A round up of the changes to the tax rates and rules affecting businesses…

Capital Allowances: From 6 April for income tax and 1 April for corporation tax the main rate of capital allowances will reduce to 14%.

A new 40% first year allowance for main rate assets was introduced from April 2026 for businesses unable to full expensing.

The 100% first year allowance for zero emission cars and EV charge points was also extended to April 2027.

Corporation Tax Penalties: From 1 April 2026 the late filing penalties will be doubled. £200 penalty for missing the filing deadline and a further £400 for those over three months late. Three successive returns more than three months late will incur a penalty of £2,000.

Closure of Free HMRC Corporation Tax filing portal: Commercial software will be needed by all businesses needing to file company tax returns from 1 April 2026. This includes any changes or amendments to previously submitted corporation tax returns or any rejected returns.

Vehicle Excise Duty:  From 1 April 2026, the standard tax rate for all petrol, diesel or hybrid cars registered after 1 April 2017 rises to £200. For expensive cars, priced over £40,000 (£50,000 for electric cars) when new, the VED rate is £640.

Electric cars will pay a first-year rate of £10, then will pay the standard rate of £200.

Vans under 3,500kg will pay £360 per annum and Motorcycles between £27 and £125 depending on cc, with zero emission bikes paying the base rate.

Business rates: Following the revaluation of commercial properties most business will see an increase in rates. However, from 1 April 2026 permanently lower business rate multipliers will apply for retail, hospitality, and leisure properties with rateable values below £500,000,

For 2026/27 only, targeted support for pubs and live music venues in England will provide 15% business rates relief. No other hospitality venues are covered by the measure.

With the start of a new tax year brings a few changes to the tax rates and rules.

Frozen Tax Thresholds: Personal allowance will remain at £12,570 until at least 2031. Higher rate will start at £50,270 and additional rate at £125,140 for England, Wales and Northern Ireland. The thresholds for Scotland are personal allowance £12,570, starter rate up to £16,537, Scottish basic rate up to £29,526, intermediate rate up to £43,662, higher rate up to £75,000, advanced rate up to £125,140 with top rate over £125,140. 

Savings Tax: Savings allowances are unchanged at £1,000 for basic rate, £500 for higher rate and £0 for additional rate

ISAs: Maximum ISA savings is £20,000 for cash ISAs or stocks and shares ISAs. From April 2027, this limit will remain for stocks and shares ISAs and cash ISAs for over 65s. However, for under 65s the maximum cash savings will reduce to £12,000.

Dividend Tax: Tax rates increase to 10.75%, 35.75% and 39.35%.

State pension: The ‘new state pension’ rate rises to £241.30 a week or £12,547.60 a year.

Child benefit: Payments are increasing to £27.05 per week, equivalent to £1,406.60 a year for the eldest or only child, and to £17.90 per week – £930.80 a year – for subsequent children.

Tax relief for homeworking costs: From April 2026, the flat rate claim of £6 per week will only be available where this is a payment made by the employer.

Venture capital trusts (VCT): Income tax relief reducing to 20% of the investment with a maximum investment of £200,000.

Enterprise investment schemes (EIS): Gross asset test for non-Northern Irish companies will double to £30 million.

VCT and EIS: Qualifying companies can raise up to £10 million in a 12-month period. The threshold for gross assets before allotting shares has increased to £30 million. Annual investment limit increases to £10 million (£20 million for knowledge intensive companies) and lifetime investment limit increased £24 million (£40 million for knowledge intensive companies)

Business asset disposal relief: BADR tax rate increased to 18%.

Making Tax Digital for Income Tax: The first wave of taxpayers will move to quarterly reporting from 6 April 2026. Sole traders and landlords with qualifying gross income over £50,000 on their 2024/25 tax return will move to the new system.

Directors’ loan tax charge: For loans made on or after 6 April 2026 the tax charge will increase to 35.75%.

