Author Archives: accounts

Choosing the right way to buy a vehicle for your business

For many business owners, a vehicle is an essential tool. Whether it is for visiting clients, delivering goods, or simply keeping things moving, choosing how to finance a vehicle can have a big impact on cash flow and tax planning. There are several routes to consider, each with its own advantages.

Buying outright

The simplest option is to purchase the vehicle in full. This means your business owns it from day one. Buying outright avoids ongoing finance costs, but it does tie up capital. The tax advantage is that you may be able to claim capital allowances on the cost, reducing taxable profits. Cars with low CO₂ emissions attract more generous allowances, while commercial vehicles such as vans can often qualify for the full Annual Investment Allowance.

Hire purchase

Hire purchase spreads the cost of the vehicle over a fixed term. You make monthly instalments and become the legal owner once the final payment is made. Interest will be payable, but this option gives certainty over repayments and allows you to claim capital allowances on the vehicle as if you had bought it outright.

Finance lease

With a finance lease, your business pays to use the vehicle but never actually owns it. Instead, you may be able to extend the lease at a reduced cost or sell the vehicle on behalf of the finance company and keep part of the sale proceeds. The rentals are tax deductible, which helps to reduce taxable profits.

Contract hire

Contract hire is often called leasing. You agree to use the vehicle for a set period and mileage, paying fixed monthly rentals. At the end of the agreement, the vehicle is returned. This option keeps vehicles off your balance sheet and helps with budgeting, as servicing and maintenance can be included. The rentals are usually deductible for Corporation Tax, but restrictions apply if the car has high emissions.

Personal contract purchase (PCP)

Some directors use PCP agreements through the company. These combine monthly payments with the option to buy the vehicle at the end for a lump sum. The tax treatment is similar to hire purchase if the business owns the agreement, but careful thought is needed if it is held personally.

Final thought

There is no one best option. The right choice depends on cash flow, tax position, and how long you intend to keep the vehicle. Speaking with your accountant before committing can ensure the vehicle is financed in the most efficient way for your business.

Source:Other | 21-09-2025

Unauthorised issue of a VAT invoice

Issuing a VAT invoice without registration or authorisation can lead to HMRC penalties, even if it is done by mistake.

A penalty may be charged by HMRC when an individual or business issues an unauthorised VAT invoice showing or including VAT without being allowed to do so. The invoice does not need to be a formal VAT invoice; it only needs to show an amount that is shown as VAT or includes an amount attributable to VAT.

An unauthorised person is anyone who is not registered for VAT, not part of a VAT group, or not otherwise authorised to act on behalf of a taxable person, such as an insolvency practitioner or an auctioneer selling goods to recover a debt. Common examples include businesses operating below the VAT registration threshold, individuals who issue VAT invoices after deregistration or businesses who begin charging VAT before being VAT registered. Farmers who are not certified to use the VAT agricultural flat rate scheme, but issue flat rate invoices may also face penalties.

A penalty may be avoided if the person has a reasonable excuse for the error. However, unauthorised issuing of VAT-related invoices is treated seriously and may result in financial penalties.

Source:HM Revenue & Customs | 15-09-2025

Beware scams pretending to be HMRC

Fraudsters are continuing to target taxpayers with scam emails as the deadline for submission of self-assessment returns for the 2024-25 tax year gets ever closer. In the 12 months to 31 July 2025, HMRC received more than 170,000 reports of suspicious contact from the public, of which more than 45,000 related to fake tax refund claims.

A number of these scams purport to tell taxpayers they are due a rebate / refund of tax from HMRC and ask for bank or credit card details in order to send the fake tax refund. The fraudsters use various means to try and scam people including making contact by phone calls, texts or emails. In fact, fraudsters have been known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC’s Chief Security Officer, said:

‘Scammers target individuals when they know Self Assessment customers will be preparing to file their tax returns. We’re urging everyone to stay alert to scam emails and texts offering fake tax refunds.

Taking a moment to pause and check can make all the difference. Report any suspicious activity to us before the fraudsters do any more harm. Search ‘HMRC scams advice’ and refer to the scams guidance on GOV.UK to stay informed and protect yourself.’

If you think you have received a suspicious email claiming to be from HMRC you are asked to forward the details to phishing@hmrc.gov.uk, suspicious texts to 60599 and suspicious calls can be reported on GOV.UK. If you have suffered an actual financial loss you should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool (or Police Scotland via 101).

Source:HM Revenue & Customs | 15-09-2025

War Widows Recognition Payments Scheme

Bereaved spouses who lost service pensions before 2015 have until 15 October 2025 to claim a one-off £87,500 recognition payment.

This scheme was launched in October 2023 to help war widows and widowers who lost their service-attributable pensions due to remarriage or entering new relationships before 2015. Since the scheme was launched, over £21 million has been paid out to more than 240 eligible individuals who had previously received no financial recognition for their sacrifice.

The scheme provides a one-off, tax-free payment of £87,500 to those who forfeited their service-attributable pensions prior to 2015 due to remarriage or cohabitation under the old pension rules and were in receipt of no other payments to recognise the loss of their partner.

The scheme applies to widow(er)s, including civil partners and unmarried cohabiting partners, of regular and reservist members of the Army, Navy or Royal Air Force.

The Minister for Veterans said,

‘The War Widows Recognition Payment Scheme has provided vital redress to those who have sacrificed so much for our country. With the scheme closing on 15 October, I urge anyone who believes they may be eligible to apply.’

Applications have slowed recently, but the Ministry of Defence believes there may still be eligible individuals who have not yet applied, and no extensions are planned.

Full details, eligibility criteria, and application forms are available at War Widow(er)s Recognition Payment – GOV.UK

Source:Other | 15-09-2025

Dividend taxes will they increase?

Speculation is growing that rates or allowances applied to dividend income may change in the next Budget.

The current tax rates for dividends received (in excess of the £500 dividend tax allowance) are as follows:

8.75% for basic rate taxpayers will pay tax on dividends
33.75% for higher rate taxpayers will pay tax on dividends
39.35% for additional rate taxpayers will pay tax on dividends

Dividends that fall within your Personal Allowance do not count towards your dividend allowance and you may pay tax at more than one rate.

If you receive up to £10,000 in dividends you can ask HMRC to change your tax code and the tax due will be taken from your wages or pension or you can enter the dividends on your self-assessment tax return, if you already fill one in. You do not need to notify HMRC if the dividends you receive are within your dividend allowance for the tax year.

If you have received over £10,000 in dividends, you will need to complete a self-assessment tax return. If you do not usually send a tax return, you need to register by 5 October following the tax year in which you had the relevant dividend income.

There has been growing speculation ahead of the upcoming Budget that the government could make further changes to the taxation of dividends. With the government under pressure to raise revenue there is the possibility that the rates of dividend taxes could be increased. The current £500 tax‑free dividend allowance could also be abolished altogether, after having been significantly reduced over the last number of years.

Source:HM Treasury | 15-09-2025