web development slot pragmatic can be a sought-after skill, which can open the door to many opportunities for earning money. However, being a web developer can be stressful and demanding particularly when you are required to meet deadlines, complex projects, and demanding clients. If you’re trying to diversify your sources of income and decrease your dependence on active income, you might think about pursuing passive income.

Top Passive Income Ideas for Web Developers

Passive income can be a great way for web developers to generate additional revenue streams without constant active effort.

Start a SAAS Product Developer Business

A SaaS solution could be an ideal method for Web developers to earn regular income. It is possible to build a large customer base and earn a steady revenue from membership fees by creating a solution that addresses the same issue that is common to other companies. After your product has been developed and launched, it will continue to earn money without needing an ongoing effort and allow you to focus on other business tasks.

Start an Affiliate Marketing

You can earn money by making use of affiliate marketing to promote the services or products of other individuals. Each time a purchase is made using your affiliate link, you’ll earn a commission. Your expertise can be utilized as a web designer to create content that draws people to your site and promotes the products that you’re associated with. When your content is finished you can then be able to generate passive income.

Also read: Top 15 Unique Website Ideas

Start an Online Jewelry Store

It is possible to sell your items to a huge client base and earn income from passive sources by setting up an online jewelry store. An appealing and user-friendly online store that showcases your items can be built with your skills as a web designer. After your store is set up, it can continue running and earning revenue without requiring an endless amount of work.

Start a Content Writing Company

As a web developer, starting a content writing business could be an excellent option to earn a passive income. It is possible to delegate work and focus on business growth while also earning a share of the profits by hiring additional editors and writers. If your team is on the job the business will continue to earn money with no direct involvement, which gives you the opportunity to move to other tasks.

Start a Subscription Box Business

Customers who subscribe to receive a particular set of products every month from a subscription-box business. Because customers love getting a variety of items from different brands Subscription boxes are in fashion in the present.

Sell Digital Products

Digital assets, such as stock images and 3D models are developed and sold by web developers. Digital assets are easy to use and could generate earnings for many years. The most highly rated items are those that can be made digital. They are easy to create and share and are a great way to increase your business.

Start a Tech Blog

Blogging has become an income-generating venture for those with the appropriate expertise and who are able to effectively communicate with their readers. Through sharing useful information bloggers are able to earn money through a variety of ways, including affiliate marketing sponsorships or Google Ads.

Start A WordPress Template Business

Web developers are able to design templates for their websites and sell them on marketplaces for digital goods like ThemeForest. After a template has been created it can be used to continue earning revenue without any additional effort from the designer.

Also read: Top 30 Money Making Apps for Extra Income

Start A Website Hosting Platform

Web developers are able to offer website hosting services to their customers or offer hosting packages for sale on websites. Hosting could be a lucrative passive income stream because customers regularly pay to host services.

Start an Etsy shop

Etsy is a popular platform for artists to sell their products and web designers are able to profit from this opportunity by creating a visually appealing and user-friendly shop. After you’ve established your shop, you’ll be able to create multiple passive income streams by implementing actions like refining the product listing, using social media to promote the shop, and collaborating with influencers to enhance its visibility.

Final Word

Web developers can generate passive income through digital products, affiliate marketing, ad revenue, mobile apps, online courses, and more. Diversifying income streams can lead to financial stability and growth.

When someone dies, their estate may need to go through a legal process called probate before assets can be passed on. Part of that process involves telling HMRC about the estate’s value. According to HMRC’s inheritance tax statistics, only around 4% of UK estates pay inheritance tax each year, yet many more still have reporting obligations. 

Not every estate needs to file a full IHT return. Some qualify as an excepted estate (an estate that is exempt from IHT), which means a simpler process applies. Knowing which category an estate falls into, what the thresholds are, and what happens if the rules are not followed correctly can make estate administration much less complicated.

What Is an Excepted Estate?

An excepted estate is one where the executor does not need to send a full inheritance tax form to HMRC when applying for probate. HMRC sets out the rules for this in the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations. If an estate meets the right conditions, the executor uses a simpler process and skips Form IHT400 altogether. The estate details are confirmed directly on the probate application instead.

This matters because IHT400 is a long and detailed form. It comes with several extra schedules, and completing it takes time and careful attention. For estates that clearly fall below the thresholds, the excepted estate route is much easier to manage.

Why This Matters for Executors

Getting this right from the start avoids delays later. A mistake in deciding an estate qualifies as excepted can lead to penalties and a longer probate process. If you are unsure, speaking to a specialist in private client tax early on is always a good idea.

According to HMRC’s guidance on inheritance tax, executors must check every condition carefully before treating an estate as excepted. The gross estate value is worked out before any debts or liabilities are taken off, which is an important point to keep in mind.

For estates involving property, getting the valuation right is especially important. Our property tax specialists can help make sure property assets are assessed correctly as part of the exempted estate IHT return process.

What Are the Exempted Estate Thresholds?

There are three categories of exempt estate under current HMRC rules. Each category has its own set of conditions, and the estate must meet all of them to qualify.

The Three Categories

Low Value Estates 

The gross value of the estate is below £325,000, which is the current inheritance tax threshold. No IHT is owed, and the estate qualifies as excepted automatically if no other complicating factors apply.

Exempt Estates 

The estate is worth more than £325,000 but passes entirely to an exempt beneficiary. This includes a spouse, civil partner, or a UK-registered charity. The gross estate must not exceed £3 million to qualify under this category.

Estates With a Transfer of Unused Nil Rate Band 

A surviving spouse or civil partner is inheriting, and the combined threshold does not exceed £650,000. The gross estate must also not exceed £3 million.

These thresholds reflect the updated rules that came into effect from 1 January 2022. Before that date, the exempt estate limit was £1 million, so far fewer estates qualified. The change means more families can now use the simpler excepted estate IHT return route without filing an IHT400.

According to HMRC’s inheritance tax statistics, only a small share of UK estates actually pay inheritance tax each year. Understanding which threshold applies to your situation can save a significant amount of time and paperwork.

If the estate includes property assets, our property tax team can help confirm that the gross value is calculated correctly before any decisions are made.

When Is a Full IHT Return Required?

A full IHT return using form IHT400 is needed when the estate does not qualify as an excepted estate. The form covers the full value of the estate, any reliefs or exemptions being claimed, and any tax that is owed.

Key Deadlines to Know

IHT400 must be submitted within 12 months of the end of the month in which the person died. Any tax owed must be paid by the end of the sixth month after death to avoid interest charges building up.

When You Will Need to File IHT400

You will generally need to file a full return in these situations:

• The gross estate is above £325,000 and does not pass to an exempt beneficiary.
• The estate includes assets that qualify for Agricultural Relief or Business Relief above the set limits.
• The person made gifts within seven years of death that are over the annual allowance.
• The estate includes assets held overseas, certain trusts, or complex ownership arrangements.
• You are claiming the residence nil rate band, and the estate does not otherwise qualify as an excepted estate.
• The person who died was based outside the UK but owned assets here.

Even when no inheritance tax is owed, HMRC can still require IHT400 if the estate falls outside the excepted estate rules. This surprises many executors who assume no tax means no paperwork.

If you need more information, “What Is An Iht400 And When Is It Required?” explains the topic in detail. 

Our private client tax team regularly supports families and executors with exempted estate IHT return assessments. For further guidance on what triggers a full return, HMRC’s inheritance tax page sets out the rules in detail.

What Changed After 1 January 2022?

The exempted estate rules changed significantly from 1 January 2022. The updates came from changes to the Excepted Estates Regulations and were designed to reduce the admin burden on executors dealing with straightforward estates.

The Main Change

The exempt estate threshold went up from £1 million to £3 million. This means many more estates can now avoid the full IHT400 process. For families dealing with bereavement, this is a meaningful practical improvement.

What Also Changed

The information executors need to provide on the probate application was also simplified. Instead of a full breakdown, executors of estates now just confirm the estate value and the category it falls under. This reduced the paperwork involved for a large number of estates.

What Stayed the Same

The standard nil rate band remains at £325,000. The conditions for each exempted estate category still apply in full. Executors must still check every condition before deciding a simpler process applies.

An Important Date to Remember

The updated rules only apply to deaths on or after 1 January 2022. For deaths before that date, the old rules still apply, including the lower £1 million limit for exempt estates. If you are administering an estate that falls under the old rules, it is worth confirming the position with a tax specialist.

According to HMRC’s guidance on excepted estates, the reforms were part of a wider effort to focus HMRC resources on more complex cases. Our tax disputes and investigations team can help if questions arise about which set of rules applies and how they affect the exempted estate IHT return for a specific estate.

What Information Do Executors Still Need to Provide?

Even when an estate qualifies as excepted, executors still have reporting steps to complete. The information is provided as part of the probate application rather than through a separate HMRC submission, but the obligations are still real.

What Executors Need to Confirm

When applying for probate in England and Wales, executors must confirm the following:

• The gross value of the estate and the types of assets it contains.
• Whether any gifts were made within seven years of death, and the amounts involved.
• Whether any assets pass to an exempt beneficiary, and the reason for that exemption.
• Whether a transfer of nil rate band is being used, and the basis for that claim.

HMRC’s Right to Investigate

HMRC can still open an inquiry into an excepted estate. They have up to 60 days after probate is granted to ask for more information. If they do, executors will need to provide evidence to back up the values and exemptions they declared.

Why Good Records Matter

Keeping clear records from the start of the estate administration process protects executors if questions arise later. This includes valuations, gift records, bank statements, and any documentation related to property or investments.

For estates that involve property assets, having an accurate valuation from the outset is essential. Our property tax team can support executors with this as part of the wider exempted estate IHT return process. For full details on what HMRC expects, HMRC’s guidance on reporting an estate sets out the steps clearly.

What Happens If You Get It Wrong?

Treating an estate as excepted when it should have had a full IHT400 filed can lead to serious problems. Executors can be personally held responsible for unpaid tax, interest, and penalties if an error is found.

How HMRC Handles Errors

The penalty rules for inheritance tax errors follow a similar pattern to other UK tax penalties. The level of the penalty depends on the nature of the mistake:

• Careless errors attract lower penalties.
• Deliberate errors attract higher penalties.
• Errors involving concealment attract the highest penalties.

Interest on Unpaid Tax

Under HMRC rules, interest on unpaid inheritance tax runs from the due date. That is generally the end of the sixth month after the date of death. If there is a long delay in resolving the position, interest can add up to a significant amount.

What to Do If You Are Unsure

If there is any doubt about the exempted estate IHT return status, getting professional advice before submitting anything is the safest approach. Mistakes are much easier to address before a submission is made than after.

Our private client tax team works with executors and families in exactly these situations. For cases where HMRC has already raised a challenge, our tax disputes and investigations team can help manage the process. HMRC’s guidance on penalties sets out how errors are assessed and what executors can expect.

Common Scenarios: Does Your Estate Qualify?

Looking at practical examples is one of the clearest ways to understand how the estate rules work. The scenarios below are simplified illustrations only and should not be taken as tax advice. Every estate is different, and the full facts always matter.

Scenario A: A Low-Value Estate

A widow passes away, leaving an estate worth £280,000. The estate includes a bank account, personal belongings, and a small ISA. She made no significant gifts in the seven years before her death and left everything to her adult children. The gross estate is below the nil rate band of £325,000, so this would likely qualify as a low-value excepted estate. No IHT400 would be needed. The executor would confirm the position as part of the probate application.

Scenario B: An Estate Passing to a Surviving Spouse

A man passes away with an estate worth £1.8 million. His entire estate passes to his wife. Because transfers between spouses are exempt from inheritance tax, and the gross estate is below £3 million, this would likely qualify as an exempt estate under the post-2022 rules. When the wife later passes away, the unused nil rate band from her husband’s estate may also be available to transfer. This could potentially double the threshold available to her estate.

Scenario C: An Estate With Property and Prior Gifts

A retired business owner passes away with a property worth £900,000 and savings of £200,000. He also made several cash gifts to family members over the past five years. The total estate significantly exceeds the nil rate band. The gifts made within seven years of death also need to be reviewed under the taper relief rules. This estate would not qualify as excepted, and a full IHT400 would need to be submitted.

For estates like this one, getting specialist support early makes a real difference. Our property tax team can help assess the position, and HMRC’s guidance on gifts and inheritance tax explains how prior gifts are treated under UK tax rules.

Speak to ETC Tax About Your Inheritance Tax Position

Inheritance tax can feel overwhelming, especially when you are dealing with it for the first time. The rules changed in 2022, and getting things wrong can lead to delays or penalties. The good news is that you do not have to figure it out on your own.

ETC Tax helps families, executors, and advisers sort out inheritance tax the right way. Our private client tax team knows this area well and can tell you exactly where you stand. We also work with solicitors and accountants through our professional adviser services when extra support is needed.

If you are not sure what applies to the estate you are dealing with, or you want to plan ahead for your own, just reach out. Contact ETC Tax today and speak to someone who can help.

Earning a high income in the UK comes with bigger tax responsibilities and more chances to get things wrong. Earning a high income in the UK comes with bigger tax responsibilities and more chances to get things wrong. HMRC received more than 11.48 million self-assessment tax returns in the 2024/25 tax year, and higher earners made up a significant portion of those with errors or unpaid tax. 

When your income comes from multiple places, property, investments, shares, or crypto, each one has its own rules. Miss one, and you could face penalties, extra charges, or even an HMRC investigation. 

The good news is that most mistakes are avoidable. Knowing what commonly goes wrong is half the battle, and making sure your return is right could also save you money you did not know you were owed.

Why High-Income Tax Returns Carry Greater Risk

Most people who file a Self-Assessment return have fairly simple finances. They might have one job, a bit of savings interest, and that is about it. But if you earn a high income, things get more complicated. Your money can come from many different places at once, and each one has its own rules.

In the UK, income above £100,000 reduces the Personal Allowance, creating an effective 60% marginal tax rate in the £100,000 to £125,140 band.

What Makes High-Income Returns More Complicated?

The higher your income, the more likely you are to have:

• Money coming from investments, rental properties, or share schemes
• Overseas income or foreign accounts
• Bonuses, dividends, or other payments that sit outside your main salary
• Reliefs and allowances that need to be claimed correctly

HMRC’s data matching system, called Connect, brought in £4.6 billion in extra tax during 2024 to 2025, a 35% rise on previous years. The system cross-references data from banks, online marketplaces, social media accounts, land registry, overseas tax authorities, and property letting agents against submitted tax returns. 

In plain terms, HMRC has a very powerful way of checking whether what you declare matches what they already know about you. If something does not add up, your return is more likely to be flagged for a closer look. 

