Whether engaging in commercial trade or simply working and living in the UK, you may encounter an audit by HM Revenue and Customs (HMRC), because tax inspections often happen routinely.  Even if you declare and pay taxes on time, you may still be subject to a 'surprise’ inspection by the tax authorities, or need to comply with routine document or information requests. Today, we’ll share three typical cases we’ve helped our clients handle, along with the correct ways to respond. Case 1: Purchasing agent VAT refund Client A is a sole trader focusing on cross-border purchasing. Due to large purchase amounts, the VAT paid monthly amounted to thousands of pounds. After gaining a detailed understanding of Client A’s business model—including purchasing channels, sales destinations, annual purchase volume, and whether imports to the UK were involved—we then helped them reduce costs by applying for the appropriate VAT refunds.  When applying for the refunds, we assisted Client A in preparing detailed application evidence and materials, clearly stating the export purpose of the goods, all eligible purchase invoices, and export customs vouchers.  Ultimately, we successfully helped Client A obtain the VAT refund. Case 2: Multiple HMRC audits, all resulting in successful refunds Client B is a seller operating a cross-border e-commerce shop and encountered multiple HMRC audits. The first instance was due to a large refund request amount, which attracted the attention of the tax authorities and led to an HMRC review. After receiving Client B’s request for help, we immediately collected all of the client’s receipts and information for the claimed deductions. Then, based on VAT deduction rules, we explained to the tax office in detail how each refund amount was calculated. HMRC eventually certified that the declaration was correct, and the client successfully received the refund. Due to the previous audit history, Client B was audited again after amending a declaration amount. This investigation lasted for three years (HMRC required a review of the seller’s tax returns, income, and expenditure invoices for the past three years). Similarly, after we organised all materials and provided detailed calculations and explanations to the tax office, we once again helped the client receive a high-value refund.  Note that HMRC audits are also recorded by customs.  Client B had previously been reviewed by HMRC during a customs declaration because customs believed the price was higher than the declared value during clearance. Once it is determined that the declared value is too low, they will require the amount to be increased. In this scenario, the VAT payment amount will also increase.  Finally, this was successfully resolved under our handling. Case 3: Personal income tax overpayment refund Client C worked in the UK for a period covering two tax years. After finishing work and moving to China, they filled out a P800, which is a tax calculation or tax review form, and received an email from HMRC stating that overpaid tax could be refunded (approx. £20,000). However, as their mailing address was in China, they had not received the refund cheque for a long time. Therefore, the client contacted us for assistance. After understanding the specific situation, we immediately applied for authorisation and handled the matter on their behalf. For clients whose address is not in the UK, we can sometimes act as an agent to receive cheques and forward them.  Ultimately, we contacted HMRC and completed the address change on the second day after receiving the client’s request, and received the refund cheque to post back to the client three working weeks later, successfully securing the £20,000. TB Accountants tips UK HMRC can trigger audits for various reasons. Common types of checks involve:  Corporation Tax VAT Self-Assessment Tax Returns  For sellers operating cross-border e-commerce in the UK, if you have non-compliant declarations, tax arrears, or long-term/large-amount refunds, you are extremely likely to be audited by the UK tax authorities.  Improper handling could face store closure or even huge fines. If your email inbox receives an email starting with CFSS followed by 7 digits, this indicates that you may be subject to a tax audit. You can contact us to handle this for you. HMRC’s 'radar': which situations are easily targeted? HMRC has entered the 'data-driven' era.  Its powerful ‘Connect’ data analysis system integrates dozens of data sources from banks, employers, property transactions, social media, and even online platforms.  When your tax return shows the following 'red flags', the risk of being audited rises significantly: Data anomalies and mismatches  This is the most common and direct trigger.  For example, if the income in your Self-Assessment tax return does not match the information HMRC has obtained from your employer (via the PAYE system), banks (interest income), or e-commerce platforms (such as Amazon or eBay). Suspicious elements in the tax return   Simple calculation errors can trigger doubts about the accuracy of the entire return.  Additionally, if the proportion of declared business expenses is too high, or includes a large amount of suspicious private consumption (such as excessive 'business entertainment' or car expenses that do not match the scale of the business), this can also alert HMRC.  If a business declares losses for many consecutive years, especially if the industry is generally profitable, HMRC will suspect whether you are counting personal living expenses as company costs, or whether you are truly operating with a view to profit. Being in a high-risk industry or sector  HMRC concentrates resources on reviewing specific areas.  Traditional high-risk industries include sectors with active cash transactions such as construction, catering, and retail.  Under new regulations, online platforms must report seller income to HMRC. If you are active on e-commerce platforms like eBay but have not declared it, you are easily identified.  Additionally, HMRC has established a special anti-fraud team to conduct extremely strict reviews of R&D refund applications from SMEs, especially start-ups, and strictly controls the definition of 'qualifying R&D activities'.  For individuals using existing 'non-dom' rules for tax planning, HMRC will strengthen reviews, focusing on inheritance tax, capital gains tax, and overseas income. Lifestyle disconnected from declared income  The Connect system can outline your life profile through public data.  For example, if your declared taxable income can only support a basic standard of living, but data shows you purchased expensive property, luxury cars, or went on frequent luxury trips. Life status shared on social media can become indirect evidence for investigation. Having a poor record If you have a history of late filing, late payment, or under-reporting tax, you will be on HMRC’s 'watch list', and the probability of being checked again is higher. Dealing with it calmly: a professional action guide after receiving an audit notice Stay calm and inform your professional tax advisor immediately  Do not panic, and do not ignore it. HMRC letters have strict reply deadlines. Immediately forward the full text of the notice to your tax advisor or accountant. Let the tax advisor lead communication  Tax advisors are proficient in tax law and communication skills, knowing how to respond precisely to HMRC’s requests to avoid expanding the scope of the investigation or falling into a disadvantageous position due to unprofessional wording. Prepare and provide documents methodically  Your advisor will help you understand the scope of HMRC’s request and guide you in collecting the necessary supporting documents. Typical documents include: Bank statements, invoices, receipts, contracts, account books, payroll records, etc. Understand the type of review and potential outcomes  Some reviews only target a specific issue (such as travel expenses). The scope is limited and usually easier to resolve. On the other hand, some reviews involve an in-depth review of all your tax affairs, which is more complex. Of course, the best strategy for dealing with audits is to avoid being audited!  The following three points should be noted:  Accuracy and timeliness : Ensure all tax returns are accurate and submitted before the deadline.  Keep complete records : Retain all business records and documents as required by law. Clear, organised records are the most powerful weapon in dealing with reviews.  Seek professional advice : Establish a long-term partnership with a trusted tax advisor. Taking TB Accountants as an example, we can not only help you declare compliantly but also provide forward-looking tax planning to avoid risks from the source. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Britons in Dubai fear leaving war-hit Middle East because they might get taxed at home As tensions escalate between the United States, Israel, and Iran, tens of thousands of British citizens remain stranded in the Middle East. However, some interviews indicate that certain British influencers and expatriates living in Dubai, United Arab Emirates, are cautious about returning to the UK. One reason is concern about becoming UK tax residents again.   UAE analyst Amjad Taha said many people believe life in the UAE remains safe: “In the UAE, everyone is protected.” The UAE has a zero personal income tax policy for residents, which is also a key factor attracting large numbers of Britons to relocate there.   According to media reports, more than 240,000 British citizens currently live in Dubai. With its low tax rates, international environment, and business opportunities, the city has in recent years become a major hub for wealthy Britons, influencers, and entrepreneurs.   The issue of these overseas Britons has also sparked debate within the UK. Ed Davey, leader of the Liberal Democrats, criticized in Parliament some “tax exiles” and “has-been celebrities” seeking British protection in Dubai. He said: “Our armed forces should protect British citizens around the world in times of crisis—but that apparently also includes tax exiles who mock ordinary taxpayers.”   Journalist Isabel Oakeshott, who moved to Dubai in 2024 and was mentioned in the criticism, responded that such claims misunderstand the contributions of Britons living abroad. She said: “We may not pay as much tax as before, but we still pay far more than the average person. And so-called tax exiles have not asked to be rescued.”   UK Prime Minister Keir Starmer emphasized that all British citizens should receive the same consular assistance regardless of their tax status.   