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.
Director’s Loans
HMRC has set out proposals requiring close companies to provide more detailed information about transactions between the company and its participators. This would include cash withdrawals, asset transfers, dividends, loans, repayments and loan releases.
Close companies are companies controlled by five or fewer participators, or by any number of participators who are also directors. A participator is someone with a share or interest in the capital or income of the company. In practice, this means that nearly all small owner-managed and privately owned companies would be caught by the rules.
The proposals focus specifically on the risk of error and evasion in transactions between a company and its owners. HMRC’s concern is that the boundary between company money and personal money can become blurred, creating scope for mistakes as well as deliberate non-compliance.
More structured data on transactions could help HMRC spot disguised distributions or mismatches between company and personal tax returns.
Whilst HMRC may get better visibility from the proposed reporting, this is not the same as insight. Without proper filtering and skilled review, there is a real risk that the result will just be more queries and more administration for compliant small businesses, rather than a dramatic reduction in the tax gap.
IHT and Pension Pot Calculations
From 6 April 2027, unused pensions will be included in calculations for IHT, which will not be straightforward to handle.
As well as introducing new complexities for people who planned to keep excess savings in their pension to pass on to loved ones, the new regime also creates extra challenges for those dealing with the estate after someone dies. ‘Personal representatives will now need to factor pensions into the IHT process alongside the estate’s other assets.
The personal representative will be responsible for telling the pension scheme the person has died. This means first tracking down all the pension schemes the deceased was a member of.
The pensions dashboard when launched, should help reunite many people with their lost pensions. But personal representatives aren’t expected to be allowed to use the first version of the dashboard, meaning they may be reliant on paperwork to track down pensions. Alternatively, they could use the government’s pension tracing service.
Once they have identified the correct pension scheme(s), personal representatives will need to prove both their identity and their authority to act on the member’s behalf.
Part of a personal representative’s role is valuing the estate, and that includes the pension. The first job is to ask the pension scheme to give a valuation of the pension account. The pension scheme has 28 days to reply with this information.
Once the personal representative knows the value of all the pension schemes, as well as the other assets in the estate, they can start to work out what, if any, IHT is due.
If the personal representatives believe that IHT is due, they can ask the pension scheme to withhold some pension money.
Once the personal representative has agreed with HMRC what IHT is due, they then need to make sure the bill is settled. The personal representative is liable for the payment of IHT.
There are three ways to pay any IHT due on a pension:
- The personal representative can pay the IHT due from the wider assets held in the estate;
- The beneficiary of the unused pension can pay the IHT from their own pocket; or
- Either the personal representative or the beneficiary may be able to ask the pension scheme to pay the IHT to HMRC before the unused pension funds are paid to the beneficiary. The pension scheme has 35 days to pay the tax due. If the 35 days elapse and the IHT is still outstanding, then the pension scheme and the personal representative are jointly liable for the IHT due.
Scottish Mansion Tax
The Scottish mansion tax will start at £1m (England £2m).
The Scottish government has issued a consultation setting out plans to introduce two new council tax bands for properties with increases of around £720 for £1m properties in the new Band I. There will also be a new Band J for £2m plus properties, adding £3,600 to the current highest Band H council tax charges, equivalent to a near doubling of rates for the most expensive homes.
The new council tax high value property bands are likely to affect less than 1% of properties in Scotland, according to Scottish officials.
A targeted revaluation will be carried out by the Scottish Assessors on all properties estimated to be worth more than £1m, regardless of current band, at 1 April 2026 values.
The consultation will close for comment on 24 August 2026.
First MTD Period
The final registration deadline for phase one of MTD for Income Tax is Friday 7 August, the deadline day for filing the first quarterly update under the new mandatory rules.
The latest HMRC figures on the level of MTD registrations from the £50,000 wave still shows that over half of those mandated to report under the new regime have not signed up.
A total of 864,000 taxpayers are liable for mandatory MTD quarterly reporting from Friday 7 August.
HMRC is still working on fine-tuning the MTD IT system with various updates implemented in the last few weeks.
The absence of penalties may make some taxpayers put off the inevitable MTD but you need the four quarterly updates all create the final year end record. HMRC requires an end of tax year declaration which requires the data from the four quarters to be aggregated.
By not registering now and by delaying it further, anyone who is in scope of MTD will need to catch up with this year’s four filings at the same time as next year’s quarterly filings become due, as well as their annual declaration, so they’ll have to potentially file nine returns over the same 12-month period.’
The introduction of MTD this April brought the personal tax system closer to real-time and is expected to affect 2.9m people by 2028 when the thresholds are lowered to £20,000.