For help managing a high-income tax return in the UK, specialist advice makes a real difference. You can also learn more about how HMRC identifies discrepancies on the HMRC tax guidance portal.

What Are the Most Common Mistakes on a High-Income Tax Return?

People with high incomes make mistakes for all sorts of reasons. Life gets busy, tax rules change, and it is easy to miss something when your finances are spread across multiple sources. The good news is that most of these errors are completely avoidable once you know what to look for.

The Most Frequent Errors Include:

• Not declaring all income, such as dividends, rental receipts, or savings interest
• Getting the capital gains tax calculations wrong when selling shares or property
• Missing out on reliefs like pension contributions, Gift Aid, or business investment schemes
• Reporting overseas income incorrectly or forgetting to claim foreign tax credits
• Not accounting for the High Income Child Benefit Charge, which applies when either parent earns over £60,000
• Errors with income from employee share schemes or share options

Each of these mistakes can lead to one of two problems. Either you end up paying more tax than you should, or you underpay, and HMRC comes looking for the difference, often with interest and penalties on top.

Why Rule Changes Catch People Out

Tax rules in the UK change regularly, and what was correct two years ago may not be correct today. The Personal Allowance taper, changes to Capital Gains Tax (CGT) rates, and new rules around property finance costs have all shifted in recent years. 

HMRC figures show that 1.12 million people are estimated to have taxable income over £100,000 in 2025 to 2026, up from 754,000 in 2022 to 2023. More people than ever are now in the territory where these rules apply, and many are still filing based on outdated information.

Getting support with a high-income tax return in the UK means someone else is keeping track of these changes for you. The HMRC Self Assessment guidance is a useful starting point, but it does not replace personalised advice.

Reporting Investment Income and Capital Gains Incorrectly

Investment income is one of the most commonly misreported areas on a high-income tax return. Dividends, bond income, and savings interest all need to be declared in full, even when some tax has already been taken off at source. A lot of people assume the job is done because tax was deducted before they received the money. It is not.

Capital Gains Tax: A Shrinking Allowance

The annual Capital Gains Tax exempt amount has been cut significantly in recent years, dropping from £12,300 in 2022 to 2023 down to just £3,000 from April 2024. CGT rates on shares and investments also rose in the October 2024 Budget, moving from 10% and 20% up to 18% and 24%. This means that even modest gains from selling shares or funds can now trigger a tax bill. 

Common mistakes people make with Capital Gains Tax include:

• Netting off gains and losses in the wrong order
• Using the wrong tax rate for the type of asset sold
• Ignoring the 30-day bed-and-breakfast rule, which stops you from selling shares and buying them back immediately to create an artificial loss
• Miscalculating the original cost of shares using HMRC’s pooling rules

You can read the official HMRC Capital Gains Tax guidance to understand the current rules. For those with more complex situations, such as income from employee share schemes, the tax treatment varies depending on the type of scheme, when shares were awarded, and how they are eventually sold. Getting that wrong can be an expensive mistake.

Are Cryptocurrency Gains Being Missed?

A lot of crypto investors still do not realise how much HMRC knows about their activity. HMRC treats crypto as a capital asset, which means every time you sell it, swap it for another coin, or use it to pay for something, it counts as a disposal. Each one of those events could be a taxable gain, and all of them need to be reported.

The number of nudge letters HMRC sent to people suspected of owing tax on cryptocurrency increased by 134% in 2024 to 2025, rising from 27,700 to 65,000. 

Around seven million UK adults now hold an estimated £12.9 billion in crypto assets. These letters are sent before a formal investigation begins, and they are a clear sign that HMRC is actively chasing undeclared gains in this area. 

What Crypto Holders Need to Track

• The original cost of every coin or token purchased
• The sale price and date of every disposal
• Any income from staking, lending, or mining, which is taxed as income rather than a capital gain
• Gains and losses across all wallets and exchanges

The cost of each asset must be calculated using HMRC’s share pooling method, which works differently from how many exchange platforms display your profit and loss figures. 

If your crypto activity is significant, getting specialist crypto tax advice is the safest way to make sure everything is reported correctly. You can also check the current HMRC Capital Gains Tax rules to understand how disposals need to be reported.

Overlooking Property Income and Allowable Expenses

Property investors often make mistakes in two directions. Some claim expenses they are not entitled to. Others miss legitimate costs they could have claimed and end up overpaying. Both are problems, and HMRC looks closely at property returns.

The Mortgage Interest Rule That Catches Landlords Out

Under Section 24 of the Finance Act 2015, landlords can no longer deduct mortgage interest from their rental income to reduce their taxable profit. Instead, they can only claim a 20% basic rate tax credit on finance costs, regardless of whether they pay tax at the higher or additional rate. This change hit higher-rate taxpayers hardest, and many landlords are still calculating their returns as if the old rules still apply. 

Costs you can legitimately claim against rental income include:

• Letting agent fees and management charges
• Repairs and general maintenance, not improvements
• Landlord insurance premiums
• Professional fees such as accountancy costs

Capital improvements are treated differently. Replacing a kitchen with a better one, rather than a like for like replacement, for example, is not a repair as this is considered an upgrade to the old kitchen. It is a capital cost, and it should instead be factored into your Capital Gains Tax calculation when you eventually sell the property. Misclassifying these costs is one of the most common errors HMRC spots in property returns.

If you own furnished holiday lets, commercial property, or property abroad, the rules differ again. Getting proper property tax advice helps make sure your return reflects the right treatment for each type of property you hold.

Failing to Use Available Tax Reliefs

Many high earners pay more tax than they need to. Not because they are doing anything wrong, but simply because they do not know what they are entitled to claim. Missing a relief is not a crime, but it does cost money.

Pension Contributions and the Personal Allowance Trap

If your income sits between £100,000 and £125,140, pension contributions are one of the most powerful tools available to you. For every £100 you earn in that band, you effectively take home only £40 once income tax and the Personal Allowance taper are applied. Putting money into a pension reduces your adjusted net income, which can restore some or all of your Personal Allowance and bring that effective rate back down. 

Other reliefs that higher earners regularly miss include:

• Gift Aid: If you make charitable donations, you can claim the difference between the basic rate and your higher rate of tax on those gifts
• Enterprise Investment Scheme (EIS): Offers income tax relief of up to 30% on qualifying investments, plus CGT deferral benefits. You can read more about EIS and SEIS and whether they could work for you
• Capital Allowances: Business owners and company directors can claim allowances on qualifying equipment and assets. These are often underclaimed or missed entirely

Getting a full picture of what is available is not something most people do on their own. Speaking to an adviser who understands your specific mix of income and reliefs can make a real difference to what you owe.

What Triggers an HMRC Investigation?

HMRC does not investigate every return. But it does use a mix of automated risk-scoring, data matching, and random selection to decide which ones to look at more closely. Higher earners are more likely to be picked because the potential tax at stake is greater.

Common Triggers for a Compliance Check

• A big gap between your declared income and how you appear to live
• A return that looks very different from previous years without explanation
• Information passed to HMRC by third parties, such as banks, employers, or overseas tax authorities
• Late filing or repeated amendments to the same return
• Inconsistencies between returns from connected individuals or companies

HMRC recently awarded a £175 million contract to a financial data platform to deploy AI systems that will scan millions of tax returns, cross-reference financial data, and flag suspicious patterns that human auditors might otherwise miss. This is not a future development. It is already happening. 

