Business Update - September
Price Mann • September 1, 2021
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Deadline approaches for fifth and final self-employed grant
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The self-employed have until the end of the month to apply for the final grant available via the self-employed income support scheme (SEISS).
Everyone who is eligible for the last SEISS grant should have received a personal start date from HMRC in recent months. These gave self-employed taxpayers a date from which they can apply for the support, with the first applications being accepted from 29 July 2021.
HMRC has warned it won’t process claims submitted before an individual’s personal start date. This staggered start aims to give HMRC enough time to assess each claim before the window closes on 30 September 2021.
Chancellor Rishi Sunak said earlier this year that the fifth round of grants will “support those most affected by the pandemic”.
There are two levels of grant available. Those whose turnover fell by 30% or more will continue to receive the full 80% grant of up to £7,500.
Those whose turnover has fallen by less than 30% will receive a reduced 30% grant of up to £2,850.
HMRC is using a turnover test to determine which level of grant taxpayers qualify for (either 30% or 80% of three months’ average monthly profits).
Just like the previous four SEISS grants, the latest grant is also subject to income tax and self-employed National Insurance contributions for 2021/22.
National Insurance contributions rates ‘poised to increase’
The Government could be set to raise National Insurance contributions (NICs) by 1% for both employers and employees, a report has claimed.
The Times claimed senior ministers have agreed to increase rates to raise an extra £10 billion a year for the National Insurance Fund.
This would initially be used to reduce NHS waiting lists, before helping to fund longer-term social care reforms.
Most employers pay NICs at a rate of 13.8%, while the majority of employees pay NICs at 12% on their earnings in 2021/22.
The move, which would go against a Conservative manifesto pledge not to raise NICs rates, has been greeted with dismay.
The Federation of Small Businesses (FSB) slammed the idea of raising the ‘jobs tax’, with many firms still reeling from COVID-19.
Mike Cherry, chairman at the FSB, said: “A lot of business owners have had the worst 16 months of their professional lives. Many firms are now struggling with staff being pinged, emergency loans and late payments. NICs essentially serve as a jobs tax, making it harder for them to create opportunities. To hike them as the furlough scheme and wider support measures end would stop our economic recovery in its tracks before it’s even started.”
Any move could potentially take effect from April 2022.
1 in 5 UK employers consider making redundancies
A minority of UK employers could be about to cut jobs, due to the withdrawal of the furlough scheme and rising costs.
The scheme, which has protected around 11.6 million jobs since the start of the pandemic, will close on 30 September 2021.
The Government currently pays 60% of a furloughed worker’s wages and employers will pay 20%, plus workplace pension and National Insurance contributions.
By making furlough more expensive for employers, the Government hopes to encourage them to take workers back full-time, if they can.
Some employers with workers on furlough might find that they cannot afford to keep them on as business returns to normal from 1 October 2021.
As a result, research from the British Chambers of Commerce (BCC) found that 18% of UK employers plan to make redundancies before the end of the year.
Jane Gratton, head of people policy at the BCC, said: “This will likely result in employers, who are still struggling to recover from the recession, being forced to make redundancies and cuts to working hours. Whether furloughed workers are returning to the workplace or the wider labour market, it is crucial that employers and the Government give the support and training they need to be re-engaged and productive. Alongside rapid retraining opportunities, the Government should extend the kickstart scheme into 2022, and expand it to enable older workers to gain new skills and experience.”
The kickstart scheme was launched in September 2020 and pays the wages and associated employment costs for businesses taking on 16 to 24-year-olds in receipt of universal credit for up to six months.
While that scheme has yet to be extended at the time of writing, the Government has launched a new flexible apprenticeship scheme for the agricultural, construction, and creative sectors.
Organisations in these industries can apply for grants of between £100,000 and £1 million to set up new flexi-job apprenticeship agencies before the end of 2023/24.
Capital gains tax receipts climb 3% to record-high
HMRC collected a record of £9.9 billion from capital gains tax receipts in 2019/20, according to official statistics published last month.
The tax authority said this was 3% up on the previous tax year’s receipts, but the number of taxpayers paying tax on their gains fell 6% to around 265,000.
Most of the liabilities collected came from 1% of taxpayers who made the biggest gains in 2019/20, with 41% of the receipts coming from those who made gains of £5 million or more.
More than a quarter (28%) of these revenues (£2.8bn) came from business assets that qualified for entrepreneurs’ relief, which saw its lifetime limit slashed from £10m to £1m with effect from 11 March 2020.
Basic-rate taxpayers pay tax at 10% on gains above the annual exemption in 2021/22, while those in the higher-rate and additional-rate income tax bands pay 20% on disposal of most assets.
Higher capital gains tax rates – of 18% and 28%, respectively – can apply when selling certain assets, such as investment properties or second homes that have significantly increased in value over time.
Earlier this year, Chancellor Rishi Sunak froze the capital gains tax annual exemptions at £12,300 for individuals and £6,150 for trusts up to and including April 2026.
With asset prices increasing and the annual exemptions frozen, it stands to reason that more taxpayers could be impacted by paying capital gains tax over the coming years.
An increase in capital gains tax rates also appears more likely than any other fiscal policy tweak, after the Office for Tax Simplification (OTS) published two capital gains tax reports containing a raft of recommendations.
Last year, the OTS suggested the Government should align capital gains tax with income tax, and reduce the annual exemptions because its current structure "distorts behaviour" and creates "odd incentives".
Speculation of rate hikes is prompting some taxpayers to plan disposals in 2021/22, to beat any kind of reform that could potentially kick in from next April.
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Managing risk in your investment portfolio Tips for a balanced investment approach. Investment markets rise and fall, yet the goals that matter to you – retirement security, children’s education, a comfortable buffer against the unexpected – remain constant. Managing risk means giving each goal the best chance of success while avoiding avoidable shocks. You can do that by holding the right mix of assets for your timeframe, using tax wrappers efficiently, and controlling costs and emotions. The 2025/26 UK tax year brings unchanged ISA and pension allowances. This guide explains the key steps, such as diversifying sensibly, rebalancing with discipline, safeguarding cash, and monitoring allowances, so you can stay on track whatever the markets deliver. It is an information resource, not personal advice. Start with a clear plan Define goals and timeframes: Decide what each pot of money is for (for example: house deposit in three years, retirement in 20 years). Time horizon drives how much short-term volatility you can accept. Short-term goals usually need more cash and high-quality bonds; long-term goals can justify more equities. Set your risk level in advance: Ask yourself two questions. Risk capacity: How much loss could you absorb without derailing plans (linked to your time horizon, job security and other assets)? Risk tolerance: How do you feel about market swings? Use a more cautious mix if you are likely to sell in a downturn. Ring-fence cash needs: Keep 3-6 months’ essential spending in easy-access cash before you invest. This reduces the chance of selling investments at a low point to meet bills. Choose simple, diversified building blocks: Broad index funds and exchange-traded funds (ETFs) covering global equities and high-quality bonds provide instant diversification at low cost. Avoid concentration in a single share, sector or theme unless you are comfortable with higher risk. Diversification: Spread risk across assets, regions and issuers Diversification reduces the impact of any single holding. Practical ways to diversify include the following. Assets: Use both growth assets (equities) and defensive assets (investment-grade bonds, some cash). Regions: Combine UK and global holdings. Many UK investors hold too much domestically; global funds spread company and currency risk. Issuers: In bonds, mix UK gilts and investment-grade corporate bonds to diversify credit exposure. Currencies: Equity funds are commonly unhedged (currency moves add volatility but can offset local shocks). For bonds, many investors prefer sterling-hedged funds to lower currency risk. A diversified core helps the portfolio behave more predictably across different market conditions. You can add small “satellite” positions if you wish, but keep any higher-risk ideas to a modest percentage of the whole. Use tax wrappers to reduce avoidable tax and trading frictions Efficient use of ISAs and pensions is one of the most effective risk-management tools because it protects more of your return from tax. ISAs (individual savings accounts) Annual ISA allowance: £20,000 for 2025/26. You can split this across cash, stocks & shares and innovative finance ISAs. Lifetime ISAs (LISAs) are capped at £4,000 within the overall £20,000. Junior ISA (for children under 18): £9,000 for 2025/26 (unchanged). ISAs shield interest, dividends and capital gains from tax. Rebalancing inside an ISA does not create capital gains tax (CGT), which helps you maintain your chosen risk level at lower cost. Note: There has been public discussion about potential ISA