Home Secretary Yvette Cooper said that after the United States and Israel launched strikes on Iran, Iran carried out retaliatory attacks. Currently, about 130,000 British nationals living in the Gulf region have registered with the government’s safety registration system, while the total number of British expatriates in the region is about 300,000.   At present, the UK Foreign Office has not asked citizens to leave the UAE, but it has advised against “all non-essential travel.” Read more... Migrants will have to speak English to A-level standard before they can settle permanently in Britain   Last week, Home Secretary Shabana Mahmood again proposed a series of detailed immigration reform measures, including raising the language requirement for migrants seeking permanent residency. Under the new policy, starting in 2027, immigrants applying to settle permanently in the UK will need English proficiency equivalent to the UK A-Level standard.   Under the new rules, applicants for Indefinite Leave to Remain (ILR) will have to demonstrate a relatively high level of English in reading, writing, speaking, and listening. The current requirement is set at the GCSE level, but the new policy will raise it to A-Level level. The rule is planned to take effect in March 2027, giving migrants roughly one year to prepare.   In last week’s speech on immigration policy, the Home Secretary emphasized:  “Working hard, learning the language, and contributing to the community — that is the contract we are now writing into law.”She also referred to different positions on immigration policy in the UK, saying the Labour government aims to strike a balance between two extremes: neither the strict restrictions advocated by Reform UK leader Nigel Farage — described as “pulling up the drawbridge and shutting the country off from the world” — nor the open borders approach promoted by Green Party deputy leader Zack Polanski.   In addition to the language requirement, the new policy will tighten access to welfare support for some migrants. According to the plan, migrants may lose taxpayer-funded housing and benefits if they:   Break the law Work illegally Rely on public funds despite being capable of supporting themselves   The government says the move is intended to reduce the roughly £4 billion spent annually on asylum support.   At the same time, the government also plans to extend the time required for most refugees to qualify for permanent residency from five years to ten years. However, the waiting period may be shortened for people in shortage occupations, such as doctors. More immigration reform measures are expected to be announced in the upcoming King’s Speech scheduled for May this year. Read more... HMRC investigations claw back £16bn tax from corporates   A new analysis by the National Audit Office (NAO) shows that the UK’s HM Revenue and Customs (HMRC) has significantly increased tax investigations into large companies to identify potential compliance risks. In the 2024/25 fiscal year, HMRC recovered about £15.8 billion in tax, more than double the £7.1 billion recovered in 2021/22.   The NAO reported that by 2025, HMRC had investigated around half of the UK’s large businesses, with the total potential tax at stake reaching £52.6 billion. About 44% of these investigations were concentrated in three sectors:   Banking: about £8.6 billion in potential tax Telecommunications: about £7.8 billion Retail: about £7.0 billion   Data also shows that in 2024/25, large businesses contributed £337 billion in taxes. When all tax types are included—such as corporation tax, National Insurance contributions, VAT, insurance premium tax, and fuel duty—large companies paid a total of £377 billion during the fiscal year.   The figures also highlight a high concentration of tax contributions. According to the data:   The top 50 corporate taxpayers for corporation tax paid about £21.5 billion, accounting for 48% of the total. The top 50 VAT-paying companies paid about £40 billion, representing roughly 53% of VAT collected from large businesses.   Meanwhile, the tax gap among large companies—tax that should have been paid but was not—has been gradually declining over time:   2005/06: £7.5 billion (first recorded) 2023/24: £5.8 billion   About half of this tax gap arises from differences in interpretation of tax law between businesses and HMRC.   The report also analyzed how HMRC identifies cases for investigation. Of the corporate tax investigations launched in 2024/25:   More than 33% came from companies voluntarily disclosing issues. 19% resulted from routine risk assessments conducted by HMRC.   The NAO recommends that HMRC develop a detailed plan to make full use of upcoming IT system upgrades. It also calls for improvements in tax data recording quality to better evaluate operational performance.   The report further suggests that HMRC should improve communication with companies under investigation, particularly by clearly explaining the purpose when requesting data and maintaining consistent procedures across all compliance investigations. Read more... Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Recently, the British supermarket giant Morrisons lost a high-profile value added tax (VAT) dispute.  The supermarket's 'Cool-Down Rotisserie Chickens' (CDRCs) were ruled to be hot food, meaning they should have been subject to the 20% standard rate of VAT rather than being zero-rated.  Consequently, the company now faces a tax clawback of approximately £17 million. This case is significant not only because of the large sum involved but also because it has reignited tax discussions within the UK retail and catering industries regarding exactly which foods qualify as 'hot food', serving as an important precedent for the sector. What exactly was the point of contention regarding VAT in this case, and how was the judgement reached?  Case background: where did the dispute originate? This dispute can be traced back to 2012. At that time, the British Chancellor of the Exchequer, George Osborne, introduced the controversial 'pasty tax', which attempted to levy VAT on all hot takeaway food sold in bakeries and supermarkets, including Cornish pasties, meat pies, sausage rolls, and rotisserie chickens. This policy faced strong public backlash, and the Treasury was subsequently forced to make adjustments. Initially, the Treasury proposed that any food sold above 'ambient temperature' should be taxed, but this standard was criticised as absurd because weather changes could directly affect tax outcomes.  The Treasury later changed the regulation: food kept in heated cabinets is subject to VAT, while food placed on shelves, sold cold or 'incidentally hot', and intended to be eaten cold, can be zero-rated. Following the policy adjustment, Morrisons conducted consumer research and categorised its rotisserie chickens into two sales methods: Hot Rotisserie Chickens (HRCs): kept in heated cabinets, clearly sold as hot food, and subject to VAT Cool-Down Rotisserie Chickens (CDRCs): bagged after roasting but not placed in heated cabinets, using packaging that does not have an obvious heat-retention effect, and claimed to be zero-rated items The core argument from Morrisons was that most customers do not eat the chicken immediately.   Instead, they eat it cold or save it to be reheated for dinner later that day. The company claimed that approximately 80% of customers fell into this category, and therefore these chickens should not be considered 'hot food'. Consequently, between January 2017 and July 2020, Morrisons did not charge VAT on these 'whole cool-down rotisserie chickens'. However, over time, HM Revenue and Customs (HMRC) determined that this practice did not comply with regulations, with the disputed tax amount accumulating to £17,034,392. Both parties subsequently entered legal proceedings. Assessing the legal case  In this multi-year litigation, the key issue considered by the court was not how customers ultimately consumed the chicken, but whether Morrisons was, in fact, providing hot food during the sales process. Evidence showed that the so-called 'cool-down rotisserie chickens' were highly similar to hot food in the following respects: The chickens were packed in foil-lined paper bags, which were clearly marked with 'Caution: Hot Product' The chickens were displayed for a maximum of two hours after leaving the oven; if unsold, they were discarded as waste Witnesses testified that the temperature of the bagged chickens remained between 42°C and 45°C after two hours, whereas the temperature of a naturally cooled chicken would be around 31.8°C The court determined that this packaging and sales method created an environment that slowed down cooling and maintained heat. Based on this, the judge held that these products were not merely 'incidentally hot' but were significantly above ambient temperature at the time of sale and were designed to be sold in a hot state. Furthermore, although Morrisons raised a 'legitimate expectation' defence, arguing that past communications from HMRC led them to reasonably believe that the 'whole cool-down rotisserie chickens' could be zero-rated, the court rejected this claim.  It stated that HMRC had never made a clear, precise, and unambiguous ruling between 2012 and 2014 that would be sufficient to support such a strong argument. The judgment also mentioned that Morrisons failed to provide evidence proving that they had clearly communicated this specific sales model to HMRC and received formal approval. Following 61 pages of reasoning, the court finally ruled that the Morrisons whole cool-down rotisserie chickens remain 'hot food' in a legal sense and should be subject to 20% VAT.  As the judgment emphasised, the criteria for judgement do not depend on the product name, marketing rhetoric, or how consumers eat it after returning home, but rather on the objective state of the product and the sales method at the time of purchase. Price, consumer, and industry impact This tax battle over rotisserie chickens has not only cost Morrisons dearly, requiring a £17 million tax clawback, but will also affect the future selling price of the product, further impacting consumers, retailers, and the catering and food industry. The then Finance Director of Morrisons, Richard Nichols, pointed out during the trial that consumers who buy rotisserie chickens usually have lower incomes, and two-thirds of customers consider £4.50 to be a psychological upper limit.  At the time of the trial, the chickens were sold for approximately £4.40, but once VAT is added, the price would rise to £5.28. The supermarket estimated that the price increase caused by VAT could result in hundreds of thousands fewer chickens being sold per month, creating a ripple effect on the supply chain and the diet of British families. However, the court did not consider these economic consequences to be a decisive factor. This tax battle eventually sent a clear signal: regarding VAT issues, regulatory authorities and courts focus on 'actual business conduct' rather than a company's own definition of a product or historical perceptions. For the retail and catering industries, it is important to note: The determination of whether an item constitutes 'hot food' is highly dependent on the specific sales method and objective presentation The form of packaging, display method, temperature at the time of sale, and marketing descriptions can all serve as key evidence for taxation Relying long-term on informal policy interpretations or historical practices carries significant tax compliance risks. At the same time, for all businesses, HMRC guidance is not equivalent to a legal guarantee and cannot completely eliminate tax risks. Companies should not easily assume that a regulatory stance will not change.  Once high tax amounts are involved, historical business models are very likely to be subject to retrospective review. The global fast-food leader KFC also previously encountered a tax lawsuit regarding dipping sauces, ultimately needing to pay back £75,000 in VAT. It is worth noting that VAT compliance is not limited to domestic UK retail enterprises. For import and export trade and cross-border e-commerce, product classification similarly directly affects the payment, deduction, and refund arrangements of VAT, and the boundaries of compliance are often even more complex. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