If HMRC does open an enquiry, it can take a long time to resolve, particularly if records are incomplete. Having a tax specialist involved early keeps the process moving and reduces the risk of things escalating. 

If you are already facing a compliance check, tax disputes and investigation support from an experienced adviser can help you respond correctly and reach a resolution as quickly as possible.

Take Control of Your High-Income Tax Return Today

Getting a high income tax return in the UK right is not easy, especially when your money comes from different places. One small mistake can mean a bigger tax bill, a penalty, or an HMRC enquiry you did not see coming.

That is where ETC Tax comes in. The team works with high earners, property investors, business owners, and entrepreneurs every day. They know the rules, they know what HMRC looks for, and they know how to make sure your return is right the first time.

If you run a company, ETC Tax also offers corporate tax support to help manage both sides of your tax affairs in one place.

Do not wait until something goes wrong. Get in touch with ETC Tax today and get the help you need.

Introduction

For many taxpayers, completing a Self-Assessment tax return is relatively straightforward. However, when your affairs involve multiple income sources such as investments, property, trusts, overseas assets, share transactions, cryptoassets, or significant wealth, the risks of getting things wrong can increase dramatically.

HMRC continues to focus its compliance activity on higher-risk and more complex tax returns, making accuracy more important than ever. Even seemingly minor omissions can result in additional tax liabilities, penalties, interest charges, and time-consuming enquiries from HMRC.

At ETC Tax, we specialise in complex Self-Assessment tax returns and regularly help clients identify issues that might otherwise be overlooked.

Here are five of the most common and costly mistakes we see.

1. Failing to Declare All Sources of Income

One of the most common errors is assuming that HMRC already has all the information it needs.

Many taxpayers correctly declare employment income, but overlook:

• Rental income
• Dividend income
• Bank interest
• Foreign income
• Share scheme benefits
• Trust distributions
• Cryptoasset gains and income
• Self-employment or consultancy income

HMRC receives increasing amounts of information directly from banks, employers, investment platforms, letting agents, and overseas tax authorities. If income is omitted, HMRC may identify the discrepancy and open an enquiry.

The challenge with complex tax returns is that income can arise from numerous sources and sometimes in ways that are not immediately obvious. At ETC, we complete a thorough review of your circumstances to ensure nothing is missed.

2. Missing Valuable Reliefs and Deductions

While many taxpayers worry about underpaying tax, overpaying tax is often just as common.

Complex returns frequently involve reliefs that can significantly reduce a tax liability, including:

Failing to claim available reliefs can result in paying substantially more tax than necessary.

Identifying these opportunities requires more than simply entering figures into a tax return. It requires understanding the wider picture and asking the right questions about investments, charitable giving, pensions, and previous transactions.

3. Incorrectly Reporting Capital Gains

Capital Gains Tax (CGT) is one of the areas where mistakes frequently occur.

Many people assume calculating a gain is simply a matter of deducting the purchase price from the sale proceeds. In reality, the rules can be significantly more complex.

Common issues include:

• Incorrect share pooling calculations
• Missing acquisition costs
• Overlooking enhancement expenditure
• Failing to claim available reliefs
• Incorrect reporting of business disposals
• Errors involving inherited assets
• Overseas asset disposals
• Cryptoasset transactions

A poorly calculated capital gain can result in either overpaying tax or creating unnecessary risk of an HMRC challenge.

4. Ignoring Overseas Income and International Tax Issues

International tax matters are becoming increasingly common, even for individuals who consider themselves UK-based.

Potential issues can arise where you have:

• Overseas employment income
• Foreign rental properties
• Overseas investments
• Bank accounts held abroad
• International shareholdings
• Foreign pensions
• Residence or domicile complexities

Double tax relief claims, residence rules, remittance issues, and foreign tax reporting requirements can all create complications.

Many taxpayers are unaware that overseas income often still needs to be disclosed to HMRC, even where tax has already been paid abroad.

Getting these rules wrong can be costly and may attract additional HMRC scrutiny.

5. Assuming the Tax Return Is Just a Compliance Exercise

Perhaps the biggest mistake of all is viewing a tax return as simply an annual form-filling exercise.

A Self-Assessment tax return is often the best opportunity to review your wider tax position and identify:

• Tax-saving opportunities
• Areas of risk
• Future planning opportunities
• Potential HMRC enquiry triggers
• Changes in legislation affecting you

Many taxpayers only focus on submitting the return before the deadline, without considering whether their affairs are structured tax efficiently.

A properly prepared tax return should not only ensure compliance but also help you understand your overall tax position and future planning opportunities.

How ETC Tax Can Help

At ETC Tax, we specialise in complex self-assessment tax returns, specifically Multiple income sources

What makes our approach different is the amount of time we spend understanding your circumstances.

Rather than simply asking for figures, we ‘factfind’ by asking detailed questions about your income, investments, assets, transactions, and plans. This allows us to identify issues that may otherwise be overlooked and helps ensure your return is as accurate and tax-efficient as possible.

We believe that attention to detail is critical when dealing with complex tax affairs. Often, the most valuable information emerges through conversations and questions that many standard tax return processes never cover.

Next Steps

If your tax affairs are becoming more complex, or you simply want reassurance that everything has been reported correctly, our specialist team can help.

Complete our online enquiry form and a member of our team will be in touch.

Being named as an executor feels like an honour, but it comes with real tax responsibilities that many people are not prepared for. HMRC collected over £7.5 billion in Inheritance Tax in 2023 to 2024, according to HMRC statistics, and mistakes on estate returns are one of the main reasons families end up paying more than they should. 

Getting the numbers wrong, missing a relief, or filing late can lead to penalties and extra costs. Some executors even end up personally liable for taxes that were not paid correctly. The good news is that most of these mistakes are avoidable once you know what to look out for.

What Does an Executor Actually Have to Do?

When someone dies in the UK, the people left in charge of sorting out their estate are called executors. One of the biggest jobs is working out if any Inheritance Tax is owed. 

According to HMRC, IHT is charged at 40% on anything above £325,000, which is called the nil-rate band. The tax usually has to be paid within six months of the person’s passing away. Miss that deadline and interest starts building up straight away.

As an executor, you are responsible for:

• Working out the total value of all assets owned
• Completing the correct HMRC forms
• Paying any tax that is owed on time
• Keeping records of all decisions made

Estates can include a wide range of assets . Property, savings, investments, pensions, life insurance, business assets, and even cryptocurrency all count. Each one may be treated differently under UK tax rules. That is what makes this job harder than most people expect.

Getting the value of an asset wrong, missing a tax relief, or filing the return late can all cause serious problems. HMRC does check these returns, and errors can lead to penalties and extra costs. Executor IHT mistakes in the UK happen more often than most people think, and they can affect both the estate and the executor personally.

If you are dealing with a complex estate, our private client tax team can help you stay on the right side of HMRC from the very beginning.

What Are the Most Common Executor IHT Mistakes in the UK?

Executor IHT mistakes in the UK tend to follow the same patterns. Knowing what they are makes it much easier to avoid them.

Undervaluing Assets

This is one of the most common mistakes. It often happens with property, where an informal estimate is used instead of a proper valuation. HMRC expects open market valuations, meaning the price the asset would realistically sell for on the date of death. If they think a value has been underreported, they can open an investigation.

Missing Gifts Made in the Last Seven Years

UK tax rules say that gifts made in the seven years before death must be reported. These are called potentially exempt transfers. Many executors simply do not know this rule exists, or they cannot find the records needed to trace these payments.