reforms, but the current 2025/26 allowance is £20,000. If government policy changes later, we will let you know. Pensions (workplace pension, personal pension/SIPP) Annual allowance: £60,000 for 2025/26 (subject to tapering for higher incomes; see below). You may be able to carry forward unused annual allowance from the three previous years if eligible. Tapered annual allowance: If your adjusted income exceeds £260,000 and threshold income exceeds £200,000, the annual allowance tapers down (to a minimum of £10,000 for 2025/26). Money purchase annual allowance (MPAA): £10,000 for 2025/26 once you’ve flexibly accessed defined contribution benefits (for example, taking taxable drawdown income). Tax-free lump sum limits: The lifetime allowance has been replaced. From 6 April 2024, the lump sum allowance (LSA) caps total tax-free pension lump sums at £268,275 for most people, and the lump sum and death benefit allowance (LSDBA) is £1,073,100. Pensions are long-term wrappers designed for retirement. Contributions usually attract tax relief and investments grow free of UK income tax and capital gains tax while inside the pension. Personal savings: Interest allowances Personal savings allowance (PSA): Basic-rate taxpayers can earn up to £1,000 of bank/building society interest tax free; higher-rate taxpayers up to £500; additional-rate taxpayers do not receive a PSA. Starting rate for savings: Up to £5,000 of interest may be taxable at 0% if your other taxable non-savings income is below a set threshold. For 2025/26, that threshold is £17,570 (personal allowance of £12,570 plus the £5,000 starting rate band). Dividends and capital gains outside ISAs/pensions Dividend allowance: £500 for 2025/26 (unchanged from 2024/25). Dividend tax rates remain 8.75%, 33.75% and 39.35% for basic, higher and additional-rate bands, respectively. The annual capital gains tax (CGT) exempt amount , £3,000 for individuals (£1,500 for most trusts). CGT rates from 6 April 2025: For individuals, 18% within the basic-rate band and 24% above it, on gains from both residential property and other chargeable assets (carried interest has its rate). HMRC examples confirm the £37,700 basic-rate band figure used in CGT calculations for 2025/26. CGT reporting reminder: UK residents disposing of UK residential property with CGT to pay must report and pay within 60 days of completion. Other gains are reported via self assessment (online filing deadline is 31 January following the tax year; if you want HMRC to collect through your PAYE code, file online by 30 December; payments on account remain due 31 January and 31 July). Why this matters for risk: Using ISAs and pensions lowers the drag from tax, allowing you to rebalance and compound returns more effectively. Outside wrappers, plan disposals to use the £3,000 CGT allowance and each holder’s tax bands and consider transfer to a spouse/civil partner (no CGT on gifts between spouses) before selling where suitable. Bonds and cash: Interest-rate and inflation considerations Interest rates: The Bank of England reduced the Bank Rate to 4% at its August 2025 meeting. Bond prices can move meaningfully when rates are high or changing, especially for longer-dated bonds. Consider the duration of bond funds and whether a mix of short- and intermediate-duration exposure suits your time horizon. Inflation: Headline Consumer Price Index (CPI) inflation was 3.6% in the 12 months to June 2025, while the CPI including owner occupiers’ housing costs (CPIH) rose by 4.1%. Inflation affects the real value of cash and bond coupons, and can influence central bank policy, affecting bond prices. Review whether your mix of cash, index-linked gilts and conventional bonds remains appropriate as inflation and interest-rate expectations evolve. Cash strategy: For short-term needs, spread deposits to respect Financial Services Compensation Scheme (FSCS) limits. For longer-term goals, excessive cash can increase the risk of falling behind inflation. Control costs and product risk Keep fees low: Ongoing charges figures (OCFs), platform fees and trading costs compound over time. Favour straightforward funds and avoid unnecessary expenses. Understand the product: Structured products, highly concentrated thematic funds or complex alternatives can behave unpredictably. If you use them, size them modestly within a diversified core. Use disciplined trading rules: Avoid frequent tinkering. Set rebalancing points (see below) and resist acting on short-term news. Rebalancing: Why, when and how Markets move at different speeds. Without rebalancing, a portfolio can “drift” to a higher or lower risk level than you intended. Follow this simple rebalancing framework. Invest in something that will rebalance automatically (i.e. certain ETFs) Frequency: Review at least annually. Thresholds: Rebalance when an asset class is 5 percentage points away from target (absolute) or 20% away (relative). Tax-aware execution: I prefer to rebalance inside ISAs and pensions. Outside wrappers, use new cash or dividends where possible; then consider selling gains up to the £3,000 CGT allowance and factoring in dividend and