Pay Less Tax – December 2024
Welcome to the December edition of Pay Less Tax! I hope you find this issue informative. If you would like to discuss any topics in more detail, please feel free to reach out. Wishing you a wonderful Christmas and all the best for 2025!
Farmers Campaign for Agricultural Property Rethink
The Autumn Budget announcement on inheritance tax (IHT) changes has sparked significant concern, particularly among farming businesses. A demonstration was held in London on 19th November as farmers voiced their concerns.
Starting on 6 April 2026, 100% agricultural and business property relief (APR and BPR) will only apply to the first £1 million of combined property value, with the relief reducing to 50% on amounts exceeding £1 million. This new limit could hit small farms hard, especially given that the cost of agricultural land and equipment—such as combine harvesters—far exceeds the £1 million threshold. For instance, a 100-acre farm at £10,000 an acre would already exceed this limit, potentially forcing farmers to sell land to pay IHT.
Farmers should be aware that IHT payments can be made to HMRC in 10 interest-free installments, but this may still pose significant financial challenges.
Bring Forward Succession Planning to Avoid a Large IHT Bill
Current tax rules encourage farmers and business owners to hold on to their businesses until death, benefiting from a tax-free uplift in value for capital gains tax (CGT) purposes and 100% APR/BPR relief. However, with increasing life expectancy, the next generation may inherit the business later in life, potentially stifling growth.
To avoid hefty IHT charges, consider transferring the business during your lifetime and surviving the seven-year exemption period. While this may trigger CGT, it can be “held over” through joint election, meaning no CGT is due at the time of transfer. However, the recipient’s base cost will be reduced, potentially leaving them in the same tax position as the donor. Contact us if you’d like to explore this strategy.
Check Your State Pension Entitlement
HMRC has launched an app to help individuals plan for retirement. You can use the app to check your State Pension forecast, including:
- State Pension age
- Forecasted State Pension amounts based on contributions
- National Insurance contribution (NIC) record, including any gaps
If you have NIC gaps, you can make voluntary payments online to fill them. The current Class 3 voluntary NIC rate is £15.85 per week, which can boost your State Pension by £342.86 annually. Be sure to make any voluntary contributions by 5 April 2025 to benefit from this rate. After that, you’ll only be able to go back six years.
Paying Employees Early Before Christmas
If your business closes for the holidays and you need to pay employees early, HMRC has relaxed the Real Time Information (RTI) reporting requirements. However, make sure to report the normal or contractual payment date on your Full Payment Submission (FPS). For example, if you pay on 20 December but your usual date is 31 December, report the payment as 31 December. This ensures that employees’ eligibility for income-based benefits, like Universal Credit, is unaffected.
Christmas Gifts of Up to £50 Per Employee Are Tax-Free
Employers can provide certain “trivial” benefits in kind, such as Christmas gifts, tax-free, provided the cost per employee does not exceed £50. This is in addition to birthday or other occasion gifts. The exemption applies to items like food, wine, or store vouchers.
Christmas Party Time!
If you’re hosting a Christmas party, there’s no taxable benefit if the cost does not exceed £150 per employee (including VAT), and all employees are invited. If you had a summer event as well, the combined cost of both events should not exceed £150 per head to qualify for the exemption. If the total exceeds this, employees may be taxed on the excess amount, but employers can settle this tax through a PAYE settlement agreement (PSA) with HMRC.
GET FREE CONSULTATION
Advisory Fuel Rate for Company Cars
The advisory fuel rates for company cars have been updated for December 2024. Below are the current rates for reimbursing private mileage:
| Engine Size | Petrol | Diesel | LPG |
| 1400cc or less | 12p (13p) | 11p | |
| 1600cc or less | 11p (12p) | ||
| 1401cc-2000cc | 14p (15p) | 13p | |
| 1601cc-2000cc | 13p (14p) | ||
| Over 2000cc | 23p (24p) | 17p (18p) | 21p |
For hybrid cars, use the petrol or diesel rate, and for fully electric vehicles, the rate is 7p per mile.
Diary of Main Tax Events – December 2024 / January 2025
| Date | Event |
| 1 Dec | Corporation tax for year to 29/02/2024, unless quarterly instalments apply. |
| 19 Dec | PAYE & NIC deductions, and CIS return for month to 5/12/24 (due 22/12 if you pay electronically). |
| 30 Dec | Deadline for filing 2023/24 tax return online to request HMRC collect outstanding tax via PAYE code. |
| 1 Jan | Corporation tax for year to 31/03/2024, unless quarterly instalments apply. |
| 19 Jan | PAYE & NIC deductions, and CIS return for month to 5/1/25 (due 22/1 if you pay electronically). |
| 31 Jan | Deadline for filing 2023/24 self-assessment tax return online and paying outstanding tax for 2023/24, plus first payment on account for 2024/25. |
Please get in touch if you need assistance with any of the above matters. We’re here to help!
