Beam Accountancy

UK taxpayers with income from overseas may not always be aware of the tax rules that apply.  Foreign income is defined as any income from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign. Different rules may apply if you’re eligible for Foreign Income and Gains relief.

Foreign income can include wages from working abroad, overseas dividends and savings interest, rental income from foreign property, and pensions held outside the UK.

Whether UK tax is due depends mainly on your UK residence status. If you are not UK resident, you will not usually pay UK tax on your foreign income. However, UK residents will generally need to pay tax on worldwide income unless a specific exemption or relief applies.

Since 6 April 2025, changes to the rules affecting individuals who previously relied on their overseas domicile status mean that some people may need to review how their foreign income and gains are taxed. Eligible individuals may be able to claim Foreign Income and Gains (FIG) relief, depending on their circumstances.

Foreign income that is taxable in the UK is normally reported through a self-assessment tax return, although some types of income have different rules.

If the same income is taxed in both the UK and another country, you may be able to claim relief to prevent double taxation. In some cases, you may need a certificate of residence from HMRC to confirm your entitlement to relief.

Some self-employed individuals experience significant fluctuations in their profits from one year to the next. When this happens, HMRC’s averaging relief may help to regularise tax payments by levelling profits across more than one tax year.

However, the relief is only available to limited groups of taxpayers. Farmers and market gardeners can claim to average profits over either two or five consecutive tax years, while creators of literary or artistic works, such as authors, artists and composers, can average profits over two consecutive tax years.

Averaging relief is intended to reduce the impact of unusually high or low profits in a particular year. By spreading profits over the relevant period, it may reduce the amount of tax payable where income would otherwise push a taxpayer into a higher tax band or affect National Insurance liabilities.

The relief is most beneficial where your tax position differs between years. For example, it may reduce your tax bill if you pay tax at the basic rate in one year and the higher rate in another, or if your income falls below your personal allowances in one year but is taxable in another. However, it is unlikely to provide any benefit if you are already paying the highest rate of tax and Class 4 National Insurance contributions in every year being averaged.

The relief is not available to companies and generally cannot be claimed by businesses using the cash basis. Specific conditions must also be met before a claim can be made, including rules on the level of profit fluctuations between the relevant tax years.

Claims are made through self-assessment for the latest tax year. Rather than requiring earlier tax returns to be amended, HMRC adjusts the tax and National Insurance position for the claim year to reflect the averaging calculation.

If your profits vary considerably from year to year and work in a qualifying business, it is worth checking whether averaging relief is available. Claiming the relief where eligible could reduce your tax bill and provide a fairer reflection of your business profits over time.

Employees who use their own vehicle for business journeys may receive Mileage Allowance Payments (MAPs) from their employer. These payments can be made tax-free up to HMRC’s approved amount, calculated by multiplying business miles travelled by the relevant rate per mile.

Effective since 6 April 2026, the approved mileage rate for cars and vans increased to 55p per mile (from 45p) for the first 10,000 business miles, with 25p per mile (no change) applying above this threshold. Motorcycle mileage remains at 24p per mile and bicycle mileage at 20p per mile.

If an employer pays more than the approved amount, the excess must be reported to HMRC and taxed through payroll. If an employer pays less than the approved amount, the employee may be able to claim Mileage Allowance Relief on the unused balance.

Separate National Insurance rules apply to mileage payments. Employers may need to pay Class 1 National Insurance on amounts above the qualifying amount, although no National Insurance is due where payments are below the threshold.

There is an additional 5p per passenger per business mile for carrying fellow employees in a car or van on journeys which are also work journeys for them. Only payments specifically for carrying passengers count and there is no relief if you receive less than 5p or nothing at all.

Protecting hard-won local customer networks is a constant and necessary battle for commercial suppliers. However, a recent High Court judgement has exposed the risks inherent in employing standard ‘boilerplate’ contracts to restrict departing sales staff. The dispute in focus was triggered when a national building supplies merchant sought final injunctions against its former area sales manager. Under the terms of his contract, the defendant was defined as a peripatetic area sales manager responsible for high-value client accounts across the local regions. The contract was subject to a standard one-week notice period during a probationary window, yet also contained extensive post-termination restrictions, including a 6-month, geographically defined non-compete covenant, alongside a 12-month confidentiality clause.

During the course of his employment, the defendant had regular access to the merchant's digital management systems, which record customer transaction histories, pipeline projects, and a variable pricing hierarchy. Some months later, the defendant resigned from the merchant under the presumed obligation of three months' notice with a view to joining a direct competitor as an external sales manager to help launch their new regional branch.

