With just six months to go before the first round of Making Tax Digital (MTD) for Income Tax gets rolled out, many sole traders are still not ready.

A survey carried out by IRIS earlier this year found that 45 per cent of UK sole traders felt unprepared for the changes.

That leaves almost half of those affected facing a serious risk of penalties once the rules take effect next year.

Who qualifies for MTD for Income Tax?

From 6 April 2026, anyone who files a Self-Assessment tax return and has gross self-employed and/or property income over £50,000 will be brought into the MTD regime.

The entry point will then reduce in stages, falling to £30,000 from April 2027 then is planned to fall to £20,000 the following year.

How the penalties work

Think of late submissions as penalty points on a driving licence. One missed quarterly update may not do too much damage, but repeated non-compliance will accumulate into a £200 fine.

Quarterly filers reach that stage at four points, while annual filers get there in just two.

The slate can be wiped clean, but only after a sustained period of meeting every single deadline.

Payment delays are treated under a new aligned system:

• No penalty if tax is paid within 15 days of the due date
• Payments made between day 16 and day 30 attract a penalty of three per cent of the balance outstanding
• By day 30, the penalty increases to six per cent

After 30 days, a second penalty begins to accrue daily at 10 per cent per year until the debt is cleared.

These charges will stop if a Time to Pay arrangement is agreed with HM Revenue and Customs (HMRC).

Additional consequences to be aware of

Besides the penalties for late submissions and payment delays, HMRC can also impose up to a £3,000 fine for failing to maintain adequate records in relation to a return. This includes not maintaining digital records or any issues with digital links within functional compatible software.

They can also issue a £300 minimum fine if you deliberately conceal information needed for HMRC to assess your liability.

Get in touch today to make sure you stay compliant and avoid MTD penalties.

HM Revenue and Customs (HMRC) has confirmed it uses AI to scan social media posts as part of criminal investigations into suspected tax and benefits fraud.

That means, if you are posting content that could be viewed as advocating for, admitting to, or describing tax avoidance, you could find yourself at the centre of legal action.

Why is HMRC browsing social media?

HMRC says AI tools have been used for several years to compile and analyse data.

It is keen to assert that it is only in criminal cases where fraud is suspected that social media checks are being conducted.

The move comes as the department is expanding compliance resources following the Government announcement of 5,500 new compliance staff.

The technology supplements human judgement and operates under legal oversight, and it is intended to free up staff to focus on helping taxpayers and targeting evasion.

Does AI help to catch fraud?

AI can pull together publicly available information from platforms and flag pieces of evidence that merit human review.

In practice, investigators have long read suspects’ social posts to spot discrepancies.

Automation speeds the collation and helps prioritise cases for investigators, but the process is not entirely without risk.

Experts caution that fake, hacked or misattributed accounts could generate false leads.

Automation may also miss context that a human reviewer would catch, so robust oversight is essential.

Be mindful of what you post online, as even jokingly describing the steps to avoid tax might put you on HMRC’s radar.

If you have any concerns about under-declaring your tax, speak to a professional confidentially rather than posting about it on social media.

This will let you get control of the situation without automatically being detected by HMRC.

If you are unsure about your position, seek professional advice before making voluntary disclosures or amending returns.

We can help make sure your tax filings are fully compliant, so please speak to our team today.

After months of uncertainty, Companies House has set the identity-verification deadline as 18 November 2025.

From that date, all new company directors and People with Significant Control (PSCs) must verify their identity.

Existing directors and PSCs will then have 12 months to complete verification, which means 18 November 2026 is the true identity verification deadline.

How should directors prepare?

If you are a new director, verify your identity before your first filing.

If you are an existing director, 18 November 2025 begins a transition year as you must be verified before your company’s next confirmation statement.

You will need to supply Companies House with your personal code and a verification statement for each director listed.

If any directors or PSCs are overseas or likely to be delayed, contact them now.

Directors with multiple companies must link the same personal code to each role separately.

Check your next confirmation date on the Companies House website, and if you need help, get in touch with our team.

How should PSCs prepare?

PSCs must provide their personal code via an online service.

Each PSC has a 14-day window to submit their code, and exact dates depend on when the PSC was registered and whether they are also a director.

If you have already verified your identity, you still need to supply your personal code and a verification statement for each role.

How do you verify?

You can use the DIY option via GOV.UK One Login or use an Authorised Corporate Service Provider (ACSP).

However, using an ACSP is the easy option if you want to ensure that there are no issues with getting your identity verified.

ACSPs can manage the entire process, reduce errors and submit filings on your behalf.

Only registered ACSPs may verify identities, so be sure to avoid unregistered third parties.

Speak to our team to make sure you are ready for the identity verification deadline!

The Treasury is reportedly revisiting Inheritance Tax (IHT) as ministers hunt for extra revenue.