London Underground prices are going up, some ticket types increase by up to 7.1% From 1 March, London Underground fares have increased again, with some ticket types rising by as much as 7.1%. Peak fares in Zone 1 have seen particularly noticeable increases. Under the new changes, a peak single fare in Zone 1 has risen from £2.90 to £3.10, while the off-peak fare has increased from £2.80 to £3.00.   At the same time, National Rail fares across the country will be frozen to help ease cost of living pressures. However, London Underground fares will not be subject to a similar cap. London Mayor Sadiq Khan said the fare increase was one of the conditions attached to the government’s funding support for major Transport for London (TfL) infrastructure projects, a requirement stemming from last year’s public spending review.   Fare Changes on Selected Routes   This increase forms part of the annual fare adjustment. In recent years, London Underground fare rises have generally outpaced inflation.   Examples of the latest increases include:   Tottenham Court Road (Zone 1) to Edgware (Zone 5): from £3.60 to £3.80 Richmond (Zone 4) to Stratford (Zone 2), off-peak avoiding Zone 1: from £2.20 to £2.40 Upminster (Zone 6) to Cannon Street (Zone 1), peak: from £5.80 to £5.90 Piccadilly Line, Zone 1 to Heathrow Airport: from £5.80 to £5.90   In addition, fares on the Elizabeth line between central London and Heathrow Airport will increase from £13.90 to £15.50, a rise of 11.5%.   Some Positive News for Regular Passengers   There are, however, some measures that remain unchanged:   Travelcards and daily fare caps will be frozen until March 2027. Concessions such as the Zip Photocard, 18+ Student Oyster card, 18–25 Railcard-style discounts, and the 60+ Oyster card will remain unchanged. London bus and tram fares will be frozen until July 2026. The “Hopper Fare” will stay at £1.75, allowing unlimited bus transfers within one hour.   In addition, regulated intercity rail fares will also be frozen in line with commitments made in last autumn’s Budget. This applies to commuter season tickets, peak return fares, and off-peak returns between major cities, with the freeze expected to last until March 2027.   The fare increase has drawn criticism from some members of the public and campaign groups. The advocacy group Fare Free London has called for fully free public transport, arguing that raising fares amid ongoing cost of living pressures will further burden residents. In response, Sadiq Khan stated that the government’s £2.2 billion investment in TfL was conditional on London Underground fares rising by inflation plus 1%. He added that efforts had been made to limit the impact, with contactless “pay as you go” fare increases capped at 20 pence, and many fares rising by only 10 pence.   Unless the government intervenes again or announces a further freeze, London Underground fares are typically reviewed and adjusted each March. Read more... Replacement Lifetime ISA for first-time buyers only   HMRC has confirmed plans to introduce a new Individual Savings Account (ISA) designed specifically for first-time buyers, replacing the Lifetime ISA (LISA) as a home-buying savings product rather than a retirement savings tool.   Under the proposal, the government bonus for the new product will no longer be paid with each contribution, as is currently the case with the Lifetime ISA. Instead, the subsidy will be granted as a one-off payment at the point of property purchase. This approach effectively marks a return to the model previously used by the Help to Buy ISA, which was withdrawn in 2019.   The government’s decision is partly driven by ongoing criticism of the high withdrawal penalties associated with the Lifetime ISA. At present, savers who withdraw funds for purposes other than buying a first home are subject to a 6.25% withdrawal charge.   The policy also clarifies that, until the new product is officially launched, individuals can still open a Lifetime ISA, and existing account holders may continue to contribute under the current rules. The annual contribution limit for the Lifetime ISA will remain at £4,000, at least until April 2031.   Rachel Vahey, Head of Public Policy at AJ Bell, noted that since its launch in 2017, the Lifetime ISA has helped thousands of young people get onto the property ladder, but the scheme has not been without flaws. She said it is unsurprising that a new model is being considered as a replacement. According to Vahey, paying bonuses upfront means they must be clawed back if the funds are not used for their intended purpose, which has contributed to frequent issues with withdrawal penalties. Moving the subsidy to the point of purchase would make the system simpler to administer.   However, financial experts have also raised concerns about how transfers from existing Lifetime ISAs will be handled under the new scheme. Industry commentators warn that a policy focused solely on home-buying support could reduce options for those who have been using the Lifetime ISA as a long-term retirement savings vehicle. For self-employed individuals or those without access to workplace pensions, the ability to continue saving in existing Lifetime ISAs provides some continuity, but it does not fully address the broader need for long-term retirement savings solutions. Read more... Rate of small employer relief for statutory payments to increase   HMRC has confirmed that from 6 April 2026, the compensation rate under the Small Employers’ Relief (SER) scheme for certain statutory payments will be increased.   This change means that employers who qualify for SER will be able to reclaim a higher percentage of costs from HMRC after paying statutory benefits to employees, helping to ease financial pressure on businesses. The compensation rate will rise by one percentage point, reaching 9%.   Eligible statutory payments that can be reclaimed include:   ● Statutory Maternity Pay ● Statutory Paternity Pay ● Statutory Adoption Pay ● Shared Parental Pay ● Parental Bereavement Pay ● Neonatal Care Pay   Currently, UK employers can generally reclaim 92% of the statutory payments they make to employees.   Under the Small Employers’ Relief rules, businesses that paid less than £45,000 in Class 1 National Insurance in the previous tax year may qualify to:   ● Reclaim 100% of statutory payments made; and ● Receive an additional compensation amount.   This additional compensation will increase from the current 8.5% to 9% for the 2026–27 tax year. In addition to the increase in the SER compensation rate, several important employment-related changes will take effect in April 2026:   ● The National Minimum Wage will rise by up to 7%, depending on the worker’s age; ● New “Day One Rights” for employees will be introduced, including: ○ Statutory sick pay rights ○ Parental leave rights ○ Protection against unfair dismissal ○ Safeguards relating to zero-hours contracts   These changes will come into force under the Employment Rights Act 2025 and will affect businesses of all sizes across the UK.   Businesses are advised to review whether they qualify for Small Employers’ Relief and assess the impact of the new rules on payroll and tax planning. Seeking advice from a professional tax adviser can help ensure compliance and optimise cost management. Read more... Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

In the UK, many people hold a stable full-time job as an employee while using their spare time to develop a side hustle.  For example, they might work a normal day job and tutor in the evenings, run an e-commerce shop online at weekends, or even provide professional consulting services during their free time.  The question then arises:  Can an individual be both an employed member of staff and a self-employed person?  And if so, will there be conflicts regarding tax returns, National Insurance, and pension contributions? You can be both an employee and self-employed From a legal and tax perspective, there are no regulations prohibiting you from being both an employee and a sole trader.  HMRC does not concern itself with how many jobs you have.  Rather, they are concerned with whether all income is truthfully declared and taxed. Therefore, if you have a formal job and are considering becoming self-employed, the real areas to pay attention to are the method of tax reporting, the types of tax and National Insurance to be paid, and whether your employment contract allows for additional work. Check your employment contract before starting a side hustle Although HMRC will not stop you from running a side business, your employer may not be entirely supportive.  Many employment contracts contain clauses regarding 'outside work', which may require individuals to obtain written permission before engaging in a side hustle, restrict employees from engaging in activities that compete with the employer’s business, or prohibit any behaviour that might damage the employer’s reputation.  If you are unsure whether your side hustle is permitted, the safest approach is to consult your HR department or line manager before starting. Additionally, UK working time regulations usually stipulate that an employee’s average working hours must not exceed 48 hours per week (usually averaged over 17 weeks), unless they have voluntarily signed an opt-out agreement.  