Accountants & Tax Advisors for small business, contractors and self employed individuals View Services

News

Standard Terms of Business Updated

Posted on by Andrew

On 4 June 2026, we updated our Standard Terms of Business. Below is a summary of the important changes:

Section 18.1
Additional term added at 18.1.4 in relation to each party’s responsibilities where additional returns or submissions are required to be made to HM Revenue & Customs as a result of activities and transactions not specifically listed in these terms and conditions generally.

Section 18.2
Additional terms and wording added in relation to Making Tax Digital for Income Tax (MTD), and MTD submissions.

Section 18.9
Updated wording to section 18.9.4 in relation to reporting taxable employment benefits via PAYE.

A copy of our latest Standard Terms of Business can be found here.

Mileage allowance raised to 55p

Posted on by Andrew

On Thursday 21 May, the Chancellor Rachel Reeves delivered her statement to Parliament on the Government’s economic response to the war in Iran.

One of the most noticeable announcements, that was good news for small business owners and employees alike, was a 10p per mile increase in tax free mileage rates for cars and vans from 45p to 55p per mile, backdated to April 2026.

The mileage rate had not increased since 2011, so was well overdue given the level of inflation and cost of motoring over the past 15 years.

If you currently claim mileage for business journeys in a vehicle owned personally (not by a company/employer), please use the new rate of 55p from 6 April, and amend any claims already entered in your accounts where necessary.

This rate only applies to the first 10,000 miles per tax year, with anything over that remaining at the 25p per mile rate. The extra 5p per mile when carrying a business passenger also remains the same.

Note also that the rates for motorbikes remain the same and the fuel only rates for company owned cars are also unaffected by these changes.

Other announcements in the statement included:

For hauliers, a 12-month road tax holiday for HGVs, saving the typical heavy lorry up to £912.

To support farmers and the rail freight industry, a cut on the duty on red diesel by over a third until the end of this year.

A temporary cut in the rate of VAT on summer attractions and children’s meals in restaurants from 20% to 5% over the summer holidays.

The full statement can be read here.

Changes to reporting requirements for directors from 2025-26

Posted on by Andrew

For the tax year just ended 5 April 2026, there are now additional self assessment requirements which require directors in close companies to report more detailed information relating to their shareholdings and any dividends received from those companies.

A close company is defined as being a UK limited company controlled by five or fewer participators, therefore these changes will affect the vast majority of small family run companies.

Extra boxes on the employment pages of the self assessment tax return which now need to be completed for each directorship are:

  • The name of the close company and registration number
  • The amount of dividend income (even if this is zero) received from the company
  • The total percentage of the share capital owned in the company

If you complete your own tax return, please ensure you familiarise yourself with these changes and populate all necessary boxes on the employment pages for every directorship you hold.

You are also likely to be affected by these changes even if you don’t currently submit a tax return. In the past, a director who did not receive any untaxed income such as dividends from a close company did not have to complete a self assessment tax return unless they also had other reasons to submit a return.

However, this new legislation appears to suggest that all directors will now need to submit a self assessment tax return for the 2025-26 tax year onwards to report every company in which they are a participator, even if they didn’t receive any income from the company.

Unless HMRC later release guidance to the contrary, at this time we are therefore recommending all directors affected by these changes to submit a self assessment tax return for the tax year just ended 5 April 2026 (2025-26) onwards.

If you are affected by these changes, this means you may need to re-activate or register for self assessment for the first time for the 2025-26 tax year. You must do this by 5 October 2026.

Autumn Budget 2025

Posted on by Andrew

In one of the most eagerly awaited budgets for many years, the Chancellor finally announced her latest raft of financial and tax measures for 2026 onwards. Below is a summary of some of the main points of interest, but the full statement can be found here.

Personal taxation

The current personal tax and national insurance thresholds will be frozen for a further 3 years from 2028 to 2031.

From April 2026, the ordinary and upper rates of tax on dividend income will increase by 2%, with no change to the dividend additional rate. The basic rate will be 10.75% and the higher rate will be 35.75%.

Then from April 2027, there will be a 2% increase on income tax for savings income and property income. The basic rate will be 22%, the higher rate will be 42%, and the additional rate will be 47%.

From April 2027 the annual ISA cash limit will be reduced to £12,000 for under 65’s, within the overall annual ISA limit of £20,000. Stocks and shares ISA’s are therefore unaffected.

Businesses

The amount people can sacrifice from their salary to avoid paying Employee and Employer NI on pension contributions will be capped at £2,000 a year from 2029.

The minimum wage for over-21s will rise 4.1% in April, from £12.21 to £12.71 per hour, and the wage for 18 to 20-year-olds will rise by 8.5%, from £10 to £10.85 per hour.

Welfare and other announcements

The 2-child benefit cap will be lifted from April 2026.

The triple lock for state pensions will remain in place ensuring an above inflation increase again next year.

There will be a new annual High Value Council Tax Surcharge of between £2,500 to £7,500 on properties in England worth more than £2m.