While the Chancellor considers several options, IHT reforms remain a likely avenue, and now may be a good time to restructure your assets to avoid a larger IHT bill.

How could Inheritance Tax change?

No decisions have been finalised, but several serious proposals are circulating.

The clearest change already announced is that unused pension pots will be brought into the IHT net from April 2027.

That single change will bring many more estates into scope and has already altered planning strategies.

Gifting, a common tool to reduce IHT exposure, is under particular scrutiny.

Policymakers are discussing measures to curb or restrict gifting and may adjust the tapering that currently applies.

At present, gifts made within seven years of death remain relevant to IHT and are taxed at a tapered rate, while those made earlier are generally ignored.

The current rates are:

• 32 per cent for gifts made three to four years before death
• 24 per cent for gifts made four to five years before death
• 16 per cent for gifts made five to six years before death
• 8 per cent for gifts made six to seven years before death

It is believed that these rules could be subject to change in the Autumn Budget, although nothing is confirmed yet.

What can I do to lower an Inheritance Tax bill?

With uncertainty ahead, the smart first step is to quantify your estate so you know what might be exposed.

For pensions, consider how the 2027 change could shift the tax burden and whether drawing income or adjusting death benefits fits your plan.

It is then time to reassess gifting strategies.

While lifetime gifts still have value, their effectiveness will depend on any reforms brought in by the Chancellor.

Whatever the Chancellor decides, we are ready to help you review and restructure your assets to remain as tax-efficient as possible.

To ensure that you retain the most control of your assets even after you go, speak to our team for tailored Inheritance Tax planning.

With UK growth slowing to just 0.3 per cent in Q2, business confidence is fragile.

Momentum has faded after a surge in exports ahead of new tariffs earlier this year, while weaker consumer confidence and persistently high household savings add to the uncertainty.

The upcoming Autumn Budget is amplifying concerns with the expectation that the Chancellor will revisit a range of tax-raising measures to manage a potential £50 billion shortfall.

For businesses, this makes planning investment, recruitment and payroll increasingly challenging.

What might be on the table?

Recent reports suggest the Autumn Budget could bring a range of tax changes:

• Inheritance Tax (IHT) may be reformed, with reliefs on gifts scrapped and adjustments to the residence nil-rate band.
• Capital Gains Tax (CGT) rates could be aligned with Income Tax, potentially extending to high-value homes in a “mansion tax” style levy.
• The VAT threshold might be lowered to £30,000, bringing more small businesses into scope.
• Property taxes could be overhauled, with Stamp Duty replaced by a levy on higher-value homes.
• Pensions may face limits on tax-free lump sums.

Of course, all of these are speculative, but it is that uncertainty that has the capability to hold back investment.

How you can respond to change

The uncertainty is already affecting recruitment intentions, with more businesses relying on temporary or flexible contracts rather than investing in new, permanent staff.

Consumers are saving more and spending less due to caution around potential tax rises, which is hitting revenues in consumer-facing industries.

Major investment decisions are also being delayed until after the Budget in anticipation of more change.

However, even amid uncertainty, you can take steps to reduce risk:

• Plan for different tax scenarios, including higher employer costs or property and CGT changes.
• Review payroll and benefits to stay compliant and competitive.
• Streamline processes with technology to boost efficiency.
• Utilise short-term hiring options, while planning for long-term workforce needs.

Uncertainty does not have to stall growth! Contact our advisers today for tailored support and strategies to keep your business moving forward.

When the Chancellor unveiled £26 billion in additional taxes and higher employer National Insurance contributions (NIC) last autumn, the impact on business confidence was immediate.

Businesses are now trying to manage:

• The new adult National Minimum Wage rate, which has risen to £12.21.
• A 1.2 per cent rise in employer NIC.
• Statutory pay increases and extended family leave entitlements.

For labour-intensive industries such as retail, care, and hospitality, these measures pushed up employment costs by several percentage points almost overnight.

Is wage growth under pressure?

While mandated pay increases have provided a short-term boost to lower earners, broader wage growth is stalling.

A new survey prepared by the Recruitment and Employment Confederation (REC) points to starting salaries rising at the slowest pace in over four years.

Payroll budgets have been squeezed to the point where wage increases above statutory minimum are rare.

Between redundancies, job moves, fewer vacancies and career changes, there are more applicants in the job market for employers to choose from.

That supply-demand imbalance has eased pay pressures further, particularly outside specialist and technical fields.

Are businesses reluctant to hire?

The Chartered Institute of Personnel Development reports that only 57 per cent of employers plan to recruit in the next three months, down from 65 per cent just last autumn.

Vacancies for permanent roles may have decreased, but temporary and flexible contracts are helping to fill some of the gaps. However, this reflects caution rather than expansion.

