February 2025 Newsletter
Posted on 9th February 2025
This month, we're covering some essential tax topics to keep you informed and ahead of upcoming changes. If you're a landlord, our first article will help you refresh your knowledge on allowable expenses against rental income, highlighting key differences between repairs and improvements. We also discuss the Trading Allowance, which is under increased scrutiny and may affect casual traders selling online if earnings exceed £1,000.
For those selling business assets, we explain how you can defer Capital Gains Tax under the Business Asset Rollover Relief rules. If your business recently registered for VAT, don’t miss our article on reclaiming VAT on pre-registration purchases—especially if they relate to services supplied post-registration and up to four years before.
Finally, we break down the important changes to self-employment profit reporting, which now align with the tax year rather than the previous "current year basis." Be sure to check your tax deadlines, as we outline key dates leading up to mid-March.
Claiming Expenses Against Rental Income
Are you a landlord? Make sure you're claiming all allowable expenses to reduce your tax bill! From maintenance costs to Replacement of Domestic Item Relief, understanding what qualifies can help you manage your rental property efficiently.
As a general rule, expenses must be wholly and exclusively for renting out the property to be deductible. Some common allowable costs include:
✔️ Property maintenance and repairs (but not improvements)
✔️ Utility bills and council tax (if paid by the landlord)
✔️ Insurance costs
✔️ Letting agent and management fees
✔️ Legal and accountancy fees
✔️ Advertising costs for new tenants
✔️ Mileage or vehicle expenses related to the rental business
In addition, the Replacement of Domestic Item Relief allows landlords to claim for replacing furniture, appliances, and kitchenware in a rental property, provided certain conditions are met.
Keep in mind that while capital expenditures (such as adding an extension) are not deductible against rental income, they may reduce your Capital Gains Tax liability when you sell the property.
Selling Online? You May Need to Pay Tax!
Selling goods or services online? Whether it's a full-time business or just a hobby, you may need to register for self-assessment and pay tax if you earn more than £1,000 in a tax year.
This applies to:
🔹 Buying goods to resell or selling handmade products
🔹 Providing services like tutoring, dog-walking, or equipment hire
🔹 Creating content (YouTube, podcasts, social media influencing)
🔹 Renting out property, holiday homes, or even a driveway space
New Reporting Rules for Online Sellers
From January 2024, online platforms are required to report seller earnings to HMRC if you make over £1,700 (or sell 30+ items) in a calendar year. You’ll receive a copy of this report, which will be useful when filing your tax return.
Not sure if you need to pay tax? Get in touch with us, and we’ll help you determine your tax obligations.
Rolling Over Capital Gains – How to Defer CGT
If you're reinvesting proceeds from selling a business asset, you may qualify for Business Asset Rollover Relief, allowing you to defer Capital Gains Tax (CGT). This relief is available if you:
🔹 Use the proceeds to buy a new qualifying asset within three years of selling the old one
🔹 Apply the gain to improving an existing asset
🔹 Keep using the asset for business purposes
If you don’t reinvest the full sale proceeds, you can still claim partial relief. This can be a useful way to manage tax liabilities and reinvest in business growth.
Claiming VAT on Pre-Registration Purchases
Did your business register for VAT recently? You may be able to reclaim VAT on purchases made before registration, as long as they relate to taxable supplies you make after registering.
📌 Goods – Can be claimed if still in stock or used in your business (within four years before registration)
📌 Services – Can be claimed for services used in the six months before registration
VAT must be reclaimed on your first VAT return, so keeping proper records is essential!
Self-Employed? Major Changes to Profit Reporting
From 2024-25, self-employed individuals must align their profit reporting with the tax year. The old “current year basis” has been replaced, and overlap relief is ending.
Key changes:
📌 If your accounts end between 31 March – 5 April, you’re not affected.
📌 Transition profits (for businesses with different accounting dates) will be spread over five years (2023-24 to 2027-28).
📌 The change simplifies tax reporting but may lead to higher tax bills in transition years.
Understanding how these changes affect you is crucial—let us know if you need advice!
Tax Diary: February – March 2025.
📅 1 February 2025 – Corporation Tax due for year ended 30 April 2024.
📅 19 February 2025 – PAYE & NIC due for month ending 5 February 2025.
📅 1 March 2025 – Corporation Tax due for year ended 31 May 2024.
📅 2 March 2025 – Self-Assessment tax paid after this date incurs a 5% surcharge unless an HMRC payment plan is in place.
📅 19 March 2025 – PAYE & NIC due for month ending 5 March 2025.
Need help with your tax deadlines? Get in touch with us to ensure you're meeting all your obligations on time.
Tagged as: Newsletters
Share this post: