Author Archives: accounts

Did you file your tax return over the festive period?

HMRC’s figures show thousands of taxpayers are filing over the festive period, but leaving your return until late January risks penalties, stress and avoidable payment problems.

A new press release by HMRC has highlighted that 4,606 taxpayers took the time to file their tax return online on Christmas Day with a further 10,479 taxpayers completing their tax returns on Boxing Day. In total, 37,435 self-assessment returns were filed between 24 and 26 December and a further 54,053 returns between New Year’s Eve and New Year’s Day. HMRC even joked that festive filing has, for some, become as much a Christmas tradition as watching the King’s Speech or avoiding the washing up!

HMRC’s Chief Customer Officer, said:

‘Millions of customers have already completed their tax returns and can start 2026 with one less thing to worry about. For anyone yet to file, don’t leave it until the last minute. Filing now means you know exactly what you owe and have time to arrange payment. Search ‘Self-Assessment’ on GOV.UK to get started.’

If you are filing online for the first time you should ensure that you register to use HMRC’s self-assessment online service as soon as possible. Once registered an activation code will be sent by mail. This process can take up to 10 working days.

We would encourage our readers to complete their tax return as early as possible to avoid the last-minute stress as the 31 January 2026 filing date looms. If you miss the filing deadline then you will be charged a £100 fixed penalty (unless you have a reasonable excuse) which applies even if there is no tax to pay, or if the tax due is paid on time. There are further penalties for late tax returns still outstanding 3 months, 6 months and 12 months after the deadline. There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, 6 months and 12 months.

Source:HM Revenue & Customs | 05-01-2026

Changes to Agricultural and Business Property Relief reforms

The government recently announced significant changes to the planned reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). The threshold for 100% relief will be increased from £1 million to £2.5 million when the changes take effect from 6 April 2026. The change will be introduced via an amendment to the Finance Bill 2025 with relief reduced to 50% on qualifying assets above the new level.

Spouses or civil partners will be able to pass on up to £5 million of qualifying agricultural and business assets between them free of inheritance tax, in addition to the existing nil rate bands. The transferable allowance will also apply to surviving spouses or civil partners who were widowed before the new policy was announced.

These changes adjust the reforms first announced at Autumn Budget 2024, which had attracted strong criticism from the farming community and rural businesses over the potential impact on small farms and family-owned enterprises. By raising the threshold, the government aims to significantly reduce the number of estates affected by higher inheritance tax charges, ensuring that the reforms are focused primarily on the largest estates.

The government estimates that around 85% of estates claiming APR in 2026–27, including those also claiming BPR, will pay no additional inheritance tax as a result of these changes.

Shares designated as “not listed”, such as those traded on AIM, will attract BPR at a flat rate of 50% (reduced from 100%) from April 2026. This measure was unaffected by the latest announcement.

Source:Department for Business and Trade | 05-01-2026

New First Year Allowance from 1 January 2026

The new 40% First Year Allowance (FYA) for qualifying main-rate plant and machinery expenditure first announced at Autumn Budget 2025 has now come into force.

Effective from 1 January 2026, the new FYA applies to qualifying main-rate plant and machinery expenditure. It was also announced at the recent Autumn Budget 2025 that the main rate writing down allowances would be reduced to 14% (from 18%) from 1 April 2026 for Corporation Tax purposes and from 6 April 2026 for Income Tax purposes.

These changes mean that:

Businesses can claim a 40% FYA on qualifying main-rate plant and machinery.
The allowance applies to assets acquired for leasing, which did not qualify from full expensing.
Unincorporated businesses, including sole traders and partnerships can also benefit from the FYA. These businesses did not benefit from full expensing.
The allowance is permanent, providing long-term certainty for investment and capital planning.

The new FYA complements the existing full expensing regime, which remains in place for incorporated businesses. Full expensing allows companies to deduct 100% of the cost of qualifying plant and machinery from taxable profits in the year of acquisition, delivering tax savings of up to 25p for every £1 invested, in line with the current Corporation Tax rate.

Understanding how the new 40% FYA interacts with existing allowances, including full expensing and annual investment allowances, will be important when considering expenditure going forward.