However, this limit applies only to working hours under an employment relationship and does not include self-employed activities. This means the time an individual spends running a side hustle falls outside these regulatory limits. Declaring side hustle income Once you have determined that you can proceed with a side hustle, whether you need to register with HMRC and file taxes mainly depends on the income level of the side business. If your total gross income within a tax year does not exceed £1,000, you can usually use the 'trading allowance'. In this case, you generally do not need to register for Self Assessment. However, once the total income exceeds the £1,000 threshold, you must register for Self Assessment and declare your self-employment income each tax year. After registration is complete, your main job will not be affected. Your employer will still deduct income tax and National Insurance through the PAYE system. Your personal self-employment income, however, will be combined with your salary income when you complete your tax return each year. Particular attention must be paid to registration and payment deadlines. You need to complete registration by 5 October following the end of the tax year in which you started generating self-employment income.  For example, if you start receiving self-employment income in June 2025, you must complete registration by 5 October 2026 and pay the relevant tax by 31 January 2027. If you miss these dates, HMRC may issue a penalty.  How tax and National Insurance apply Although salary income and self-employment income are ultimately combined for calculation, their taxation methods differ—full-time salary income is processed automatically through the PAYE system, with tax and National Insurance deducted directly when you are paid. Income you earn as a sole trader, however, must be declared separately and is taxed separately. After the tax year ends, HMRC will combine your two types of income to recalculate the income tax and National Insurance due for the whole year. If additional tax or National Insurance needs to be paid, this will be reflected during the Self Assessment calculation. It is worth noting that sole traders may also need to pay Class 4 NICs.  This is an additional cost on top of the National Insurance already paid as an employee, usually calculated as a percentage of profits. Many people starting a side hustle mistakenly believe that 'since I already pay National Insurance at work, I don’t need to pay it for my side hustle', but this is not the case. Watch out for changes to your tax code Many people find that the first change after starting a side hustle is an adjustment to the tax code on their payslip. After completing a Self Assessment registration for self-employment, HMRC sometimes adjusts the PAYE tax code to collect a portion of the estimated tax due from your salary in advance. This method can sometimes help spread the tax burden, but it is not always accurate. in some cases, you may overpay tax through your salary and have to claim a refund later; alternatively, you may underpay and have to make a lump-sum payment when filing your tax return. In such situations, common tax codes include: BR tax code: All income is taxed at the basic rate. K tax code: Used to recover tax owed from other income sources. Regardless of how your tax code changes, it is recommended that you regularly check whether your tax code matches your actual income situation. If in doubt, you should contact HMRC promptly. Impact on pensions and benefits As an employee, workplace pension schemes usually operate as normal, with both your employer and yourself continuing to contribute via PAYE as per regulations.  At the same time, individuals can make additional pension contributions using self-employment income. Relevant contributions to your chosen workplace and personal pensions can enjoy tax relief within the annual allowance. Regarding benefits, the situation is somewhat more complex. Sick pay, paid annual leave, and statutory maternity pay apply only to employment income. If an individual cannot continue running their side hustle due to illness or taking a break, there is no automatic safety net. Furthermore, sole traders can usually apply for Maternity Allowance (MA), but cannot receive Statutory Maternity Pay (SMP). Therefore, some people choose to purchase income protection insurance to mitigate risks. Some advice from TB Accountants  It is entirely feasible to run a self-employed side hustle while working a job, provided you truly understand the rules, comply with your employment contract, truthfully declare all income, and plan your overall tax affairs in advance.  Only on a compliant foundation can a side hustle become a robust channel for increased income rather than a future risk. It is particularly important to note that whether it is for income-based student loan repayments or the High Income Child Benefit Charge, HMRC calculates these based on total income, not just salary income.  Even if you are already making repayments through the PAYE system, you may still owe an additional amount due to self-employment profits after filing your tax return. This also means that as long as there is side hustle income, it must be incorporated into your overall financial and tax planning, rather than looking at salary levels on the surface alone. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

HMRC has recently sent official letters to more than 200,000 taxpayers, warning them that they will soon be affected by a major tax reform – Making Tax Digital for Income Tax (MTD).  As the implementation date approaches, sole traders and landlords with annual gross income exceeding £50,000 will be mandatorily brought into the MTD regime from 2026. According to HMRC’s timetable, MTD will officially come into force on 6 April 2026.  With the policy now entering its countdown phase, affected taxpayers should begin preparing as early as possible to avoid unnecessary penalties arising from late or incorrect submissions. Mandatory inclusion where gross income exceeds the threshold At present, Making Tax Digital mainly applies to VAT.  However, the full digitalisation of Income Tax reporting will be phased in from 6 April 2026, primarily targeting sole traders and landlords. Unless an exemption applies, sole traders and landlords must use Making Tax Digital for Income Tax if they meet all of the following conditions: Registered for Self Assessment Have income from self-employment and/or property letting Have qualifying income* exceeding the MTD threshold * Qualifying income refers to the total annual gross income in a tax year from self-employment and/or property letting, before the deduction of any expenses or taxes. The following types of income are not included as qualifying income: Employment income (PAYE) Partnership income Dividend income, including dividends from your own company In addition, regardless of whether you live in the UK, if you earn rental income from UK property and are registered for Self Assessment, you fall within the mandatory scope.  As a result, non-UK resident landlords will also be affected by the new MTD rules. Making Tax Digital thresholds will reduce year by year From April 2026, individuals with annual income from self-employment and/or property exceeding £50,000 will be required to use Making Tax Digital for Income Tax. It is estimated that around 780,000 people will fall within this scope. Furthermore, the mandatory MTD threshold will be reduced progressively to cover more individuals: From 6 April 2027, landlords and self-employed individuals with annual income over £30,000 must register for MTD; From 6 April 2028, landlords and self-employed individuals with annual income over £20,000 must also register for MTD. In other words, within the next three years, the vast majority of landlords and self-employed individuals will inevitably be brought into the MTD system. From once a year to four times a year The introduction of Making Tax Digital represents a significant change to the timing of Income Tax reporting from the 2025–26 tax year onwards.  From 6 April 2026, eligible taxpayers will be required to submit quarterly updates to HMRC on a standardised schedule, rather than filing only one annual return. You may be wondering:  Does moving from one submission a year to four make tax reporting more burdensome?  Will my tax burden increase significantly? In fact, the core aim of MTD is to spread tax administration throughout the year, replacing the previous high-pressure January Self Assessment deadline, thereby improving efficiency and reducing the risk of errors.  In response to concerns about increased complexity, HMRC has emphasised that MTD does not require taxpayers to submit additional tax returns. Under the new model, taxpayers will indeed submit quarterly updates, but these are not full tax returns. Instead, they consist of brief summaries of income and expenses automatically generated by compliant software. This can be viewed as an ongoing digital bookkeeping process involving communicating data to HMRC four times a year, rather than submitting everything in one go in January. If errors are identified during the reporting process, taxpayers can correct them in the next quarterly update, without waiting for the annual return or submitting additional documents, improving both flexibility and accuracy. Making Tax Digital for businesses — VAT As HMRC will automatically enrol all newly VAT-registered businesses into Making Tax Digital for VAT, unless they are exempt or have applied for exemption, there is no need to register separately. Businesses simply need to use compatible software to keep VAT records and submit VAT returns. How to register for MTD for Income Tax Before starting the registration process, please ensure you have the following information ready: A Government Gateway ID (if you do not have one, it can be created during registration) Your National Insurance number Business details (such as business name and start date). Landlords must also provide evidence of rental income (for example, rent statements) The name of the MTD-compatible software you are using or plan to use (such as QuickBooks, Xero or FreeAgent) Taxpayers must use HMRC-recognised software to automatically record transactions, categorise income and expenses, submit quarterly updates and final declarations, and provide tax forecasts and reminders.  Common software options include Xero, QuickBooks, FreeAgent, Sage and 123 Sheets. Once the steps have been completed, HMRC will notify you by email or text within five to seven days to confirm whether registration has been successful. If you are unfamiliar with digital systems or have multiple sources of income, you may also appoint an accountant or tax advisor to register on your behalf. The view from TB Accountants  With only a few months remaining before Making Tax Digital for Income Tax comes into effect, now is the right time to start preparing.  Whether you fall within the MTD scope depends on gross income, not net profit. Even if you also have employment or investment income, you may still be required to use MTD if your self-employment or property income exceeds the threshold. The taxation system is undergoing a structural transformation. The earlier you adapt, the smoother the transition will be. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

