Making Tax Digital (MTD)

Sole Traders and Landlords whose total turnover exceeded £50,000 in the last tax year should by now have received a letter from HMRC mandating them into quarterly filing.  It is likely that we will also have been in touch to agree the best individual approach for you to provide and maintain appropriate records in readiness for the first filing deadline of 7 August 2026.  If you’re not one of the individuals filing this year, it is worth starting to think about quarterly record keeping and reporting as the threshold for inclusion in MTD next year will be £30,000 capturing many more sole traders and landlords.

Benefits in Kind (BIKs) P11d

Although there has been a delay to the mandatory payrolling of BIKs, P11d forms still need to be completed and filed for each employee/director receiving a benefit.  Forms must be submitted by 6 July 2026 with payment of any Class 1A NICs subsequently due by 22 July 2026. 

Workplace Benefits Relief

Certain work-related costs were previously taxable when reimbursed to employees rather than provided directly by the employer.  However, with effect from this tax year, Income Tax and National Insurance exemptions will apply when employers reimburse employees for the following:

• eye tests required for display screen equipment users
• glasses (specific corrective appliances) for visual display unit use
• seasonal flu vaccinations
• eligible equipment needed to work effectively from home.

If you are unsure whether an expense qualifies for this exemption, please get in touch for advice.

Should you Disincorporate

Reductions to the dividend allowance and increases in dividend tax rates, as well as an ever-increasing administrative burden, has raised the question of whether it is now more tax effective and time efficient to be a sole trader rather than a limited company.  Here are some key things to consider:

The method of closing the company affects how reserves and retained profits distributed to shareholders are taxed.  For smaller companies a voluntary strike-off is the most straight forward and cost-effective method versus a formal voluntary liquidation process which can be expensive and needs an insolvency practitioner.

Disincorporation involves transferring company assets (stock, land, property, vehicles, goodwill, etc.) to the shareholders personally which can be complicated and generate a tax bill even if no money changes hands. 

Being a limited company provides limited liability, protecting your personal assets so if you operate as a sole trader you might need to check the risks and whether they can be insured against.   Contracts, finance agreements, insurance, banking and professional registrations will also be affected and transferred to the new entity.

Being a sole trader reduces the administrative burden of Companies House filings, corporation tax, and dividend paperwork and sole trader income is taxed once on profits whereas company profits can be double taxed – once under Corporation Tax and then again by the individual when the profits are taken (dependent upon the circumstances).  

If you would like us to analyse the pros and cons of disincorporation for you, please get in touch.

Small Employers’ Relief

Employers who qualify for Small Employers’ Relief, i.e. those who have paid £45,000 or less in Class 1 National Insurance contributions can this year reclaim 109% of the following “statutory” payments: Maternity Pay, Paternity Pay, Parental Bereavement Pay, Neonatal Care Pay and Shared Parental Pay.  The rate for all other employers is 92%.

Construction Industry Scheme Reforms

Contractors are now once again legally obliged to file a CIS return EVERY month even if it is a nil return because they have not used a subcontractor.  The full CIS late filing penalty regime is being reinstated alongside this meaning late filers may be charged:

• first £100 fixed penalty
• second fixed penalty of £200 after 2 months
• £300 or 5% of any liability which should have been shown on the return at 6 months
• another tax assessed penalty at 12 months calculated depending upon why the return was late.

We are here to work alongside you, help you prosper, and turn profit into lasting wealth.  Please do get in touch at any time for strategic tax and business advice.

Janet, Lucy, James, Josh, Dawn, Becky, Nat & Leanne

01969 624999