There are special rules to prevent close companies, generally companies controlled by a small group of individuals, from allowing directors or shareholders to take money out of the company without paying the appropriate tax. Under CTA10/S455, if a close company makes a loan to participators (typically a shareholder, director or someone with significant influence) it can be liable to pay tax on that transaction.

The S455 charge does not automatically make the loan a distribution or income for the recipient, but the company must account for the tax. Some limited exceptions exist, such as loans made in the ordinary course of a lending business.

If a loan remains outstanding beyond nine months and one day after the end of the company’s accounting period, the company must pay a tax charge, calculated as a percentage of the loan amount. This ensures that short-term loans that are quickly repaid do not trigger the charge. The tax is calculated on each new loan or benefit in an accounting period, not the total outstanding balance.

Loans to directors or employees on beneficial terms may also create additional tax liabilities under employment income rules. Companies must include any S455 liability in their Corporation Tax return.

There are simplified expenses arrangements available for sole traders and business partnerships (with no corporate partner) that allow the use of fixed mileage rates instead of working out the actual costs of buying and running a vehicle (such as fuel, insurance, servicing and repairs). This simplified method is optional, but if you choose to use it for a specific vehicle, you must continue to use it for that vehicle for as long as it is used for business purposes. The simplified expenses regime is not available to limited companies or partnerships involving a corporate partner.

Under simplified expenses, the following flat rates per business mile are available for vehicle costs that are wholly and exclusively for business use:

The number of people in the vehicle does not affect the rates above. The rates are only available for journeys, or any identifiable part or proportion of a journey, that are wholly and exclusively for business purposes. For example, travel from home to work is not a qualifying journey.

The self-employed can continue to claim for other costs not covered by the flat rate for mileage such as parking, tolls, and congestion fees as well as other separate travel expenses such as train journeys.

The income generated from land or property in the UK is treated as arising from a UK property business. The underlying legislation defines this broadly to include all activities that produce rental income or similar receipts from UK land, whether the taxpayer is subject to Income Tax or Corporation Tax.

Although property income is treated as coming from a business, landlords are not generally regarded as trading unless they meet the normal trading tests. As a result, most trading-related tax reliefs, such as certain Capital Gains Tax reliefs, do not usually apply. Property business profits are instead calculated using principles similar to those for trading profits.

Since the 2017–18 tax year, the cash basis is the default method for calculating profits and losses for most individual landlords. However, companies and some other landlords must still use Generally Accepted Accounting Practice (GAAP).

A wide range of persons can carry on a UK property business, including individuals, partnerships, trustees, companies and non-residents with UK property income. Using an agent does not change who is treated as carrying on the business.

In most cases, all UK property income is treated as part of one single property business, allowing income and expenses across different properties to be combined. UK and overseas property, however, are treated as separate businesses. Activities carried out in different legal capacities, such as personally, as a partner or as a trustee, are also treated as separate property businesses for tax purposes.

The salaried member legislation applies to certain members of a Limited Liability Partnership (LLP) whose terms of membership are more like an employee than a partner. To be a salaried member, the individual must perform services for the LLP in their capacity as a member.

The legislation uses a three-part test. If all three conditions apply, the member is classified as a salaried member for tax purposes:

• Condition A – Disguised salary: At least 80% of the member’s pay is fixed, or any variable amounts do not vary in line with the LLP’s overall profits or losses.
• Condition B – Lack of influence: The member has no significant influence over the LLP’s affairs.
• Condition C – Insufficient capital stake: The member’s capital contribution is less than 25% of their expected reward package.

If a member can show that at least one condition does not apply, they continue to be treated as a partner.

The rules do not apply to:

• Companies
• Individuals who do no more than invest money
• Individuals who no longer provide services for the LLP but continue to receive a profit share

HMRC examples illustrate that remuneration linked to overall firm profits, rather than individual performance, does not create a salaried member situation. Professional qualifications or experience are also irrelevant, what counts is the member’s role and risk exposure in the LLP.

The new 40% First Year Allowance came into force from 1 January 2026. This marks an important development for businesses investing in plant and machinery. The new allowance was first announced at Autumn Budget 2025 and is intended to encourage continued capital investment while changes to other capital allowance rates take effect.

This means that since 1 January 2026, businesses can claim a 40% First Year Allowance on qualifying main-rate plant and machinery expenditure. This provides an immediate deduction against taxable profits in the year the asset is acquired, improving cash flow and bringing forward tax relief.

A key feature of the new allowance is its broad availability. It applies to assets acquired for leasing, which were excluded from full expensing, and it is also available to unincorporated businesses such as sole traders and partnerships, who were unable to benefit from the full expensing regime. The allowance has been introduced on a permanent basis, providing greater certainty for long-term investment and capital planning.

The new 40% First Year Allowance sits alongside existing reliefs, including full expensing for companies and the Annual Investment Allowance. Taking advice before committing to significant investment can help maximise available reliefs and avoid any missed opportunities.