5 Things Before Tax Year End
The current tax year ends on 5th April 2026 — and there are just a few weeks left. Once that date passes, many tax-saving opportunities are gone for good. Here are five things you should do right now.
1. Use Your Personal Allowance
The personal allowance for 2025/26 is £12,570. If you haven’t earned this amount yet — or if a spouse or partner hasn’t — it may be worth looking at how income is structured before 5th April. Unused personal allowance cannot be carried forward.
2. Pay Yourself the Right Dividend (Limited Company Directors)
If you run a limited company, the dividend allowance is £500 for 2025/26. If your company has profits available, review whether you’ve drawn the most tax-efficient amount before the year ends. Taking too much or too little could cost you.
3. Make a Pension Contribution
Pension contributions are one of the most powerful ways to reduce your tax bill. You can contribute up to £60,000 per year and get full tax relief. Contributions made before 5th April count for this tax year. Limited companies can also make employer pension contributions directly — saving corporation tax too.
4. Check Your Annual Investment Allowance
If you’re thinking of buying equipment, vehicles, or machinery for your business — do it before 5th April to get the tax relief this year. The Annual Investment Allowance is £1 million, meaning most small businesses can write off 100% of qualifying asset purchases against profit.
5. Review Your Business Structure
Are you still a sole trader? Now is a good time to review whether operating as a limited company could save you money. In many cases, incorporating can save thousands per year through a combination of salary and dividends.
Need Help Before 5th April?
At MBSC Accountancy & Consultancy Ltd, we offer tax planning consultations to help you make the most of the remaining weeks. We serve small businesses and self-employed individuals across Surrey and the UK.
MTD for Income Tax
Making Tax Digital Income Tax April 2026
Making Tax Digital for Income Tax starts April 2026 for sole traders and landlords earning over £50,000. Find out what you need to do now — and how MBSC can help.
If you’re a sole trader or landlord earning over £50,000 a year, Making Tax Digital for Income Tax (MTD for ITSA) is coming — and it starts in just weeks, from 6th April 2026.
This is one of the biggest changes to the UK tax system in years, and many business owners are still not ready. Here’s exactly what it means and what you need to do right now.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC’s programme to move tax reporting fully digital. Instead of filing one Self Assessment return per year, you will need to keep digital records of all income and expenses, submit quarterly updates to HMRC through approved software, file an End of Period Statement at the end of the tax year, and submit a final declaration replacing your current Self Assessment return. That means five submissions per year instead of one.
Who Is Affected From April 2026?
The April 2026 deadline applies to sole traders and landlords with gross income over £50,000 from self-employment or property — or a combination of both. From April 2027, the threshold drops to £30,000, bringing in many more businesses.
What Software Do You Need?
You must use HMRC-recognised software. Popular options include QuickBooks, Xero, FreeAgent, and Sage. Spreadsheets on their own will not be accepted unless you use compatible bridging software.
What Do You Need to Do Right Now?
Check if you’re affected by looking at your 2024/25 income figures. Choose your software and set it up before April. Start keeping digital records from 6th April 2026 at the latest. And speak to your accountant — we can help you choose the right software and set everything up.
How MBSC Can Help
At MBSC Accountancy & Consultancy Ltd, we are helping all our clients get MTD-ready before April. We can advise on the right software for your business, help you set it up, and manage your quarterly submissions on your behalf. Don’t leave it until the last minute
Autumn Budget 2024: VAT on Private Education Fees – What You Need to Know
In a significant move outlined in the Autumn Budget 2024, the UK government has announced that Value Added Tax (VAT) will now apply to private education fees. This decision has stirred considerable debate, especially among private schools and parents. Here’s a breakdown of the key points to help you understand the implications of this change.
What Does This Mean for Private Education Fees?
Starting from the budget announcement, VAT will be levied on private education fees, which were previously exempt from the tax. This means that parents will now have to pay VAT on tuition fees for their children attending private schools. The government’s reasoning behind this change is to align the taxation system more consistently and ensure a fairer distribution of VAT across different sectors.
When Does VAT Apply?
