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October Questions and Answers
Newsletter issue – October 2025
Q: My husband has been out of work for a year, so his income has dropped below the Personal Allowance. Is it correct that I can now qualify for the Marriage Allowance?
A: To be eligible for the Marriage Allowance, one partner (in the marriage or civil partnership) must not be paying any income tax, and the other must be a basic rate taxpayer.
The lower earner can transfer £1,260 of their Personal Allowance to the higher earner, reducing the latter's tax bill by £252 (20% of £1,260). This can be done via a self-assessment tax return (if you are already registered) or online on the GOV.UK website.
Q: I'm thinking of going freelance but am unsure of how to account and save for any tax I might have to pay. Can you give any advice?
A: Going freelance can be rewarding, but it does come with risks and pitfalls you should make yourself aware of. Make sure you have a solid financial plan and are realistic about your expected level of income.
If you think you'll earn at least £50,000 per year, you will need to be compliant with Making Tax Digital from next April (see earlier article in this newsletter). If you think your turnover will reach above £90,000 you will also have to register for VAT. Keeping up-to-date financial records using HMRC approved MTD software will help you calculate your VAT obligations.
Regarding your personal tax to be paid, as a rule of thumb you should aim to set aside 40% of the net value of your invoices received from customers. This will cover you for tax, national insurance and possibly a pension contribution.
Please get in touch with us if you would like to discuss your business plans in detail and get further tax planning advice.
Q: We've sold inherited assets at less than the estate valued them at but have already paid the Inheritance tax (IHT) based on the higher valuation. Is there anything we can do?
A: Yes, there is. There are an increasing number of cases of families successfully reclaiming overpaid IHT, but many are unaware that they can even do this.
Based on your question, I believe you've paid IHT within the six months deadline but have sold some assets later. If those assets, such as property or stocks and shares, have fallen in value since the initial valuation, then you may be able to reclaim the overpayment in IHT.
The executors of the estate should submit the relevant forms to HMRC upon disposal of the asset. For example, form IHT35 is used for qualifying investments sold within 12 months of death and IHT38 for property sold within four years.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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