With the abolishment of the specific tax considerations for Furnished Holiday Lets (FHL) from the beginning of the current tax year, owners need to prepare for higher tax bills.

Given that couples and joint owners of FHL benefited from specific considerations, they may find themselves uniquely impacted by the changes.

To avoid being hit with a surprise bill, it is worth understanding the changes and what can be done about them.

How have the Furnished Holiday Lets rules changed for jointly held property?

Part of the tax relief afforded to FHLs was the application of taxation based on the share of the income that each individual in the partnership received.

In some cases, where one individual paid Income Tax at a higher rate than the other, it resulted in them receiving lower shares of the income, which would reduce the overall tax bill.

However, shares of the property will now be divided 50:50 by default.

This could result in a higher rate of tax being paid on the income, particularly if one individual pays a higher rate for Income Tax.

To avoid the division remaining at the 50:50 split, joint owners of FHL can use HM Revenue & Customs’ (HMRC) Form 17 to ascribe the specific split of income.

To ensure that Form 17 is accepted, evidence will need to be provided of the division of shares by using a declaration or deed.

Form 17 will not, by itself, change the ownership split of the property, but it can inform HMRC if the division of shares is not the default 50:50.

Be aware that income from the property is taxed in line with the designation of Form 17 from the date that it was signed by the last spouse or civil partner to sign it, and it needs to reach HMRC within 60 days.

Any submissions after this will be invalid, and any income before the form is signed will not be covered by the form.

If you have been affected by the abolition of the FHL tax reliefs, please contact us today.

HM Revenue & Customs (HMRC) will permanently close its free service for submitting Company Tax Returns and annual accounts on 31 March 2026.

Built over a decade ago for simpler businesses, the platform no longer meets modern digital standards.

Companies must now move to commercial filing software to remain compliant.

This software provides more modernised features, including:

• Error checks before submission
• Filing to both HMRC and Companies House in one step
• Alerts, reminders and built-in support.

Make the switch before it disrupts your next deadline

The changes are not due to take place until next year, but if you prepare now, it allows you to test the new system, reduce the risk of errors and late filings, and avoid any last-minute scrambles before the deadline.

If you haven’t already, you should review your current processes, choose HMRC-compatible software, and set up your system well ahead of time.

You do not need to notify HMRC or Companies House when you switch.

Prepare for the deletion of old tax returns

After 31 March 2026, you will no longer be able to access previously filed returns or amend them online.

You should download and store at least three years of records. Any changes after this date must be made using software or by post.

If appointed as your agent, we will be able to action this on your behalf.

Dormant companies still have duties

Even if your company is inactive, you must file annual accounts with Companies House.

Corporation Tax may not apply, but that does not remove your reporting obligations.

This includes:

• Charities
• Flat management companies
• Amateur sports and community clubs

Start preparing now. Speak to us today about switching your Company Tax Returns and annual accounts process to HMRC-compatible software.

Cryptoassets make up a growing portion of the market, and businesses are increasingly looking to take advantage of these digital currencies.

If your business carries out activities involving the exchange of cryptoassets, then you are liable to pay tax on them.

However, understanding how HM Revenue & Customs (HMRC) treats cryptoassets for tax purposes can be tricky.

Here is what you need to know about how HMRC taxes cryptoassets for corporates.

Disposal of cryptoassets

Disposal of cryptoassets includes selling tokens for money and exchanging tokens for a different type of token.

Using cryptoassets to pay for goods or services, or giving away cryptoassets to another person, also counts as a disposal.

Disposal of cryptoassets is usually treated by HMRC as capital disposal gains or losses rather than profits or losses.

This means that, if you hold exchange tokens as an investment in your business, you are liable to pay Corporation Tax (CT) on any gains resulting from disposal.

However, in exceptional circumstances where your business regularly buys or disposes of cryptoassets, HMRC may classify your profits as subject to Income Tax and National Insurance (NI), rather than CGT.