The defendant’s previous company learned that regional clients on the departing manager’s sales ledger were being actively engaged. Specifically, the merchant referenced a professional networking exchange between the defendant and a buyer for a prominent local construction company, during which the defendant directed the buyer's representative to reroute quotes through his new employer. Fearing an immediate loss of its localised trade connections, the merchant issued a formal legal claim and successfully secured an interim injunction to enforce both the 6-month non-compete covenant and a temporary confidentiality restriction.

The High Court, however, dismissed the employer’s claims, declaring the non-compete covenant void and unenforceable, while further rejecting the application for a final confidentiality injunction. The Judge’s assessment focused on fatal drafting flaws in the agreement, specifically the dismantling of a contractual "carve-out" intended to allow the employee to work in non-competing areas. Moreover, the former employer attempted a belated "blue-pencil" deletion to alter this exception. However, the High Court ruled that an employer cannot retroactively rewrite a relaxation clause to limit a former employee's freedom.

The High Court also applied the "Quilter point," confirming that, as the manager could have been dismissed at a week's notice during his initial probation period, applying an immediate 6-month blanket ban from ‘day one’ was fundamentally disproportionate. Finally, the Court ruled that the pricing schedules listed on the company’s internal software were merely artificial screen prices. Given that genuine commodity prices fluctuate rapidly due to global market forces, regional builders routinely and openly share competitor quotes to drive down costs. Thus, the departing manager possessed no memorable or stable trade secrets which could have been unlawfully exploited.

If boilerplate trade protections are structurally inconsistent, geographically bloated, or syntactically flawed, they will be struck down entirely under employment law, leaving client databases open to exploitation. A non-competition restriction is only as strong as the internal consistency of your wider framework, and seeking to retroactively expand a post-termination boundary to include marginal outlier accounts will likely backfire.

If an organisation reserves the right to terminate an introductory employee at a week's notice, any attempt to lock that individual out of the job market for 6 months will likely be viewed as an unlawful restraint of trade, and so corporate counsel must structure agreements using variable, ascending tiers of restriction that directly correspond to the employee’s actual length of service and seniority.

Economic conditions remain uncertain and many business owners are understandably cautious about the months ahead. Although there are signs of improvement in some sectors, rising costs, changing customer demand and ongoing economic pressures mean that confidence remains fragile.

When uncertainty increases, it is tempting to postpone important decisions until conditions become clearer. However, delaying action can sometimes create bigger problems. Businesses that monitor their financial performance regularly are generally better equipped to respond to changing circumstances than those relying solely on annual accounts.

A good business plan is not simply a document prepared for a bank. It should be a practical management tool that helps owners understand where the business is heading, what risks may lie ahead and how future opportunities can be developed.

Regular cash flow forecasts, profit projections and key performance indicators provide valuable early warning signs if trading conditions begin to change. They also enable business owners to make informed decisions about pricing, recruitment, investment and financing before problems become urgent.

Periods of uncertainty can also create opportunities. Competitors may reduce investment, delay product launches or cut marketing activity. Businesses with a clear strategy and a good understanding of their financial position are often well placed to strengthen their market position while others hesitate.

Planning does not eliminate risk, but it does help reduce surprises. Even a short quarterly review of financial performance and future objectives can identify issues that might otherwise go unnoticed.

We can help you develop meaningful management information, prepare realistic forecasts and review your business strategy throughout the year. Regular planning discussions can provide greater confidence when making important decisions and help ensure your business remains resilient whatever economic conditions lie ahead.

Artificial intelligence (AI) has dominated business headlines over the past year, with many suggesting it will transform the way companies operate. While there is no doubt that AI has enormous potential, recent research indicates that many small businesses have yet to experience significant commercial benefits.

For some business owners, the challenge is knowing where to start. Others have invested in AI tools only to discover that they do not automatically save time or reduce costs. Like any technology, AI is most effective when it is applied to specific business problems rather than simply because it is fashionable.

There are, however, areas where AI can make a genuine difference. It can help draft marketing content, answer routine customer enquiries, summarise lengthy documents, automate repetitive administration and assist with bookkeeping and data analysis. Used sensibly, these tools can free up valuable time for higher value work.

It is important to remember that AI is not a substitute for professional judgement. Financial decisions, legal matters and strategic planning still require human expertise and careful consideration. Businesses should also ensure that confidential information is protected before entering data into AI systems.

Before investing in new technology, business owners should identify the tasks that consume the most time and consider whether AI could improve efficiency. Starting with one or two simple applications often produces better results than attempting a complete overhaul.

The businesses that benefit most from AI are likely to be those that adopt it thoughtfully, train their staff properly and regularly review whether it is delivering measurable improvements.