Failing to Claim Available Reliefs

Several reliefs can reduce the IHT bill, but they are often missed. Business Property Relief and Agricultural Property Relief are two of the most valuable. Executors who are not aware of these can end up paying more tax than necessary.

Getting the Nil-Rate Band Wrong

A surviving spouse can inherit the unused nil-rate band from their partner, meaning up to £650,000 may be sheltered. There is also an additional £175,000 allowance when a family home passes to direct descendants. Missing these can lead to a much higher tax bill than is actually owed.

Filing Late

IHT must be paid within six months of the end of the month in which the person died. Delays happen, especially in complicated estates, but HMRC will charge interest from the day the payment is overdue.

If any of these apply to you, specialist support with tax disputes can help you correct the situation before it gets worse.

For further guidance, read our article: 7 Common Mistakes When Completing an IHT400. 

Why Do Executors Undervalue Assets?

Undervaluing assets is one of the most common executor IHT mistakes in the UK, and it is rarely done on purpose. It usually comes down to a lack of professional valuations and a limited understanding of what HMRC actually expects.

Common Reasons It Happens

• Using an old bank statement to value shares or investments
• Estimating the value of jewellery or personal belongings without expert input
• Relying on a rough idea of what a property is worth rather than a formal assessment
• Not knowing that digital assets like cryptocurrency need to be included at all

HMRC expects what is called an open market valuation. This means the realistic price the asset would achieve if sold on the open market on the date of death. Anything less detailed than that leaves the return open to challenge.

Cryptocurrency and Digital Assets

This is a fast-growing problem area. Many executors do not know the deceased held crypto, or they have no idea how to value it. Under UK tax rules, all digital assets must be reported as part of the estate. Our crypto tax specialists can help identify and correctly value these holdings.

Property

Property is the most common trigger for an HMRC dispute. If the declared value looks too low compared to local market prices, or if the property sells for more shortly after death, HMRC is likely to ask questions. A formal RICS valuation is the best way to protect against this. Property tax advice is worth getting early if real estate is involved in the estate.

According to GOV.UK, the value used for IHT purposes can also affect Capital Gains Tax if the asset is later sold, making accuracy even more important.

What Happens If an Executor Gets It Wrong?

Executor IHT mistakes in the UK can have serious consequences, and not just for the estate. The executor themselves can face personal financial risk if things are not handled correctly.

HMRC Can Open an Enquiry

If HMRC believes an estate return is incorrect or incomplete, they can open a formal investigation. This can result in:

• An additional tax being charged on top of what was already paid
• Interest on any unpaid amounts
• Financial penalties, which can be significant if HMRC believes information was withheld

These enquiries can happen even after the estate has been distributed, which is why getting it right from the start matters so much.

Executors Can Be Personally Liable

If the estate is distributed to beneficiaries before all the tax is paid, and it later turns out more was owed, the executor may have to cover the difference from their own money. This is one of the less well-known risks of the role.

What to Do If Something Has Gone Wrong

The earlier a problem is spotted, the easier it is to deal with. If you think an error has been made on an estate return, it is important to act quickly rather than wait for HMRC to raise it. Support with tax disputes and investigations can help you understand your options and respond in the right way.

You can also find general guidance on what HMRC expects from estate returns on GOV.UK, though, professional advice is usually needed for anything complex.

Protecting yourself as an executor means making sure the return is accurate, complete, and filed on time. Our private client tax team works with executors to do exactly that.

Can You Claim Reliefs to Reduce the IHT Bill?

Yes, and claiming the right reliefs is one of the most important parts of completing an estate return. Many executor IHT mistakes in the UK come from simply not knowing these reliefs exist.

The Main Reliefs Available

Business Property Relief (BPR)

This can reduce the value of qualifying business assets by either 50% or 100%. It applies to things like shares in unlisted companies or interests in a trading business.

Agricultural Property Relief (APR) 

This applies to farmland and certain buildings used for agriculture. Like BPR, it can reduce the taxable value significantly.

Charity Exemption 

Any gifts left to registered UK charities are completely free from IHT, no matter the size.

Spouse and Civil Partner Exemption 

Assets passed directly to a surviving spouse or civil partner are generally exempt from IHT altogether.

Residence Nil-Rate Band 

This gives an additional £175,000 allowance when a family home is left to direct descendants such as children or grandchildren.

Each of these reliefs comes with conditions. HMRC looks at them carefully, and a claim that does not meet the criteria will be challenged. Our private client tax specialists can check which reliefs apply and make sure they are claimed correctly.

If the estate includes business shares or company interests, corporate and business tax advice may be needed to confirm whether Business Property Relief applies. Getting this wrong in either direction, claiming too much or missing it entirely, can be costly.

Does HMRC Check Estate Tax Returns?

Yes, and more thoroughly than many people expect. One of the most important things to understand about executor IHT mistakes in the UK is that they rarely go unnoticed.

How HMRC Reviews Estate Returns

HMRC has a dedicated team that looks at estate returns as a matter of routine. They do not simply accept the figures that are submitted. According to HMRC guidance, they can open an enquiry up to five years after a return has been filed if they believe something is missing or incorrect.

They cross-reference information from multiple sources, including:

• Banks and building societies
• HM Land Registry
• Financial institutions and investment platforms
• Probate records

This means that assets that were not declared are often picked up through these checks. Executors who think something might be missed are usually wrong.

What Triggers a Review?

Property is the most common trigger. If the value declared on the estate return looks low compared to similar properties in the same area, or if the property sells for significantly more shortly after death, HMRC is likely to ask questions.

Other common triggers include estates with business assets, large cash gifts made before death, or returns where no reliefs have been claimed despite the estate appearing to qualify.

How to Protect Yourself

The best protection is a thorough, accurate return supported by proper valuations and clear records. If HMRC does raise questions, specialist support with tax disputes can help you respond correctly and avoid unnecessary penalties.

Accuracy from the start is always better than trying to correct things later. Our property tax team can help where real estate is involved in the estate.

When Should You Get Professional Help?

Some executors manage simpler estates without professional support, and that is fine. But executor IHT mistakes in the UK are far more likely when the estate is complex, and the cost of getting it wrong can far outweigh the cost of getting help early.

Signs You Probably Need Professional Advice

• The estate includes property, whether residential or commercial
• There are business assets or shares in a private company
• The deceased made significant gifts in the seven years before death
• The estate includes investments, pensions, or digital assets like cryptocurrency
• The deceased owned assets outside the UK
• There are disputes between beneficiaries

Any one of these factors can make an estate significantly more complicated. Trying to handle them without expert guidance increases the risk of errors that HMRC may later pick up.

When Executors Are Also Beneficiaries

This is a situation worth paying particular attention to. If you are both an executor and someone who benefits from the estate, there is a potential conflict of interest. Having an independent adviser involved protects everyone and helps make sure decisions are made fairly and correctly.

Our private client tax team works with executors in exactly these kinds of situations. We help make sure the return is accurate, all reliefs are claimed, and HMRC requirements are met from start to finish.

Where overseas assets are involved, specialist international tax advice may also be needed, as the rules around non-UK domicile and foreign assets can be particularly complex.

For a full overview of what executors are expected to report, GOV.UK provides useful guidance on personal tax obligations that often run alongside estate administration.