Even if the profit or gain is within your tax-free allowance, you must still report it to HMRC.

Under HMRC rules, transactions concerning currency used as legal tender are exempt from Value Added Tax (VAT).

However, HMRC does not consider cryptoassets to be money or currency.

This means that cryptoassets are liable for VAT.

HMRC also does not consider the trading of cryptoassets as gambling.

Airdrops and mining

If your business receives an allocation of cryptoassets as part of an airdrop (for example, a marketing campaign), any future disposal will be subject to CGT.

In all cases, income from mining cryptoassets is subject to Income Tax.

Where mining activity is deemed to be a trading activity by HMRC, then any income will be regarded as trading income. Otherwise, it will be treated as miscellaneous income.

The latter will not be liable for Class 4 NI contributions and will be classed as unearned income for student loan repayments.

It is important to note that costs for mining activities do not count toward allowable costs in respect of tokens.

Taxes on cryptoassets – do not get caught out

Taxing cryptoassets is a complex process, but while it may be tempting to bury your head in the sand, you mustn’t ignore the issue.

Failure to declare gains or income from cryptoassets could get you in trouble with HMRC, while misunderstanding which kind of tax you are liable for could lead to costly errors.

If your business is involved in cryptoassets, you must seek expert tax advice from a specialist.

Unsure about the taxation of cryptoassets used by your business? Contact our tax team today for tailored advice and guidance.

The recent rise in employers’ National Insurance Contributions (NICs) to 15 per cent will lead to a 60 per cent increase in NIC costs for a business employing minimum wage staff, according to the Centre for Policy Studies.

With no new business reliefs announced in the Spring Statement and prices continuing to rise, many businesses could face growing losses.

In a period of economic uncertainty, it is essential to make the most of the tax reliefs available on your losses.

Trading loss

If your business makes a loss from trading, the disposal of a capital asset, or on property income, then you may be able to claim relief from Corporation Tax by offsetting your loss against income from the same tax year.

You can also offset losses against capital gains you have made in the same tax year.

This may only be done after you have offset losses against your income first.

If you make a trading loss and it cannot be used in the same year, you may be able to carry it back to earlier accounting periods.

Losses on qualifying shareholdings

If you have shares in an eligible business that has failed, you may be able to offset losses against your income.

This means you could receive tax relief of up to 45 per cent on your loss.

However, you need to make sure that your loss meets the strict conditions required by HM Revenue & Customs (HMRC), as not all losses are eligible for tax relief.

Business closure

No one wants to be forced to close their business.

Unfortunately, higher employment costs may mean that some businesses are simply unable to continue.

If you make a loss in your final 12 months of trading, you can also offset this against your profits from the previous three tax years to reduce your liabilities.

Mitigate your losses with our tax team.

Business owners need to make the most of the tax reliefs available to them, including those related to losses.

Our tax advisors can help you claim tax relief on losses and recover much-needed funds.

Need help claiming tax relief on losses? Contact our tax specialists today.

VAT is complex, and too many businesses are making costly, avoidable mistakes.

Even a simple oversight or misunderstanding can lead to penalties, cash flow problems, and disputes with HM Revenue & Customs (HMRC).

Here are some of the most common VAT mistakes to avoid:

• Charging the wrong VAT rate – Some goods and services have reduced or zero-rated VAT and applying the wrong rate can mean underpaying or overpaying tax.
• Incorrect VAT reclaims – Not all expenses qualify for VAT recovery. Claiming back VAT incorrectly can trigger an HMRC investigation.
• Late VAT returns and payments – HMRC penalises businesses that miss deadlines. In the Spring Statement the Government announced that late payment penalties for VAT taxpayers will increase from April 2025 onwards. Filing and paying on time is essential to avoid these fines and unnecessary scrutiny.
• Missing the VAT registration threshold – If your annual turnover exceeds £90,000, you must register for VAT. Failing to monitor this can result in penalties for late registration.