HMRC introduces GOV.UK One Login for new customers From 9 February 2026, new customers registering for digital services with HM Revenue and Customs (HMRC) can log in using GOV.UK One Login, without needing to create a traditional 10–12 digit Government Gateway ID. Under this streamlined process, users only need an email address and password to access HMRC services.   GOV.UK One Login is the UK government’s planned unified online login system, which will eventually cover all government digital services. Users only need to register once to use the same login for managing taxes, applying for passports, registering to vote, and more. By verifying their identity once, users can reuse their login across different government services, saving time when interacting with the government online.   HMRC stated that the rollout of the new system will be gradual and closely monitored. Customers who already have a Government Gateway account do not need to switch immediately; they can continue using their existing account and will be notified when it is time to move to GOV.UK One Login. If a user already has a GOV.UK One Login for other government services (such as managing their state pension or Companies House services), they will still need to use their Government Gateway account to access HMRC for now.   With the addition of HMRC’s tax services, more than 200 government services will now be accessible via GOV.UK One Login. Anyone needing extra assistance with GOV.UK One Login can contact the Government Digital Service for support. Read more... Some London boroughs have tax revenues exceeding those of larger cities combined   HMRC Data Shows UK Income Tax Highly Concentrated in London and the Southeast The latest data from HM Revenue & Customs (HMRC) shows that total UK income tax revenue reached £240.7 billion in the 2022/23 fiscal year, but the distribution of this revenue is highly uneven across regions. London and the Southeast of England continue to be the core contributors to the UK’s public finances, with some London boroughs paying more income tax than several major cities combined.   According to the data, Wandsworth in London paid £4.26 billion in income tax in 2022/23, surpassing the combined total of £4.23 billion from Leeds and Birmingham. At the same time, Hackney in London contributed £1.54 billion, exceeding the £1.35 billion paid by Glasgow, Scotland’s second-largest city.   Overall, London and the Southeast accounted for 45% of total UK income tax revenue in 2022/23, with London alone contributing 26.5%.   The report also highlights that the 20 UK regions with the highest per capita income tax contributions are all located in London or the Southeast. This is not only due to the high concentration of high-income earners in these areas, but also reflects recent tax policies such as frozen tax thresholds and the so-called “fiscal drag” effect—whereby rising incomes push more taxpayers into higher tax bands over time, increasing revenue.   Analysts note that London and the Southeast have a high proportion of taxpayers subject to the top 45% income tax rate, which has long contributed to the region’s outsized tax revenue. In April 2023, the threshold for the 45% additional rate was lowered from £150,000 to £125,140, further increasing the tax burden on high earners in these regions.   Moreover, since April 2021, the UK’s personal allowance and higher-rate threshold have been frozen. As incomes rise, more taxpayers are pushed into higher tax bands, creating the “fiscal drag” effect and further boosting revenue.   Looking at long-term trends, over the ten-year period from April 2016, London’s income tax revenue rose from £35.3 billion to £63.8 billion, an increase of 80.7%, compared with 48.4% in the rest of the UK.   Analysts involved in the report emphasize that freezing allowances and lowering the additional rate threshold have significantly increased London’s contribution to UK tax revenue over the past decade, exceeding an 80% rise. They also warn that the UK’s heavy reliance on London and the Southeast for tax revenue could pose long-term challenges to the competitiveness of the tax system. Persistently high tax burdens may encourage some high-income earners to relocate overseas or reduce their economic activity. Read more... Amazon pays £1bn to UK taxman   US tech giant Amazon recently reported that its revenue in the UK reached £29 billion in 2024, with a total tax payment of £1 billion, representing a 7% increase compared with the previous year. Amazon emphasized that its total “taxes borne and collected” amounted to £5.8 billion, up from £4.3 billion in 2023, a year-on-year increase of 34%. This total includes employment taxes, business rates, value-added tax (VAT), plastic packaging tax, stamp duty land tax, and corporation tax.   Amazon stated that it is one of the “top ten taxpayers in the UK.” In 2024, the company paid £500 million in employer taxes in the UK, mainly employer National Insurance contributions (NICs), and £175 million in business rates. Amazon noted that the rise in business rates is partly due to the expansion of its physical store presence.   Globally, Amazon now employs more than 1.5 million people, including 75,000 in the UK. These roles span software development, product management, and engineering, as well as positions in fulfillment centers, sortation centers, and delivery stations.   Amazon also announced plans to invest £40 billion in the UK between 2025 and 2027, aiming to create thousands of permanent jobs, including over 2,000 positions outside London and the Southeast.   In 2024, Amazon’s capital investment in advanced robotics technology reached £1.6 billion. This investment includes building four new fulfillment centers and new delivery stations nationwide, as well as upgrading and expanding its existing network of more than 100 operational facilities. Read more... Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

A new First Year Allowance policy in the UK officially came into effect on 1 January 2026—offering a permanent 40% First Year Allowance (FYA) on qualifying plant and machinery for UK companies. This policy marks another significant step by the UK in improving the business and investment environment. The Treasury stated that this measure aims to encourage businesses to undertake capital investment, providing significant upfront tax relief for both incorporated and unincorporated businesses, thereby supporting business growth and economic development. Key details of the new policy for UK Companies According to the new regulations, the main details of the First Year Allowance (FYA) include: 40% First Year Allowance: businesses can claim a 40% First Year Allowance on qualifying main rate plant and machinery Applicable to leased assets: assets purchased for leasing purposes are also eligible for this relief Coverage for unincorporated businesses: unincorporated businesses, which were previously unable to benefit from full expensing, are now included in the scope Long-term stability: this allowance is a permanent policy, providing long-term certainty for business investment planning This new First Year Allowance policy builds upon the existing capital allowance system, giving the UK a distinct corporate advantage amongst OECD nations and further strengthening domestic investment incentives.  Full expensing still applies The new allowance policy complements the existing full expensing system. Full expensing allows companies to claim a 100% capital investment deduction in the year they purchase qualifying plant and machinery (such as warehouses or production equipment), meaning the entire cost is deducted from taxable profits. For incorporated businesses, this system remains applicable: for every £1 invested, up to 25p in tax can be saved, corresponding to the current corporation tax rate. Practical impact on businesses This change is particularly relevant for businesses investing in equipment, infrastructure, logistics, manufacturing, and other capital-intensive operations. Chancellor Reeves pointed out that encouraging business investment is key to driving economic growth and enhancing market confidence.  Upon the launch of these new tax incentives, policy commitments were reiterated, including: Maintaining the corporation tax cap at 25% for the remainder of this parliament (the lowest in the G7) Maintaining a stable and competitive corporation tax environment Supporting fast-growing businesses and long-term capital investment As part of fiscal balancing, the UK government proposed in the 2025 Budget that, from April 2026, the Writing Down Allowance (WDA) for main rate assets will be reduced from 18% to 14%. The view from TB Accountants  With the 40% First Year Allowance (FYA) policy having officially come into effect on 1 January 2026, businesses can now enjoy significant upfront tax relief on capital investments such as plant and machinery.  This policy complements the existing full expensing system, not only reducing the initial tax burden for companies but also providing long-term, stable investment incentives for unincorporated businesses and leased assets. For enterprises planning to expand into overseas markets and establish a presence in the UK, this period is undoubtedly the best time to enter. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

