By Katie Business Advisory • Business News 0 Comments

Making Tax Digital for Income Tax: What Sole Traders and Landlords Need to Know

Making Tax Digital for Income Tax is now here.

From 6 April 2026, Making Tax Digital (MTD) for Income Tax became mandatory for many sole traders and landlords with qualifying income over £50,000.

And if you haven’t signed up when you should have, HMRC may now do it for you.

From September 2026, HMRC is starting to automatically sign up taxpayers who its records show should already be using Making Tax Digital for Income Tax.

So, if you’re self-employed, a landlord, or both, it’s important to understand whether the new rules apply to you and what you need to do next.

At A&C Chartered Accountants, we’ve put together a straightforward guide to the latest Making Tax Digital changes.

Who needs to use Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is being introduced gradually according to your qualifying income.

You need to use MTD for Income Tax:

  • from 6 April 2026 if your qualifying income for 2024/25 was more than £50,000
  • from 6 April 2027 if your qualifying income for 2025/26 is more than £30,000
  • from 6 April 2028 if your qualifying income for 2026/27 is more than £20,000.

This means considerably more sole traders and landlords will be brought into the MTD system over the next two years.

What counts as qualifying income for Making Tax Digital?

This is an important point because the threshold isn’t based on your profit.

Qualifying income is broadly your total gross income from self-employment and property before expenses are deducted.

If you have both self-employment and property income, these are combined when determining whether you exceed the threshold.

For example, if you received £35,000 of gross income from your self-employed business and £20,000 of gross property income, your combined qualifying income would be £55,000.

It’s therefore important not to assume you’re outside MTD simply because the profit you actually make is below £50,000.

What do you have to do under Making Tax Digital?

If you’re within MTD for Income Tax, the way you maintain your accounting records and report information to HMRC changes.

You’ll need to:

  • keep digital records of your self-employment and property income and expenses
  • use MTD-compatible software
  • send quarterly updates to HMRC
  • submit your tax return using compatible software.

For taxpayers who entered MTD from April 2026, the first quarterly update deadline was 7 August 2026.

The next quarterly update deadline is 7 November 2026.

MTD therefore isn’t simply a different way of submitting your annual Self Assessment tax return. Digital record keeping and reporting become part of what you need to do throughout the year.

What are the Making Tax Digital quarterly deadlines?

For those using the standard quarterly update periods, the deadlines for the 2026/27 tax year are:

7 August 2026 – first quarterly update

7 November 2026 – second quarterly update

7 February 2027 – third quarterly update

7 May 2027 – fourth quarterly update

You will then need to prepare and submit your tax return through MTD-compatible software by the relevant Self Assessment deadline.

Keeping your bookkeeping up to date throughout the year becomes particularly important when you’re working to quarterly reporting deadlines.

HMRC is automatically signing up some taxpayers from September 2026

This is one of the most important recent developments.

From September 2026, HMRC is starting to sign up people who should be using Making Tax Digital for Income Tax but haven’t already registered.

HMRC says this will happen where its records show that the taxpayer had qualifying income over £50,000 in the 2024/25 tax year and therefore should be using MTD during 2026/27.

If HMRC signs you up, it will contact you to tell you what has happened and what you need to do next.

If you receive a letter, email or digital notification from HMRC about Making Tax Digital, don’t ignore it.

What should you do if HMRC signs you up automatically?

Being signed up by HMRC doesn’t remove the need to comply with MTD.

You’ll still need to make sure you have appropriate compatible software and are keeping the digital records required under the new system.

If you’re contacted by HMRC, you should check:

  • whether your qualifying income means you are actually required to use MTD
  • whether the information HMRC holds about you is correct
  • whether you have compatible accounting software in place
  • whether your digital records are up to date
  • whether you’ve missed any quarterly reporting requirements
  • whether you could qualify for an exemption.

If you’re unsure, getting advice early can prevent the problem becoming more complicated.

What if my income is below £50,000?

You may not be required to use MTD yet, but you should still check when the rules will apply to you.

The threshold drops significantly over the next two tax years.

From April 2027, those with qualifying income above £30,000 will be brought into MTD.

From April 2028, the threshold drops again to more than £20,000.

This means many smaller sole traders and landlords who aren’t currently affected will need to prepare soon.

If your qualifying income for 2025/26 is approaching or above £30,000, now is a sensible time to start thinking about your bookkeeping and accounting software rather than waiting until April 2027.

What software do I need for Making Tax Digital?

You’ll need software that is compatible with Making Tax Digital for Income Tax.

The right software will depend on your circumstances, the type of business you run and how you currently manage your bookkeeping.

For some small businesses, moving to cloud accounting software can also make it easier to keep records up to date, monitor business performance and share information with their accountant.

A&C Chartered Accountants is a Xero Platinum Partner and can help businesses move to digital accounting and establish a bookkeeping system that works for both MTD compliance and the day-to-day running of the business.

Can you be exempt from Making Tax Digital?

There are circumstances where someone may be able to apply for an exemption from the digital requirements.

HMRC considers whether it is reasonable or practical for someone to use digital tools, taking their individual circumstances into account.

If you think you may qualify for an exemption, don’t simply ignore the MTD requirements.

Your circumstances should be reviewed and, where appropriate, an exemption should be requested from HMRC.

What should sole traders and landlords do now?

If your qualifying income exceeded £50,000 in 2024/25, you should already have considered whether you need to be using MTD for Income Tax.

If you’re not yet signed up, take action now rather than waiting for HMRC to contact you.

And if your income is between £30,000 and £50,000, don’t assume MTD isn’t relevant to you.

The next phase begins on 6 April 2027.

Preparing early gives you time to choose suitable software, get your bookkeeping organised and understand how quarterly reporting will work before it becomes mandatory.

Need help with Making Tax Digital for Income Tax?

Making Tax Digital represents a significant change for sole traders and landlords, but it doesn’t need to make running your business more complicated.

The right accounting system can help you stay compliant while also giving you a much clearer picture of your income, expenses and business performance throughout the year.

A&C Chartered Accountants can help you determine when MTD applies to you, get set up with compatible accounting software, maintain digital records and meet your ongoing reporting requirements.

If you’ve received an MTD notification from HMRC, think you should already be registered, or want to prepare for the £30,000 threshold coming in from April 2027, contact A&C Chartered Accountants and we can help you get ready.

This article is intended as general information only and does not constitute tax advice. Making Tax Digital requirements depend on individual circumstances and HMRC guidance may change.

By Katie Business Advisory • Business News 0 Comments

HMRC Advisory Fuel Rates from September 2026

HMRC’s advisory fuel rates for company cars have changed from 1 September 2026.

If your business provides company cars or reimburses employees for business mileage, it is important to make sure you are using the correct rates.

There has also been a significant change for employees using their own cars for business journeys, with the approved mileage rate increasing to 55p per mile for the first 10,000 business miles.

At A&C Chartered Accountants, we’ve broken down the latest mileage and fuel rates and what they mean for employers.

What are HMRC advisory fuel rates?

Advisory fuel rates are HMRC’s recommended mileage rates for company cars.

They can be used when:

  • an employer reimburses an employee for business travel in their company car
  • an employee needs to repay the cost of fuel used for private travel in a company car.

Where the correct rates are used in the appropriate circumstances, there should generally be no taxable profit or benefit for the employee.

It is important to distinguish these rates from the mileage rates available when an employee uses their own personal car for business travel.

HMRC advisory fuel rates from 1 September 2026

The rates depend on the type of fuel and engine size.

Engine size Petrol Diesel LPG
1400cc or less 14p — 11p
1600cc or less — 15p —
1401cc to 2000cc 17p — 13p
1601cc to 2000cc — 16p —
Over 2000cc 27p 22p 20p

The new rates apply from 1 September 2026.

Employers can continue to use the previous rates for up to one month from the date the new rates apply.

What is the advisory fuel rate for electric company cars?

There are separate advisory electricity rates for fully electric company cars.

From 1 September 2026, the rates are:

Home charging – 7p per business mile

Public charging – 15p per business mile

Having separate rates recognises the difference between the typical cost of charging an electric company car at home and using public charging facilities.

Businesses with electric company cars should therefore make sure their mileage reimbursement procedures distinguish between home and public charging where appropriate.

What rate should you use for a hybrid company car?

Hybrid cars do not use the electric advisory rate.

HMRC says hybrid cars should be treated as either petrol or diesel cars for advisory fuel rate purposes.

The appropriate rate will therefore depend on the vehicle’s fuel type and engine size.

What if an employee uses their own car for business?

Different rules apply when an employee uses their own car or van for business journeys.

For the 2026/27 tax year, the Approved Mileage Allowance Payment rate for cars and vans is:

55p per business mile for the first 10,000 business miles

25p per business mile after 10,000 business miles.

The 55p rate increased from 45p and applies retrospectively from 6 April 2026.

There is also an additional passenger payment of 5p per mile for each fellow employee carried on a qualifying business journey.

What about National Insurance on mileage payments?

There is an important difference between the Income Tax and National Insurance rules.

For Income Tax purposes, the approved mileage rate for cars and vans is 55p for the first 10,000 business miles and 25p thereafter.

For National Insurance purposes, the relevant rate is 55p per business mile, without the 10,000-mile reduction.

Employers should therefore make sure they understand which rules apply when calculating the tax and National Insurance treatment of mileage payments.

