Every week, we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely, as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.

While every effort is made to deliver accurate, informative and balanced articles, this content is general in nature and should not be used as the sole basis for making decisions.

 

 

MTD – Are You Exempt?

Only sole traders and landlords are required to join MTD. Companies are outside the scope, as are partnerships (for now, at least). Beyond that, there are two main MTD exemptions to be aware of:

• the income exemption
• digital exclusion.

You will only need to join MTD if your total gross income from trading and property reported on the most recently filed tax return is above the relevant threshold, i.e. £50,000 for April 2026, £30,000 for April 2027 and £20,000 for April 2028 onwards.

The digital exclusion exemption applies to:

• practising members of a religious society or order whose beliefs are “incompatible with using electronic communications or keeping electronic records”, and
• those for whom it is not “reasonably practicable” to comply with MTD due to age, disability, location or any other reason.

If you think you may be digitally excluded, you will need to apply to HMRC and get their approval.

Beyond the main exemptions described above, there are also a number of exemptions for certain types of taxpayers, including:

• You do not have a national insurance number
• a trustee or personal representative
• donors of a lasting or enduring power of attorney or those under a deputyship
• Lloyd’s Underwriters
• ministers of religion
• recipients of married couples’ allowance or blind persons’ allowance.

The following income streams are also exempt from MTD:

• partnership income
• income of non-UK resident foreign entertainers and sportspeople
• qualifying care income received by foster carers.

These only relate to the income.

Some taxpayers also benefit from a deferred start date, and won’t have to join MTD until April 2027 at the earliest, even if they have qualifying income above £50,000. They include:

• if you are required to complete an SA109
• recipients of income from trusts and estates
• individuals using averaging
• foster carers eligible for qualifying care relief
• non-UK resident foreign entertainers and sportspeople.

 

 

MTD Soft Landings

If you are within MTD, you move into a new regime for late filing and late payment, similar to that in place for VAT.

You will receive a penalty point, with a £200 penalty being imposed when a certain threshold is reached. Points will also expire after two years if the threshold is not reached, or can be reset after a period of good behaviour if the threshold is reached.

Late payment penalties will also change under MTD, with penalties kicking in at 15 days, then becoming more severe from 30 days onwards.

Under the soft landing, no penalty points will be incurred for the late filing of quarterly updates during 2026/27, but will be awarded for late filing of the MTD tax return for that year.

 

 

So What is a PSC

Both companies and LLPs must investigate and report their people with significant control (PSCs) to Companies House.

A person is deemed to have significant control if one or more of the relevant conditions apply.

The conditions mention ‘significant influence or control’ multiple times. ‘Significant influence’ and ‘control’ are alternatives. The guidelines say that a person is a PSC:

• where a person can direct the activities of a company or LLP, trust or firm, this would be indicative of ‘control’;
• where a person can ensure that a company or LLP, trust or firm generally adopts the activities which they desire, this would be indicative of ‘significant influence’; and
• the ‘control’ and ‘significant influence’ do not have to be exercised by a person with a view to gaining economic benefits from the policies or activities of the company, trust or firm.

UK companies, LLPs and eligible Scottish partnerships (ESPs) are required to identify their PSCs and to report this information to Companies House. Those failing to comply may be committing a criminal offence and could receive a fine, imprisonment, or both.

 

 

Late Budget Affects Accounting Jobs

The total number of job postings for chartered and certified accountants stood at 17,711 in December, down 9.1% from the previous month, which represents a drop of 1,611 positions.

Finance roles were also hit with investment analyst and advisor roles down 9.5% at 11,442 advertised jobs, down by 1,087 job listings in the space of a month.

Year on year, there was a 12.6% decline for certified accountants and a 14.7% decline in active job postings for finance and investment analysts and advisers.

In total, across the whole jobs market, advertised positions in December 2025 stood at 1.3m, representing an 11.1% decrease from November 2025.

It appears that the late Budget meant that few firms had time to put revised hiring plans into place before

In addition, it has been suggested that negative tax policy and higher national insurance and minimum wage costs for businesses are driving up unemployment.