Many businesses are delaying investment until there is clarity on future tax policy in the next Autumn Budget.

What it means for you

Balancing compliance with competitiveness is now a key challenge for employers.

We are working alongside businesses like yours to ease the impact of higher costs through smarter payroll planning, reviewing benefits, and using technology to improve efficiency.

Speak to us about a tailored payroll review and discover where efficiencies can ease the pressure.

The Government’s Making Tax Digital (MTD) for Income Tax is now only a matter of months away.

It is important that you are prepared and understand how the changes could affect you as the phased introduction of this new tax reporting regime begins in April 2026.

For individuals who complete self-assessment tax returns, the way you report and communicate are changing and it is important that you prepare now.

When do the new laws come into effect?

From April 6, 2026, individuals completing Self-Assessment tax returns with an annual turnover or gross income exceeding £50,000 will be required to follow the new MTD for Income Tax legislation.

The threshold will gradually decrease year on year, dropping to £30,000 from April 2027 and £20,000 from 6 April.

Your income tax return from the 2024/25 tax year will determine when the MTD for Income Tax laws apply to you, so if you are likely to be affected from April 2026 and you aren’t prepared yet, speak to our team today.

What will I need to do?

Once you are required to follow the new MTD for Income Tax regulations, you will need to maintain digital account records as paper records will not be accepted.

It is recommended you incorporate cloud accounting software into your current processes to ensure all reporting is accurate.

Whilst it will be possible to continue to report your income using spreadsheets by relying on bridging software, HMRC compliant software is recommended.

As well as maintaining digital account records, you will need to submit quarterly updates to HM Revenue and Customs (HMRC) and confirm your tax position at the end of the tax year.

Your updates must be submitted through the HMRC app or through an external agent, such as an accountant who can file the updates on your behalf.

Act and prepare now

Preparation is key because you will need to change your Self-Assessment processes to deal with quarterly reporting and get comfortable using software and technology to submit information to HMRC.

Get in touch to start preparing for MTD for Income Tax.

The Government’s plan for small businesses, also known as The Backing Your Business Plan, is being introduced to support SMEs growth and development.

The plan has been created to give businesses the ability to grow and help them realise their maximum potential.

Increased access to financial support

The UK has one of the lowest levels of business borrowing in the G7.

This has prompted change, with the Government increasing the British Business Bank’s financial capacity to £25.6 billion, meaning more funds are available for small businesses.

In addition to this, they are expanding the Start-Up Loans programme and increasing the capacity of the ENABLE Guarantee Scheme by £3 billion.

The increased capacity also includes a mandatory code of conduct for accredited lenders to ensure their personal guarantees are fair.

The small business plan is for all business owners from all backgrounds and the latest financial support reflects this.

The plan also includes creating a new £400 million Investor Pathways Scheme, an extension to the British Business Bank’s Regional Angels Programme and the Nations and Regions Investment Fund.

Improving SME skills

The Government’s plan also includes measures to encourage staff growth and development, as well as a pledge to improve access to artificial intelligence (AI) and digital skills.

A £1.2 billion investment will be made each year by 2028/29 to help small business owners improve the skills of their team.

More apprenticeships are being launched with courses for digital skills, AI and engineering to launch from April 2026.

There will also be an Employer Support Fund set up for SMEs to help with the T Level placement costs. The Government hope to have this available during the 2025/26 financial year.

Ending late payments

Late payments have long been an issue for SMEs, so the plan will give the Small Business Commissioner new powers, including the ability to issue fines against companies that persistently pay their suppliers late.

Additional legislation will also ensure the mandatory payment of interest on all overdue invoices, thereby preventing late payers negotiating better compensation rates than the current statutory rate.

A plan to support growth

The Government’s plan focuses on business development with a determination to kick-start economic growth and grant SMEs more clout to hold late payers to account.

Want to learn more about how this new plan may affect you and your business? Get in touch today.

It can be confusing trying to keep pace with the changes to Companies House since the introduction of the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

The biggest concern around these changes is that if any slip under the radar, you face penalties and fines for noncompliance.

We know that Companies House is committed to tighter scrutiny and greater transparency, but what this looks like is still being ironed out.

As such, we are going to break down the changes that have happened recently, those that are coming soon, and those that may never come to pass.

What has changed with Companies House?

2025 has been a big year of changes for Companies House, as we see the conclusion of the first big wave of reform.

January saw the ability for individuals to apply to suppress a residential address.

This is especially useful for those who may have used their home address, back when the rules around registered addresses were more relaxed.

This is a positive change that allows people to secure their personal data now that standards have shifted.

In the spirit of data protection, overseas entities also gained the ability to apply to protect trust member details if certain criteria were met.

Another positive change saw the increased ease of access to Companies House services through the GOV.UK One Login.