One crucial aspect of the new rules is the timing of VAT application. The VAT will apply based on the taxable supply of services rather than at the point of payment. This means that even if parents make advance payments towards tuition fees, these will not be exempt from VAT. The application of VAT is tied to when the service (education) is actually provided, not when the payment is made.
For example, if a parent pays upfront for a year’s worth of tuition, VAT will apply to that payment when the educational services are delivered throughout the year, not when the payment is made in advance.
Input VAT on Past Purchases
Private schools who registered for VAT after purchasing assets or services can claim back VAT on their past purchases under certain conditions.
Assets: Schools that bought assets prior to VAT registration can claim input VAT for up to six years. This could include items like buildings, equipment, or other long-term investments that were purchased before they were VAT-registered.
Services: For services, schools can claim input VAT for up to six months before the VAT registration date. This applies to services directly related to the school’s operation, such as utilities or maintenance services.
What Does This Mean for Schools and Parents?
For private schools, the decision to apply VAT could significantly alter their financial planning. Schools will need to adjust their pricing structure to account for VAT on fees and ensure that they comply with the new regulations. Additionally, private schools may find some relief in being able to claim input VAT on previous purchases.
Parents, on the other hand, will face higher education costs as VAT is added to their tuition fees. Schools will likely pass this cost onto parents, making private education a more expensive option. However, it’s important to note that the specific details on how VAT will be added to fees are still being worked out, and schools may vary in how they apply this charge.
Looking Ahead
The decision to apply VAT to private education is a significant policy shift that will affect both private schools and the families who send their children to them. While private schools will have some relief through the ability to claim VAT on past purchases, parents should brace for higher tuition costs. It will be essential for both schools and parents to stay informed on the detailed implementation of these rules to fully understand their impact.
As the Autumn Budget 2024 continues to unfold, more guidance will likely be issued to clarify how VAT will be applied, and how private education providers can manage the changes effectively. Stay tuned for updates!
Building materials – reverse charge or not?
Some of my clients who are subcontractors have sent their invoice. They charged VAT on materials but not on the services because these are covered by the domestic reverse charge (DRC).
Is the VAT charge on materials correct ?
Materials are Generally Subject to the DRC: When a supply of construction services is subject to the DRC, the VAT is not charged by the supplier. Instead, the customer accounts for both input and output VAT on their VAT return.
1.Supplies to End Users: If the customer receiving the construction service is the end user (i.e., they do not intend to sell or supply the service onward), then the DRC does not apply. Instead, regular VAT rules apply, meaning the supplier charges VAT on the full value of the work, including materials.
2. Intermediary Suppliers: If the customer is an intermediary, not supplying the construction services directly but passing them to another party, they are also outside the scope of the DRC. VAT is charged in the usual way.
In summary, under the CIS, materials are excluded from deduction calculations, while under the DRC, materials are generally included unless the customer is an end user or intermediary supplier.
Early Christmas pay to employees
HMRC is reminding employers who are planning to pay their workers early over the Christmas period. If you pay any of your employees before their normal payday, you must report the payment on your full payment submission (FPS) as if it were made on the employee’s normal (contractual) date.
Paying employees early doesn’t change the date on which the deductions from pay must be sent to HMRC. Payment of PAYE tax and NI contributions for salaries paid between 6 December 2024 and 5 January 2025 is 17 January 2025 (normally the remittance date is 19th of the month, but this falls on a Sunday this time ), or 22 January if paid electronically.
Is compensation for damaged property taxable?
Depends on;
What does the payment cover?
If The cover is to compensate for the revenue loss, then the answer is ‘YES’,the payment is taxable for income tax.
If it is to replace an asset, capital gain rules apply.
The compensation payment for an asset is taxable as a capital gain. However, if the unused compensation amount is relatively small you can opt to defer the gain until the building is sold. This might not always be the most tax-efficient option in a future year, so it could be more tax efficient not to defer.
News on Jobs expense claims
Since 14 October 2024 HMRC will only accept claims for job expenses made by post on a Form P87 accompanied by evidence, e.g. a receipt for the purchase. There are exceptions for flat rate expenses .