From 2028, a new tax will be introduced on electric vehicles and plug-in hybrid cars based on annual mileage; 3p/mile for EV’s and 1.5p/mile for hybrids.

Recovering VAT on motoring repairs

Posted on by Andrew

If your business is VAT registered and is not using the flat rate scheme, you may be eligible to recover all of the input VAT on vehicle maintenance and repair costs provided that the vehicle is used some of the time for business journeys. This is true even if the vehicle is also used for personal use.

For self employed people or partnerships, to recover VAT on vehicle maintenance, you just need to be able to evidence business use. This is usually easy if it’s a van or commercial vehicle, but for domestic cars, you will need to have some form of mileage log detailing business journeys.

For limited companies, where the vehicle is owned or leased by the company, any repair costs should be paid for by the company directly and VAT recovered as normal through your accounts.

But where the vehicle is not owned or leased by your limited company, the rules are different and there are a number of conditions that must be met in order to recover VAT on motor repairs:

  • The invoice must be made out to your company and the company must pay the invoice to the supplier directly.
  • The vehicle must be used for business purposes at least some of the time, evidenced by business mileage claims perhaps.
  • The employee must make good the payment to the company of the GROSS amount to avoid a P11d taxable benefit charge on the amount and Class 1A NICs.

If you fail to follow all of the above, there are severe penalties for failing to disclose this and for failing to submit P11d’s.

This may therefore be a bit of a hassle for only a small gain if your motor repairs are small, but it could be worth considering if you incur a large repair bill at some point.

Example

Here is an example of how this works in practice for a limited company where the vehicle is not owned by the company and instead, the company pays the approved 45p per mile for business journeys to the employee/director:

If your company pays £500 plus VAT from the company bank account for a repair, the entries in your accounts would be as follows:

  • Payment of £500 plus input VAT of £100 that will be reclaimed on the VAT return. Allocate this payment to travel and subsistence or motoring (use same code as mileage payments are allocated to).
  • The director then repays £600 into the company bank account and the transaction is recorded as a bank receipt of £600 (NO VAT – or Out of Scope) from the director/employee which should also be allocated to the same code i.e. travel or motoring. You may need to explain it as a Refund in some accounting packages.

The net effect is that the company will recover £100 of input VAT, but will not receive any corporation tax relief for the payment because it is not allowable. It will in fact pay tax on the extra £200 received from the director, but overall the company has gained because the VAT reclaimed is more than the additional corporation tax charge.

Parents of teens reminded to go online to extend their Child Benefit claim

Posted on by Andrew

If you have children, aged between 16 and 19 years old, make sure you don’t miss out on up to £1,354 a year in Child Benefit.

Parents must confirm to HMRC if their teens are staying in full time education, or training, before the deadline of 31 August 2025.

This requirement recurs every year, so if you have children at or reaching this age in the coming years, make sure you remember to do this.

How to extend Child Benefit claims

You can make sure you get the payments you’re entitled to by remembering to extend your Child Benefit claim online or through the HMRC app.

You should also be sent a letter which contains a handy QR code which takes you straight to the digital service on GOV.UK or you can search ‘extend Child Benefit’ and sign into your online account.

If parents do not tell HMRC by 31 August 2025 that their child is staying in full time non-advanced education or approved training after age 16, their Child Benefit will stop. Parents can check eligibility on GOV.UK.

Child Benefit Charge for High Income parents

If you or your partner have opted out of getting Child Benefit payments because of your income, you still need to extend your claim. Note also that the amount parents can earn before they need to pay the High Income Child Benefit Charge has now increased to between £60,000 and £80,000.

Minimum Wage Changes 2025

Posted on by Andrew

From 1 April 2025, the National Living Wage and National Minimum Wage rates will increase. The new rates will be as follows:

  • Aged 21 and over: £12.21 per hour
  • Aged 18 to 20: £10.00 per hour
  • Aged 16 to 17: £7.55 per hour
  • Apprentices: £7.55 per hour

Apprentices

Apprentices are entitled to the apprentice rate if they’re either:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

Apprentices are entitled to the minimum wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship

Salaried employees

Employers will need to check if the above changes affect any employees who are paid a fixed salary, rather than variable hours. The salary must be no lower than the equivalent hourly rate calculated by reference to their normal contracted hours.

Non-payrolled employees

If you don’t currently operate a payroll scheme because your employees earn less than the Lower Earnings Limit (LEL), you will need to check whether this increase affects you. From April, the LEL will rise to £125 per week, above which employees’ wages must be reported on a payroll scheme. However, the Secondary Threshold for employer’s NIC’s is now only £5,000 per year, so it’s now likely that any employee earning over £96 per week will also now need to be reported on a payroll scheme.

National Minimum Wage Pitfalls

Employers should also make sure any calculations of minimum wage levels take account of other circumstances that might occur in the workplace. This previous article provides some examples here.

Spring Statement 2025

Posted on by Andrew

Yesterday the Chancellor delivered her Spring Statement to the nation. As promised, there were no further changes to taxes at this time, so the statement focussed on the economic outlook and proposed government spending.

