One of the biggest incentives for offering company cars to employees is the company car benefit-in-kind (BIK) rates, which have been exceptionally generous for electric vehicles.

The current BIK rate for fully electric cars is 3% for 2025–26. Importantly, these rates are now secured until April 2030, with gradual increases to 4% in 2026–27, 5% in 2027–28, and then rising to 9% by 2029–30. Compare this to petrol and diesel cars, which can reach as high as 37%, and the advantage is clear.

This means you can offer employees an electric vehicle while keeping their taxable benefit significantly lower than traditional fuel options – supporting both your environmental commitments and the UK’s net-zero goals.

Capital Allowances: The 100% First Year Allowance

Here’s where the real tax benefit lies. If your company purchases a brand new, fully electric car, you can claim a 100% First Year Allowance (FYA) against your Corporation Tax bill in the year of purchase.

This also applies to charging stations installed at an employee’s home address, making it a genuinely comprehensive relief.

The government has now confirmed this relief will be extended for a further year, so the favourable treatment continues beyond the original March 2026 deadline.

FYAs are available whether the company owns the vehicle outright or acquires it via hire purchase. However, they’re not available on leased vehicles (including PCP-style agreements). When you eventually sell the vehicle, any sale proceeds will be subject to Corporation Tax.

Commercial vehicles continue to qualify for 100% allowances under the Annual Investment Allowance, offering further flexibility for businesses with fleet requirements.

Three Ways to Finance – And How Each Is Taxed

Leasing Your EV

If you lease an electric car, the monthly rentals are treated as an allowable business expense, directly reducing your taxable profits and Corporation Tax bill.

For VAT purposes, you can reclaim 50% of the VAT on lease payments – a worthwhile consideration when budgeting.

Hire Purchase

Hire purchase offers a middle ground. You still benefit from the 100% FYA, and you can deduct the interest element of your monthly payments for Corporation Tax purposes. This makes it more tax-efficient than a simple lease while still allowing capital allowances.

Outright Purchase

Purchase the vehicle outright and you get the full 100% FYA benefit. However, VAT can only be reclaimed if the vehicle is used exclusively for business purposes. Commuting doesn’t count as business use – so if there’s any personal use, VAT recovery won’t be available. This is an important distinction worth getting right.

Benefit-in-Kind: Taxing the Personal Benefit

A benefit-in-kind arises whenever an employee has any personal use of a company car. For fully electric cars, the BIK rates are:

• 2025–26: 3% of the list price
• 2026–27: 4% of the list price
• 2027–28: 5% of the list price
• 2028–29 onwards: Rising to 9% by 2029–30

The tax cost falls on both employer and employee:

• Employer: List price × BIK rate × 15% (employer’s National Insurance Contribution)
• Employee: List price × BIK rate × employee’s marginal income tax rate

There’s a helpful relief here: the installation of a home charging point for a company car is not treated as a taxable benefit, even though it clearly benefits employees personally.

Vehicle Excise Duty: Current Position and Future Changes

From April 2025, electric cars are subject to standard Vehicle Excise Duty (VED) like other vehicles and are no longer exempt.

The expensive car supplement (ECS) – an additional charge for vehicles originally costing more than £40,000 – applies for the first five years from the start of the second licence. However, there’s positive news: from April 2026, the ECS threshold for battery electric cars increases to £50,000. This is a significant relief that takes approximately 51% of all new EVs out of the tax, up from 37% when it was set at £40,000.

For an EV purchased in 2025–26 with a list price between £40,000 and £50,000, this change will save approximately £2,050 over five years (£410 × 5 years).

A Major Change Coming in 2028: The Mileage-Based Tax

This is the significant development you need to be aware of. From April 2028, a new mileage-based road tax (called eVED – electric Vehicle Excise Duty) will be introduced. This will be charged at 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids. This charge sits on top of the standard VED, not instead of it.

For a typical driver covering 8,500 miles annually, this would add approximately £255–£260 per year to running costs. The government has positioned this at roughly half the fuel duty rate paid by petrol and diesel cars, but it’s still a material increase in the cost of ownership.

This has timing implications for purchase decisions. Vehicles delivered before April 2028 are likely to be grandfathered and exempt from this future charge – worth factoring into your planning if you’re considering a purchase now.

