If you are a higher rate or additional rate taxpayer you have the option to carry back your charitable donations to the previous tax year. A request to carry back the donation must be made before or at the same time as your previous year’s self-assessment return is filed.

This means that if you made a gift to charity in the current 2024-25 tax year that ends on 5 April 2025, you can accelerate repayment of any tax associated with your charitable giving. This can be a useful strategy to maximise tax relief. For example, if you would not pay higher rate tax in the current tax year but did in the previous tax year. The formal carry-back claim should be undertaken as part of the self-assessment tax return for 2023-24, which must be submitted by 31 January 2025.

You can only claim if your donations qualify for gift aid. This means that your donations from both tax years together must not be more than four times what you paid in tax in the previous year.

If you do not complete a tax return you need to use a P810 form to make a claim.

If you are a higher rate or additional rate taxpayer, you are eligible to claim additional tax relief on the difference between the basic rate and your highest rate of tax.

For example:

If you donated £5,000 to charity, the total value of the donation to the charity is £6,250. You can claim:

• £1,250 if you pay tax at the higher rate of 40% (£6,250 × 20%),
• £1,562.50 if you pay tax at the additional rate of 45% (£6,250 × 25%).

The self-employed tax basis period reform has changed the way trading income is allocated to tax years. Under the reforms, the tax basis period has changed from a ‘current year basis’ to a ‘tax year basis’.

This means that all sole trader and partnership businesses must now report their profits on a tax year basis, beginning with the self-assessment return due by 31 January 2025 (covering the tax year 2023-24) and future years.

Under the old rules there could be overlapping basis periods, which charged tax on profits twice and generated corresponding ‘overlap relief’ which was usually given on cessation of the business. The new method of using a ‘tax year basis’ has removed the basis period rules and prevents the creation of further overlap relief. 

The changes do not affect sole traders and partnership businesses who draw up annual accounts to a date between 31 March and 5 April. These businesses will continue to file as usual for the 2023-24 accounting year and beyond. 

The new rules will come into effect in the current 2024-25 tax year with the previous 2023-24 tax year known as the ‘transition year’. During the transitional year, all businesses’ basis periods will have been aligned to the tax year and all outstanding overlap relief used against profits for that tax year.

Any excess profit (after overlap relief) covering more than 12 months, is known as ‘transition profit’. The transitional profit will be spread by default over 5 tax years from 2023-24 until 2027-28.

A reminder of the changes to Scottish Income Tax rates for the 2024-25 tax year. It was announced as part of the Scottish Budget measures that a new tax band called the advanced rate band will apply a 45% tax rate on annual income between £75,000 and £125,140 and would come into effect from 6 April 2024. 

In addition, 1p was added to the top rate of tax and the starter and basic rate bands were increased in line with inflation (6.7%, based on Consumer Price Index from September 2023). There were no changes to the Starter, Basic, Intermediate and Higher tax rates and the Higher rate threshold was maintained at £43,662. The measures are expected to raise an additional £1.5 billion in Income Tax revenue.

The Scottish rates and bands for 2024-25 are as follows:

The standard personal allowance for 2024-25 remains frozen at £12,570. 

If you are an employee who is working from home, you may be able to claim tax relief for part of your household bills that are related to your work. If your expenses or allowances are not paid by your employer, you can claim tax relief directly from HMRC.

You can claim tax relief if you have to work from home, for example because:

• your job requires you to live far away from your office; and/or
• your employer does not have an office.

Tax relief is not usually available if you choose to work from home. This includes if your employment contract lets you work from home some or all of the time or if your employer's office is unable to accommodate you.

Employees can claim tax relief of £6 per week (or £26 a month for employees paid monthly) to cover additional costs if they have to work from home. Employees do not need to keep any specific records if they receive this fixed amount.

Employees will receive tax relief based on their highest tax rate. For example, if you pay the 20% basic rate of tax and claim tax relief on £6 a week, you will receive £1.20 per week in tax relief (20% of £6). Alternatively, employees can claim the exact amount of extra costs they have incurred but will need to provide evidence to HMRC. HMRC will accept backdated claims for up to 4 previous tax years.

Employees may also be able to claim tax relief for using their own vehicle, be it a car, van, motorcycle or bike. As a general rule, there is no tax relief for ordinary commuting to and from your regular place of work. The rules are different for temporary workplaces where the expense is usually allowable or if an employee uses their own vehicle to do other business-related mileage. Employees may also be able to claim tax relief on equipment they have bought, such as a laptop, chair or mobile phone.

HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for school holiday childcare costs.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, breakfast and after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and save up their TFC allowance to use during school holidays. 

The TFC scheme provides for a government top-up on parental contributions. For every £8 contributed by parents an additional £2 top up payment will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs. 

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.

HMRC’s Director General for Customer Services, said:

‘Springtime is a good opportunity to take a fresh look at family finances. A quick check online and you can find out how Tax-Free Childcare can help cut the cost of your childcare bills. Every bit of financial support helps – I would urge families to ’hop to it’ and search ‘Tax-Free Childcare’ on GOV.UK to find out how you could be better off and open your account today.