered an RCA, the responsibility to report and pay the appropriate tax to HMRC may fall to you rather than your employer. PAYE deductions might not apply. So, tax is still owed, it's just a question of how and when it is paid. It's a question of the method of collection (PAYE vs. self-reporting) that differs. Later, if you decide to sell or convert the cryptocurrency, you may also be liable for Capital Gains Tax (CGT) if its value has increased. Cryptocurrency's volatility means it's important to carefully consider how these tax liabilities may fluctuate before agreeing to be paid this way.

Q: I earn £62,000 and have been offered a bonus that would increase my total income to £95,000. How will this affect my tax, and are there any higher tax bands I should be aware of? Am I right that bonuses are taxed more than normal income A: No, bonuses are taxed just like your regular salary. It's not taxed at a higher rate but neither is there an exemption for them. So, if you get a bonus, it's added to your total income and taxed at the same rates. When your income rises to £95,000, here's how it will affect your tax: You'll pay no tax on the first £12,570 due to the personal allowance. You'll then pay 20% tax on the next £37,700 (the portion of income between £12,570 and £50,270). Any amount between £50,270 and £95,000 will be taxed at 40%. Since your income is under £100,000, you won't lose any of your personal allowance. If your income were to exceed £100,000, you would start losing your personal allowance, thereby increasing your effective tax rate. The additional 45% tax rate applies only to income over £125,140. Q: I'm a long-term non-domiciled resident in the UK - how will the 2025 changes impact my tax status? A: Firstly, you're right to say there are changes coming next year that will affect you and any others who are classified as non-domiciled. The issue of 'non-doms' - referring to a person's tax status, not nationality, citizenship or resident status - has been highlighted politically for several years. Former Chancellor Jeremy Hunt surprisingly announced changes at the Budget earlier this year, in an attempt to steal Labour's thunder after they had signalled they would scrap the status. The new Government is going ahead with the plans Mr Hunt laid out, with a few changes. The existing system will be replaced by a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non-UK residence. The rule changes set for April 2025 will significantly alter your tax situation. Currently, you may be taxed only on UK income and any foreign income you bring into the UK (remittance basis). However, from 2025, you will only be able to use this remittance basis for the first four years of UK residence. After that, all your worldwide income will be taxed, regardless of whether it's remitted to the UK. This will likely increase your tax liability substantially, so it's important to review your financial arrangements now. It's also worth noting that the previous Government's plan offered a 50% reduction in foreign income subject to tax for individuals who lose access to the remittance basis in the first year of the new regime. But the new Government has axed that element. And for any UK resident individuals ineligible for the new scheme or who choose not to make a claim for a tax year will be 'subject to Capital Gains Tax (CGT) on foreign gains in the normal way', the Government has said. Q: My company is considering paying me in cryptocurrency. What are the tax implications for me? A: If your employer pays you in cryptocurrency, it's treated as taxable income by HMRC. This means you'll owe Income Tax and National Insurance Contributions (NICs) just as you would for regular salary payments. However, the type of cryptocurrency is important because it can be either classified as a 'readily convertible asset' (RCA) or not. It will be deemed RCA if the crypto can be easily exchanged for cash. In this case, it will be subject to Income Tax and National Insurance Contributions (NICs) via PAYE, just like regular salary. The value of the cryptocurrency at the time of payment will be calculated in GBP, and tax will be deducted via PAYE. However, if the cryptocurrency is not considered an RCA, the responsibility to report and pay the appropriate tax to HMRC may fall to you rather than your employer. PAYE deductions might not apply. So, tax is still owed, it's just a question of how and when it is paid. It's a question of the method of collection (PAYE vs. self-reporting) that differs. Later, if you decide to sell or convert the cryptocurrency, you may also be liable for Capital Gains Tax (CGT) if its value has increased. Cryptocurrency's volatility means it's important to carefully consider how these tax liabilities may fluctuate before agreeing to be paid this way.