Electricity: A Tax-Efficient Benefit

Electricity provided for company car drivers is not treated as a benefit-in-kind where the journey is for business use. This applies whether the company pays for charging directly or reimburses employees.

Employers can either reimburse charging costs claimed by employees or pay for all charging and recover the cost of private mileage (including commuting) through payroll deduction. Either way, electricity costs are fully tax-deductible for the company.

Grants and Support

Several grants remain available and have been significantly boosted:

• Electric Car Grant – Up to £3,750 off eligible EV models priced under £37,000. The scheme has been expanded with an additional £1.3 billion in funding and will now run until 2029–30, making it a worthwhile consideration for purchase timing
• EV infrastructure grant for staff and fleets (for SMEs) – Contributes towards the cost of installing multiple charge points
• Workplace Charging Scheme grant – Provides support for installing charge points at business premises

These combined measures represent substantial government support for electrification.

What’s Right for Your Business?

The tax treatment of electric vehicles remains highly favourable – but the optimal approach depends on your specific circumstances. Are you looking to offer employee benefits, develop a fleet, or both? Will the vehicle be used exclusively for business, or is there personal use? How long do you plan to keep it?

The introduction of the mileage-based tax from 2028 also deserves consideration. If you’re thinking about a company car purchase in the next few years, acting before April 2028 could mean grandfathering your vehicle out of that future charge – though this still requires confirmation from HMRC on the detail.

The answers to these questions will determine whether outright purchase, hire purchase, or leasing makes the most sense for your company.

If you’re considering an electric vehicle for your business, we’d recommend discussing your options with us. We can model the tax position for your specific situation, consider the 2028 mileage tax implications, and help you make the most of these reliefs while they remain in their current form.

The post Electric Vehicle Tax Reliefs for Limited Companies: A Complete Guide appeared first on TS Tax.

Understanding Current and Future IHT Rules

Inheritance tax is charged at 40% on estates above £325,000 (the nil-rate band), with an additional £175,000 residence nil-rate band if you leave your main home to direct descendants. Assets left to a spouse or civil partner are usually exempt.

With thresholds frozen and property/asset values rising, HMRC collected a record £8.2 billion in IHT in 2024/25, with estimates suggesting it will exceed £9 billion in the current tax year.

From April 2027, certain pensions and unused death benefits will be included in your estate for IHT purposes, making it crucial to plan ahead for retirement wealth and estate management.

Pensions: Passing on Retirement Wealth

Pensions remain one of the most tax-efficient ways to save for retirement and pass wealth to heirs:

Before age 75: Pension pots can usually be inherited tax-free.

After age 75: Beneficiaries pay income tax on withdrawals at their marginal rate, but the pension itself avoids IHT.

A Self-Invested Personal Pension (SIPP) gives flexibility over investments, including funds, shares, bonds, and other assets. To ensure smooth transfers, keep your pension expression of wishes form up to date.

Case Study: Maggie, aged 77, has £300,000 in her SIPP and £600,000 in her estate. Under current rules, she pays £110,000 in IHT. After April 2027, including her SIPP in the estate would increase her IHT bill to £230,000, highlighting the importance of planning early.

ISAs: Tax-Efficient Savings for Your Estate

Individual Savings Accounts (ISAs) let you save up to £20,000 per year with tax-free growth. Normally included in your estate for IHT, ISAs can still benefit your spouse or civil partner via an additional permitted subscription (APS), allowing them to inherit tax-free.

Example: John leaves £150,000 in his ISA to his wife Mary. She can claim the APS, preserving tax advantages while avoiding inheritance tax.

Junior ISAs: Investing for the Next Generation

Junior ISAs (JISAs) allow long-term savings for children under 18. Contributions are tax-free, and the annual allowance is £9,000 in 2025/26. Over 18 years, consistent contributions with modest growth could provide children with over £250,000, a strong start to adulthood.

Remember: JISA contributions are treated as gifts for IHT purposes; they are exempt only if you survive seven years after the gift.

Property: Planning for Your Home

For many, the family home is the largest asset. The residence nil-rate band (RNRB) can shield an additional £175,000 per person from IHT if passed to children or grandchildren. The allowance tapers for estates over £2 million, so property-rich estates with modest savings may face higher IHT bills.