MTD returns can only be filed digitally so allow enough time to implement any software. Bear in mind bridging software can be used to file data to HMRC, while there are also some free software options available from major software providers, and some major high street banks and online banks are also offering free software to business bank account holders.
Corporate Criminal Attribution
The Crime & Policing Act 2026, which gained Royal Assent just last month introduced new ways in which companies may be held criminally responsible for crimes committed by senior managers.
This law came into effect on 29 June 2026 and will see all UK companies become liable for the criminal offences committed by a ‘senior manager’ when ‘acting within the actual or apparent scope of their authority’.
It applies to a body corporate or partnership.
Senior Manager means an individual who ‘plays a significant role in the making of decisions about how the whole or a substantial part of the activities of the body corporate or partnership are to be managed or organised, or the managing or organising of the whole or a substantial part of those activities’.
This enables prosecutors to hold companies criminally liable for the actions of their “senior managers”, a term which is deliberately broadly drafted.
There is no defence based on having adequate or reasonable procedures in place. This is simply a mechanism for attributing a senior manager’s criminal conduct to the company.’
HMRC’s Phone Service
The annual independent HMRC perceptions survey of nearly 3,000 taxpayers found that only 46% of respondents only use online services, while a staggering 33% only communicate with HMRC by letter.
Phone systems were still one of the biggest problems for taxpayers generally.
Respondents still find ‘HMRC’s telephone system hard to navigate’. It was made worse by the long list of options, with the report stating: ‘Automated menus often did not offer appropriate options, making it difficult to reach the right service or speak to an advisor. This caused frustration and uncertainty.’
The HMRC website and online services like digital tax accounts and the app were used by 46% of taxpayers, while 12% used both online and phone calls. Only 4% used only telephone only to interact with HMRC.
The high use of letters still indicates some way to go for HMRC to achieve its digital by default goal for all tax services.
The survey showed 46% gave a positive rating of the quality of the phonelines and call centre service, meaning over half 54% gave a negative.
33% of callers rang about tax payments or refunds, 21% to amend details, and 20% for ‘specific tax, benefit, or allowance queries.
43% wanted reassurance from speaking to a HMRC adviser, while 33% said it was their preference.
65% did not find it easy to deal with HMRC.
State Pension (Small) Error
An incorrect state pension figure was used in pay as you earn end-of-year reconciliations, feeding through into self assessment pre-population information and simple assessment calculations.
Although the issue affects a large number of taxpayers, the amount of tax at stake for each taxpayer appears to be relatively small (estimated at £1.76 per tax year for a basic rate taxpayer in receipt of the full basic state pension).
Payment on Account
You may need to make a payment on account (POA) against your income tax self assessment (ITSA) and class 4 national insurance contributions (NIC) liability for 2025/26 by 31 July 2026.
With the 31 July 2026 deadline for making the second POA for 2025/26 fast approaching you should check if a POA is required, so that the deadline is not missed and where a POA is required, to:
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- consider if it should be reduced, to ensure that tax is not overpaid; and
- ensure that it is made by the due date, to avoid having to pay interest on any tax paid late.
Payments on account are required if you are within ITSA as follows:
- 31 January 2026: first POA;
- 31 July 2026: second POA; and
- 31 January 2027: balancing payment (if required).
However, you do not need to make a payment on account where:
- their total ITSA and class 4 NIC liability for 2024/25 was less than £1,000; or
- more than 80% of the income tax and NIC you owed for 2024/25 was deducted at source (eg, through pay as you earn).
In the first instance, each POA for 2025/26 is equal to 50% of your income tax and class 4 NIC liability for 2024/25. You can make a claim to reduce the amount of the POA where you expect that their total ITSA and class 4 NIC liability for 2025/26 will be less than that for 2024/25.
A claim can be made online or by post. If the 2025/26 tax return is submitted in time for HMRC to process it before 31 July, HMRC will automatically update each POA before the 31 July payment falls due.
Horizon Compensation Payments
Regulations have been made to ensure that compensation payments made under the Horizon family members redress scheme are not subject to tax or national insurance contributions.
The measure ensures that compensation payments made under the Horizon Family Members Redress Scheme are not subject to Income Tax or Capital Gains Tax and are relieved from Inheritance Tax. This means that eligible individuals will receive the full value of their compensation without any deductions or the need to engage with the tax system. Payments made under the scheme will not attract National Insurance contributions under existing legislation, and no changes are required.
The Government has committed to providing redress to close family members of postmasters who experienced significant impacts because of failures of the Horizon IT system.