If you are considering introducing AI into your business, we can help you assess where it may add value, evaluate the likely financial benefits and ensure that any investment supports your wider business objectives.

With childcare costs continuing to rise, many working families could be missing out on valuable support through the Tax-Free Childcare scheme. The scheme helps eligible parents pay for registered childcare by providing a government top-up on their contributions. For every £8 paid into a childcare account, the government adds £2.

Tax-Free Childcare can be used to pay for a range of approved childcare providers, including childminders, nurseries, nannies, after-school clubs and holiday clubs. The government contribution is capped at £500 every three months, providing up to £2,000 a year per child. For children with disabilities, the maximum increases to £1,000 every three months, or £4,000 a year.

The scheme is available to many working parents, including those who are self-employed. You will usually need to be working, or returning to work, and earning at least the equivalent of the National Minimum Wage or Living Wage for 16 hours a week. Both employed and self-employed workers can qualify, as well as those on certain types of leave, including maternity, paternity and adoption leave.

Children are generally eligible until 1 September after their 11th birthday, or until 1 September after their 16th birthday if they are disabled.

However, there are restrictions. You cannot usually claim Tax-Free Childcare if you or your partner’s expected adjusted net income is more than £100,000 a year, or if you receive Universal Credit or childcare vouchers. Parents must set up a childcare account and sign-in every 3 months to confirm they remain eligible. 

Keeping your skills and knowledge up to date is important but the cost of professional training can add up. If you are self-employed some training costs may be claimed as allowable business expenses.

Training costs can usually be claimed where the course helps you improve skills or knowledge that you already use in your business. This includes keeping up to date with changes in your industry, learning about new technology used in your work, or developing new skills that support your business operations, such as administration or management skills.

For example, a graphic designer taking a course on updated design software, or a tradesperson learning about new industry standards, may be able to claim the cost as a business expense.

However, tax relief is not available for every type of training. You cannot claim the cost of courses that help you start a new business or expand into a completely new area of business activity that is not directly related to your industry.

To support a claim, you should keep records of the training course, including invoices and details of how it relates to your business activities. If you are unsure whether a particular course qualifies, HMRC’s guidance at https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense includes some useful examples or we would of course be happy to help.

Receiving money from a family member can be a welcome source of financial support, but many people are unsure whether they need to pay tax on it. In most cases, the person receiving a gift does not pay Income Tax on money given by family. However, the gift could have Inheritance Tax implications for the person making the gift.

Inheritance Tax may become an issue if the person giving the money dies within seven years of making the gift. Gifts made during this period may be included when calculating the value of their estate, depending on the amount given, who received it and when it was made.

Gifts can include money, property, land, personal possessions and shares. If someone sells an asset to a family member for less than its market value, the difference may also count as a gift.

There are several exemptions and allowances that allow people to give money without it becoming liable for Inheritance Tax. Each tax year, an individual can give away up to £3,000 known as the annual exemption. They can also make unlimited gifts of up to £250 per person, provided another exemption has not been used for the same recipient.

Certain wedding gifts are also exempt, including gifts of up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to other individuals.

Regular financial support may also be exempt if it is paid from normal income and the person giving the money can still afford their usual living costs. This could include helping with rent, supporting an elderly relative or contributing into a savings account for a child under 18.

Anyone making significant gifts should ensure they keep records showing what was given, to whom, the value and the date of the gift as this may have Inheritance Tax implications in the future.

Most people are aware that cash donations to a charity can qualify for tax relief. However, it is less well known that gifts of land, property and qualifying shares can also provide valuable tax advantages.

If you donate land, property or shares to a UK charity, or sell them to a charity for less than their market value, you may be entitled to both Income Tax and Capital Gains Tax (CGT) relief. However, Income Tax relief is not available for gifts to Community Amateur Sports Clubs (CASCs).

Income Tax relief is claimed by deducting the value of the qualifying donation from your total taxable income for the tax year in which the gift or sale is made. If you complete a self-assessment tax return, the claim is made in the ‘Charitable giving’ section. Those who do not file a tax return can contact HMRC directly to claim the relief, either as a repayment or through an adjustment to their tax code.

There is also no CGT to pay on qualifying gifts of land, property or shares made to charity. Where an asset is sold to a charity for less than its market value, any gain is calculated using the actual amount paid by the charity rather than the asset’s market value.

To support any claim, it is important to retain records showing that the gift or sale was made and accepted by the charity. If the charity asks you to sell the asset on its behalf before donating the proceeds, keep evidence of both the gift and the charity’s request, as this will help preserve your entitlement to tax relief and avoid any unnecessary tax liability.