However, the long-term trajectory for the labour market is more positive. Unemployment is likely to peak in the early months of 2026 and then cool as the year progresses.

 

 

National Insurance and Older Workers

Primary (employee) Class 1 National Insurance contributions (NICs) are not payable by anyone over state pension age. However, the employer should continue to pay secondary (employer) Class 1 NICs.

It is essential to use the NIC category letter in force at the time the payment is made. If the employee is at or over state pension age at the time payment is made:

• NIC category letter C should be used.
• No primary(employee) Class 1 NIC should be deducted.
• secondary (employer) Class 1 NIC should still be deducted.

The NIC is based on the pay date, not the earnings period. This means not splitting the week/month. The NIC category letter that applies at the time the payment is made must be used.

For example, if a monthly paid employee reaches state pension age partway through a month but is paid at the end of the month, NIC category letter C should be used for the whole of that month.

From 6 April 2010, there has been a gradual increase in state pension age to 67. This applies to men and women.

It is necessary to ask the employee for a copy of their birth certificate or passport as evidence of their date of birth. If the date of birth is verified, change the employee’s NIC category letter to C when the employee reaches their state pension age.

 

 

State Pension Age

Date of birth	Date state pension age reached
6 April 1960 – 5 May 1960	66 years and 1 month
6 May 1960 – 5 June 1960	66 years and 2 months
6 June 1960 – 5 July 1960	66 years and 3 months
6 July 1960 – 5 August 1960	66 years and 4 months
6 August 1960 – 5 September 1960	66 years and 5 months
6 September 1960 – 5 October 1960	66 years and 6 months
6 October 1960 – 5 November 1960	66 years and 7 months
6 November 1960 – 5 December 1960	66 years and 8 months
6 December 1960 – 5 January 1961	66 years and 9 months
6 January 1961 – 5 February 1961	66 years and 10 months
6 February 1961 – 5 March 1961	66 years and 11 months
6 March 1961 – 5 April 1977	67 years

 

 

Wrong Tax Codes

It has been reported that HMRC overcharged employees £3.5bn in income tax last year, with 5.6 million people paying too much due to mistakes on tax codes in the PAYE system.

You must check that you are not overpaying through the PAYE system, as HMRC stresses that the liability to report an incorrect tax code rests with you, not the taxman.

Changes in your circumstances can lead to problems, as HMRC will continue to deduct tax based on its own estimate of income without checking with you.

The scale of the issue is surprising, with 5.6m taxpayers a year being given the wrong tax code.

HMRC won’t always correct overcharging mistakes automatically. If you don’t check your tax code or your PAYE calculation, you may never get your money back. The onus is on you to spot HMRC’s errors. HMRC is under no obligation to check and tell you if you have overpaid.

Everyone is responsible for ensuring their own tax code is correct, and they can manage and update their details quickly and easily via the HMRC app or their online tax account.

 

 

Claim Pension Tax Relief

If you are a higher-rate taxpayer, are you leaving hundreds, or even thousands, in unclaimed pension tax relief each year?

Basic rate pension tax relief is added automatically in PAYE pension contribution calculations, but higher and additional rate tax relief needs to be claimed, either through Self-Assessment or HMRC’s online service.

The only exception is where employees are in salary sacrifice or net pay pension schemes, as they typically receive full relief automatically.

 

 

Can’t pay Self Assessment Bill?

Don’t plan around a guess. Confirm the final amount due and check what that payment actually includes, because it’s not always as straightforward as people expect.

Double-check the basics, especially income totals and allowable expenses, before you submit your return.

Even if you can’t pay the full amount, paying something helps.

If you’re unsure what your options are, ask sooner rather than later. The earlier you speak to an accountant, the more breathing room you usually have.

Don’t wait until the last minute. If you cannot pay what’s due, it’s better to engage with HMRC early.

If you can’t pay in full, you’re not the only one. If you engage with HMRC, you may be able to get a time to pay arrangement set up. Ignoring it is the one move that almost always makes things worse. Treat it like a cash flow problem.

 

 

Questions?

If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at alan.long@thelongpartnership.co.uk.