Other Planning Options

• Gifting during your lifetime: Up to £3,000/year free of IHT, plus small regular gifts and wedding gifts.
• Trusts: Useful for controlling wealth distribution and complex estates, sometimes with tax advantages.
• Charitable gifts: Exempt from IHT, either during life or through your will.

Planning Ahead Matters

Successful wealth transfer requires regular review and careful planning:

• Keep pension nominations up to date
• Maintain a will and review regularly
• Spread assets across pensions, ISAs, and JISAs
• Organize financial records for executors
• Stay informed on changing IHT rules
• Seek professional advice for complex estates

With IHT rules changing in 2027, early planning is essential. Don’t leave your wealth exposed to unnecessary taxes. Our team can help you review pensions, ISAs, JISAs, and other assets, optimise tax efficiency, and create a clear estate plan tailored to your needs.

Contact us today to secure your financial legacy and make inheritance planning simple and stress-free.

The post How Upcoming Inheritance Tax Changes Could Affect Your Pension and Wealth Planning appeared first on TS Tax.

Complex Tax Rules and the Media Spotlight

Rayner’s situation was complicated by trusts and technical stamp duty rules that even experienced professionals find challenging. Experts like Emma Rawson (Association of Taxation Technicians) and Mike Warburton have acknowledged that many accountants would struggle to give definitive advice in similar circumstances. Warburton emphasized that UK tax rules are overly complex, and stamp duty is a prime example where confusion is common.

The Role of Professional Advice

Rayner likely received guidance indicating a potential issue with the correct stamp duty rate. She may also have been advised that a counsel’s opinion would be required for a definitive answer, an approach that is often costly and still may not provide complete clarity. While she acted with integrity, the ethics watchdog concluded that she had breached the ministerial code over her tax affairs.

This underscores the importance of seeking expert advice in areas outside your expertise. Professionals, whether accountants, lawyers, or financial advisors, often face situations where risk is present. In such cases, it may be better to admit uncertainty and consult a specialist, rather than risk an error that could attract fines, reputational damage, or media scrutiny.

The Media Factor

Interestingly, Rayner’s challenge was amplified not by HMRC, but by the media and social media attention. Tax professionals should note that even when compliance is technically met, public and media scrutiny can create serious reputational consequences. Schemes with only a marginal chance of success (e.g., 51%) are often not worth the risk when potential penalties and publicity are considered.

Risk Management in Tax Advice

The story highlights key takeaways for accountants and advisers:

• Know your limits: If expertise is lacking, seek guidance from a genuine expert or legal counsel.
• Avoid unnecessary risk: Sometimes, it is wiser to decline a project if your firm cannot confidently deliver.
• Document decisions carefully: Maintain thorough records and ensure transparency with clients.
• Plan for reputational risk: Consider media scrutiny as part of the overall risk assessment.

Broader Implications for Politicians

Rayner’s case is not unique. Political figures often face aggressive media analysis of tax and financial affairs. This illustrates a broader lesson: even highly experienced professionals can be caught out by complex rules or aggressive avoidance schemes.

By taking a cautious and well-documented approach, both professionals and public figures can reduce risk and ensure compliance while avoiding negative publicity.

Complex tax rules and media scrutiny can affect anyone. Our team can help you navigate intricate tax regulations, review compliance risks, and provide clear, professional guidance to protect your finances and reputation.

Contact us today to get expert support and peace of mind for all your tax and compliance needs.

The post Lessons for Politicians and Accountants from Angela Rayner’s Tax Story appeared first on TS Tax.

The first line of defence is Private Residence Relief, which removes CGT on a property that has been your main home throughout ownership, including certain “deemed occupation” periods many owners overlook. Even after you move out, the final 9 months of ownership stay exempt, and up to £40,000 of Lettings Relief may be available if you once rented part of your home.

Next comes timing. Every individual enjoys a £3,000 annual CGT exemption (2023/24), so staggering disposals across tax years or between joint owners, can shelter a larger slice of the gain. Selling just after 5 April often defers tax for almost 22 months, while completing a sale before the year-end can absorb any unused allowance. We calculate the optimal window around your income position, other disposals and the property market, so you pay the lowest legal amount.