Can employees claim tax relief if they receive less than 55p per mile?

Potentially, yes.

An employer does not have to reimburse an employee at the full approved mileage rate.

However, if an employer pays less than the approved amount, the employee may be able to claim Mileage Allowance Relief from HMRC on the difference.

For example, if an employer reimburses an employee at 30p per mile when the applicable approved rate is 55p, the employee may be able to claim tax relief on the 25p per mile difference.

It is tax relief on the difference rather than HMRC simply paying the employee the missing 25p.

Can employers reclaim VAT on mileage payments?

VAT-registered businesses may be able to recover VAT relating to the fuel element of mileage payments.

The advisory fuel rates can be used to determine the fuel element of the mileage payment.

The VAT element is calculated from the relevant fuel amount, and the business will need appropriate VAT evidence to support its claim.

For example, if the relevant advisory fuel rate is 15p per mile, the VAT element at the standard 20% VAT rate would be 2.5p per mile.

Employers should retain appropriate VAT invoices or receipts to support the VAT reclaimed.

Why should employers review their mileage policies?

The changes during 2026 make this a good time for employers to review their existing business mileage arrangements.

Check:

  • which employees use company cars
  • which employees use their own cars for business
  • the mileage rates currently being paid
  • whether payroll has been updated for the new rates
  • how electric vehicle charging is being reimbursed
  • whether appropriate mileage records are being maintained
  • whether VAT is being reclaimed correctly.

If your business was still using the previous 45p mileage rate after 6 April 2026, you may also want to review the impact of the retrospective increase to 55p.

Company car or personal car: don’t confuse the two mileage rates

One of the easiest mistakes to make is confusing advisory fuel rates with Approved Mileage Allowance Payments.

They serve different purposes.

Advisory fuel rates are primarily used in connection with fuel costs for company cars.

The 55p and 25p Approved Mileage Allowance Payment rates apply when an employee uses their own car or van for qualifying business journeys.

Using the right rate matters because getting it wrong can have Income Tax, National Insurance and VAT consequences.

Need help with business mileage and company car expenses?

Mileage payments can appear straightforward, but the tax treatment depends on who owns the vehicle, the type of journey and how much the employee is reimbursed.

With changes to both advisory fuel rates and Approved Mileage Allowance Payments during 2026, now is a sensible time for employers to check that their mileage policies are up to date.

A&C Chartered Accountants can help businesses understand the tax treatment of company cars, mileage payments and employee expenses and make sure they are applying the correct HMRC rates.

If you’re unsure which mileage rate your business should be using, contact A&C Chartered Accountants and we can review your current arrangements.

This article is intended as general information only and does not constitute tax advice. Rates and HMRC guidance can change, and the correct treatment will depend on individual circumstances.

By Katie Business Advisory • Business News 0 Comments

HMRC Using Third-Party Data to Target Landlords

HMRC has access to more information about landlords and rental properties than many people realise.

It is increasingly using third-party data alongside the information submitted on tax returns to identify landlords whose declared property income may not match the information HMRC holds.

Landlords may receive a letter from HMRC asking them to check whether all of their rental income has been correctly declared.

If you receive one, it is important not to ignore it.

At A&C Chartered Accountants, we explain what HMRC is looking for, what landlords should check and what to do if you discover that rental income has not previously been declared.

How does HMRC know about rental income?

HMRC has extensive data-gathering powers and receives information from a range of third parties and statutory reporting systems.

This can include information connected with letting agents and other organisations involved with property and rental transactions.

HMRC can compare information from these sources with the figures taxpayers have reported.

If the information does not appear to match, it may prompt HMRC to contact the landlord and ask them to review their tax position.

For landlords, this makes accurate record keeping and complete reporting increasingly important.

What should you do if you receive a letter from HMRC about rental income?

The first thing is not to panic, but don’t ignore the letter either.

Receiving a letter does not automatically mean that you have deliberately done anything wrong.

However, you should review your tax affairs carefully and respond within any deadline given by HMRC.

This may involve checking:

  • rental income received during the relevant tax years
  • expenses claimed against your property income
  • information previously included on Self Assessment tax returns
  • jointly owned properties and how income has been reported
  • income from more than one rental property
  • income from short-term or holiday lets
  • overseas property income
  • whether any rental income has accidentally been omitted.

If your records show that everything has been declared correctly, you may still need to respond to HMRC using the instructions provided in its correspondence.

What happens if you haven’t declared rental income?

If your review identifies rental income that should previously have been reported, it is important to deal with it properly.

HMRC operates the Let Property Campaign, which allows individual residential landlords with previously undisclosed property income to bring their tax affairs up to date.

Depending on the circumstances, you may need to calculate the tax owed for earlier years together with any applicable interest and penalties.

HMRC states that landlords with undisclosed rental income should tell HMRC about unpaid tax rather than waiting for HMRC to discover it.

The exact approach will depend on why the income was not declared and the individual circumstances involved.

Could landlords face penalties for undeclared rental income?

Potentially, yes.

The amount of any penalty can depend on factors including why the tax was underpaid and how the disclosure is made.

This is one reason landlords should not simply wait to see whether HMRC takes further action.

If you realise that rental income has not been correctly declared, getting professional advice at an early stage can help you understand the appropriate way to correct your tax position.

What is the HMRC Let Property Campaign?

The Let Property Campaign is an HMRC disclosure facility aimed at individual landlords who need to disclose unpaid tax relating to residential property income.

It can apply to different types of landlords, including those who rent out one property or several properties.

The process involves notifying HMRC that you intend to make a disclosure and then calculating the amount of tax owed.

HMRC currently requires the disclosure and payment to be made within 90 days of receiving its acknowledgement of your notification.

If you think you may have undeclared rental income, it is important to understand the process before making a disclosure.

A&C Chartered Accountants can review your circumstances and help establish what information needs to be provided to HMRC.

Don’t forget Capital Gains Tax when selling a rental property

Rental income isn’t the only tax issue landlords need to consider.

If you have sold or otherwise disposed of a rental property, there may also be Capital Gains Tax implications.

The tax position will depend on factors including how much you originally paid for the property, the disposal proceeds, allowable costs, available reliefs and your individual circumstances.

HMRC correspondence relating to your property affairs should therefore be an opportunity to review your wider tax position rather than looking solely at rental income.

Making Tax Digital is another major change for landlords

Landlords also need to consider whether they are now required to use Making Tax Digital for Income Tax.

MTD for Income Tax became mandatory from 6 April 2026 for qualifying sole traders and landlords with qualifying income above £50,000, based on their 2024/25 tax return.

The threshold will then reduce:

  • from April 2027 to qualifying income above £30,000
  • from April 2028 to qualifying income above £20,000.

Qualifying income broadly includes gross income from self-employment and property before expenses.

If you have both self-employment and property income, the amounts are combined when determining whether you exceed the relevant threshold.

This means many more landlords will be brought into Making Tax Digital over the next two years.

What records should landlords be keeping?

Good record keeping is becoming increasingly important.

Landlords should maintain clear records of their rental income and property-related expenditure, together with supporting documents where appropriate.

If you fall within Making Tax Digital, you will also need to meet the relevant digital record-keeping requirements and use compatible software.

Keeping your property finances organised throughout the year makes it much easier to prepare accurate tax information and respond to HMRC if questions arise.

Can HMRC find out that you are a landlord?

Landlords should not assume that HMRC only knows about a property if they declare it themselves.

HMRC has legal powers to obtain information from third-party data holders and uses a range of information to identify potential non-compliance in the property sector.

The safest approach is therefore simple: make sure all taxable property income is correctly reported and deal with any historic errors as soon as they are identified.

Received an HMRC letter about rental income? A&C Chartered Accountants can help

Receiving an HMRC letter can be worrying, particularly if you are unsure why you have been contacted or whether your previous tax returns were correct.

Don’t ignore it and don’t rush into responding before you understand your position.

A&C Chartered Accountants can review your rental income, previous tax returns and the information requested by HMRC to establish what action needs to be taken.

Where income has not previously been declared, we can also advise on the appropriate disclosure process and help you bring your tax affairs up to date.

If you have received an HMRC letter relating to your rental property or are concerned that you may have undeclared rental income, contact A&C Chartered Accountants as soon as possible.

This article is intended as general information only and does not constitute tax advice. The correct tax treatment will depend on individual circumstances and tax rules and HMRC guidance can change.

By Katie Business News 0 Comments

Mandatory Payrolling of Benefits in Kind from April 2027

Big changes are coming to the way employers report benefits in kind (BiKs) to HMRC.

From 6 April 2027, employers will have to report certain benefits through payroll in real time, rather than waiting until after the end of the tax year to report them on a P11D.

The changes are being introduced in phases, with company cars, fuel, vans and private medical benefits among the first to move to mandatory payrolling.

If your business provides benefits to employees or directors, now is a good time to understand what is changing and make sure your payroll processes are ready.

At A&C Chartered Accountants, we’ve broken down what employers need to know.

What are benefits in kind?

Benefits in kind are benefits or perks provided to employees or directors on top of their salary.

They can include things such as:

  • company cars
  • fuel for private use
  • company vans
  • private medical insurance
  • beneficial loans
  • living accommodation
  • other taxable employee benefits.

Depending on the benefit and the circumstances, the employee may have to pay tax on its value.