Protect Yourself From Executor Tax Mistakes Today

Executor IHT mistakes in the UK can be expensive and stressful to fix, especially once the estate has already been distributed. Small errors in asset values, missed reliefs, or a late filing can quickly turn into a much bigger problem with HMRC.

The good news is that none of this has to fall entirely on your shoulders. ETC Tax helps executors, families, and advisers get estate returns right from the start. From valuing assets correctly to making sure every available relief is claimed, the right support makes a real difference.

If you are acting as an executor and want to make sure everything is handled properly, contact ETC Tax today. Our private client tax team is ready to help.

When people talk about inheritance tax planning, they often bundle everything together under the heading of “protecting family wealth”.

In reality, there’s a big difference between passing on wealth and passing on a business.

Both may form part of your estate, but the challenges, risks and planning opportunities can be completely different. What works for an investment portfolio may not work for a family company, and vice versa.

Understanding that distinction is often the difference between a smooth transition to the next generation and a very expensive lesson.

The traditional Inheritance Tax problem

Let’s start with family wealth

This is the side of the balance sheet most people think about when inheritance tax comes up: investment portfolios, property, savings, and other assets accumulated over a lifetime.

The challenge is relatively straightforward. Unless a relief applies, those assets could be exposed to inheritance tax at 40% on death.

That doesn’t necessarily mean families lack wealth. The problem is often that they lack cash.

A portfolio of properties might be worth millions, but HMRC doesn’t accept bricks and mortar as payment. Families can find themselves having to sell assets, disrupt long-term investment plans or liquidate holdings simply to settle the tax bill.

That’s why planning often focuses on gifting strategies, trusts and other ways of reducing the eventual tax exposure whilst still ensuring the older generation remains financially secure.

Family businesses bring a different challenge

A family business changes the conversation entirely.

Yes, tax still matters, but for many business owners it isn’t the biggest concern. The real question is often:

What happens when I’m no longer here?

Who takes over?

Do the children actually want to run the business?

If one child works in the company and the others don’t, should ownership be split equally?

How do you preserve family harmony whilst also protecting the future of the business?

These are often far more difficult questions than calculating an inheritance tax liability.

The Business Relief advantage

One major difference is the potential availability of Business Relief.

Where the conditions are met, qualifying business interests can attract relief from inheritance tax, potentially reducing the taxable value by up to 100%.

For some families, that can mean the difference between a substantial inheritance tax bill and no inheritance tax at all on the business. However, relief isn’t automatic and shouldn’t be taken for granted.

The nature of the business, its assets, ownership structure and future legislative changes can all affect whether relief is available. A business that qualifies today may not necessarily qualify forever.

That’s why regular reviews are so important.

Tax isn’t always the biggest risk

One of the biggest misconceptions in succession planning is that tax is the main threat.

In our experience, succession failures often destroy far more value than inheritance tax ever could.

A business can survive a tax bill. However, it may struggle to survive family disagreements, unclear leadership, competing interests or the absence of a succession plan.

We’ve seen situations where a family spent years focusing on tax efficiency but very little time discussing who would actually run the company in the future. Those conversations are often uncomfortable, but they’re usually the ones that matter most.

The families who need both types of planning

Many successful families have both business interests and personal wealth. That’s where things become more interesting.

A family might have a trading company worth £10 million that qualifies for Business Relief, alongside investment properties and investment portfolios worth several million pounds that don’t.

The business may be relatively protected from inheritance tax, while the personal wealth remains fully exposed.

If planning only focuses on the company, a significant inheritance tax liability could still arise elsewhere. Equally, focusing solely on tax could mean critical succession questions are left unanswered.

The most effective planning looks at the whole picture rather than individual assets in isolation.

A simple example

Imagine a family with a successful manufacturing company worth £10 million, alongside £5 million of investments and property.

The company may qualify for Business Relief, meaning little or no inheritance tax is payable on that part of the estate. The £5 million of personal investments and property, however, could still create an inheritance tax liability running into millions.

At the same time, the family still needs to answer some fundamental questions:

• Who will run the business?
• Who will own it?
• Should ownership and management sit with the same people?
• How can future disputes be avoided?

The tax planning and succession planning are connected, but they aren’t the same exercise.

Final thoughts

When it comes to inheritance tax planning, family wealth and family businesses shouldn’t be viewed through the same lens.

With personal wealth, the focus is often on preserving assets and reducing future tax liabilities.

With family businesses, preserving continuity, leadership and long-term success can be just as important as achieving tax efficiency.

The families who tend to achieve the best outcomes are those who recognise both challenges and plan for them early.

After all, preserving wealth is important. Preserving the thing that created that wealth in the first place can be even more important.

Next Steps

If you have a question regards IHT planning or exit planning please get in touch.

For most people, a tax return sits firmly in the “jobs I’d rather not do” category.

It’s something that needs to be completed, submitted to HMRC and then promptly forgotten about until the following January.

But in reality, a tax return is often far more interesting than that.

For business owners, property investors and families with growing wealth, a tax return can reveal far more than just how much tax is due. Hidden within those pages are clues about future opportunities, potential risks and, quite often, conversations that need to happen sooner rather than later.

The best tax advice rarely starts with a clever tax planning scheme. More often, it starts with a careful look at what the numbers are already telling us.

An annual financial MOT

A tax return brings together almost every aspect of someone’s financial life.

Employment income, dividends, rental profits, investments, pension contributions, capital gains and charitable donations all end up in one place.

When you step back and look at the bigger picture, it often raises questions that haven’t been considered before:

• Are you paying more tax than necessary?
• Are all available allowances being used?
• Have you drifted into a higher tax bracket without realising?
• Are pension contributions keeping pace with your income?
• Is too much of your wealth tied up in one area?

Much like an annual health check, a tax return can highlight issues long before they become problems.

Spotting problems before HMRC does

One of the most valuable parts of the tax return process is identifying risks early.

We’ve seen landlords whose rental portfolios have grown far quicker than they realised, only to be surprised by the resulting tax bill. Equally, we’ve seen business owners facing unexpected tax consequences from money withdrawn from their company, while investors may build up substantial gains over many years without ever considering the Capital Gains Tax position that could arise when those assets are eventually sold.

None of these situations appear overnight.

They tend to develop gradually in the background until someone takes the time to review the bigger picture.

A well-prepared tax return provides the perfect opportunity to do exactly that.

The unexpected starting point for inheritance tax planning

Inheritance tax planning isn’t always triggered by a dedicated estate review.

In many cases, it starts with a tax return.

A return can quickly reveal:

• Large investment portfolios
• Significant cash reserves
• Valuable business interests
• Property portfolios
• Previous gifts made to family members

Whilst these assets may not create an immediate income tax issue, they can have a significant impact on the eventual value of an estate.

It’s not unusual for clients who have spent decades building successful businesses and investments to discover that their estate has grown well beyond the available inheritance tax allowances.

That discovery often leads to wider discussions around gifting, trusts, succession planning, business reliefs and how wealth will ultimately pass to the next generation.

Business Owners: Looking beyond this year’s tax bill

For business owners, personal and business finances are rarely separate conversations.

A profitable year may result in a larger tax bill, but it can also raise some much bigger questions:

• Is the current company structure still fit for purpose?
• Are profits being extracted in the most efficient way?
• Should pension funding be increased?
• What does retirement look like?
• Is there a plan for eventually passing on or selling the business?

These aren’t compliance questions. They’re strategic decisions that can have a lasting impact on both the business and the family behind it.