Economic Overview

  • Inflation: The OBR now expects it to average 3.2% this year, before falling in 2026 and stabilising around 2% thereafter.
  • Growth Forecast: The OBR has cut the growth forecast for 2025 from 2% to 1%, citing economic pressures and global instability.
  • Government Borrowing: Revised figures show a higher short-term deficit, but a surplus of £9.9bn is forecast for 2029-30—restoring the Chancellor’s fiscal headroom.

Public Spending and Welfare

  • Welfare Reform: The health element of Universal Credit will be cut by 50% for new claimants and then frozen. The overall welfare budget is expected to be cut by £4.8bn.
  • Day-to-day government spending will still grow, but more slowly—1.2% a year above inflation instead of 1.3% as previously planned.
  • Defence spending will rise by £2.2bn next year, reaching 2.5% of GDP by 2027 with an ambition to increase this to 3%.

Planning and Growth Initiatives

  • The government will protect capital spending, increasing it by £2bn annually.
  • New planning reforms are forecast by the OBR to increase GDP by 0.2% by 2029/30 and 0.4% within 10 years, the largest forecasted GDP uplift the OBR has ever made from a single policy.
  • Additional growth measures include support for a third runway at Heathrow and pension reforms to boost investment.

Autumn Budget 2024

Posted on by Andrew

Following lots of pre-budget announcements, the Chancellor today delivered an eagerly awaited autumn budget statement, with a number of tax rises aimed at plugging the “Black Hole”. There is a lot to highlight this year, but below is a summary of some of the main points of interest, and the full statement can be found here.

Business taxes and wages

The Employer National Insurance rate will increase to 15% from 13.8% from April 2025, whilst the threshold at which they are taxed will decrease to £5,000 from £9,100 per employee. Together this would mean an additional £806 payable on an employee salary of £25,000 per annum.

However, to offset this for the smallest businesses, the Employment Allowance will increase to £10,500 from £5,000. The Employment Allowance allows employers to reduce their total national insurance liability by up to this amount, so overall most of the smallest businesses will not be as worse off as first thought, and some may actually be better off. But one person director owned companies with no other employees might be badly affected by the above changes because currently they cannot access the Employment Allowance (unless this changes).

The National Minimum Wage will rise to £12.21 per hour from April (£10 for 18 to 20 year olds), with a phased increase towards a single adult rate.

Hidden in the budget were details that the government will start treating double cab pick-up vehicles with a payload of one tonne or more as cars for certain tax purposes from April 2025, including for benefits in kind, and deductions from profits. Transitional benefit in kind arrangements will apply though until 2019 for employers that have purchased, leased, or ordered a vehicle before 6 April 2025, but this will be a substantial increase in the benefit in kind tax charge. We await more details about this.

There will be no increase to corporation tax at this time.

Personal taxes

There will be no rise in income tax or National Insurance for private individuals, but the freeze on the annual thresholds will remain until April 2028, at which point they will increase in line with inflation. The freeze on the allowances effectively means more tax is payable if your income rises by inflation though in the meantime.

Capital gains tax rates will increase to 18% (basic rate) and 24% (higher rate) for all types of asset disposals, to match those currently paid on residential property. This is with immediate effect from 30 October 2024.

Capital gains tax rates for Business Asset Disposal Relief and Investors’ Relief will rise gradually from 10% to 14% from April 2025 and match the main lower rate of 18% from April 2026, to allow business owners time to adjust to the changes.

Non-dom tax status will be abolished from April 2025, replaced by a residence-based regime.

Property

The Higher Rates for Additional Dwellings in Stamp Duty Land Tax on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property, will increase from 3% to 5% with immediate effect from 31 October 2024.

Inheritance tax

The current inheritance tax thresholds will remain frozen until April 2030.

Agricultural property relief and business property relief will be reformed from April 2026. The 100% rate of relief will continue for the first £1 million of combined agricultural and business assets to help protect family farms and businesses, and will be 50% thereafter.

Minimum Wage Changes 2024

Posted on by Andrew

From 1 April 2024, the National Living Wage and National Minimum Wage rates will increase. The new rates will be as follows:

  • Aged 21 and over: £11.44 per hour
  • Aged 18 to 20: £8.60 per hour
  • Aged 16 to 17: £6.40 per hour
  • Apprentices: £6.40 per hour

Apprentices

Apprentices are entitled to the apprentice rate if they’re either:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

Apprentices are entitled to the minimum wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship

Salaried employees

Employers will need to check if the above changes affect any employees who are paid a fixed salary, rather than variable hours. The salary must be no lower than the equivalent hourly rate calculated by reference to their normal contracted hours.

Non-payrolled employees

If you don’t currently operate a payroll scheme because your employees earn less than the Lower Earnings Limit (LEL), you will need to check whether this increase affects you. From April, the LEL will remain at £123 per week, above which employees’ wages must be reported on a payroll scheme.

National Minimum Wage Pitfalls

Employers should also make sure any calculations of minimum wage levels take account of other circumstances that might occur in the workplace. This previous article provides some examples here.