Traditionally, many of these benefits have been reported to HMRC after the end of the tax year using form P11D.

That system is now changing.

What is changing from 6 April 2027?

From 6 April 2027, mandatory payrolling will initially apply to:

  • company cars
  • company car fuel
  • vans
  • van fuel
  • private medical benefits.

Instead of reporting these benefits after the tax year has ended, employers will need to report them through payroll using Real Time Information (RTI).

This means the tax due on these benefits can be collected through PAYE during the tax year.

For employers, benefits in kind will therefore become much more closely connected to the monthly or weekly payroll process.

What happens to P11Ds?

The move to mandatory payrolling does not mean P11Ds will disappear immediately.

The new system is being introduced gradually.

From April 2027, the first five categories of benefits will become subject to mandatory payrolling.

From April 2028, mandatory payrolling is expected to extend to most other benefits in kind.

Employment-related loans and living accommodation are currently excluded from mandatory payrolling and can continue to be payrolled voluntarily.

This means some employers may still have P11D reporting requirements while the new system is being phased in.

How will mandatory payrolling work?

Under the new rules, employers will need to calculate the taxable value of the relevant benefit and include it within their payroll reporting.

The information will be submitted to HMRC through RTI.

Employers will therefore need accurate and up-to-date information about the benefits employees and directors receive throughout the year.

This is an important change.

Previously, businesses could often gather much of their benefits information after the tax year had ended when preparing P11Ds.

Under mandatory payrolling, employers will need processes that allow changes to be identified and reported much sooner.

What does this mean for employees?

Employees will also see a change in how tax on their benefits is collected.

Currently, HMRC may adjust an employee’s tax code to collect tax relating to a benefit in kind.

Under mandatory payrolling, tax on the relevant benefits will instead be collected through PAYE in real time.

Employees may therefore notice changes to their tax codes, PAYE deductions and take-home pay.

There could also be situations where an employee is still paying tax relating to benefits from an earlier year while tax on their current benefits is being collected through payroll.

This makes communication particularly important.

Employers should explain the changes before April 2027 so employees understand why their payslips or tax deductions may look different.

Do employers need to register?

Employers will not need to register to payroll the benefits that become mandatory from April 2027.

However, businesses that want to voluntarily payroll other benefits will need to register with HMRC.

HMRC is expected to open voluntary registration for the 2027/28 tax year from November 2026.

This will allow employers to choose to payroll certain benefits that are not yet included within the first phase of mandatory payrolling.

What should employers do now?

Although April 2027 is still several months away, employers should start reviewing their current arrangements.

A good starting point is to:

  1. Compile a complete list of benefits currently provided to employees and directors.
  2. Review previous P11Ds to identify which benefits are currently being reported.
  3. Check whether your payroll software can support real-time benefits in kind reporting.
  4. Speak to your payroll provider or accountant about how the changes will be managed.
  5. Establish a process for reporting employees who start, stop or change benefits during the year.
  6. Consider how underpayments and overpayments will be dealt with.
  7. Prepare communications explaining the changes to employees.

The key difference is that benefits information will increasingly need to reach payroll throughout the year rather than being dealt with retrospectively.

Will small businesses be affected?

Yes.

These rules do not only affect large employers.

A small limited company with one director who has a company car, for example, could be affected by mandatory payrolling from April 2027.

Likewise, a small business providing private medical insurance to a handful of employees will need to understand how those benefits should be reported.

For small employers, having a clear process in place could make the transition considerably easier.

Key dates for mandatory payrolling of benefits in kind

November 2026 – HMRC’s registration service is expected to open for employers wishing to voluntarily payroll additional benefits for the 2027/28 tax year.

6 April 2027 – Mandatory payrolling begins for company cars, company car fuel, vans, van fuel and private medical benefits.

April 2028 – Mandatory payrolling is expected to extend to most other benefits in kind.

How A&C Chartered Accountants can help

Mandatory payrolling represents a significant change to the way benefits in kind are reported.

For employers, the biggest challenge will be making sure accurate information reaches payroll at the right time.

Preparing early gives businesses the opportunity to review their benefits, payroll software and internal processes before the new system becomes mandatory.

A&C Chartered Accountants can help businesses understand their benefits in kind obligations, manage payroll reporting and prepare for the April 2027 changes.

If your business provides company cars, vans, fuel, private medical insurance or other employee benefits, speak to A&C Chartered Accountants about getting your payroll ready for the new rules.

This article is intended as general information only and does not constitute tax advice. Tax rules and HMRC guidance can change, and the treatment of benefits will depend on individual circumstances.

By Katie Business Advice • Business Advisory • Business News 0 Comments

Side Hustle Tax UK: When Do You Need to Tell HMRC?

From selling products online and creating content to freelancing at weekends, side hustles have become an increasingly common way for people in the UK to earn extra money.

But at what point does a side hustle become something you need to tell HMRC about?

HMRC has launched a new summer campaign reminding people earning additional income that they may have tax and reporting obligations.

The campaign specifically highlights people making money from areas such as wedding services, online selling, content creation and freelancing.

For anyone earning money outside their main job, now is a good time to check whether that additional income needs to be reported.

How much can you earn from a side hustle before telling HMRC?

One of the most important figures to understand is the £1,000 trading allowance.

If your gross trading income is £1,000 or less during a tax year, you may be able to use the trading allowance and, in many straightforward cases, won’t need to tell HMRC about that income.

However, if your gross trading income exceeds £1,000, you may need to register for Self Assessment and report your income.

Importantly, the £1,000 threshold relates to income before expenses, not simply the profit you make.

For example, if you receive £1,500 from a side business but spend £800 on materials, your profit may only be £700. However, your gross trading income is still £1,500, so you shouldn’t assume you’re below the threshold.

Whether you actually have tax to pay will depend on your circumstances, including your income, allowable expenses and how the trading allowance applies.

Do you have to pay tax on a side hustle?

Potentially – but earning more than £1,000 doesn’t automatically mean you’ll have a tax bill.

Your overall tax position depends on factors including how much profit your side hustle makes and what other income you receive.

The important distinction is between having an obligation to report income and actually owing additional tax.

If you’re employed and also earn money from a side business, for example, your salary and other income can affect how much tax is ultimately due.

Does HMRC know about income from online platforms?

HMRC increasingly receives information from digital platforms and marketplaces.

That means information held by online selling and gig-economy platforms can potentially be compared with information reported to HMRC.

This has caused some confusion, particularly around whether simply selling items through platforms such as Vinted or eBay automatically creates a tax liability.

It doesn’t.

The underlying tax rules are what matter.

Do you have to pay tax when selling on Vinted or eBay?

If you’re simply clearing out your wardrobe or selling unwanted possessions from around your home, you are not necessarily trading.

For example, selling an old coat, children’s clothes or furniture you no longer need is very different from deliberately purchasing products with the intention of reselling them for profit.

The nature and pattern of your activity matters.

If you’re regularly buying products to resell, making products specifically to sell or operating your online activity like a business, HMRC may regard you as trading.

In that situation, the normal rules surrounding trading income and the £1,000 trading allowance become relevant.

What counts as a side hustle?

A side hustle can take many forms.

You could potentially be trading if you regularly earn money from activities such as:

  • Freelance work
  • Social media and content creation
  • Photography or videography
  • Wedding services
  • Tutoring
  • Beauty treatments
  • Selling handmade products
  • Buying and reselling products
  • Consulting
  • Graphic design or marketing
  • Gig-economy work
  • Other paid services alongside your main employment

The fact that you consider something a hobby doesn’t necessarily determine its tax treatment.

If you’re regularly providing goods or services in return for payment, it’s worth checking your position.

Do influencers and content creators need to declare income?

Content creators, influencers and people earning money through social media should pay particular attention to their tax position.

Income can come from multiple sources, including sponsorships, brand partnerships, advertising, affiliate commissions and platform payments.

Having lots of relatively small income streams can make it surprisingly easy to lose track of how much you’ve earned during a tax year.

Good bookkeeping is therefore valuable even when a side hustle is still relatively small.

Keeping records from the beginning is much easier than trying to reconstruct a year’s worth of transactions when a tax deadline approaches.

What should you do if your side hustle earns more than £1,000?

Don’t panic.

Crossing the £1,000 gross income threshold doesn’t mean HMRC is suddenly going to send you a large tax bill.

Instead, it’s a prompt to check whether you need to register for Self Assessment and understand what information needs to be reported.

A sensible starting point is to:

  1. Add up your gross income from relevant trading activities.
  2. Keep records of payments received and business expenses.
  3. Check whether you need to register for Self Assessment.
  4. Understand whether claiming actual allowable expenses or using the trading allowance is appropriate.
  5. Put money aside for tax if you expect to have a liability.

The earlier you understand your position, the easier it generally is to manage.

What if you haven’t declared previous side hustle income?

If you think you should have reported income to HMRC in an earlier tax year but didn’t, ignoring it is unlikely to make the situation easier.

Coming forward voluntarily can generally put you in a better position than waiting for HMRC to identify a discrepancy and open an enquiry.

Exactly how you should correct the position will depend on the circumstances and the tax years involved.

It’s therefore worth getting professional advice before making a disclosure, particularly where the income is substantial or covers several years.

Don’t let your side hustle create a tax headache

Starting a side hustle should be exciting.

The tax side doesn’t need to make it complicated.

