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.

 

Online Platforms Share Data with HMRC

It has been estimated that £55bn of sales have been declared from online marketplaces, holiday home rental and content sharing sites in 2025. This figure is nearly double the previous year’s disclosed figure of £25.5bn. HMRC is gearing up for a fresh crackdown on those who fail to disclose their incomes from online sales.

HMRC received reports on nearly 4 million online sellers in calendar year 2025.

Since 1 January 2024, digital platforms have been required to share information with HMRC where a user makes more than 30 sales per year and earns more than £1,700.

If someone is earning more than £1,000 from their side hustle annually, HMRC may consider this “trading” and they might need to pay tax.

People selling unwanted items online from time to time are not liable to pay tax on that activity. As has always been the case, some people trading via websites or selling services online may need to register for self-assessment.’

Making Tax Digital for Income Tax for taxpayers with over £50,000 in qualifying income earned in 2024-25 tax year, including landlords, sole traders and self-employed, starts from 6 April 2026, with the first mandatory quarterly reporting deadline for MTD on Friday 7 August.

 

Year-end Tax Planning

Director salaries vs dividends

A salary is subject to income tax along with employer and employee National Insurance contributions (NICs). This is also a deductible business expense which can reduce corporation tax.

Dividends are paid from company profit after corporation tax has been paid and taxed at a different rate to a salary which can create some savings.

The most efficient structure for a director depends on many factors.

Business reliefs to consider

Before the end of the tax year it is important to consider:

• Full expensing:Limited companies can claim 100% tax relief in the first year on qualifying new plant and machinery purchases.
• Annual investment allowance (AIA):Businesses can deduct up to £1m from the full cost of qualifying equipment from taxable profits. This can include computers, office equipment, machinery and certain fixtures and fittings.
• Research and development (R&D) tax relief:Companies developing new products, services or processes, or improving existing ones, may be able to claim tax relief on costs such as staff salaries, software and materials. It is highly recommended using a reputable R&D specialist as the criteria for the relief is very specific. A lot of businesses get it wrong.
• Employment allowance:Eligible employers can reduce their annual employer National Insurance bill, lowering the cost of employing staff. It is now £10,500 per annum.
• Business rates relief:Small businesses may qualify for reductions or exemptions on business rates depending on the rateable value of their property.
• Capital allowances:Businesses can claim tax relief on assets used in the company, such as machinery, equipment and vehicles, by deducting a portion of the cost from profits over time.
• Electric vehicle first-year allowance: Companies purchasing brand new electric vehicles for business use may be able to claim 100% tax relief in the first year, allowing the entire cost of the EV to be deducted from taxable profits in the year it is bought.
• Employer pension contributions:Pension contributions made by the business on behalf of directors or employees are typically treated as a deductible business expense, reducing the company’s taxable profits.
• Creative industry tax reliefs:Businesses in sectors such as film, television, animation, video games and theatre may qualify for additional tax relief on qualifying production costs.

Personal allowances

As their income is often closely linked to how profits are taken from the company it is key that directors consider their personal tax allowances alongside the business finances. Ensuring that all personal tax reliefs have been considered will also allow directors to be more efficient with their tax bill:

• Dividend allowance:  Individuals can receive up to £500 tax-free dividend income each tax year.
• Personal savings allowance:Basic rate taxpayers can earn up to £1,000 in interest tax-free while higher rate taxpayers can earn up to £500.
• Capital gains tax allowance:Individuals can make up to £3,000 in profit from selling assets, such as shares or property (not including the main home) before capital gains tax (CGT) applies.
• ISA allowance:Individuals can save up to £20,000 per year in ISAs tax-free for 2025-26 tax year but the cash ISA limit is being cut to £12,000 from April 2027 to encourage investment in stocks and shares ISAs so plan ahead.
• Pension annual allowance:Directors can contribute up to £60,000 into their pension each year with tax relief.
• Trading allowance:Individuals can earn up to £1,000 a year from other work such as a side hustle without paying tax on it.
• Inheritance tax annual gift allowance:Individuals can gift up to £3,000 each year to beneficiaries without it counting towards an estate for inheritance tax (IHT) purposes.
• Marriage allowance: This means that if one partner earns below the personal allowance, they can transfer up to £1,260 of unused allowance to their spouse.
• Rent-a-room relief:If you rent out a furnished room in your home, you can earn up to £7,500 per year tax-free from that income.