The tax return simply provides the information needed to start the conversation.

Life changes usually leave a paper trail

One thing we’ve noticed over the years is that major life events nearly always show up on a tax return.

A marriage, divorce, retirement, business sale, inheritance, property purchase or significant investment decision will often leave a tax footprint somewhere.

Sometimes, a large capital gain points towards the need for investment planning. Sometimes a change in income suggests retirement is approaching. Sometimes a substantial gift prompts a review of inheritance tax exposure.

The tax return often becomes a snapshot of where someone’s life is heading, not just where it’s been.

A real-life example

Take David.

At 62, he owned a successful engineering business and viewed his annual tax return as little more than a necessary administrative task.

During a routine review, a few things stood out:

• Company dividends had increased significantly over several years.
• Investment portfolios had grown substantially.
• Pension contributions had reduced.
• No estate planning review had been carried out for some time.

A conversation followed.

David explained that he hoped to retire within five years and eventually hand the business over to his children.

What started as a straightforward tax return review quickly became a much broader planning exercise. Working alongside legal and financial advisers, we reviewed succession plans, pension funding, inheritance tax exposure and the future ownership structure of the business.

The outcome wasn’t created by the tax return itself. The tax return simply highlighted the questions that needed answering.

Turning compliance into something more valuable

It’s easy to see a tax return as a compliance exercise.

After all, HMRC requires one, deadlines exist, and nobody enjoys paperwork.

But every tax return tells a story.

It shows how wealth is being created, where potential risks are developing and where opportunities may exist.

When viewed in that way, a tax return becomes far more than a historical record of the previous year. It becomes a planning tool that can help shape future decisions, improve tax efficiency and support long-term financial goals.

Finally

A tax return should never be viewed as just another form to complete.

Behind every figure is a wider story about someone’s finances, family, business and future plans.

Some of the most valuable advice we provide doesn’t come from calculating the tax liability. It comes from asking the question that follows: What are these numbers really telling us?

Next Steps

If you have an interesting tax return or want to discuss your situation, please get in touch.

The taxation of image rights has long been a central feature of remuneration structures in professional sport, particularly football. Athletes and other public figures have relied on arrangements whereby payments for the commercial exploitation of a player’s image are received separately from employment income through dedicated image rights companies.

Reforms announced in the 2025 Budget signal a significant shift in HMRC’s approach. From April 2027, image rights payments connected to employment will be treated as taxable employment income and subject to income tax and national insurance contributions (NICs) through the PAYE system.

The change will affect not only the individual receiving the income but also the employer, who may face increased costs due to employer NICs.

The implications for football clubs, athletes and advisers could be significant. Existing contractual structures may require renegotiation, the role of image rights companies may diminish substantially, and uncertainty remains around the treatment of genuine sponsorship arrangements. As a result, the reforms could significantly reshape remuneration structures across professional sport.

The reform represents a shift away from HMRC’s historical acceptance of certain image rights structures and towards a statutory framework that treats employment-related image rights payments as remuneration.

Buried in the Budget

Within the detailed provisions of the 2025 Budget is a measure that could fundamentally alter established practices in the sports industry. While the government’s wider tax reform package aims to raise approximately £2.3 billion, the changes targeting image rights payments may have disproportionate consequences for football clubs and players.

HMRC estimates the reform will raise around £40 million annually. Although relatively modest in fiscal terms, the measure could have substantial practical implications for player contracts, club finances and long-standing tax planning strategies within professional sport.

New Rules from April 2027

From 6 April 2027, image rights payments connected with employment will be treated as employment income. As a result, such payments will be subject to income tax and both employer and employee NICs through PAYE.

This would represent a significant departure from current practice. Football clubs have traditionally entered into separate agreements with players’ image rights companies for the licensing of personal brand and intellectual property rights.

Provided these arrangements reflected genuine commercial exploitation of a player’s image, payments were generally made outside the PAYE system.

Under the proposed legislation, however, where a connection exists between employment and the image rights payment, the tax advantages associated with these structures will no longer apply.

Although HMRC has yet to publish detailed guidance, early indications suggest that existing arrangements may also be affected from April 2027, potentially requiring widespread restructuring of current contracts.

A Landmark Case Reduced to History?

Image rights arrangements have long relied on the reasoning established in Sports Club PLC (2000).

The case accepted that payments made for the commercial exploitation of a player’s image could, in appropriate circumstances, be separated from employment income. While not strictly binding, the decision has been influential due to the limited case law in this area.

Once new legislation takes effect, however, the relevance of this precedent may diminish significantly. Where statutory rules clearly define the tax treatment of image rights payments, those provisions will override previous reliance on case law.

Counting the Cost

The financial consequences of the reform could be significant.

Football clubs will become liable for employer NICs of around 15% on image rights payments that were previously outside the NIC regime. This alone could increase payroll costs considerably.

In addition, many player contracts are structured on a net-of-tax basis. If players face higher tax liabilities as a result of the new rules, clubs may need to increase payments to maintain agreed net income levels.

Players themselves will also face higher taxation. Income previously received through an image rights company and taxed initially within a corporate structure may instead be taxed as employment income at as much as the additional rate band (45%).

As a result, many existing contractual arrangements may need to be renegotiated or restructured.

The Grey Areas

One key issue that remains unresolved is the treatment of genuine third-party sponsorship arrangements.

In principle, commercial agreements that are entirely independent of a player’s employment contract should remain outside the employment income rules. However, complexities arise where sponsors are also commercial partners of the player’s club.

This overlap creates a potential grey area. Where sponsorship payments are linked, directly or indirectly, to a player’s employment with a club, HMRC may seek to treat those payments as employment income.

Further guidance will therefore be necessary to clarify how genuinely independent endorsement arrangements will be treated.

Beyond Image Rights: Wider Tax Changes

The image rights reforms form part of a broader series of tax developments affecting high-earning individuals.

From April 2029, some taxpayers who receive both PAYE income and self-assessment income may be required to settle a greater proportion of their tax liabilities through PAYE during the year.

For professional athletes with significant investment income, this could result in HMRC seeking to collect additional tax through PAYE coding adjustments. The practical operation of this system remains uncertain.

A further change is the mandatory payrolling of benefits in kind from 6 April 2027. For footballers and other high earners, this may create practical difficulties where PAYE deductions approach the 50% regulatory limit on deductions from earnings, particularly where agent fees are also involved.

Although HMRC has issued guidance in this area, employers are not required to follow a single prescribed approach, which may lead to inconsistencies in practice.

Reading Between the Lines

The language used in the Budget documentation is notable. The measure is described as addressing “the use of image rights to avoid employment income tax and NICs”.

This suggests that HMRC views many existing structures as primarily tax motivated.

However, image rights payments often reflect genuine commercial value. Professional athletes frequently generate substantial income from endorsements, sponsorships and promotional activities linked to their personal brand.

Nevertheless, the wording of the announcement may signal a shift in HMRC’s compliance strategy. Since April 2021, enforcement activity has focused largely on clubs rather than individual players, but this focus may broaden in the future.

Technical Considerations and Planning Points

Several technical issues will require careful analysis once draft legislation is published.

The definition of “connected with employment” will be particularly important. If interpreted broadly, the test could capture arrangements where clubs facilitate sponsorship opportunities or where players engage with brands associated with the club.

The treatment of existing contracts will also be significant. If no transitional rules are introduced, long-term agreements negotiated several years earlier could suddenly become substantially more expensive for clubs.