The easiest approach is to treat your finances properly from the beginning: keep records, separate business transactions where practical, understand the £1,000 trading allowance and check your Self Assessment obligations as your income grows.

At A&C Chartered Accountants, we work with start-ups, sole traders, freelancers, content creators and small businesses across Manchester and the UK.

Whether your side hustle has just crossed the £1,000 threshold or has developed into a growing business, we can help you understand your tax obligations and make sure everything is reported correctly.

Need help with your side hustle tax? Get in touch with A&C Chartered Accountants and we’ll help you understand what you need to do next.

This article provides general information only and does not constitute tax advice. Tax treatment depends on individual circumstances and tax rules can change. Professional advice should be obtained where appropriate.

By Katie Business Advisory • Business News 0 Comments

HMRC Tax Changes 2026: What the Latest Tax Update Means for Small Businesses

HMRC has published a major package of tax consultations and policy announcements that could change how businesses and individuals report, manage and pay tax over the coming years.

Published on 23 June 2026, the Tax Update 2026: Simplification, Modernisation and Fairness covers everything from more frequent Self Assessment tax payments and mandatory e-invoicing to Capital Gains Tax relief and the taxation of payments to company shareholders.

Many of these measures are currently proposals rather than confirmed changes to the law.

However, they give businesses a useful indication of where the UK tax system could be heading: more digital, more real-time and increasingly data-driven.

For small businesses, landlords, sole traders and company directors, understanding these changes early could make it much easier to prepare.

Here, A&C Chartered Accountants explains some of the most important proposals and what they could mean for you.

Could Self Assessment tax payments become more frequent?

One of the most significant proposals is HMRC’s consultation on Timely Payments for Self Assessment taxpayers.

Currently, many Self Assessment taxpayers make payments in January and July through the Payments on Account system.

The Government is exploring whether more tax could instead be collected throughout the year.

For taxpayers who receive both PAYE income and Self Assessment income, the proposals could result in more of their tax liability being collected through PAYE from April 2029.

HMRC is also considering wider reforms to Payments on Account for other Self Assessment taxpayers.

Under the proposals, taxpayers could be required to pay their forecast tax liability during the tax year, followed by a balancing payment or repayment once their final tax position is established.

What could this mean for sole traders and landlords?

There are potential advantages.

Paying tax more frequently could make budgeting easier and reduce the prospect of facing a substantial tax bill in January.

However, there’s another side to it.

If tax has to be paid sooner than under the existing system, businesses and individuals may have less cash available during the year.

For sole traders, landlords and other Self Assessment taxpayers, cash-flow forecasting could therefore become increasingly important if these proposals eventually become law.

HMRC is reviewing Benchmark Scale Rates

HMRC is also reviewing Benchmark Scale Rates (BSRs) and Overseas Scale Rates (OSRs).

These rates allow employers to reimburse employees for qualifying expenses such as meals and travel using agreed flat rates rather than checking every individual receipt.

The Government is considering whether the existing rates accurately reflect current costs and whether the overall system can be simplified.

For businesses with employees who regularly travel for work, a simpler system could reduce administration and make expense claims more consistent.

Employers should therefore keep an eye on the outcome of the review.

Mandatory e-invoicing is coming to the UK

Another important development for businesses is the continued move towards electronic invoicing, or e-invoicing.

The Government has confirmed that the Peppol framework will form the core network supporting the UK’s planned e-invoicing system.

But what exactly does that mean?

What is e-invoicing?

E-invoicing isn’t simply creating an invoice and emailing it to your customer as a PDF.

Instead, invoice information is created in a standardised digital format and transmitted directly between accounting and finance systems.

This can reduce manual data entry, improve accuracy and potentially speed up invoice processing.

Peppol is an international framework designed to allow different accounting and finance systems to exchange invoice information securely and consistently.

When will e-invoicing become mandatory in the UK?

The Government is working towards mandatory e-invoicing from 2029, primarily covering VAT invoices for business-to-business and business-to-government transactions.

Businesses are expected to exchange invoices through approved software providers rather than uploading invoices to a central Government platform.

A more detailed implementation roadmap is expected later in 2026.

What should small businesses do about e-invoicing?

There’s no need for small businesses to overhaul their systems immediately.

However, this is another strong reason to consider how digital your bookkeeping currently is.

Businesses already using modern cloud accounting software are likely to be better positioned for the transition than businesses relying heavily on spreadsheets, paper records or manual invoicing.

At A&C Chartered Accountants, we already work with businesses using cloud accounting systems such as Xero, helping them streamline bookkeeping and financial processes.

Moving towards good digital bookkeeping isn’t simply about complying with future HMRC requirements. It can also give business owners better visibility over cash flow, invoices, expenses and overall business performance.

Proposed changes to CGT Holdover Relief

The Government has also published draft legislation intended to correct an anomaly in the calculation of Capital Gains Tax (CGT) Holdover Relief for gifts of business assets.

Holdover Relief can allow a capital gain arising when certain business assets are gifted to be deferred until the person receiving the asset subsequently disposes of it.

The proposed legislation would amend the calculation used for certain share transfers so that the relief operates as intended.

Why could this matter for business owners?

The change could be particularly relevant where shares are being transferred as part of:

  • Business succession planning
  • Family ownership arrangements
  • Company restructures
  • Transfers of business assets

The measure isn’t yet law.

However, if you’re currently considering a transaction that could be affected, it may be worth taking professional tax advice before proceeding.

Depending on the circumstances and the final legislation, the timing of a transaction could potentially affect the tax outcome.

Changes to how company payments to shareholders are taxed

The Government is also examining the rules governing how certain payments made by companies to shareholders are taxed.

Many of the existing rules have developed over decades and can be complicated.

The consultation considers areas including distributions, returns of capital, company reorganisations and interactions with the loans to participators rules.

There are no immediate changes for owner-managed businesses as a result of the consultation.

However, it is an area worth watching.

For company directors and shareholders, future reform could potentially affect the tax treatment of dividends, extracting money from a company and certain company restructures.

HMRC’s increasing focus on digital tax compliance

A wider theme running through the 2026 Tax Update is HMRC’s continued investment in digitalisation and tax compliance.

Several consultations look at ways of tackling tax evasion, fraud and inaccurate reporting.

Proposals include extending VAT liability rules for online marketplaces, introducing software standards designed to combat electronic sales suppression and creating a new offence relating to reckless untrue statements in direct tax matters.

For businesses already complying with their tax obligations, these measures are primarily intended to target businesses and individuals that deliberately understate sales or avoid tax.

However, they reinforce an important trend.

HMRC is increasingly using technology and data to administer and enforce the UK tax system.

Accurate bookkeeping and robust financial records are therefore becoming more important, not less.

What does the HMRC Tax Update mean for small businesses?

Most of the measures announced on 23 June 2026 are consultations or proposals rather than immediate changes to tax law.

There is therefore no need for businesses to make rushed decisions.

But taken together, the announcements give us a useful indication of the direction in which UK tax administration is moving.

We expect four themes to become increasingly important:

  1. Greater digitalisation – businesses will increasingly need accounting systems capable of communicating digitally with HMRC and other businesses.
  2. More real-time tax reporting and payment – the gap between earning income, reporting it and paying the associated tax could become shorter.
  3. Greater use of data and compliance technology – HMRC will continue to use digital information to identify errors and potential non-compliance.
  4. Simplification of existing tax rules – some long-standing and complicated areas of taxation are being reviewed.

What should businesses do now?

The key message from A&C Chartered Accountants is prepare rather than panic.

Many of these proposals won’t take effect for several years, and some could change significantly following consultation.

But businesses can still take sensible steps now.

Keep your accounting records accurate and up to date. Review whether your bookkeeping and invoicing systems are ready for an increasingly digital tax system. Monitor upcoming changes that could affect your business and consider cash-flow forecasting if the timing of tax payments changes.

Most importantly, seek advice before making significant decisions based on proposed tax changes.

Preparing your business for the future of tax

HMRC’s Tax Update 2026 isn’t simply a collection of technical tax consultations.

It provides a glimpse of what running a tax-compliant business in the UK could look like towards the end of this decade.

Digital bookkeeping, electronic invoicing, more timely tax payments and increasingly sophisticated HMRC data analysis are all part of that picture.

Businesses that prepare gradually should be in a much stronger position than those that wait until new requirements become mandatory.

This article is intended for general information only and does not constitute tax or financial advice. Many of the measures discussed are proposals or consultations and may change before implementation. Individual circumstances vary, so professional advice should be obtained before taking action.

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By Katie Business News • Tax 0 Comments

VAT and Public Electric Vehicle Charging Points

HMRC has published Revenue and Customs Brief 4 (2026) following a recent First-tier Tribunal (FTT) decision concerning the VAT treatment of electricity supplied at public electric vehicle (EV) charging points.

The case, Charge My Street Ltd v HMRC, found in favour of the taxpayer, concluding that electricity supplied through public EV charging points qualified for the reduced rate of VAT (5%), rather than the standard rate.

However, HMRC has applied for permission to appeal the decision and has confirmed that its position has not changed. It continues to treat electricity supplied at public EV charging points as standard-rated for VAT (20%).

Why is there a difference?

Electricity supplied to domestic premises generally qualifies for the reduced 5% VAT rate.