Enterprise management incentives (EMI):  Can be used by independent quoted or unquoted companies with group gross assets of £120m.

Construction industry scheme (CIS):  From 6 April will be required to complete monthly CIS returns even where no subcontractor is paid.

Inheritance Tax: No change to the nil rate band of £325,000 and additional residential nil rate band of £175,000. However, privately owned businesses and farmers will see changes to business property relief (BPR) and agricultural property relief (APR). The threshold for 100% relief is set at £2.5 million. Amounts over this will get 50% relief therefore IHT will be paid at a reduced rate of 20%.

UK Residents who sell UK residential property may need to submit a tax return and pay the associated tax due on the disposal of UK residential property within 60 days of completion.

Since 6 April 2020 a UK resident taxpayer with a CGT liability is required to report and pay capital gains tax due on disposals made. Initially the returns and tax were due within 30 days of completion, from 27 October 2021 this deadline was extended to 60 days after completion. If you have made a chargeable gain you will need to submit a CGT return by the due date, even if you intend to include this on a self-assessment tax return at a later date.  If you do not report and pay on time, interest and penalties will be due. If your property was jointly owned, you will need to report your own gain or loss.

To work out your gain

Capital Gains tax is due on any profits you make when you sell an asset, e.g. if you bought a property for £200,000 and sold it for £250,000, you’ve made a gain of £50,000 on the property you will pay capital gains on this amount, less any deductions available to you.

Allowable Expenditure

When calculating the taxable gain on your property you can deduct certain other costs. These include stamp duty, estate agent costs, solicitors’ fees, along with improvement costs, e.g. an extension or conservatory. You cannot deduct expenses related to the general upkeep of the property or any amounts relating to the mortgage on the property.

Tax Reliefs

You may also be eligible to claim various tax reliefs the most common for residential property is Principle Private Residence (PPR) Relief. If the property you are selling is your main residence, it will be exempt from CGT due PPR relief. To qualify as your main residence all of the following must apply:

• You have one home and you’ve lived in it as your main home for all the time you’ve owned it
• You have not let part of it out (not including having a lodger)
• You have not used a part of your home exclusively for business purposes
• The grounds, including all buildings, occupy less than 5,000 square metres
• You did not buy it just to make a gain

If all of the above apply, you will qualify for principle private residence relief and you will not have to pay any CGT on the disposal. However, if one or more of the above conditions applied then you may have some CGT to pay. Please get in touch and we can help you determine your CGT liability.

Losses

If you have made losses on previous capital disposals these can also be set against the remaining gain.

Each year a taxpayer has an annual exempt amount to be used against any capital gains made during the year. In the current year, 2025/26, the exemption is £3,000.

Calculating your CGT liability

Once you have calculated your taxable gain, you will then need to calculate your CGT liability. To complete this you will need to estimate your other taxable income for the year to ascertain how much of your basic rate band is remaining. If the gain is within your basic rate band this will be charged at 18%. If you are a higher or additional rate taxpayer this will be charged at 24%.

Report and pay online

To complete the CGT return, you will need to use the Capital Gains Tax on UK property account. This is a standalone account and does not link directly to your self-assessment account. From this account you can complete your CGT return, appoint an agent to complete the CGT return on your behalf, and pay your CGT liability.

Please note that separate rules apply to non-UK residents.

If you have sold  UK residential property, please get in touch and we will give you a quote to complete your CGT Return.

The National Minimum Wage is the minimum pay per hour almost all employees are entitled to be paid by law. The rate changes dependant on age and whether the employee is an apprentice. From 1 April 2026 the National Minimum Wage is set to increase as detailed in the table below:

As always, if you have any questions please get in touch!

If you are an employer and you provide expenses and benefits to employees and directors, you must report these to HMRC and pay National Insurance on these benefits. Currently they are reported to HMRC using forms P11D and P11D(b). After the end of the tax year the taxable value of the expenses and benefits is calculated and reported to HMRC on forms P11D and P11D(b) by 6 July. The employer then pays the Class 1A National Insurance liability by 22 July.