Your “gain” is also lower than you might think once legitimate costs are factored in. We add value-enhancing improvements, extensions, new kitchens, loft conversions, plus purchase and sale expenses such as stamp duty, estate-agent fees and solicitors’ bills, all of which lift the cost base and trim the taxable profit. Good record-keeping turns every invoice into a deduction; our templates make sure nothing is missed and everything would satisfy HMRC on review.

For larger or business-related gains we look beyond reliefs to outright deferral. Roll-over relief lets you reinvest proceeds into new trading assets without immediate CGT, while EIS or SEIS shares can push the charge years into the future and potentially yield income-tax breaks. Transferring property into a company may qualify for Incorporation Relief, and gifting business assets or farmland often triggers Hold-over Relief, moving the tax to the recipient instead of writing a cheque today. In short, with considered planning CGT becomes a manageable cost, not a nasty post-sale surprise.

The post Capital Gains Tax Planning appeared first on TS Tax.

If you run a family-owned business, you’ve probably had the conversation. Or avoided it.

“What happens when you want to step back?”
“Is anyone ready—or willing—to take it on?”
“Should we sell?”
“Do we really want to hand this over to a stranger?”

For many family business owners, these aren’t just practical questions—they’re emotional ones.

You’ve built something with care. You’ve woven your values into the way the business runs. And you may have people—family and employees alike—who are relying on what happens next.

An Employee Ownership Trust (EOT) offers a solution that’s increasingly attractive to families trying to navigate succession with honesty and heart.

Why Consider an EOT?

Most family businesses face one or more of the following:

• Some family members work in the business. Some don’t.
• There’s no obvious successor. Or there is, but the thought of handing it all over is… complicated.
• You’ve got long-standing employees who feel like part of the family.
• The idea of selling to a competitor or private equity firm doesn’t sit right.

An EOT gives you a different option. You sell your shares to a trust that holds them on behalf of the employees. The business continues under its own steam, guided by a board and trustees. The culture is preserved. The team is rewarded. And you get a tax-efficient exit.

What Happens to the Family?

That depends on how you structure it. An EOT doesn’t have to mean cutting ties:

• Family members can still work in the business—in leadership or operational roles.
• You can remain on the board during the transition, or for the long term if that suits everyone.
• If appropriate, family trustees can be appointed to the EOT board (although you’ll need independent oversight too).
• If some family members want to stay involved and others don’t, the EOT can be a way to exit fairly—without family fallout over money, control, or direction.

And because the EOT pays you over time (typically from profits), the business doesn’t have to take on excessive debt to make it happen.

What About the Employees?

They benefit from:

• Stability—because the company isn’t being absorbed, flipped, or broken up
• A sense of inclusion—they’re beneficiaries of the trust
• Tax-free bonuses (up to £3,600 per year) if the business chooses to distribute profits
• A voice—via employee trustees or representative roles

For many family-owned businesses, that feels like the right kind of legacy.

What You’ll Need

If you’re exploring this route, you’ll need to:

• Have a realistic business valuation and repayment plan
• Choose trustees carefully (including whether any family members should be involved)
• Be honest with your family and your team about the vision
• Work with a solicitor and tax advisor who understand the balance of structure, sentiment, and succession

We’ve helped family businesses do exactly that—with care, discretion, and clarity.

The post EOTs for Family-Owned Businesses: Protecting the Legacy Without the Drama appeared first on TS Tax.

Setting up an Employee Ownership Trust (EOT) is often one of the most positive decisions a business can make. But like any structure involving multiple stakeholders, things can get tense—especially when trustees and directors don’t see eye to eye.

The good news? Most disagreements are manageable. The better news? You can plan for them.

At TS Tax, we help clients structure EOTs with good governance from day one—so when friction happens, everyone knows where they stand.

Here’s what to understand.

First, Let’s Be Clear on Roles

• Directors are responsible for running the company—setting strategy, making operational decisions, and managing performance.
• Trustees are responsible for ensuring the company is being run in the interests of the employee beneficiaries of the trust.

The trustees don’t get involved in day-to-day decisions. But they do oversee the business at a strategic level. Think of it like a board of governors in a school—not involved in timetables, but very interested in leadership, safeguarding, and values.