10-year permanent residency plan criticised as ‘unfair’, triggering sharp divisions within the Labour Party The closely watched and controversial public consultation on the UK’s proposal to extend the route to permanent residency for work visa holders to 10 years is set to close on 12 February. The consultation seeks views on transitional arrangements for people already on the path to permanent settlement. Under the plan, the minimum qualifying period for skilled worker visa holders to apply for permanent residency would be extended from the current five years to 10 years.   According to UK media reports, the proposal has triggered strong discontent within the Labour Party. Around 40 Labour MPs have voiced opposition to changes to the permanent residency rules, arguing that the policy would have retrospective effect and is “unfair” to lawful migrants already living in the UK—likening it to “constantly changing the rules after the game has started”.   Permanent residency—also known as Indefinite Leave to Remain (ILR)—allows individuals to live, work and study in the UK on a long-term basis, and to access public benefits if they meet the relevant conditions.   Under the reform proposals, the standard qualifying period for permanent residency would be extended to 10 years, though this could be shortened or lengthened depending on individual circumstances. For example, high earners, those entering under the Global Talent visa, or taxpayers paying higher rates of tax could see the qualifying period reduced from 10 years to as little as three years.   For those entering the UK on post-Brexit health and social care visas, the waiting period to apply for permanent residency would be extended to 15 years. In addition, if an applicant has relied on welfare benefits or other forms of public assistance while in the UK, the qualifying period for settlement could be extended further.   However, individuals who have already been granted permanent residency would not be affected by the new rules.   Labour MPs opposing the proposal have warned that the reform could worsen skills shortages in the UK, particularly in the care sector. They point out that many care workers are low-paid but essential to society, and that extending the waiting time for permanent residency could undermine the UK’s ability to attract such workers.   In response to internal criticism, Home Secretary Yvette Cooper has firmly defended the policy. She said the UK has experienced migration on an “unprecedented scale” in recent years, and that “such large numbers of people arriving in unusual ways” require a government response.   Home Office data show that between 2021 and 2024, the UK’s net migration (the difference between arrivals and departures) increased by a total of 2.6 million. Projections suggest that around 1.6 million people could be granted permanent residency between 2026 and 2030.   The retrospective nature of the policy is at the heart of the widespread anxiety and controversy surrounding it. Some MPs have asked whether people who are already eligible to apply for permanent residency, but have not yet done so for financial reasons, would be affected once the new system comes into force. In response, the Home Secretary said that settlement applications are “always assessed under the rules in force at the time the application is submitted”, and that this approach does not represent a new change.   Critics have also argued that the Home Office has been ineffective in tackling illegal migration, while imposing stricter requirements on lawful migrants—an approach they say is “inconsistent with Britain’s tradition of fairness”. Earlier, the Home Office acknowledged that it could not guarantee a reduction in the number of people crossing the English Channel in small boats over the next 12 months.   Official figures show that in 2025, a total of 41,472 migrants arrived in the UK by small boats, an increase of nearly 5,000 compared with the previous year. Read more... From water to council tax, household bills are going up in April 2026   The UK’s new tax year will begin on 1 April 2026, bringing a fresh round of changes to household bills. While not all costs have yet been confirmed, some price rises have already been announced, and others follow established annual patterns—meaning many households are likely to see higher bills.   Water bills – rises confirmed   In England and Wales, water companies have confirmed an average increase of around 5.4%, meaning a typical household will pay about £30–£35 more per year. The exact increase will vary depending on the provider. In Scotland, water charges are collected alongside council tax, with early estimates pointing to rises of around 8%–9%. Northern Ireland does not levy separate domestic water charges.   Council tax – increases expected   Council tax is set by local authorities. Most English councils are expected to raise council tax again in April, with increases often close to the maximum level allowed without a local referendum (5%). For households living in a Band D property, this could mean paying an additional £80–£120 per year, depending on location.   Energy bills – yet to be confirmed   The energy price cap, which limits what suppliers can charge households on standard variable tariffs, is reviewed every three months. The next cap, covering April to June 2026, has not yet been announced and is expected to be confirmed on 26 February. Current forecasts suggest the cap could fall slightly due to lower wholesale energy prices and changes in policy costs. However, energy markets remain highly volatile, and projections could change quickly.   Mortgages – dependent on interest rates   Mortgage costs are not directly tied to the tax year. Future mortgage repayments will depend on interest rate decisions made by the Bank of England throughout the year. While rates are widely expected to ease gradually, borrowers coming off older low-rate deals may still face higher repayments than before.   Other costs that often change in April   A number of other household expenses are also commonly adjusted at the start of the tax year, including:   Vehicle Excise Duty (VED) Public transport fares Certain insurance premiums, such as car and home insurance   Not all of these changes have been confirmed for April 2026, but many typically rise broadly in line with inflation. Read more... Bank of England keeps interest rates at 3.75%, unemployment to Rise Again   The Bank of England’s Monetary Policy Committee (MPC) voted to keep the benchmark interest rate unchanged at 3.75%, but signalled that conditions for rate cuts could emerge in the coming months as cost-of-living relief measures in Chancellor Rachel Reeves’s budget help push inflation lower. Since mid-2024, the Bank of England has cut interest rates six times in total. Governor Andrew Bailey voted in favour of holding rates steady, saying: “We currently judge that inflation will fall back to around 2% this spring. To ensure that inflation can remain sustainably at that level, we decided to keep the rate at 3.75%. If progress continues as expected, there remains scope for further rate cuts later this year.” In its latest Monetary Policy Report, released alongside the rate decision, the Bank downgraded its forecast for UK economic growth in 2025 to 0.9%, down from 1.2% projected three months earlier. The report also highlighted that measures announced by Chancellor Reeves to reduce energy costs and freeze rail fares, due to take effect in April, are expected to drive inflation down “by significantly more than previously anticipated”. Inflation is now forecast to fall to 2.1% by the second quarter of 2026—slightly above the government’s 2% target, but well below the 3.4% recorded in December last year. Following the announcement, financial markets priced in around a 50% chance of a rate cut at the Bank’s next policy meeting on 19 March. However, the Bank also warned that while inflation is easing, the labour market may weaken more than previously expected. It now forecasts the UK unemployment rate to rise to 5.3% in 2026, compared with an earlier estimate of 5%. The report noted that the Labour government’s increase in employer National Insurance contributions (NICs), alongside rises in the minimum wage, has weighed on employment growth over the past 12 months. Policymakers said these factors are also helping to curb rapid wage growth, which had previously been seen as a potential driver of higher inflation. Read more... Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

In the latest Autumn Budget, a £2,000 annual cap was set on the National Insurance (NI) exemption for pension contributions made via salary sacrifice.  On the surface, this appears to be a fix targeting high earners.   However, upon closer inspection, those truly affected are the middle-income groups who are diligently planning for their retirement. This change is quietly altering the pension strategies of millions of British workers. Millions choose salary sacrifice for pension contributions Salary sacrifice is a voluntary agreement between an employee and their employer, where a portion of nominal salary is converted into a benefit paid directly by the employer—the most common form being pension contributions. Since the 'sacrificed' portion of the salary is transferred into the pension account before it is paid out, employees do not need to pay income tax or National Insurance on it, and employers can also save on their corresponding National Insurance contributions.  This mechanism not only improves the efficiency of pension savings but has also served as an effective means for middle-to-high earners to optimise their tax burden for a long time. According to Treasury data, approximately 7.7 million people currently contribute to pensions through salary sacrifice, representing about one-fifth of the UK workforce. NI exemption cap to be implemented from April 2029 From April 2029, only the first £2,000 of pension contributions made via salary sacrifice each year will be exempt from National Insurance.  This means that any portion exceeding £2,000 will be treated by the tax system as a standard employee pension contribution. Consequently, both employees and employers will need to pay National Insurance on this excess, resulting in higher individual tax bills and increased labour costs for employers. The current National Insurance thresholds are as follows: 8% on annual earnings below £50,270 and 2% on earnings above that amount, with the employer contribution rate set at 15%.  Middle earners become the primary victims The Treasury claims that the majority of people will be unaffected.  