Starting in February, Users of the Find and Update Company Information service were able to use the same login as for other Government services.

This allows for a more streamlined approach to corporate filings in a secure environment.

Springtime saw the focus shift towards identity verification, laying the groundwork before the mandatory deadline in the autumn.

For the first time, third-party providers performing identity verification on behalf of clients had to be registered as Authorised Corporate Service Providers (ACSPs).

This was done to crack down on misfiling, enhance overall compliance and keep an eye out for money laundering all in one move.

With the ACSPs established, anyone who would need their identity verified to make Companies House filings could voluntarily do so.

Remember, if you are:

• A director
• A Member
• A general partner
• A managing officer
• A person with significant control
• Or someone who files for the company, like a company secretary

You will need to have your identity verified to ensure you can file with Companies House.

What are the upcoming changes?

As mentioned, the biggest upcoming change is the mandating of identity verification.

From the autumn, we have the end of the voluntary registration for identity verification.

All new directors and People with Significant Control (PSCs) will need to verify their identity, while existing ones will have to do so within 12 months.

This means that, by autumn 2026, all relevant identities must be verified, and Companies House will begin clamping down on those that are not.

Before that, though, we have a relatively minor change to round out the summer.

By the end of August, trust-related information on the register will be made available on request.

This is another transparency measure aimed at letting the public know who is involved in businesses, especially those with ties overseas.

Looking ahead to 2026, there is much we do not yet know.

One of the few confirmed changes is the targeting of Limited Partnerships.

These entities will need to file details about partners and control structures with Companies House and will have to verify identity using an ACSP.

Unlike other businesses, they will not be able to self-verify their identity and must use an ACSP.

More information about the upcoming changes in the next five years will be released in the 2025-2030 strategy, which is due to be released later this year.

What changes have been scrapped?

One of the most controversial changes to Companies House regards the publication of Profit and Loss (P&L) forms.

As these are highly sensitive documents, many small businesses are uncomfortable about them being publicly accessible, with many fearing it will sound the death knell for competition.

There have been reports that such measures have been delayed or scrapped, but it is worth noting that this has not been officially decided one way or the other just yet.

All we know for now is that these proposals are deeply unpopular and the Government seems aware of this.

Whether that means it will listen to the will of the people is another matter entirely, though, so it is not quite time to breathe a sigh of relief just yet.

We are on hand to help guide you through the changes to Companies House so that you can stay compliant.

When the 2025-2030 strategy comes out, we will be there to break it down and help you understand what the future holds.

Until then, be sure to get in touch for professional support to help your business thrive.

Don’t get caught out by Companies House changes. Speak to our team today!

The Employment Rights Bill looks set to come into law by the end of the year.

Now is the time for any business that hires staff to sit up and take notice, as the bill will impact the way that your business operates.

We are going to explore some of the more notable aspects, so that your business can plan ahead and stay compliant.

What are the big changes coming in the Employment Rights Bill?

As the name would suggest, the Employment Rights Bill is focused on giving workers more rights and better protections in the workplace.

One of the main ways this is being implemented is with the removal of qualifying periods for a lot of protections, replacing them with day-one protection instead.

This means that every worker will be entitled to:

• Protection from unfair dismissal
• Right to request flexible working
• Parental leave
• Paternity leave

The Bill also seeks to provide increased stability for workers by banning any new zero-hour contracts and forcing employers to change contracts to fixed hours upon the request of the employee.

This is coupled with a ban on ‘fire and rehire’ practices and a greater right to equal pay for agency workers, though this will require them to have worked for twelve weeks.

Bereavement leave is being extended to cover pregnancy‑loss before 24 weeks to give grieving parents more of an opportunity to recover from their loss.

What does this mean for businesses?

The main considerations centre around compliance.

You will need to ensure that you have updated your employees’ contracts to better reflect their rights within the workforce and ensure your payroll processes are equally aligned to account for this reform.

You need to ensure that you do not accidentally infringe upon any of these rights, otherwise, you could face tribunal action, which could lead to compensation costs.

From a financial perspective, the change to the way contracts are managed could be a concern for some businesses.

If your business relies on zero-hour contracts, then you need to assess your financial structure to ensure that you can manage with the new fixed-hour contracts.

There is increasing concern that enhanced leave rights and guaranteed‑hours contracts could increase wage bills and employer National Insurance contributions, as well.

This is set to be felt hardest by SMEs, many of which are already facing pressures from inflation.

As the Bill makes its way through the House of Lords, now is the time for your business to prepare.

While your employees will likely welcome the added protections, a lack of preparation could leave your business in financial trouble as a result.

Seeking professional guidance is the best way to minimise any negative impact that the Employment Rights Bill could have on your business.

Protect your business and understand the cost of your new obligations by speaking to our team today.