savings allowances. Implementation tip: If markets are volatile, use staged trades (for example, three equal tranches a few days apart) rather than one large order. Safeguard cash and investments with the right protections FSCS protection (cash deposits): Up to £85,000 per person, per authorised bank/building society group is protected. Temporary high balances from specific life events can be covered up to £1m for six months. The Prudential Regulation Authority has consulted on raising the standard deposit limit to £110,000 and the temporary high balance limit to £1.4m from 1 December 2025 (proposal stage at the time of writing). FSCS protection (investments): If a regulated investment firm fails and your assets are missing or there is a valid claim for bad advice/arranging, compensation may be available up to £85,000 per person, per firm. This does not protect you against normal market falls. Operational risk checks: Use Financial Conduct Authority authorised providers, check how your assets are held (client money and custody), enable multi-factor authentication, and keep beneficiary and contact details up to date. Currency risk: When to hedge For equities, many long-term investors accept currency fluctuations as part of the growth engine, since sterling often weakens when global equities are stressed, partly offsetting losses. For bonds, many prefer sterling-hedged funds to keep defensive holdings aligned with sterling cashflow needs. A blended approach works: unhedged global equities plus mostly hedged bonds. Behavioural risks: Keep decisions steady Common pitfalls include chasing recent winners, selling after falls or holding too much cash after a downturn. Tactics to keep you on track include: automate contributions (regular monthly investing), which spreads entry points write down rules (what you will do if markets fall 10%, 20%, 30%) separate spending cash from investments so you do not sell at weak prices to fund short-term needs use portfolio “buckets” in retirement. Retirement planning: Sequence-of-returns risk and withdrawals If you are drawing an income from investments consider the following. Hold a cash buffer (for example, 12–24 months of planned withdrawals) to avoid forced sales during sharp market falls. Be flexible with withdrawals: Pausing inflation-indexing or trimming withdrawals after a poor market year can help portfolios last longer. Use tax bands efficiently: Consider the order of withdrawals (pension, ISA, general investment account) to make use of personal allowance, PSA, dividend allowance and the CGT annual exempt amount. Take care around the MPAA if you are still contributing to pensions after accessing them. Putting it together: A repeatable checklist Confirm goals and time horizons. Check emergency cash (3-6 months). Map your target asset allocation. Use wrappers first: Fill ISAs and workplace/personal pensions as appropriate. Keep costs low: Prefer broad index funds/ETFs. Set rebalancing rules: Annual review + thresholds. Document tax items: Monitor dividend/CGT use; note 60-day property CGT rule; plan for 31 January/31 July self assessment dates if relevant. Review protection limits: Spread larger cash balances across institutions in line with FSCS; note proposed changes for late 2025. Schedule an annual review to update assumptions for interest rates, inflation and any rule changes. Get in touch if: you are unsure how to set or maintain an asset allocation you plan to draw income and want to coordinate wrappers and tax bands you expect large one-off gains or dividends and want to plan disposals or contributions you have concentrated positions (employer shares, single funds) and want to reduce single-asset risk tax-efficiently you are considering more complex investments. Wrapping up Risk management is not a one-off task but an ongoing discipline. By defining clear objectives, spreading investments across regions and asset classes, using ISAs and pensions to shelter returns, and reviewing allocations at least annually, you create a framework that limits surprises and keeps decisions rational. Document key dates – self assessment payments on 31 January and 31 July, the 60-day CGT rule for property, and the annual ISA reset on 6 April – so tax never forces a sale at the wrong time. Check deposit limits and platform safeguards for peace of mind, and keep a written record of your rebalancing rules to prevent knee-jerk trades. If life events or regulations change, revisit your plan promptly. A measured, systematic approach lets your portfolio work harder while you stay focused on the goals that matter most. Important information This guide is information only and does not account for your personal circumstances. Past performance is not a guide to future returns. The value of investments and income from them can fall as well as rise, and you may get back less than you invest. Tax rules can change and benefits depend on individual circumstances. If you need personalised advice, please contact a regulated financial adviser. If you’d like advice on managing your portfolio, get in touch.
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