Statistically, this is correct – roughly 74% of basic-rate taxpayers will not reach the £2,000 cap. However, the problem is that the people who will be hit are often those most actively saving for their pension. For example, an employee earning £40,000 a year who contributes the common minimum of 5% to their pension would hit the £2,000 exemption cap exactly, incurring no extra tax. But as soon as the contribution rate is increased, even from 5% to 6%, the excess portion will begin to incur National Insurance costs. This leads to a counter-intuitive conclusion: those who feel the 'most pain' from the National Insurance increase are actually those whose income sits right at the £50,270 threshold. If an individual earns £50,270 per year (the upper limit for the basic rate) and continues to save only the minimum 5% into their pension, the amount paid via salary sacrifice would exceed the £2,000 cap by £513.50. As a result, they would have to pay an additional £41.08 in National Insurance. Interestingly, if their income were just £1 higher, officially entering the higher-rate tax bracket, the situation would look 'better'. Because the National Insurance rate for higher-rate taxpayers drops to 2%, the same excess portion would only increase their tax bill by £10.27. If an individual earns £105,000 and contributes £10,000 to their pension via salary sacrifice, under the new rules, only the first £2,000 is exempt from National Insurance. The remaining £8,000 would be subject to NI. However, because they are a higher-rate taxpayer, the NI rate is only 2%, meaning the extra National Insurance paid for the year would be just £160. Therefore, for high earners, this is an increase in cost, but not a devastating blow.  Following this analysis, one might ask – is this truly a crackdown on the wealthy?  Perhaps not. Proportionally, high earners face smaller marginal losses due to the lower NI rate (2%), whereas middle earners who want to save more for retirement but still fall within the 8% NI bracket are most likely to be caught in the middle. For those with annual incomes approaching the £50,270 basic-rate threshold, the new National Insurance deductions are more noticeable in percentage terms. Once income crosses this threshold and the NI rate drops from 8% to 2%, the additional burden actually decreases. This 'threshold effect' means some upper-middle-income earners may face higher relative pressure under the new policy than those with even higher incomes. The real signal from this policy is that the government is no longer encouraging the optimisation of tax bills through salary sacrifice, but rather wants pensions to return to their essence as long-term savings.  However, while the rules may have changed, individual retirement pressures have not. Maximising funds under the new regulations In the face of this change, the consensus among several UK financial experts is that, if personal finances allow, individuals should make the most of salary sacrifice to increase pension contributions before the policy officially takes effect. This does not mean blindly increasing the salary sacrifice ratio, but rather rationally assessing cash flow, living costs, and long-term goals to optimise pension savings within an affordable range. Of course, not everyone is in a position to increase their stakes in advance.  Under the pressure of high inflation and the cost of living, many families are more concerned with immediate cash flow stability. For these people, maintaining a sustainable contribution level and regularly reviewing pension arrangements remains the most realistic and important strategy. One should also be wary that salary sacrifice reduces nominal salary levels, which may affect mortgage applications, eligibility for social benefits, and other financial aspects.  Furthermore, it must not bring earnings below the statutory minimum wage. All these factors require careful consideration before making a decision. The view from TB Accountants In the long run, the new cap does not mean the end of pension planning, but rather a change in approach.  Even without using salary sacrifice, individuals can still obtain income tax relief through standard pension contributions; it simply requires more administrative effort when filing tax returns or adjusting net income calculations. Overall, the introduction of the £2,000 salary sacrifice cap marks a shift in UK pension tax incentives to targeted support.  For individuals, the key is not whether to continue contributing to a pension, but how to plan more cleverly under the new rules. The earlier you understand the changes and begin to adjust, the more prepared you will be when facing tax and retirement issues in the future. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

UK households urged to consider 25% pay cuts ahead of HMRC punishment As the issue of high tax burdens imposed by HMRC continues to spark controversy in the UK, a growing number of high-income earners are considering voluntarily cutting their salaries to avoid what they describe as “punitive taxation.” One British pilot has publicly revealed that he chose to take a 25% pay cut in order to avoid facing sharply higher taxes once his income crossed a key threshold.   The 41-year-old pilot, Brown, said that after his annual salary exceeded £100,000, he discovered that more than half of his income was going toward taxes. Under the current tax system, income above £100,000 up to £125,140 is subject to an effective marginal tax rate of 60 pence for every additional £1 earned, resulting in a marginal tax rate as high as 60%.   Speaking in an interview, Brown said: “In my view, anything above a 50% tax rate is a tipping point. You’re giving more than you’re getting back — it feels like being punched in the face.” To avoid this “high-tax trap,” he decided to work only three weeks a month, reducing both his workload and income by 25%, and using the extra time to help his partner, Danisa, run her business.   He was blunt in his criticism, saying the tax policy actually undermines motivation to work. “I’m deliberately limiting my earning potential, paying less tax, and becoming less productive. In the end, everyone loses — individuals, society, and consumers,” he said, calling the policy “fundamentally flawed.”   Brown added that such tax policies actively discourage work. He noted that most people earning close to or around £100,000 do not have the flexibility his job allows. “They either cut back on working hours, curb their career ambitions, or funnel all their income into pensions. Ultimately, the economy loses both their output and the potential growth in tax revenues.”   In the same report, another taxpayer expressed strong dissatisfaction: “If you do an extra £1,000 worth of work and only take home £380, the return is just too low. In that situation, I’d rather work only three or four days a week.” He added sarcastically, “I’ll put my feet up and take the dog for a walk in the woods.”   Analysts say this phenomenon highlights the potential negative impact of the UK’s high-income tax system on work incentives and economic vitality, and has once again reignited widespread debate over tax reform. Read more... HMRC cracks down on “speculative” stamp duty refund claims, recovering an average of £66,000 per case   As HMRC intensifies its crackdown on “speculative” tax refund claims, both the number of investigations and the amount of tax recovered have risen sharply. Notably, the number of homebuyers investigated for underpaying stamp duty doubled last year.   In the 2024/25 tax year, more than 3,000 taxpayers were investigated for allegedly avoiding or underpaying stamp duty. HMRC recovered an average of approximately £66,000 per case, bringing the total amount recovered to around £201 million. By comparison, in the 2023/24 tax year, only 1,617 homebuyers were investigated, with £85.4 million recovered. HMRC said the sharp increase was largely driven by its targeted scrutiny of stamp duty refund claims. In October 2025, the tax authority publicly warned homebuyers not to trust so-called “no win, no fee” stamp duty refund services promoted by rogue agents on social media.   According to HMRC, in many cases these agents incorrectly tell buyers that properties requiring renovation qualify for lower stamp duty rates. HMRC stressed that such claims are often inaccurate and speculative, and may not only be rejected but also result in higher back taxes and penalties.   HMRC further clarified that even properties requiring substantial renovation may still be classified as residential property and therefore do not qualify for reduced stamp duty rates. A 2024 ruling by the UK Court of Appeal made it clear that unless a property has serious structural safety issues, it should still be regarded as residential—even if it requires a new kitchen or extensive rewiring.   The tightening of stamp duty enforcement has also been linked to a high-profile political case involving former Deputy Prime Minister Angela Rayner. Last year, a media investigation revealed that Rayner had underpaid stamp duty by tens of thousands of pounds when purchasing a flat in Hove, forcing her to resign from her post. Rayner said she had mistakenly believed she qualified for an exemption from the higher stamp duty rate applied to second homes.   Industry experts note that the public attention surrounding Rayner’s case may have prompted HMRC to step up enforcement further, particularly in transactions involving second homes. They expect HMRC to intensify scrutiny of multiple-property purchases going forward. Read more... Every pub in London to get 15% off business rates bill as £300m support package unveiled   Last week, UK Chancellor Rachel Reeves announced that every pub in England will receive a 15% reduction in its business rates bill, with bills effectively frozen at that level for the next two years. Under the £300 million support package for pubs and music venues, pubs are expected to receive around £100 million in additional financial support each year through to 2029.   The relief measures come in response to a business rates increase announced in last year’s Budget. Previously, pubs and music venues were facing sharply higher bills due to a significant rise in rateable values—based on estimated annual market rents—and the removal of a 40% sector-specific relief. Industry groups warned that by 2028, average bills for many pubs could rise by as much as 76%, potentially triggering widespread closures and job losses.   Earlier, amid dissatisfaction with the Autumn Budget, dozens of Labour MPs—including the Chancellor herself—had reportedly been refused entry by pub owners in protest.   However, other parts of the hospitality sector, including restaurants, hotels, and cafés, are not covered by the new relief. These businesses are expected to see their business rates bills rise by an average of 115% over the next three years, reaching approximately £111,300.   Speaking in the House of Commons, Treasury Minister Tomlinson said: “Pubs are the backbone of many communities and play a vital role in our social and cultural life. Given the unique and long-standing challenges faced by the pub sector, we will provide targeted support over the next three years.” He added that the government would further review valuation methods across hotels, retail, and the wider hospitality sector to ensure they more accurately reflect market conditions.   In recent months, several major restaurant groups, including TGI Fridays UK and Leon, have announced insolvency proceedings. Read more... Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .

Running a successful business is no small feat.  Beyond daily operations, it requires forward planning, an accurate grasp of policy changes, and the timely fulfilment of various statutory obligations. To help business owners plan more effectively for 2026, we have compiled the 2026 UK Corporate Compliance Calendar which includes a list of key dates for the year. This covers tax filings, payment deadlines, employer obligations, and important policy trends to ensure your business remains organised and compliant throughout the year. 2026 UK Corporate Compliance Calendar January: Tax filing and payment deadlines For those registered for Self Assessment, such as the self-employed, sole traders, and landlords, 31 January is one of the most important tax milestones of the year. You must complete your online tax return and pay all tax due by midnight on this date. For 31 January 2026, this includes: Submitting your online Self Assessment tax return for the 2024/25 tax year. Failure to submit on time results in an automatic £100 penalty, which increases the longer the delay Paying the tax due for the 2024/25 tax year. This includes income tax, National Insurance contributions (NICs), capital gains tax, and other relevant charges Making the first 'payment on account' for the 2025/26 tax year. This is an advance payment towards your next tax bill, usually calculated based on your previous year’s liability. February: Companies House fee adjustments From 1 February 2026, Companies House will implement adjustments to its filing fees as follows: Online company incorporation fee: increasing from £50 to £100 Annual filing fee: increasing from £34 to £50 for online submissions, and from £62 to £110 for postal submissions Confirmation statement: online submission fees will rise from £34 to £50, while postal submissions will increase from £71 to £124 Voluntary strike-off: the fee for online applications will decrease to £13, and postal applications will decrease to £18 March: Spring Statement The Spring Statement is expected to be delivered on 3 March 2026.  At this time, the Chancellor will provide an update on the economic situation and public finances, and announce measures that may affect businesses. Business owners should pay close attention to these updates. April: Start of the new tax year and employer-related changes April is one of the months with the highest concentration of policy changes in the UK, including the transition of the tax year: 5 April 2026 marks the end of the 2025/26 tax year. For businesses that report via Self Assessment or align their accounting year with the tax year, this is the final day of their accounting period 6 April 2026 marks the start of the 2026/27 tax year. Businesses must update employee payroll and salary records. By 19 April, the final Full Payment Submission (FPS) and Employer Payment Summary (EPS) up to 5 April must be submitted, and annual tax and National Insurance contributions must be settled According to the 2025 Autumn Budget, from 1 April 2026, the UK national minimum wage will increase as follows: Employees aged 21 and over: increasing to £12.71 per hour (from £12.21) Employees aged 18 to 20: increasing to £10.85 per hour (from £10.00) Employees under 18 and apprentices: increasing to £8.00 per hour (from £7.55) Additionally, from April 2026, the Employment Rights Bill is expected to introduce new employee protection measures.  For employers, this means a simultaneous increase in compliance costs and management requirements, including: Rights to paternity leave and unpaid parental leave from day one of employment Expanded statutory sick pay protections Establishment of a new independent Fair Work Agency Strengthened whistleblower protection mechanisms May: Local elections and P60 deadline UK local elections are expected to take place in May 2026.  Changes in local leadership can sometimes affect funding allocations, planning policies, or regional business priorities. Furthermore, employers must issue P60 forms for the 2025/26 tax year to all eligible employees by 31 May 2026.  Directors of limited companies who receive a salary must also issue a P60 for themselves. June: Update to Advisory Fuel Rates From 1 June 2026, new Advisory Fuel Rates (AFR) will come into effect. Businesses should update their mileage reimbursement and expense policies accordingly. July: Tax payments 31 July 2026 is the deadline for the second payment on account. The second instalment for the 2025/26 tax year must be paid by this date. August and September: Bank holidays and business activities The British Business Bank typically hosts Business Finance Week in September, featuring free online and offline events to help businesses understand the financing options available to them. October: HMRC deadlines and the Autumn Budget 5 October each year is the deadline to register for Self Assessment for the previous tax year.  If you started a business during the 2025/26 tax year but have not yet registered, you must notify HMRC by this date. Additionally, new partnerships formed or new partners added during the 2025/26 tax year must also complete their notifications to HMRC by this date. Typically, the Autumn Budget is announced in late October (the specific date for 2026 is yet to be confirmed). Relevant adjustments may affect taxation, immigration visas, or employer costs. November and December: Retail peak season and year-end preparation As the year draws to a close, Black Friday, Cyber Monday, and the Christmas holidays bring the busiest online shopping season of the year to the UK.  For e-commerce businesses, this is the best period for a marketing sprint, whilst many businesses use this time to organise records, review their financial situation, and prepare documents required for the January Self Assessment. The view from TB Accountants 2026 remains a year of challenges and new opportunities for UK businesses.  Mastering key tax milestones in advance and planning cash flow rationally can effectively avoid the risk of penalties and lay a solid foundation for the long-term steady development of your enterprise. Prepare accounts and documents as early as possible – do not wait until January of the following year to organise your data. Completing preliminary calculations before the end of the year helps reduce errors and alleviate filing pressure. Focus on cash flow and payment on account arrangements – payments on account are not an additional tax burden, but they significantly impact cash flow. Consider planning funds in stages to maintain operational flexibility. Evaluate employment and salary structures – in light of the minimum wage increase and related employment policy changes, re-examine your staffing and cost structures. Seek a professional accountant for tax filings – if you have doubts about tax filing processes, form completion, or key deadlines, it is advisable to appoint a professional accountant early to handle your accounts and filings, allowing you to focus on your business growth with peace of mind. Why TB Accountants? Professional Assurance : Our team includes ACA members and ACCA-certified professionals, delivering services to the highest industry standards. Responsive Service : We respond to your inquiries within 24 hours, ensuring efficient communication across time zones. Multilingual Support : Services available in English, Mandarin, Cantonese, Japanese, French, German, Spanish, Italian, Turkish, and more. Trusted by Clients Worldwide : Consistently praised by global clients for proactive, professional, and reliable accounting and tax support. For individuals and businesses looking for UK taxation services, use our contact form  to get in touch for more information. Get in touch with us at info@tbagroup.uk  or for a free one-to-one consultation.  This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact  TBA Group  via  email  or  WhatsApp .