When Might They Disagree?

Disagreements often arise when:

• The directors want to take risks (e.g. expansion, borrowing) and the trustees are more cautious.
• The trustees believe employee interests are being ignored or sidelined.
• The business underperforms, and trustees challenge leadership decisions.
• There’s a mismatch in communication or expectations.

None of this is unusual. In fact, it’s a sign that the governance system is working—as long as both sides stay respectful and focused on the trust’s purpose.

How Are Disputes Resolved?

A well-drafted trust deed and shareholder agreement should include mechanisms for resolving disputes between trustees and directors. These might include:

• Escalation procedures (e.g. bringing in the independent trustee or external advisors)
• Defined voting thresholds for key decisions
• Clear protocols around when trustees can intervene in company matters
• Regular joint meetings to avoid conflict in the first place

When we structure EOTs at TS Tax, we help clients think through not just the rosy scenarios, but the awkward ones. Because planning for disagreement is a hallmark of good governance.

What About Removing a Director or Trustee?

It can happen. The trust may have the power to remove a director in serious cases—usually if they are acting against the interests of the trust or in breach of their duties. Similarly, trustees can be removed if they’re obstructive, absent, or acting improperly.

But these are exceptional situations. Most of the time, what’s needed is better communication, not a dramatic reshuffle.

So, Should I Worry?

Not if you’re setting things up well.

The best way to avoid damaging conflict is to:

• Choose trustees carefully—especially the independent trustee
• Make sure directors understand the purpose of the trust and their duties to it
• Hold regular board and trust meetings with clear agendas
• Deal with disagreements early, not when they’ve festered

If you’re thinking about setting up an EOT, or already running one and need governance support, we can help.

Need Clarity on EOT Governance?

We offer a free 15-minute consultation with a senior solicitor at TS Tax to help you understand how trustee and director roles can be structured for long-term stability.

The post What Happens When Trustees and Directors Don’t Agree? appeared first on TS Tax.

If you’re starting to think about your business exit, you’ve probably realised this already:

There’s no single “right” way to hand over the reins. But the choice you make will shape your legacy, your finances, and your team’s future.

At TS Tax, we talk to business owners weighing up the big three:

1. Selling to an Employee Ownership Trust (EOT)
2. Selling to Private Equity
3. Selling via a Trade Sale

Each comes with advantages. And trade-offs. Here’s what you need to know to make a well-informed decision.

1. Employee Ownership Trust (EOT)

What it is

You sell a majority of your company’s shares to a trust that holds them on behalf of the employees. You get paid (usually over time), and the business is run for the long-term benefit of the team.

Why people choose it

• Preserves the company’s values and independence
• Offers 0% Capital Gains Tax on the qualifying sale
• Avoids outside buyers with different agendas
• Leaves a real legacy for your team

What to think about

• You may not receive the full sale price upfront
• You’ll need a clear internal leadership plan
• It must be properly structured with legal and tax support

2. Private Equity Sale

What it is

You sell all or part of your company to a private equity investor—usually in exchange for a large lump sum, with the aim of growth and resale within a few years.

Why people choose it

• Potential for a high initial payout
• Access to capital and strategic expertise
• A defined exit strategy for shareholders

What to think about

• Business direction may shift toward investor priorities
• Internal culture may change rapidly
• You may be required to stay on under new conditions
• You’ll have limited control after completion

3. Trade Sale

What it is

You sell your business to another company—often a competitor or strategic buyer in your sector.

Why people choose it

• Can deliver a clean exit
• May be relatively quick
• Often includes brand, IP, and client transfer

What to think about

• Your team may face job uncertainty
• Business identity and autonomy may be lost
• Client relationships may be disrupted
• You have little say in what happens after the sale

Which One Is Right for You?

It depends on your goals. Ask yourself:

• Do I want to maximise my payout, or protect my company’s legacy?
• How much influence do I want after the sale?
• What do I want for my team once I’ve stepped away?
• What would make me proud to hand over?

There’s no right or wrong—just the model that fits your business and your values best.

Still Deciding? Let’s Talk It Through.