HMRC’s long-standing view is that public EV charging points are not domestic premises. As a result, electricity supplied through public charging stations remains subject to the standard 20% VAT rate.

What does this mean?

At present, there is still a difference in the VAT charged depending on where an electric vehicle is charged:

• Charging an EV at home is generally subject to 5% VAT.
• Charging an EV at a public charging point remains subject to 20% VAT, in line with HMRC’s current policy.

Although the tribunal ruled in favour of the taxpayer, First-tier Tribunal decisions do not create binding legal precedent. Until any appeal is concluded or HMRC changes its guidance, businesses and charging point operators should continue to follow HMRC’s published policy.

If you have any questions about the VAT treatment of electric vehicle charging or how it could affect your business, please get in touch. A&C Chartered Accountants will be happy to help.

By Katie Business News • Tax 0 Comments

GOV.UK Chat – A New AI Tool for Tax Questions

The government has launched GOV.UK Chat, an Artificial Intelligence (AI) chatbot designed to help people find official government information more quickly. Users can ask questions in plain English and receive instant answers based on guidance published on GOV.UK.

The chatbot can help with a range of tax and financial topics, including:

• Understanding Income Tax
• Calculating Stamp Duty
• Planning for retirement and the State Pension

Since its soft launch in March 2026, thousands of people have used the service, with tax-related questions proving particularly popular.

Use with caution

While GOV.UK Chat can be a useful starting point, it does have limitations. It is important to remember that:

• It only uses information published on GOV.UK.
• It does not access HMRC’s detailed technical manuals or specialist guidance.
• It is primarily designed to answer straightforward questions rather than complex tax issues.

Like any AI tool, its responses are not guaranteed to be accurate. Occasionally, it may provide incomplete information or generate incorrect answers that appear convincing.

Our advice

GOV.UK Chat can be a helpful way to find official guidance quickly, but it should not replace professional advice. To get the most from the tool:

• Use it to help locate information rather than relying on it to make important decisions.
• Read the full response, including any notes or limitations.
• Make sure your question includes all the relevant facts and circumstances.

For straightforward queries, GOV.UK Chat may save you time. However, when it comes to tax planning or decisions that could affect your finances, it’s always worth seeking professional advice.

If you’re unsure how the rules apply to your circumstances, A&C Chartered Accountants is here to help. We’ll ensure you receive advice that’s tailored to your situation and gives you confidence before you act.

By Katie Business News • Tax 0 Comments

Advisory Fuel Rates for Company Cars – June 2026

HMRC has updated its advisory fuel rates for company cars with effect from 1 June 2026. These rates are used when employers reimburse employees for business mileage in a company car or when employees repay the cost of private fuel.

If an employer does not provide fuel for private use, the advisory rates can be used to reimburse business mileage without creating a taxable benefit.

Engine Size Petrol Diesel LPG
1400cc or less 14p (12p) – 11p (10p)
1600cc or less – 15p (12p) –
1401cc to 2000cc 17p (14p) – 13p (12p)
1601cc to 2000cc – 17p (13p) –
Over 2000cc 26p (22p) 23p (18p) 21p (19p)

Previous rates are shown in brackets. Employers may continue to use the previous rates for up to one month after the new rates take effect.

Hybrid vehicles should use the appropriate petrol or diesel rate.

For fully electric vehicles, the advisory rate remains 7p per mile where the vehicle is charged at home and 15p per mile where it is charged using public charging facilities.

Employees Using Their Own Cars

The Approved Mileage Allowance Payment (AMAP) rates for employees using their own vehicle for business journeys increased from 6 April 2026 to:

• 55p per mile for the first 10,000 business miles in the tax year.
• 25p per mile for each business mile over 10,000.
• An additional 5p per mile can be paid for each business passenger carried.

For National Insurance purposes, employers can continue to reimburse at 55p per mile regardless of the total business mileage, as the 10,000-mile threshold does not apply.

VAT Recovery

Where employees are reimbursed using the AMAP rates, employers may be able to reclaim the VAT element relating to the fuel cost, provided they hold a valid VAT receipt from the filling station.

For example, for a diesel company car with an engine size of 1,500cc, the fuel element is 15p per mile, allowing input VAT of 2.5p per mile (15p × 1/6) to be reclaimed.

If you would like advice on mileage claims, company car tax or VAT recovery, please get in touch. A&C Chartered Accountants will be happy to help.

By Katie Business News • Tax 0 Comments

Mandatory Payrolling of Benefits in Kind: Phased Introduction Confirmed

HMRC has confirmed that mandatory payrolling of Benefits in Kind (BiKs) will now be introduced in two phases, beginning on 6 April 2027.

The changes will move the reporting of most employee benefits away from the annual P11D process and into real-time payroll. This means Income Tax and Class 1A National Insurance will be reported through payroll each pay period, whether that is weekly or monthly.

From 6 April 2027

The first phase will apply to:

• Company cars and car fuel
• Vans and van fuel
• Employer-provided medical benefits

From 6 April 2028

Most other taxable benefits will also become subject to mandatory payrolling.

The only exceptions will be:

• Beneficial loans
• Employer-provided living accommodation

These benefits will remain voluntary for payrolling and can continue to be reported using the existing process if preferred.

What does this mean for employers?

Instead of reporting benefits after the end of the tax year using P11Ds, employers will need to include relevant benefits in their payroll submissions throughout the year using Real Time Information (RTI).

Although this will reduce year-end administration, it also means payroll records must be accurate from the outset. Any errors are likely to be identified much sooner and may need to be corrected during the tax year rather than after it has ended.

What should you do now?

Although the new rules do not begin until April 2027, now is a good time to prepare by:

• Reviewing the benefits you currently provide to employees.
• Identifying which benefits will be affected in the first phase.
• Checking that your payroll software and processes will be ready for the changes.

HMRC is continuing to work with payroll software providers and is expected to publish further technical guidance during 2026, with final details anticipated ahead of the Autumn Budget.

This is one of the biggest changes to the taxation and reporting of employee benefits in many years. Planning ahead will help ensure a smooth transition and minimise disruption to your payroll processes.

By Katie Business News 0 Comments

Are Your Workers Employed or Self-Employed? What the PGMOL Case Tells UK Businesses

re Your Workers Employed or Self-Employed? What the PGMOL Case Tells UK Businesses

Employment status has always been one of the trickier areas of UK tax law, and a landmark tribunal decision handed down on 1 May 2026 has put it firmly back in the spotlight. The case is Professional Game Match Officials Ltd v HMRC [2026] UKFTT 654 (TC), and while it involves football referees, the lessons it contains apply to businesses of all kinds.

The Background

Professional Game Match Officials Ltd (PGMOL) is the organisation that provides referees for professional football matches in England. HMRC argued that match officials should be treated as employees, meaning PAYE and National Insurance contributions should have been applied to the match fees paid to them. With over £583,000 at stake, PGMOL disagreed and took the matter to tribunal.

This was not a straightforward case. It had already travelled through the Upper Tribunal, the Court of Appeal and all the way to the Supreme Court before landing back at the First Tier Tribunal for a final determination. The Supreme Court had confirmed that when a referee accepted a match appointment, there was sufficient mutuality of obligation and a framework of control in place. However, it sent the case back to the FTT to look at the overall picture of the relationship and make a final call on employment status.

What the Tribunal Decided

The FTT took a step back and considered the relationship as a whole. Its key findings were:

  • PGMOL was not required to offer matches, and referees were not required to accept them
  • Referees could decline appointments or withdraw without penalty
  • Each match appointment was a short, discrete engagement with no ongoing commitment
  • Most referees carried out their refereeing work alongside other full-time employment

Taking all of this into account, the Tribunal concluded that the relationship simply did not have the hallmarks of employment. The referees were self-employed, and PGMOL was not required to operate PAYE or pay employer National Insurance on the fees it paid them.

Why Does This Matter for Your Business?

The PGMOL case is a reminder that employment status is never determined by a single factor. It does not come down to who provides the equipment, how often someone works for you, or whether there is a written contract calling someone self-employed. What matters is the overall picture of the working relationship, assessed across multiple factors at once.

Getting this wrong can be costly. If HMRC concludes that someone you treat as self-employed should actually be classified as an employee, you could face a significant bill for unpaid PAYE, National Insurance and penalties, potentially going back several years.

If you engage contractors, freelancers or other flexible workers and you are not completely confident about their employment status, it is well worth having that conversation sooner rather than later.

At A&C Chartered Accountants, we help businesses across Manchester review their worker arrangements and make sure they are on solid ground with HMRC. We would be happy to take a look at your situation and give you a clear, practical view.

Book a free consultation today

This article is based on publicly available tribunal decisions and HMRC guidance current as of June 2026. Tax rules can change. Please speak to a qualified accountant before making decisions based on this content.

By Katie Business News 0 Comments

R&D Tax Relief in 2026: A New Opportunity for SMEs and a Costly Warning for All

If your business carries out Research and Development, there are two important updates you need to be aware of right now. One is genuinely good news. The other is a cautionary tale that every business considering an R&D claim should read carefully.

A New Way to Get HMRC’s Blessing Before You Claim

HMRC has launched a new Targeted Advance Assurance pilot for R&D tax relief, which opened on 18 May 2026 and will run for 12 months. It is free of charge, voluntary, and specifically designed for small and medium-sized businesses.