Additionally, you may need to consider the Kittel principle which allows HMRC to deny VAT reclaims if a business knew or should have known it was involved in a fraudulent supply chain.

Even if a company is not directly involved in fraud, failing to carry out proper due diligence on suppliers can lead to serious financial consequences.

How to stay compliant

VAT mistakes are avoidable with the right approach, so we suggest you do the following:

• Check VAT rates carefully to avoid costly errors.
• Keep track of turnover to ensure VAT registration happens on time.
• Maintain proper records to support VAT claims and submissions.
• Submit returns and pay on time to avoid HMRC scrutiny.
• Verify suppliers to steer clear of fraudulent transactions.

For extra peace of mind, seeking expert advice can help ensure your VAT processes are always compliant.

Protect your business from VAT traps – speak with our team today.

The Government has confirmed that Making Tax Digital (MTD) for Income Tax will apply to sole traders and landlords earning over £20,000 a year.

This latest extension means that an additional 900,000 sole traders must adopt digital record-keeping and quarterly tax submissions by this deadline.

Who is affected and when?

Mandating digital record-keeping allows HMRC to enhance compliance and streamline reporting for taxpayers and the tax authority, reducing errors and improving efficiency.

Over the next few years, more sole traders will be brought into the MTD system.

Here is when different income thresholds will come into effect:

• From April 2026 – Sole traders and landlords with income over £50,000 must comply.
• From April 2027 – The threshold reduces to £30,000.
• From April 2028 – Those earning over £20,000 will also be required to join.

You will need to plan ahead to ensure your business is ready for these changes before they are enforced.

How should you prepare?

Sole traders should take the following steps to ensure compliance before the deadline:

1. Adopt digital record-keeping – Research and select HMRC-approved accounting software that best fits your needs.
2. Understand quarterly reporting – Rather than submitting a single annual return, you must provide tax updates every three months, followed by a final declaration. Keeping up-to-date financial records will help to avoid errors and late submissions.
3. Seek professional guidance – An accountant can clarify compliance and help optimise tax efficiency. Their expertise can make the transition less stressful.
4. Stay informed – HMRC may refine its requirements, so signing up for relevant updates and attending webinars will ensure you remain prepared.

Taking proactive steps now to prepare for mandatory digital record-keeping will make your transition to MTD smoother.

Are you ready for MTD? Get in touch for tailored support.

The Chancellor’s Spring Statement introduced harsher penalties for late taxpayers under Making Tax Digital for Income Tax Self Assessment (MTD for ITSA).

With the Government confirming an extension to sole traders and landlords earning more than £20,000 from April 2028, a lot more taxpayers – an estimated 900,000 – will need to pay tax via MTD for ITSA.

Under the current rules, you will not receive a penalty if you pay your tax within the first 15 days of the deadline.

Penalties then apply at the following rates:

• Day 15 – two per cent
• Day 30 – four per cent
• Annual interest rate on late payments – four per cent

However, from April 2025, the new penalty rates will be:

• Day 15 – three per cent
• Day 30 – six per cent
• Annual interest rate on late payments – 10 per cent

The 15-day grace period, however, will remain.

These increased penalties only apply to taxes paid under MTD for ITSA.

How to avoid late tax penalties

Higher penalty charges will be painful for those with cashflow difficulties, businesses still getting to grips with MTD for ITSA, and those who simply forget to pay their taxes on time.

To avoid getting caught out, make sure your bookkeeping is up to date and that you have money set aside for tax bills in advance.

Give yourself plenty of time to submit your tax return and make payments. Leaving everything to the last minute will be even more costly than before.

Avoid getting caught by costly penalties. Get in touch today for urgent advice and guidance.

Submitting your Self-Assessment tax return at the start of this tax year is a great way to manage your tax bill effectively.

The earlier you file a return, the sooner you will find out how much tax you owe.

