When a sole trader or partnership transfers a business to a company, a chargeable gain may arise. This is calculated by reference to the market value of the business assets at the date of incorporation (including goodwill), compared with their original base cost. The resulting gain would ordinarily be subject to Capital Gains Tax.

In many cases, however, the transfer is structured to qualify for Incorporation Relief. Broadly, this requires that the whole business is transferred as a going concern, together with all of its assets (other than cash), in exchange wholly or partly for shares issued by the company.

Where the conditions are satisfied, Incorporation Relief applies automatically and no formal claim is required. The effect of the relief is to defer the gain by reducing the base cost of the shares received, thereby postponing the tax charge until those shares are subsequently disposed of.

A taxpayer may elect for the relief not to apply. This election must be made in writing by 31 January, two years after the end of the tax year in which the incorporation takes place. For example, for a transfer in the current 2026-27 tax year, the election deadline is 31 January 2030. This deadline is reduced by one year if the shares are disposed of in the tax year following that of incorporation.

Pensioners are being urged to stay vigilant for any Winter Fuel Payment scams. HMRC is starting to recover Winter Fuel Payments issued for winter 2025 from those earning over £35,000 a year. While the process will affect nearly two million people, most will see the repayment handled automatically through adjustments to their PAYE tax code from April 2026, meaning there is no need to contact HMRC directly.

However, the scale of the recovery operation has created an opportunity for scammers. Over the past year, HMRC recorded more than 25,000 scam reports linked to Winter Fuel Payments. Officials are warning that fraudsters may now exploit confusion around the repayment process. Fake texts, emails, and phone calls are expected to increase, often impersonating HMRC and individuals may feel pressured to hand over personal or financial details.

For those submitting self-assessment tax returns online, the payment should appear automatically in their 2025-2026 return which is due to be submitted by the 31 January 2027. Taxpayers are also advised to check carefully and add the payment manually if they are liable. Paper filers will need to include it themselves.

HMRC stresses that it will never request repayment or bank details via text or email. As HMRC’s Chief Customer Officer, said: 

‘Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money.

I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us.’

Bonuses are treated as taxable earnings, so both employers and employees need to understand how they are taxed and reported.

For cash bonuses (including vouchers that can be exchanged for cash), the rules are straightforward. The payment is added to an employee’s normal salary and taxed through the Pay As You Earn (PAYE). This means employers must deduct Income Tax and National Insurance (Class 1) in the usual way through payroll.

Bonuses can sometimes push employees into a higher tax band for that pay period, so the net amount received may be lower than expected.

For non-cash bonuses, such as gifts or rewards, the treatment depends on what is provided. If the item is considered as something that can easily be turned into cash then it is taxed in the same way as cash through PAYE. Other benefits may instead be treated as benefits in kind. A list of typical expenses and benefits and their tax treatment can be found at https://www.gov.uk/expenses-and-benefits-a-to-z

It is important for employers to ensure they apply the correct treatment and reporting method for bonuses, as errors can lead to underpaid tax or penalties.

A recent initiative led by the Lucy Rigby is shining a light on a surprising issue, many young adults in the UK may be sitting on savings they do not even realise they have. The focus is on Child Trust Funds, long term, tax free savings accounts set up for children born between September 2002 and January 2011.

These accounts were originally introduced to encourage saving from an early age and to give young people a financial head start when they reached adulthood. In many cases, the government contributed at least £250 at birth, with additional amounts for lower income families. Over time, these funds have often grown, and some are now worth a few thousand pounds.

However, a significant number of these accounts remain unclaimed. According to recent government commentary, hundreds of thousands of young people are unaware that they even have a Child Trust Fund, let alone how to access it. Lucy Rigby highlighted that this money could provide meaningful support as individuals begin adult life, whether that means funding education, covering living costs, or helping with a first major purchase. 

To address this, HM Revenue and Customs has stepped up its efforts to reconnect individuals with their savings. One of the key measures is a targeted campaign aimed at 21 year olds, a group considered more likely to have up to date contact details through employment or student finance records. Letters are being issued directly to encourage individuals to check whether they have an account and to take steps to access it. 

In addition, HMRC continues to promote its free online tracing service, which allows individuals to locate their Child Trust Fund provider quickly and without cost. This is an important point, as some third party services charge fees for what is essentially a straight–forward process when completed through official channels.

Clients reading this update, with children in the relevant age group, or young adult clients themselves, may be advised to check whether funds are available.

In many ways, this initiative highlights a broader theme. Even well intentioned government schemes can lose visibility over time, leaving valuable resources unused. A small amount of awareness can make a significant difference, particularly when it helps individuals access funds that are already rightfully theirs.