The idea is straightforward. Rather than submitting a claim and waiting to see if HMRC pushes back, eligible SMEs can now approach HMRC in advance and get clarity on the trickiest parts of their claim before they file. This is particularly useful if your R&D involves any of the following:

  • Whether your project genuinely meets the definition of R&D for tax purposes
  • Whether overseas expenditure qualifies for relief
  • Whether R&D relief can be claimed where one company contracts work to another
  • Whether your company qualifies for an exemption from the PAYE and National Insurance contributions cap

It is worth noting that this new pilot runs alongside the existing full claim advance assurance service, which remains available but is restricted to first-time claimants only. The new targeted scheme is open more broadly to any eligible SME, regardless of whether they have claimed before.

If you are planning an R&D claim and there are areas where you are genuinely uncertain, this pilot could be well worth exploring. Get in touch and we can help you assess whether it is right for your situation.

A Tribunal Case Every R&D Claimant Should Know About

At the same time as this new pilot was launched, a significant First Tier Tribunal decision was handed down that serves as a sharp reminder of what can go wrong when R&D claims are not handled properly.

In Beer Express Ltd v HMRC [2026] UKFTT 672 (TC), a wholesale drinks business from the North of England lost its appeal against HMRC’s decision to disallow R&D tax relief totalling over £490,000 across two accounting periods.

The company had been approached by a third-party R&D advisory firm, which identified several of Beer Express’s operational projects as potentially qualifying for relief and prepared the claims on their behalf. When HMRC challenged those claims, the advisory firm had become uncontactable, leaving Beer Express to defend a case it could not fully explain.

The Tribunal’s findings were damaging. The supporting reports were described as vague and unconvincing, offering little more than high-level descriptions of the work carried out. There was no clear explanation of the technological baseline the company was working from, no defined advance in science or technology, and no identification of the genuine technological uncertainties the projects were trying to resolve. Crucially, there was no input from a competent professional with the technical knowledge to explain why the work qualified.

The Tribunal found Beer Express’s director to be honest and credible, but that was not enough. The appeal was dismissed in full.

This case is not an isolated incident. HMRC has significantly increased its scrutiny of R&D claims in recent years, and poorly evidenced claims are increasingly being challenged. The message is clear: R&D tax relief is a genuinely valuable relief, but it has to be claimed correctly, with proper technical evidence and proper professional support.

What This Means for Your Business

Whether you are considering your first R&D claim or have been claiming for years, now is a good time to ask some honest questions:

  • Is your claim supported by clear technical evidence, not just high-level descriptions?
  • Can someone with genuine technical knowledge explain why your work qualifies?
  • Do you know exactly who would defend your claim if HMRC came knocking?

At A&C Chartered Accountants, we work with businesses across Manchester to make sure their R&D claims are well-founded, properly evidenced and compliant. We can also help you assess whether the new HMRC advance assurance pilot is worth pursuing before you file.

Book a free consultation today

This article is based on HMRC guidance and publicly available tribunal decisions current as of June 2026. Tax rules can change. Please speak to a qualified accountant before making decisions based on this content.

By Katie Business News 0 Comments

HMRC Mileage Rates 2026/27 and the Summer VAT Cut: What UK Businesses Need to Know

On 21 May 2026, Chancellor Rachel Reeves announced the Great British Summer Savings scheme, a package of measures aimed at reducing costs for families across the UK. But buried within the headlines are two changes that matter just as much to business owners, directors, and the self-employed as they do to families planning a day out.

Here’s a plain-English breakdown of what’s changed, what it means for your business, and what you should do next.

HMRC Mileage Rates 2026/27: The Biggest Increase in 15 Years

If you or your employees use a personal vehicle for business travel, this is the most significant update in over a decade.

The HMRC approved mileage rate for cars and vans has increased from 45p to 55p per mile for the first 10,000 business miles in the 2026/27 tax year and it’s been backdated to 6 April 2026. That means if you’ve already been paying or claiming mileage since the start of the tax year, you may owe a top-up.

This is the first increase to HMRC’s Approved Mileage Allowance Payments (AMAPs) since 2011, a long-overdue update given how much the cost of running a vehicle has risen in that time.

Updated HMRC Mileage Rates for 2026/27

For employees using their own vehicle:

Vehicle First 10,000 miles Over 10,000 miles
Cars & vans 55p (up from 45p) 25p (unchanged)
Motorbikes 24p (unchanged) 24p (unchanged)
Bicycles 20p (unchanged) 20p (unchanged)

For the self-employed:

Vehicle First 10,000 miles Over 10,000 miles
Cars & goods vehicles 55p (up from 45p) 25p (unchanged)
Motorbikes 24p (unchanged) 24p (unchanged)

Only the rate for cars and vans (or goods vehicles) for the first 10,000 miles has changed. All other rates remain the same.

What Does This Mean in Practice?

The Treasury estimates this saves a worker doing around 6,000 business miles approximately £120 per year, but for higher mileage drivers, the saving is considerably more. For example, an employee driving 10,000 business miles in their own car could now receive up to £5,500 tax-free, compared to £4,500 under the old rate.

What Should Employers Do Now?

  • Update your mileage reimbursement policy to reflect 55p per mile for cars and vans
  • Review mileage payments made since 6 April 2026 – if you’ve been paying at the old 45p rate, consider making a top-up payment to employees
  • Check employees aren’t being underpaid – if your rate is lower than the HMRC approved amount, staff may be missing out on tax relief and could have grounds to claim the difference themselves
  • Don’t overpay either – reimbursing above the approved HMRC rate creates a taxable benefit and potential National Insurance implications

What About Self-Employed Individuals?

If you’re self-employed and use simplified mileage expenses, you can claim the new 55p rate for the full 2026/27 tax year on your Self Assessment return. Make sure your mileage logs are up to date – HMRC requires records of each journey’s date, start and end point, reason for travel, and total miles claimed.

Temporary 5% VAT Rate on Summer Activities: What It Means for Your Business

From 25 June to 1 September 2026, the standard 20% rate of VAT will be reduced to 5% on a specific range of activities. While this is primarily aimed at helping families during the school holidays, it has direct practical implications for businesses operating in the affected sectors.

What’s Covered?

Children’s meals in restaurants and cafés, where the meal:

  • Is specifically held out for sale as a children’s meal
  • Is a supply of catering consumed on the premises
  • Is not takeaway food
  • Can include drinks

Children’s tickets for cinema, theatre, shows, and concerts.

Admission to qualifying attractions – including amusement parks, museums, heritage sites, zoos, and soft play areas. Importantly, the reduced rate applies to all admissions regardless of age, not just children’s tickets.

What Do Affected Businesses Need to Do?

If your business falls into any of the above categories, there are a few things to get in order before 25 June:

  • Update your point-of-sale and accounting systems to apply the 5% rate to eligible sales from the correct date
  • Review your VAT return periods – if your VAT quarter straddles the start or end date, you’ll need to apply different rates within the same period
  • Train your team on which products or admissions qualify and which don’t, especially if your business offers a mix of eligible and non-eligible items
  • Revert to 20% from 1 September – this is a temporary measure, so your systems need to switch back automatically or be updated manually on that date

If you’re not sure whether your business qualifies, or how to handle the transitional periods, it’s worth speaking to an accountant before the change comes into effect.

A Quick Summary

Change What’s Changed When From
HMRC mileage rate (cars/vans, first 10,000 miles) 45p → 55p per mile Backdated to 6 April 2026
VAT on eligible summer activities 20% → 5% 25 June – 1 September 2026

Not Sure How This Affects Your Business?

These changes might seem straightforward on paper, but the practical implications – especially around backdated mileage payments and VAT system updates — can be easy to get wrong.

At A&C Chartered Accountants, we work with startups and SMEs across Manchester and beyond to make sure they’re always on the right side of HMRC. Whether you need help updating your expense policy, reviewing your VAT setup, or just want a second opinion – we’re here to help.

Book a free consultation today →

By Katie Business News • Tax 0 Comments

SDLT and mixed use property: why classification matters

When buying property in England, Stamp Duty Land Tax (SDLT) can be a significant cost. One important distinction is whether a property is treated as purely residential or as mixed use.

A mixed use property includes both residential and non residential elements. This could include a house with farmland, commercial buildings or land used for a genuine non residential purpose. Mixed use properties are subject to lower SDLT rates than residential properties, which can result in substantial tax savings.

However, HMRC continues to closely scrutinise claims for mixed use treatment.

This was highlighted in the recent case of HMRC v Christopher Brzezicki. Mr Brzezicki purchased a large house together with a fishing stream and an island and argued that the transaction qualified as mixed use. Although the First tier Tribunal initially agreed, the Upper Tribunal overturned the decision and ruled that the entire property was residential.

The Tribunal found that the stream and island formed part of the property’s “grounds” and were therefore residential in nature, rather than genuinely non residential land. While trout bred naturally in the stream, there was no active commercial operation in place at the time of purchase.

The decision is a useful reminder that unusual features such as woodland, streams, paddocks or separate parcels of land will not automatically qualify a property for mixed use SDLT treatment. The key consideration is how the land is actually being used and whether it would ordinarily be regarded as part of the home.

For buyers, getting the classification wrong can lead to unexpected tax liabilities, interest and penalties if HMRC successfully challenges the SDLT position.

At A&C Chartered Accountants, we can help review property transactions, assess whether mixed use treatment is appropriate and ensure SDLT claims are properly supported before completion.

