Not all state benefits are tax-free! Some, like the State Pension and Carer’s Allowance, are taxable, while others, like PIP and Universal Credit, are not. Knowing the difference can help you stay on top of your tax responsibilities and avoid surprises.

HMRC’s guidance outlines the following list of the most common state benefits on which Income Tax is payable, subject to the usual limits:

• Bereavement Allowance (previously Widow’s Pension)
• Carer’s Allowance or (in Scotland only) Carer Support Payment
• Contribution-Based Employment and Support Allowance (ESA)
• Incapacity Benefit (from the 29th week you receive it)
• Jobseeker’s Allowance (JSA)
• Pensions Paid by the Industrial Death Benefit Scheme
• The State Pension
• Widowed Parent’s Allowance

The most common state benefits that are not subject to Income Tax include:

• Attendance Allowance
• Bereavement Support Payment
• Child Benefit (income-based – use the Child Benefit tax calculator to see if you’ll have to pay tax)
• Disability Living Allowance (DLA)
• Free TV Licence for Over-75s
• Guardian’s Allowance
• Housing Benefit
• Income Support – though you may have to pay tax on Income Support if you’re involved in a strike
• Income-Related Employment and Support Allowance (ESA)
• Industrial Injuries Benefit
• Lump-Sum Bereavement Payments
• Maternity Allowance
• Pension Credit
• Personal Independence Payment (PIP)
• Severe Disablement Allowance
• Universal Credit
• War Widow’s Pension
• Winter Fuel Payments and Christmas Bonus

Understanding which state benefits are taxable and which are tax-free is important in order to understand the tax implications and ensure compliance with HMRC rules. If you are receiving any of the benefits listed and are unsure about your tax obligations, please do not hesitate to contact us.

After a business closes, income can still arise. Post-cessation receipts must be properly reported and taxed under specific rules. Knowing what qualifies — and what does not — ensures businesses and individuals stay compliant with UK tax law.

Under the legislation, the individual or entity who receives, or is entitled to receive, the post-cessation income is liable to Income Tax or Corporation Tax on that income. This recipient does not need to be the same person who originally carried on the trade. The key factor is whether the income in question meets the definition of a post-cessation receipt.

To fall within the scope of these rules, the income must:

• be received after a person permanently ceases to carry on a trade;
• arise from the carrying on of the trade before the cessation; and
• not be otherwise subject to tax.

Additionally, the legislation outlines specific types of income that are treated as post-cessation receipts beyond those that naturally arise from the winding down of a trade. However, certain types of payments, such as consideration received for the transfer of trading stock, are specifically excluded from this classification and are dealt with under different tax rules.

Not all LLP members are taxed as partners. HMRC may treat them as employees if they meet certain conditions. Here's how the salaried member rules work, what the three-part test involves, and who’s excluded from the legislation.

The salaried member legislation can apply to certain members of a Limited Liability Partnership (LLP). This can happen where HMRC consider that a member of an LLP is not a risk-taking partner and can be re-classified as a salaried member.

Prior to 2014, all individual members of an LLP were taxed as if they were a partner. The salaried member legislation brought in new provisions that means that individual members of an LLP are effectively treated as employees for tax purposes.

The legislation includes a three-part test to see if LLP members should be taxed as salaried members. If all three parts apply, then the member will be considered a salaried member.

In a simplified format they are:

• Condition A: a member’s regular payments from the LLP have the characteristics of a “disguised salary”, i.e., at least 80% of the member's pay is fixed or if variable do not vary in line with actual profits and losses of the LLP.
• Condition B: a member has no significant influence over the affairs of the LLP.
• Condition C: a member’s capital stake in the business is less than 25% of their expected reward package.

As long as an LLP member is able to demonstrate that at least one of the three conditions does not apply to their circumstances, they will continue to enjoy the status of a regular partner. HMRC’s internal manuals include a number of examples to help clarify how these rules are applied in practice.

This means that the salaried member provisions do not apply to:

• companies
• individuals who do no more than invest money
• individuals who no longer perform services for the LLP but who continue to receive a profit share.

If you are self-employed as a sole trader or a partner in a business partnership, you are required to maintain suitable business records as well as separate personal income records for tax purposes.

For tax compliance, these business records must be kept for at least five years from the 31 January submission deadline of the relevant tax year. For instance, for the 2023-24 tax year, where online filing was due by 31 January 2025, you must retain your records until at least the end of January 2030. In some situations, such as when a return is filed late, you may be required to keep the records for a longer period.

As a self-employed individual, you should keep a record of the following:

• All sales and income
• All business expenses
• VAT records if you're VAT registered
• PAYE records if you employ anyone
• Records of your personal income
• Details of any grants received if you claimed using the Self-Employment Income Support Scheme (SEISS) due to coronavirus

You don't necessarily need to keep the original physical records. Most records can be stored in an alternative format, such as scanned copies, as long as they can be retrieved in a readable and uncorrupted format.

If any of your records are lost or unavailable, you must attempt to reconstruct them. If the figures are estimated or provisional, you must inform HMRC accordingly. Failing to keep proper or accurate records can result in penalties.

From income tax to VAT, HMRC has specific time limits for issuing tax assessments. Depending on the circumstances—whether it’s standard, careless, offshore, or deliberate behaviour—these limits can stretch from 4 to 20 years.

HMRC’s time limits apply in different ways to various taxes, including income tax, capital gains tax, corporation tax, VAT, insurance premium tax, aggregates levy, climate change levy, landfill tax, inheritance tax, stamp duty land tax, stamp duty reserve tax, petroleum revenue tax, and excise duty.

There are four time limits within which assessments can be issued. These are:

• 4 years from the end of the relevant tax period
• 6 years (careless) from the end of the relevant tax period
• 12 years (offshore) from the end of the relevant tax period
• 20 years (deliberate) from the end of the relevant tax period

The 4-year time limit is the standard time limit for all taxes.

The 6-year time limit applies when taxes have been lost due to the careless behaviour of the taxpayer, or another person acting on their behalf.

The 12-year time limit applies when taxes have been lost due to an offshore matter or offshore transfer. This also applies if reasonable care was taken, or the behaviour is considered careless by the taxpayer or another person acting on their behalf.

Lastly, the 20-year time limit applies when taxes have been lost due to the deliberate behaviour of the taxpayer or another person acting on their behalf, or if the taxpayer has failed to comply with specific historic obligations for periods ending before 1 April 2010.