We offer a free 15-minute consultation with a senior solicitor at TS Tax to help you explore your options—including whether an EOT is a viable alternative to a third-party sale.

Book your consultation today.

The post EOT vs Private Equity vs Trade Sale: Which Exit Route Is Right for You? appeared first on TS Tax.

If you’re considering selling your business to an Employee Ownership Trust (EOT), you’ve probably spoken to your accountant already. Or your solicitor. Or both—at different times.

Here’s our honest advice: get them talking to each other.

Because while an EOT can be an incredible route for succession—offering full capital gains tax relief, long-term cultural continuity, and a way to thank your team—it’s not something one professional can handle in isolation.

This is one of those moments where joined-up advice matters.

Why You Need Both

The EOT process is part tax planning, part share sale, part trust setup, and part succession strategy. That’s why you’ll need:

• A solicitor to draft the legal structure: the trust deed, the share sale agreement, the board and trustee framework, and any associated governance changes.
• A tax advisor to make sure the sale qualifies for the available reliefs, is viable from a cash flow perspective, and doesn’t leave you or the business with an unpleasant surprise later.

If either side is working blind, you’re more likely to end up with delays, extra costs, or a structure that doesn’t work quite as well as it should.

Early Advice = Smoother Process

We often work with clients right at the exploratory stage. These early chats typically cover:

• What a realistic sale price might look like
• Whether the company can afford to buy you out over time
• What you can (and can’t) do with the trust
• How the governance will work once you’re no longer the majority owner

If your accountant is already running some numbers, that’s the perfect time to bring in a solicitor to talk about structure. If you’ve started discussing the legal documents, it’s time to get your tax advisor looped in.

We don’t do turf wars. We do clarity.

But Isn’t This Just for Big Firms?

Nope. EOTs work brilliantly for small and mid-sized companies with:

• Solid profits
• A strong team
• Owners who care about what happens next

If you want to sell to your team without selling out, the EOT might be your best option. But it only works well when the professionals advising you are working well together.

If you would like to work together, reach out at TS Tax.

The post EOTs: When You Need a Solicitor and a Tax Advisor in the Same Room appeared first on TS Tax.

Because, for all the talk of structure and tax reliefs, there’s a very human element to this: you’re passing on something you’ve built.

Here’s what happens when you sell your business to an EOT—without the corporate waffle.

1. You Agree a Price:

Sounds simple. It’s not always.

The sale price has to be fair and justifiable—both for HMRC (to meet the EOT criteria) and for the business itself (because usually, the purchase is funded by the company’s own profits over time).

You’ll need a proper valuation, and this is where having a calm, practical accountant and solicitor really helps. It’s not about inflating numbers; it’s about what the business can genuinely support.

2. You Set Up the Trust:

You’ll create a legal trust that will hold the shares on behalf of the employees. This includes:

• A trust deed that sets out the rules and purpose.
• Appointing trustees (usually a mix of directors, employees, and one independent person).
• Making sure the trust holds at least 51% of the shares.

From this point on, the trust is the majority owner of the business.

3. You Finalise the Sale:

This involves a sale agreement (just like any share sale) and a payment structure. In most cases, the business doesn’t pay you the whole value up front. It repays you over time out of profits.

Some business owners choose to forgive part of the price as a gift to the staff. Others don’t. Both are valid choices—this is your call.

4. You Tell the Team:

Handled well, this can be one of the most powerful, positive moments in your business journey.

You’re not selling to a competitor. You’re putting the business into the hands of the people who’ve helped shape it.

You’re also giving them:

• The potential for future bonuses (tax-free up to £3,600/year).
• A say in how the business moves forward.
• A clear sign that you trust them with the future.

5. You Stay On—Or Step Back:

Many sellers stay on as directors or consultants for a few years. Others step away entirely. There’s no one-size-fits-all here, and it depends on what your goals are.

What matters is that this isn’t a handbrake turn. It’s a structured, thoughtful transition.

So, Is It All Worth It?

Only you can answer that—but here’s what we know: for business owners who want a meaningful exit, a protected legacy, and a way to reward their team without throwing everything into the hands of outsiders, the EOT is often the best solution they didn’t know existed.

The post Selling Your Business to an Employee Ownership Trust: What Actually Happens appeared first on TS Tax.