By Katie Business Advisory • Business News • Tax 0 Comments

What Qualifies for Capital Allowances?

In Orsted West of Duddon Sands (UK) Limited & Ors v HMRC, the Supreme Court considered whether significant pre-construction costs could qualify for capital allowances tax relief.

The case centred on offshore windfarm projects where the companies incurred substantial expenditure on environmental surveys, seabed investigations and technical studies before any turbines were constructed. The companies argued that these costs were an essential part of creating bespoke assets and should therefore qualify for capital allowances.

HMRC disagreed, and the Supreme Court ultimately sided with HMRC.

The decision focused on a key piece of legislation stating that capital allowances are only available for expenditure incurred “on the provision of plant or machinery”.

The judges concluded that this requires a direct and close connection to the physical asset itself. Although the surveys and investigations were necessary for deciding whether and how the windfarms could be built, they were considered preparatory in nature. They helped place Orsted in a position to construct the assets, but they were not part of providing the plant or machinery itself.

While this case involved offshore windfarms, the implications are much wider.

Many businesses incur significant costs before acquiring or constructing long term assets, including:

• feasibility studies
• design and planning work
• professional fees
• environmental or regulatory assessments

Following this decision, these types of costs are less likely to qualify for capital allowances unless they are closely linked to the acquisition, construction or installation of the qualifying asset itself.

For businesses planning major investment projects, this is an important reminder not to assume that all upfront project costs will attract tax relief.

At A&C Chartered Accountants, we recommend reviewing expenditure carefully as projects progress, separating early stage exploratory costs from spending directly connected to the asset. Getting this distinction right from the outset can help avoid unexpected tax liabilities later.

By Katie Business News 0 Comments

Good luck to everyone running the Manchester Marathon

Good luck to everyone running the Manchester Marathon this weekend.

Our team member Katie will be taking on the marathon in support of Royal Manchester Children’s Hospital. It’s a fantastic cause and one that makes a real difference to the lives of children and families across our region.

We would love to raise as much as we can for this important charity. If you would like to support, you can do so using the link here.

We also know that many of our clients are running this weekend, and we want to wish each of you the very best of luck. It’s an incredible achievement to even get to the start line, and we’ll be cheering you all on!

By Katie Business News • Tax 0 Comments

VAT on public electric vehicle charging: tribunal challenges HMRC position

A recent VAT case has raised important questions around the correct VAT treatment of public electric vehicle charging.

In Charge My Street Ltd v HMRC [2026], the First-tier Tribunal concluded that supplies of electric vehicle charging at public charging stations could qualify for the reduced rate of VAT at 5%. This contrasts with HMRC’s long-standing position that such supplies should be subject to the standard rate of 20%.

Charge My Street Ltd operated electric vehicle charging points in public locations across the North of England. The company applied the reduced 5% VAT rate on the basis that its supplies fell within the rules for domestic fuel and power.

Under VAT legislation, supplies of electricity for domestic use can qualify for the reduced rate, provided certain conditions are met. One key provision is the ‘de minimis’ rule, which treats supplies of electricity below 1,000 kWh per month as domestic.

The Tribunal found that where charging was supplied to individual users, the level of electricity consumption fell below this threshold. As a result, those supplies qualified for the reduced rate.

This decision challenges the long-standing disparity between VAT treatment for electric vehicle charging at home, which benefits from the reduced rate, and charging at public stations, which has typically been standard-rated.

However, it is important to note that this is a First-tier Tribunal decision and does not set binding precedent. It is widely expected that HMRC will appeal the ruling, and the position may evolve further as the case progresses.

A complex and evolving area of VAT

This case highlights the complexity of VAT, particularly where legislation intersects with emerging technologies and changing consumer behaviour. The correct VAT treatment will depend on the specific facts of each supply, including how the electricity is delivered and measured.

At A&C Chartered Accountants, we are monitoring developments in this area closely. Businesses involved in electric vehicle infrastructure, or those uncertain about the VAT treatment of their supplies, should ensure their approach is robust and well-supported.

If you would like to review your VAT position or discuss how these developments may affect your business, we would be happy to assist.

By Katie Business News • Tax 0 Comments

Dividends: increased scrutiny and new reporting requirements

Recent developments indicate a clear shift in HMRC’s approach to monitoring dividends and transactions between companies and their shareholders. With new consultations and expanded data collection, there is a growing focus on transparency and compliance for close companies.

New consultation: reporting company payments to participators

A new consultation, Reporting company payments to participators, has been published, seeking views on proposals to introduce enhanced reporting requirements for close companies.

The government’s position is that the risk of error and tax non-compliance is higher in close companies, where the distinction between the company and its participators can become blurred. HMRC has identified that it does not currently have full visibility over how these companies interact with their shareholders.

Under the proposed framework, close companies may be required to report detailed information to HMRC on transactions with participators, including:

  • payments made by cash, bank transfer or other means
  • loan repayments and loan write-offs
  • sales of assets to the company
  • purchases of assets from the company
  • dividends and other distributions
  • any other transfer of value from the company to the participator

Salary and wage payments are expected to remain outside the scope of these requirements, as they are already captured through PAYE reporting systems.

If implemented, these proposals would represent a significant increase in reporting obligations and HMRC oversight.

Expanded dividend reporting through self-assessment

In addition to the consultation, Finance Act 2024 introduced powers allowing HMRC to collect more detailed information through self-assessment tax returns.

From the 2025/26 tax year onwards, company directors will be required to disclose additional information, including:

  • whether they were a director of a company
  • whether the company was a close company
  • the company’s name and registration number
  • the amount of dividends received from the close company during the tax year
  • the highest percentage shareholding held during the tax year

This enhanced reporting framework provides HMRC with greater insight into the relationship between directors, shareholders and their companies, particularly in relation to dividend extraction.

A clear direction of travel

Taken together, these developments point to a more data-driven and compliance-focused approach from HMRC. With increased access to information on dividends and participator transactions, discrepancies are more likely to be identified.

For business owners operating through limited companies, it is increasingly important that dividend procedures are robust, properly documented and aligned with both company law and tax legislation.

By Katie Business News • Tax 0 Comments

What the 2026/27 tax year means for your business: key changes to plan for now

Each new tax year introduces a range of updates, and while some thresholds remain unchanged for 2026/27, a number of targeted changes will have a direct impact on business owners and shareholders. Understanding these developments early allows for more effective planning and informed decision-making.

Income tax: higher dividend tax rates

Income tax thresholds remain broadly aligned with the 2025/26 tax year. The personal allowance continues at £12,570, and the basic rate band remains at £37,700.

The principal change is an increase in the rates applied to dividend income from 6 April 2026. Dividends within the basic rate band will be taxed at 10.75%, increased from 8.75%. Dividends within the higher rate band will be taxed at 35.75%, increased from 33.75%. The additional rate remains unchanged at 39.35%.

This adjustment increases the overall tax cost for individuals who extract profits via dividends, particularly owner-managed businesses where dividends form a key part of remuneration.

Corporation tax: increased compliance costs and charges

Two notable changes take effect in relation to corporation tax.

The section 455 tax charge, which applies to loans made by close companies to participators that remain outstanding nine months and one day after the end of the accounting period, will increase to 35.75% for loans and advances made on or after 6 April 2026. This aligns the charge with the higher dividend rate.

In addition, revised penalties will apply to late-filed corporation tax returns where the filing deadline falls on or after 1 April 2026. The updated penalty structure is as follows:

  • £200 for missing the filing deadline
  • £400 where the return is three months late
  • £1,000 for a third consecutive failure to file on time
  • £2,000 where the return is three months late for a third consecutive failure

These changes represent a more stringent approach to compliance and increase the financial consequences of late filing.

Capital gains tax: higher rates on qualifying disposals

The rate of capital gains tax applicable to gains qualifying for Business Asset Disposal Relief and Investors’ Relief will increase to 18% from 6 April 2026. This follows the increase to 14% introduced in April 2025.

The continued upward movement in these rates increases the tax cost associated with qualifying business disposals and investment exits.

VAT: relief for donations of business goods

From 1 April 2026, a new VAT relief will apply to certain donations of business goods to charities. Where the relevant conditions are met, these donations will no longer be treated as a deemed supply for VAT purposes.

The relief is subject to specific eligibility criteria, including value limits and exclusions for certain categories of goods.

Summary

Although many headline thresholds remain unchanged, the 2026/27 tax year introduces a series of focused changes that increase tax exposure in key areas, particularly for company owners and investors. Higher dividend tax rates, increased section 455 charges, enhanced penalties for late filing, and rising capital gains tax rates all contribute to a more demanding tax environment.

At A&C Chartered Accountants, we support clients in navigating these changes with clarity and confidence, ensuring that tax positions are managed proactively and aligned with wider business objectives.

By Katie Business News • Tax 0 Comments

Inheritance tax reliefs – a welcome U-turn for family businesses and farms

If you own a business or agricultural land, the last few months have probably felt unsettled. The proposed changes to Inheritance Tax (IHT) reliefs created real concern for many family businesses and farming families who rely on Agricultural Property Relief (APR) and Business Property Relief (BPR) to pass assets down the generations.

There is now some much-needed good news.

What has changed?

The government has confirmed that the cap on 100% relief for APR and BPR – due to take effect from 6 April 2026 – will be increased from £1 million to £2.5 million per individual.