 

The Cost of Regulations

It is estimated that the average SME pays £7,100 a year on compliance.

For SMEs with more than 10 staff the annual bill was £12,600 on average, while under nine employees it was £6,200, and £2,500 for sole traders.

Most SMEs have to deal with more than one external regulator or government body, with 40% said they work with four or more.

These include HMRC, Companies House, local authorities, the Information Commissioner’s Office, The Pension Regulator , Trading Standards and

=the Financial Conduct Authority.

There is a wide held view that the rules are written for large businesses and do not take into account the needs of SMEs, with nearly half saying regulators ‘do not consider the ability of small businesses to comply with rules and that they need to make more effort to understand the needs of smaller businesses.

 

Companies House Data Loss

The Companies House WebFiling service was suspended recently after a user found a potentially serious security flaw. Using the back button gave access to information that should not have been visible in the public record.

It emerged that the flaw had existed for five months, stemming from a routine IT update.

No data was compromised

In a statement, Companies House assured users that, during the window of vulnerability:

• no passwords were compromised,
• no data used as part of its identity verification process – for example, passport information – was accessed, and
• no existing filed documents, such as accounts or confirmation statements, could have been altered.

 

MTD Penalty Regime

From April individuals with combined gross income from sole trades or property over £50,000 must keep digital accounting records and submit quarterly updates to HMRC.

A new penalty regime applies where you are late in meeting a filing obligation for:

• 2024/25 and 2025/26, where you have volunteered to use MTD for income tax for that tax year;
• 2026/27, where you are a volunteer or not:
• 2027/28 onwards for all taxpayers who use MTD for income tax or are within self-assessment.

No changes apply to interest on late payments, which continues to be charged as normal.

Under the new regime, one penalty point is awarded each time a relevant filing obligation is missed. For volunteers, the end-of-year return is the relevant filing obligation, and for mandated taxpayers it is both the end-of-year return and quarterly updates.

Taxpayers who meet the points threshold receive a £200 penalty. An additional £200 penalty is charged for each penalty point over the threshold. The threshold is four penalty points for mandated taxpayers and two penalty points for volunteers.

Penalty points are removed:

• automatically 24 months after the missed deadline where the person has not reached the threshold; or
• where the taxpayer meets specific conditions or exceptional circumstances apply.

 

Changes to Company Tax Returns

HMRC is asking for feedback on its plans to modernise and standardise company tax returns, including introducing a prescribed format for computations and requiring amendments to be made online.

The consultation closes on 2 June 2026.

Computations are submitted as part of the company tax return, alongside the CT600 and the company’s accounts. As companies can be quite diverse in size, and in the nature of the activities they carry on, some flexibility is allowed in the presentation and tagging of computations.  However, HMRC says that too much divergence has evolved over time resulting in significant variation in how essentially similar information is presented.

 

Provisional Tax Returns

HMRC is writing to taxpayers who included provisional or rounded figures in their self-assessment (SA) tax return for 2024/25 to ask them to take action within 35 days of the date of the letter.

One of two letters is being sent. The taxpayer may also receive a follow-up SMS (text) message.

The first letter is being sent to taxpayers who included provisional figures in their 2024/25 SA tax return and have yet to update their return for the final figures.

The second letter is being sent to taxpayers who HMRC suspects may have used rounded figures in their 2024/25 SA tax return.

In both cases, you are given the deadline of 35 days from the date the letter was issued to take the appropriate action.

 

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.