This can help with financial planning and budgeting for the year ahead.

Early submission also means that any refunds you are owed can be paid to you sooner, thus boosting your cash flow.

You will also have more time to calculate any reliefs or allowable expenses available to you.

This could reduce the amount of tax you owe and free up crucial funds for your business.

Furthermore, submitting a tax return at the beginning of the year provides you with proof of income, which can otherwise be difficult to obtain for those who are self-employed.

Having this proof of income is crucial if you need to apply for a mortgage, claim benefits, or open a savings account.

Finally, leaving your tax return to the last minute can lead to panic, errors, and late submissions that result in penalties from HM Revenue & Customs (HMRC).

This was the case for the more than one million taxpayers who missed the 31 January 2025 deadline this year.

Submitting your tax return at the beginning of the tax year gets it done and out the way, giving you peace of mind and enabling you to focus on other business and financial matters.

Need help submitting your tax return? Contact our experts today.

The new financial year will see many of the proposed changes announced in the Autumn Budget enacted, impacting businesses across the country.

These changes will have business owners planning their tax strategy for the 2025/26 tax year, and a key part of this should be considering capital allowances.

Capital allowances available to businesses

While the changes made in the Autumn Budget could cause you financial problems, capital allowances provide a efficient way to reduce taxable profits.

Here are just a few of the capital allowances you can take advantage of in the 2025/26 tax year:

• Full expensing
  • Available to companies investing in new, qualifying plant and machinery.​
  • Allows 100 per cent of the cost to be deducted in the year of purchase.​
  • Applies to main rate assets only (machinery, equipment), not to long-life or special rate assets.​
• Annual Investment Allowance (AIA)
  • Offers 100 per cent relief on qualifying capital expenditure.​
  • Available to companies, sole traders, and partnerships.​
  • The limit is £1 million per year. ​
• First-Year Allowances (FYA)
  • Allows 100 per cent relief on certain environmentally beneficial or energy-efficient equipment.​
  • Does not reduce the available AIA.​
  • Must be claimed in the year of purchase.​
  • Qualifying assets include electric cars with zero CO₂ emissions and equipment for electric vehicle charging points. ​
• Writing Down Allowances (WDA)
  • Used when assets do not qualify for AIA or full expensing.​
  • Main rate pool – 18 per cent per year on a reducing balance basis.​
  • Special rate pool – Six per cent per year (integral features, long-life assets).

In short, capital allowances can give your business a real financial boost, but only if the claims are done right.

It is easy to overlook what qualifies or make mistakes that invite HMRC attention, so a bit of expert help now can save a lot of hassle later.

Speak to us today and make capital allowances work for your business in 2025/26.

From 6 April 2025, many directors will need to report dividend income in much more detail in their Self-Assessment tax return.

This change will affect an estimated 900,000 directors across the UK.

HM Revenue & Customs (HMRC) will now require directors to disclose the name and registration number of the company, the highest percentage shareholding held during the tax year, and the amount of dividend income received from that company.

These figures must be listed separately from dividends received from other sources.

At present, directors simply report total dividend income. HMRC has no visibility of how much comes from their own business versus other investments.

This change will allow HMRC to build a clearer picture of remuneration and target compliance activity more effectively.

Employee hours reporting scrapped

The Government has abandoned its proposal to require the reporting of actual hours worked by employees through payroll.

Originally delayed to April 2026, the plan has now been dropped entirely due to concerns over the implementation cost, which was estimated at nearly £60 million.

Compulsory questions are coming

The question about whether a taxpayer is a director of a close company will also become mandatory on the Self-Assessment return from 2025/26.

As a director, you will need to be prepared with accurate figures, particularly where shareholdings change during the year or where different share classes are involved.

These changes are an indication of a move towards increased transparency and more detailed individual reporting.

If you own a business and need help preparing for the 2025/26 changes then contact our team of expert accountants today.