In practical terms, this means you will be able to pass on up to £2.5 million of qualifying business or agricultural assets free from IHT from that date. Anything above this amount will still attract IHT, but at least the starting point is now significantly more generous than originally proposed.

A second important improvement

This is not the only positive adjustment.

When the reforms were first announced in the 2024 Autumn Budget, the new £1 million allowance was not going to be transferable between spouses or civil partners. That would have limited family planning options and, in many cases, increased the eventual tax bill.

The government reversed this position in the 2025 Autumn Budget, confirming that the allowance will be transferable between spouses and civil partners.

What does this mean for you?

Taken together, these changes mean that couples could potentially pass on up to £5 million of qualifying agricultural and business assets free of IHT from April 2026.

For many family-owned businesses and farms, this is a significant relief and removes a lot of the immediate pressure that followed the original proposals.

What should you do now?

This is a welcome development, but it does not mean planning is no longer needed. The rules around what qualifies for APR and BPR can be complex, and ownership structures, wills, and succession plans still need to be reviewed.

By Katie Business News • Tax 0 Comments

MTD for Income Tax – nearly there

If you complete a Self Assessment tax return, you’ve probably been hearing about Making Tax Digital (MTD) for what feels like a long time. The change is now very real, and the first wave of taxpayers will be brought into the regime from 6 April 2026.

In other words, MTD for Income Tax is no longer something “for the future” – it is just around the corner.

Who does this affect?

From 6 April 2026, MTD for Income Tax will become mandatory for a significant number of Self Assessment taxpayers.

You are likely to be within scope if, in the 2024/25 tax year, your combined turnover from your sole trade and/or property business was more than £50,000.

If you fall into this category, you will need to keep digital records and submit income and expense information to HMRC using compatible software, rather than relying solely on your traditional annual tax return.

Further groups of taxpayers will then be brought into MTD in 2027 and 2028, so this is a change that will eventually affect many more people.

What does this mean in practice?

For those within scope, MTD will mean:

  • keeping digital records for your business or property income

  • using MTD-compatible software

  • sending regular updates to HMRC throughout the year, rather than just once at year end

For some business owners and landlords, this will feel like a big shift in how their tax affairs are managed.

You don’t have to do this alone

Over the past year, A&C Chartered Accountants has already been helping many clients prepare for MTD, testing systems, and getting processes in place so the transition is as smooth as possible.

By Katie Business News • Tax 0 Comments

Employment expenses – important change to working from home relief

Many employees have relied on tax relief for the costs of working from home since the pandemic. However, the rules are changing, and it is worth understanding what this means for you before the next tax year begins.

What is changing?

From 6 April 2026, employees will no longer be able to claim tax relief against their employment income for the costs of working from home.

The government is making this change because a large number of claims have been made incorrectly in recent years. As a result, the long-standing relief is being withdrawn for most employees from 2026/27 onwards.

What applies for 2025/26?

The good news is that the relief is still available for the current tax year.

For 2025/26, you can still claim:

  • £6 per week without needing to provide evidence of actual costs, or

  • a higher amount if you can demonstrate your actual additional homeworking expenses.

However, this is only available if you are contractually required to work from home. If you choose to work from home but your employer does not require it, the relief will not be available.

What will this cost employees?

From 2026/27, the removal of this relief will typically increase Income Tax by:

  • £62 per year for basic rate taxpayers, and

  • £124 per year for higher rate taxpayers.

While these amounts may not seem large, they are still worth factoring into your personal tax position.

What about employer reimbursements?

There is an important exception.

From 2026/27, if your employer reimburses you for the costs of working from home, those payments can be made free of Income Tax and National Insurance, provided you are contractually required to work from home.

This means employers may need to review their policies if they want to continue supporting homeworking employees without creating a tax charge.

What should you do now?

If you currently claim working from home relief, it is sensible to check whether you are contractually required to work from home and to consider how this change will affect you from April 2026.

If you are an employer, you may want to review your employment contracts and reimbursement arrangements to ensure they remain tax-efficient.

By Katie Business News • Tax 0 Comments

There’s still time to take control of your year-end tax planning

With the tax and financial year end fast approaching on 5 April 2026, now is the moment to make sure you are not leaving money on the table. A little planning now can make a real difference to your tax position, your cash flow, and your longer-term financial security.

At A&C Chartered Accountants, we help start-ups, owner-managers and small businesses make smart, timely decisions so you keep more of what you earn. Below are the key areas to consider before the year end.

Savings – making your money work harder

If you have spare cash, one of the simplest and most effective moves is to use your ISA allowance.

For 2025/26, you can invest up to £20,000 per person in ISAs, sheltering that money from income tax and capital gains tax.

If you are aged between 18 and 39, a Lifetime ISA could also be worth considering. You can contribute up to £4,000 per year, and the government adds a 25% bonus, up to £1,000 annually. This can be used towards your first home or for retirement. It is important to note that the Lifetime ISA limit sits within your overall £20,000 ISA allowance.

We can help you decide which option makes most sense for your goals.

Pension planning – one of the most powerful tax tools available

If you can, increasing your pension contributions before 5 April 2026 is often a very tax-efficient move.

At a basic level, for every £4,000 you contribute to a personal pension, the government tops this up to £5,000 through basic rate tax relief.

If you pay higher rate tax, you can claim an additional £1,000 in your tax return, reducing the real cost of that £5,000 contribution to £3,000.

Pensions become even more valuable if your income sits between £100,000 and £125,140. In this band, your personal allowance is gradually withdrawn, which can result in an effective 60% marginal tax rate. Making pension contributions can reduce your taxable income and help you avoid or reduce this charge.

There are annual limits on how much you can contribute tax efficiently, and timing matters. A&C Chartered Accountants can review your position and help you get this right.

Dividends and company loans – act before rates rise

From 6 April 2026, dividend tax rates are increasing by two percentage points.

This means:

  • Basic rate dividends will rise from 8.75% to 10.75%

  • Higher rate dividends will rise from 33.75% to 35.75%

  • The additional rate will remain at 39.35%

The higher rate increase will also apply to the ‘penalty tax’ charged on certain company loans to shareholders made on or after 6 April 2026.

If you are a company director or shareholder, it is worth reviewing the timing of dividends and any planned company loans before the year end to benefit from the lower 2025/26 rates where appropriate.

We can model the numbers for you and recommend the most tax-efficient approach.

Capital allowances – timing your business investment

If your business has a year end of 31 March or 5 April, the tax year end is especially important for capital allowances.

To qualify for allowances in your current period, assets must be purchased and brought into use before your accounting year end.

Key points to know:

  • The Annual Investment Allowance (AIA) lets both companies and sole traders write off 100% of the first £1 million spent on qualifying plant and machinery in a 12-month period. This excludes cars, although new zero-emission cars can qualify for 100% relief.

  • Limited companies can also benefit from “full expensing” on most new (not second-hand) equipment, with no overall spending cap.

  • From 1 January 2026, a new 40% first-year allowance is available on certain qualifying assets, which may be particularly useful for unincorporated businesses that have already used their full £1 million AIA.

If you are buying equipment on hire purchase, you can still claim allowances on the full cost of the asset, provided it is in use by your year end.

Getting the timing right can make a big difference to your tax bill, and we can help you plan this properly.

Capital Gains Tax – use your allowance while you can

Everyone has a £3,000 Capital Gains Tax annual exemption for 2025/26. If you have not used it, you may want to consider realising gains before 6 April 2026.

There are also further increases coming to the rates for Business Asset Disposal Relief (BADR) and Investors’ Relief. These rose from 10% to 14% in April 2025 and will increase again to 18% from 6 April 2026.

If you are planning a qualifying disposal, bringing this forward could save you tax.

Voluntary National Insurance – protecting your state pension

To receive the full new State Pension, you generally need 35 qualifying years of National Insurance Contributions.

If you have gaps in your record, you can usually fill these by paying Class 3 voluntary NICs at £17.75 per week (£18.40 in 2026/27).

You can normally only make payments for the previous six tax years, which means gaps for 2019/20 must usually be filled by 5 April 2026.

If you are unsure about your record, we can help you check whether topping up makes financial sense for you.

Year-end tax planning is not about rushing into decisions – it is about making informed, well-timed choices that suit your circumstances.

By Katie Business News • Tax 0 Comments

Employees’ working from home expenses

From 6 April 2026, employees will no longer be able to claim a tax deduction for expenses incurred while working from home.

Currently, some employees are able to claim either a flat-rate deduction of £6 per week or the actual additional costs of working from home, where these are higher. This relief will be withdrawn in full from April 2026.

Why the relief is being removed

The government has confirmed that the home-working expenses deduction is being abolished because it is frequently claimed by individuals who are not entitled to it under the existing rules.

HMRC has taken the view that the relief is no longer operating as intended.

Employer reimbursement will still be possible

Although employee tax relief will be removed, employers will still be able to reimburse home-working expenses without triggering PAYE tax or National Insurance contributions, provided strict conditions are met.

The expenses must be wholly, exclusively and necessarily incurred as a result of the employee’s duties. In practice, this generally means that the employee’s contract requires them to work from home.

Employees who choose to work from home, rather than being required to do so, will not qualify for tax-free reimbursement of home-working expenses.

Further guidance is expected closer to April 2026.