The reforms may also reduce the importance of valuation disputes that historically centred on whether payments to image rights companies reflected the genuine market value of a player’s image. Instead, disputes may focus on whether a payment is truly independent of employment.

The changes may also affect the future viability of image rights companies. If most payments from clubs are treated as employment income, these companies may become commercially redundant. This could lead to corporate restructuring, liquidation, or the transfer of intellectual property to alternative commercial entities managing endorsement income.

Another area that may require consideration is the potential interaction with the settlement’s legislation (ITTOIA, 2005). Historically, image rights companies have often been owned by players, sometimes alongside family members as shareholders. If income from commercial endorsements continues to be routed through such companies, questions could arise as to whether the arrangements constitute a settlement where income is effectively diverted from the individual who generated the underlying value of the image rights. While the settlements provisions have not typically been central to HMRC’s challenges in this area, the narrowing of the employment income rules may lead to greater scrutiny of how endorsement income is distributed through corporate structures.

Advisers may also need to consider whether broader anti-avoidance principles could apply where endorsement income is structured to fall outside the new rules. HMRC is likely to scrutinise whether arrangements are genuinely independent commercial transactions or instead arise by reason of employment.

From an employment tax perspective, the rules may operate similarly to existing anti-avoidance provisions targeting employment-related payments routed through intermediary structures. Payments connected with employment but made through corporate structures could therefore be treated as employment income for tax purposes.

There are also similarities with rules that apply to employment-related benefits provided through corporate arrangements. Under these principles, benefits received because of an individual’s employment may still be taxed as employment income, even where they arise indirectly through companies or other structures.

Finally, practical difficulties may arise in relation to PAYE operation and the 50% regulatory limit on deductions from earnings. Where players already face significant deductions and agent fees, the reclassification of image rights payments as employment income may result in liabilities that cannot be fully collected during the tax year, increasing the likelihood of year-end underpayments.

What Happens Next?

Although image rights companies may continue to play a role in genuine commercial activities outside the employment relationship, the direction of travel is clearly towards greater alignment of image rights payments with employment taxation.

Before April 2027, clubs, players and advisers will need to review existing contractual arrangements carefully to ensure compliance with the new rules. Sponsorship agreements may need to be clearly separated from employment structures, and remuneration models across the industry may require substantial restructuring.

For advisers, the priority will be reviewing existing contractual arrangements well in advance of April 2027 and identifying payments that may fall within the new employment income definition. Early restructuring may be essential to manage the increased employment tax and NIC exposure.

Next Steps

With significant changes on the horizon, now is the time for clubs, players and advisers to review existing image rights arrangements and assess how the reforms may affect current contracts and commercial structures. ETC Tax can assist clients in understanding the implications of the new rules and planning ahead of April 2027. Click here to get in touch.

Why more taxpayers are paying Capital Gains Tax than ever before

HMRC’s latest figures show that Capital Gains Tax receipts reached £24.3 billion during the 2025/26 tax year. Whilst rising asset values have undoubtedly contributed to this increase, the growth in receipts is also a consequence of successive reductions to available reliefs and allowances.

As a result, many individuals who would historically have fallen outside the Capital Gains Tax regime are now finding themselves exposed to unexpected tax liabilities when disposing of shares, investment properties or business interests.

In our experience, the issue is often not that reliefs are unavailable. Rather, it is that advice is sought after a transaction has already been agreed, at which point many planning opportunities have disappeared.

Timing matters more than many taxpayers realise

One of the most common misconceptions surrounding Capital Gains Tax is that the tax position only becomes relevant once a sale is imminent.

In reality, the decisions made months or even years before a disposal can significantly influence the eventual tax outcome.

For example, where an individual intends to dispose of a sizeable investment portfolio, the timing of disposals may determine whether more than one Annual Exempt Amount can be utilised. Whilst the exemption has reduced considerably in recent years, it can still represent a worthwhile saving when used effectively.

Similarly, taxpayers frequently overlook historic capital losses which could be available to offset future gains. We regularly encounter situations where losses have arisen but have not been properly reported to HMRC, creating uncertainty over whether relief will be available when needed.

Ownership structures should not be ignored

For married couples and civil partners, the way in which assets are held can have a material impact on the eventual Capital Gains Tax liability.

Because transfers between spouses and civil partners generally take place on a no gain/no loss basis, there can be opportunities to spread gains between individuals and make better use of available exemptions, losses and tax bands.

This is particularly relevant where one spouse is already a higher-rate taxpayer and the other has unused allowances or lower levels of taxable income.

Of course, tax should not be the sole driver of ownership decisions. Legal ownership, commercial objectives and wider estate planning considerations also need to be taken into account.

Tax-efficient investments remain important

Whilst Capital Gains Tax planning often focuses on disposals, equal attention should be given to how investments are structured from the outset.

Investments held within tax-efficient wrappers such as ISAs can grow free from Capital Gains Tax. Over a number of years, consistently utilising available ISA allowances can significantly reduce future tax exposure and simplify reporting obligations.

For individuals with substantial investment portfolios, periodic reviews can help ensure that assets are being held in the most appropriate structure for their circumstances.

Business owners face additional considerations

Where a disposal involves shares in a trading company, partnership interests or other business assets, the analysis becomes considerably more complex.

Questions frequently arise around the availability of Business Asset Disposal Relief, company reorganisations, share rights, family ownership structures and succession planning.

In these situations, the tax consequences can differ dramatically depending on how a transaction is structured. Seeking advice only after heads of terms have been agreed may mean valuable planning opportunities have already been lost.

The importance of early advice

The increasing amount of Capital Gains Tax being collected by HMRC serves as a reminder that tax should form part of the transaction planning process, rather than being viewed as a compliance exercise after the event.

Whether you are considering the sale of an investment property, a share portfolio or a business, understanding the tax implications before a transaction progresses can often lead to a significantly better outcome.

At ETC Tax, we advise business owners, investors and private individuals on Capital Gains Tax planning and transaction structuring. Where appropriate, we can help identify available reliefs, review ownership structures and assess the tax consequences of a proposed disposal before commitments are made. Get in touch here!

____________________________________________

Frequently Asked Questions

What is Capital Gains Tax?

Capital Gains Tax is charged on the profit realised when an individual disposes of a chargeable asset. Common examples include investment properties, shares, business interests and certain personal assets.

The tax is generally charged on the gain arising, rather than the sale proceeds themselves.

Is my main residence subject to Capital Gains Tax?

A disposal of an individual’s only or main residence will often qualify for Private Residence Relief, which can eliminate or significantly reduce any CGT liability.

However, relief may be restricted in certain circumstances, including periods of non-occupation or where part of the property has been used exclusively for business purposes.

Are gifts subject to Capital Gains Tax?

In many cases, gifts are treated as disposals for CGT purposes and may give rise to a taxable gain, even where no cash consideration is received.

The availability of reliefs will depend on the nature of the asset being transferred and the circumstances of the transaction.

How are Capital Gains Tax rates determined?

The applicable CGT rate depends on a range of factors, including the nature of the asset disposed of and the individual’s wider tax position.

Different rates may apply to residential property, carried interest and other chargeable assets.

When should I seek Capital Gains Tax advice?

Ideally, advice should be sought before a transaction is agreed or becomes legally binding. Early engagement allows potential reliefs, exemptions and planning opportunities to be identified and considered while options remain available.