If you’re intending to make a claim, use HMRC’s eligibility checker first . It doesn’t guarantee that you’re entitled to tax relief; its main purpose is to tell you which claim method to use.
Working from home
A claim for working from home expenses, either the £6 per week allowed by concession or actual costs, will only be eligible where the employee can submit a relevant clause in their employment contract proving an obligation to work at home.
HMRC now requires evidence showing the amount, date and the reason why the expense was necessary. For example, this can include receipts for purchases or mileage logs for business journeys. Plus, you must provide details of any part of the expense reimbursed to you by your employer
What is Making Tax Digital? Everything You Need to Know for 2026
Making Tax Digital is a UK government programme designed to modernise the tax system. Its goal is to reduce errors, streamline the process of tax filing, and ultimately make tax administration more efficient. Under MTD, taxpayers are required to keep digital records and submit tax returns through compatible software.
• April 2026: MTD for Income Tax Self-Assessment (ITSA) for Self-Employed and Landlords
From April 2026, self-employed individuals and landlords earning over £50,000 annually will be required to comply with MTD for Income Tax Self-Assessment (ITSA). They must keep digital records of their income and expenses and send quarterly updates to HMRC through MTD-compatible software. This is a significant expansion of the MTD programme and represents the next phase in the government’s plan to make tax reporting easier and more efficient.
• From April 2027: self-employed individuals and landlords earning over £30,000 annually will be required to switch to MTD reporting as well.
MTD Requirements: What Does MTD Compliance Mean?
1. Keep Digital Records
2. Use MTD-Approved Software
3. Quarterly Submissions
4. Final End-of-Period Statement
For more information please visit the website below;
https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax
surreyaccountancy.com/self-assessment-tax-return-deadline
Does My Business Need to Register for VAT? A Quick Guide
VAT (Value Added Tax) is a crucial part of the UK tax system, and understanding when and how to register for it can impact your business operations significantly. This guide will help you understand when your business needs to register for VAT, the benefits and drawbacks of VAT registration, and how to choose the right VAT scheme for your UK business.
When Does Your Business Need to Register for VAT?
VAT is a tax on the value added to goods and services. Most businesses in the UK deal with VAT at some level, and understanding when VAT registration is mandatory is essential. In the UK, a business must register for VAT if its VAT taxable turnover exceeds the VAT threshold set by HMRC. As of 2024, the VAT threshold is £90,000. This figure is based on the total turnover over a 12-month period.
Situations that Trigger Mandatory VAT Registration:
- Exceeding the VAT Threshold: If your business’s taxable turnover exceeds £90,000 in a 12-month period, you must register for VAT.
- Anticipating Exceeding the Threshold: If your business is likely to surpass the £90,000 threshold in the next 30 days, VAT registration is required.
- Selling VAT-Taxable Goods and Services: If you sell products or services that are VAT-taxable in the UK, registration becomes mandatory once the threshold is breached.
- Businesses Outside the UK: If you are a non-UK business that supplies goods or services to the UK, you may need to register for VAT even if your turnover is below the threshold.
Voluntary VAT Registration:
Even if your business’s turnover is below £90,000, you may voluntarily register for VAT. This is common for businesses that want to claim back VAT on their purchases, or if their suppliers and clients are mostly VAT-registered and can reclaim the VAT you charge them.
Benefits and Drawbacks of VAT Registration
Benefits:
- Claim VAT on Purchases: Once registered, your business can reclaim VAT on goods and services purchased from other VAT-registered businesses. This can result in significant savings, particularly for businesses with high input costs.
- Enhanced Business Reputation: Being VAT-registered may enhance your business’s credibility, as it can give the impression that your business is larger and more established.
- Avoid Late Registration Penalties: By registering on time, you can avoid penalties that HMRC imposes for failing to meet the VAT registration deadline.
- Offset Input VAT: If the VAT your business pays on purchases (input VAT) exceeds the VAT you collect on sales (output VAT), you can reclaim the difference from HMRC.