From 6 April 2027, this will change, and employers will be mandated to report the expenses and benefits via payroll. The associated Class 1A National Insurance liability will also be due for payment at this time. As these amounts will be paid in real-time, it is expected to reduce underpayments or overpayments occurring.

What do you need to do now?

To ensure you are ready for the change in system, employers should check the following:

• Does your current payroll software have the functionality to allow you to payroll benefits? Where Clarand are already preparing your payroll, we can confirm that you are already ready.
• Let your employees with benefits know about the changes. When employees move to payrolled benefits, they should check their PAYE code to ensure any adjustments are no longer included in their code.
• Decide who will be responsible for collating the benefit data and checking the taxable values are correct each pay period. This will also include information in relation to joiners and leavers along with any changes to the benefits provided during the year.

If you would like to voluntarily register to submit payrolled benefits from 6 April 2026, please let us know, and we will let you know how to register.

HMRC are introducing a new way to file your self employment and property income, Making Tax Digital (MTD) for Income Tax. You will need to keep digital records of your income and expenditure relating to your businesses and rental properties. Each quarter you will need to send information to HMRC and following the year end, you will make a final submission to include all of your income from other sources.

From April 2026 individuals with gross self employment and/or property income over £50,000 will need to register for MTD and make submissions quarterly.

From April 2027 the threshold drops so individuals with gross self employment and/or property income over £30,000 will need to register for MTD and make submissions quarterly.

Finally, from April 2028 individuals with gross self employment and/or property income over £30,000 will need to register for MTD and make submissions quarterly.

What will this involve?

• Business and property records will need to be kept digitally using MTD-compliant software. This software can vary from a full accountancy package to bridging software attached to your existing records kept in a spreadsheet.
• From these records you will need to make quarterly submissions for each income source (self-employment, UK property, foreign property).
• After the end of the tax year, the quarterly submissions will be collated by HMRC along with other personal income information they hold. This information will form the basis of your end of year tax return.

What should I do now to get ready?

• If you are already using software, check that it is MTD compliant. HMRC have a tool to help you choose your software. MTD software We can also offer advice on what software will work well for you and your business.
• Have a separate bank account for your business transactions. This will reduce the need to unnecessarily categorise personal transactions.
• Keeping your bookkeeping up to date will help you to submit your quarterly submissions seamlessly. Doing little but often can be less cumbersome than looking at everything all at once.
• If you currently keep paper business records, you may find it easier to move to a spreadsheet to record your transactions. This could then be connected to bridging software to make your quarterly submissions.

What are the benefits of MTD for Income Tax?

By keeping more regular digital records this should help to streamline your tax reporting, keep a closer eye on the cash in your business, be more aware of trends and issues within the business and help with forecasting and budgeting.

If you would like to arrange a meeting to discuss the changes under Making Tax Digital for Income Tax, please contact the office to book a slot.

Companies house have increased their fees From 1 February 2026, the key changes are detailed below:-

• Confirmation statement increased to £50 from £34
• Incorporation fee increased to £100 from £50
• Strike off fee decreased to £13 from £33

Our offices are now closed for the Christmas holidays and will reopen on 2 January. We wish you a Merry Christmas and a very happy New Year!

Meet Paul and Emma, they run a haulage company that transports goods in the UK and Europe. Due to the complexities of the VAT rules when operating in this way, Emma (who looks after the admin and logistics side of the business) had some questions on the VAT treatment of their transactions. We set up a QuickBooks training session via Teams where we explained the VAT complexities and tweaked the QuickBooks set up making the bookkeeping more straight forward.

We prepare and submit the VAT returns each quarter so we check the transactions have been treated correctly but Emma wanted peace of mind that she understood at least the basics.

If you’d like QuickBooks training or your business operates overseas please get in touch to see how we can help you.