Source:HM Treasury | 05-01-2026

Suing whistleblowers for a breach of confidence is not a viable strategy

The Court of Appeal has ruled that the initiation of legal or arbitral proceedings by an employer against a ‘whistleblower’ who has made a protected disclosure constitutes an actionable detriment under the Employment Rights Act (ERA) 1996, effectively overriding the defence of Judicial Proceedings Immunity, or JPI.

In November 2021, the claimant, initiated Employment Tribunal proceedings against his former employer for post-employment detriment as a consequence of whistleblowing. The claimant, who had worked at his employers’ London residence until his resignation in 2019, alleged that he made protected disclosures regarding instances of verbal and physical abuse by his employer directed at members of staff.

The respondent’s defence was that the claimant had made the allegations for financial gain rather than for altruistic reasons, had breached a confidentiality and independent consulting agreement under ICC Rules, and was effectively running an “extortion scheme” by making “false claims”.

The Court allowed the appeal based on the protection of whistleblowers by the ERA 1996, concluding that this statutory protection overrides the common law doctrine of JPI. In the Court’s view, allowing an employer to use litigation as a shield against a whistleblowing claim would render the legislation meaningless, as Section 47B(1) of the ERA provides a right not to be subjected to “any detriment by any act” by an employer for making a protected disclosure, including any perceived breach of confidence, as such a mechanism would effectively enable employers to escape liability by suing whistleblowers. Moreover, under Section 43J of the ERA, any confidentiality agreement that precludes a protected disclosure is deemed to be void.

Thus, the initiation of legal or arbitral proceedings by an employer against a worker, when executed on the ground of a protected disclosure, is actionable as a detriment under Section 47B of the ERA. This ruling effectively prevents employers from using litigation as a de facto penalty or “punitive tool” to harass or financially pressure a whistleblower. The Court has now established that this protection is not limited to threats, but also extends to the act of commencing proceedings. Employers should note that they cannot simply bypass Section 43J by enforcing a confidentiality clause through arbitration proceedings.

Source:Other | 06-01-2026

Saving to pay tax

For many individuals and business owners, paying tax is one of the largest regular financial commitments they face. Yet tax bills often arrive as a shock, not because the amounts are unexpected, but because the funds have not been set aside in advance. Developing a disciplined approach to saving for tax can remove stress, protect cash flow and support better financial decision making.

The starting point is understanding when tax is due and how much is likely to be payable. For employees taxed through PAYE, liabilities are largely settled automatically. For the self-employed, company directors, landlords and investors, tax is often paid later, sometimes many months after the income is earned. This delay can create a false sense of affordability, leading to funds being spent rather than reserved.

A practical approach is to treat tax as a non-negotiable cost, similar to rent or wages. As income is received, a proportion should be transferred immediately into a separate savings account earmarked for tax. This creates a clear boundary between available funds and money that belongs to HMRC. For those with variable income, setting aside a conservative percentage can help ensure there is enough saved even if profits increase unexpectedly.

Using a dedicated tax savings account can be particularly effective. Keeping tax funds separate reduces the temptation to dip into them for day to day spending. Some people choose instant access accounts for flexibility, while others prefer notice or fixed term accounts if they are confident about timing and amounts. The aim is not high returns, but certainty and accessibility when payment deadlines arrive.

Regular reviews are also important. Changes in income, tax rates, or personal circumstances can affect how much needs to be saved. Reviewing figures quarterly or alongside management accounts allows adjustments to be made before problems arise. This is especially relevant where payments on account apply, as these can significantly increase cash outflows in certain months.

Saving for tax is not just about avoiding penalties or interest. It supports better planning and peace of mind. When tax funds are already in place, decisions about investment, expansion, or personal spending can be made with greater confidence. It also reduces reliance on short term borrowing or time to pay arrangements.

In simple terms, saving for tax turns a reactive problem into a controlled process. By planning ahead and treating tax as a priority, individuals and businesses can smooth cash flow, reduce anxiety and stay firmly in control of their financial position.

If you are considering an asset purchase and are unsure which funding route is most appropriate, we can help you review the options and assess the impact on your business. A short discussion at the planning stage can often lead to a more efficient and sustainable outcome.

Source:Other | 04-01-2026