Drawbacks:
- Increased Administrative Burden: VAT registration requires you to submit regular VAT returns (usually quarterly), maintain detailed VAT records, and track VAT on your sales and purchases. This added paperwork can be time-consuming.
- Higher Prices for Non-VAT Registered Customers: If your customers are consumers or small businesses that are not VAT-registered, charging VAT may make your products or services appear more expensive compared to competitors.
- Compliance Costs: You may need to invest in accounting software or hire accountants to manage your VAT affairs.
- VAT Liability: If your business collects more VAT from customers than it pays, you’ll need to pay the difference to HMRC.
How to Choose the Right VAT Scheme for Your UK Business
There are several VAT schemes available to UK businesses. Choosing the right one depends on your business size, structure, and type of transactions. Below is an overview of the most commonly used VAT schemes:
1. Standard VAT Scheme
The standard VAT scheme is the most widely used option and involves charging VAT on your sales and reclaiming VAT on your purchases. You submit VAT returns (usually every quarter), detailing the VAT you’ve charged and reclaimed.
- Who should use it? Businesses of all sizes that have straightforward VAT transactions or that want to reclaim significant VAT on purchases.
- Benefits: Greater flexibility in reclaiming VAT on purchases.
- Drawbacks: Administrative burden, especially for smaller businesses, as you have to track all VAT charged and paid.
2. Flat-Rate VAT Scheme
The flat-rate VAT scheme simplifies VAT reporting for small businesses. Instead of calculating VAT on each transaction, businesses pay a fixed percentage of their turnover to HMRC. The percentage varies depending on your industry, but typically ranges from 4% to 16.5%.
A key exception applies to “limited-cost traders,” who must use a flat rate of 16.5%, regardless of their industry. A limited-cost trader is a business with minimal purchases, typically spending less than 2% of turnover on goods or under £1,000 annually.
- Who should use it? Small businesses with an annual turnover under £150,000 (excluding VAT) that want to simplify their VAT reporting,
and participants must leave the scheme if their total turnover exceeds £230,000 (including VAT) . - Benefits: Less administrative work as you don’t need to track VAT on every transaction. It can also be cost-effective if the flat rate is lower than the VAT you’d otherwise pay.
- Drawbacks: You cannot reclaim VAT on most purchases, which can be a disadvantage if your business has significant input costs.
3. Cash Accounting Scheme
Under the cash accounting scheme, you only pay VAT on your sales when your customers pay you. Similarly, you can only reclaim VAT on your purchases when you’ve paid your suppliers. This scheme is beneficial for businesses with cash flow issues.
- Who should use it? Businesses with an annual taxable turnover under £1.35 million that experience delayed customer payments or cash flow challenges.
- Benefits: Improves cash flow management as VAT is only paid when cash is received.
- Drawbacks: If you delay payments to your suppliers, you also delay the ability to reclaim VAT.
4. Annual Accounting Scheme
The annual accounting scheme allows businesses to submit one VAT return per year instead of quarterly returns. You make advance payments throughout the year based on your estimated VAT liability and settle any balance with the final return.
- Who should use it? Businesses with a turnover under £1.35 million that want to reduce the frequency of VAT reporting.
- Benefits: Reduces the administrative burden with only one VAT return per year.
- Drawbacks: Potential cash flow issues, as you need to make regular advance payments.
Conclusion
Understanding when your business needs to register for VAT and choosing the right VAT scheme is essential for tax compliance and efficient financial management. If your turnover exceeds the VAT threshold, or if you anticipate rapid growth, VAT registration is mandatory. However, even businesses with lower turnovers may choose to register voluntarily for the benefits it offers, such as the ability to reclaim VAT on purchases.
When it comes to choosing the right VAT scheme, small businesses with simple operations may benefit from the flat-rate scheme or cash accounting scheme, while larger businesses or those with complex VAT needs might prefer the standard scheme. Always consider factors such as your business’s size, cash flow, and administrative capabilities when deciding which scheme is right for you. Consulting with an accountant or tax advisor can also help you make the best choice for your business.
