Hello everyone,

We hope you have enjoyed the summer weather and had a good break if you have been away. This month we provide some details on HMRC compliance activity, a gentle reminder on tax returns and MTD and details of coming Companies House changes. As ever, if there are any questions please do get in touch.

Kind regards, 
Simon

Tax returns – A big thank you for all those who have sent in their accounts and tax return details it is much appreciated. Our prize draw for all those sending in their details by mid-July has been drawn and the prize is on its way to the lucky winner. We would ask that clients continue to send in their tax return and accounts details as soon as they are available and by no later than 30 September. We are aiming to complete all tax returns by 30 November 2025 this year so help us to achieve this target by sending in your papers once they are ready.

Making tax digital for income tax starts in April 2026 for those with combined trading and rental income over £50,000 in the 2024/25 tax return. So once your tax return is completed for last year, you will know whether you are within the MTD reporting rules for next year. We will be discussing the MTD requirements with those effected over the coming months. It will be important to be up to date with bookkeeping by the end of March at the latest to enable a smooth transition to quarterly reporting. For anyone not already using software for record keeping, the sooner you make the transition the more prepared you will be for the upcoming changes. Please speak with us to discuss your options.

HMRC compliance activity
HMRC are hiring additional staff to undertake compliance checks so we can expect increased activity over the coming year as these staff become operational. HMRC have given notice that they are targeting specific areas which currently include:

• Ensuring that taxpayers do not claim personal expenditure, this is aimed at making sure that sole traders and landlords only claim business related costs and mixed use expenses are correctly apportioned between business and private use. Expenses typically reviewed include:
  • Travel and subsistence –to ensure only business related
  • Vehicle expenses – home to office/ work base generally not deductible. Ideally a mileage log needs to be kept of all mileage splitting out business and private mileage so that evidence is available to back up your claim.
  • Use of home – to confirm reasonable typically done number of rooms or floor space – it is important to be able to demonstrate how your use of home figure is calculated and be able to justify the basis.
  • Entertaining – generally not allowable
  • Training costs of proprietors – refresher or CPD courses generally allowable, but not if for new skills or qualifications. Retain course details to explain nature of training to back up any claims particularly for more expensive courses. 

• Pension contributions – HMRC recently reviewed a sample of pension contribution claims and found many incorrect claims. They are therefore increasing the level of checks and reducing the threshold at which they require evidence of the amount and type of contribution made. So the point here is to make sure you retain pension contribution schedules / certificates so that they are available if HMRC request them.

If you should receive a letter from HMRC requesting information do not ignore it but contact us at once so that we can review and consider what is needed to make a timely reply.

Companies House changes and ID verification
From Autumn 2025 (starting November 18, 2025), Companies House will require mandatory identity verification for all new directors and Persons with Significant Control (PSCs), and to set up a company. Existing directors and PSCs will have a 12-month transition period to comply, verifying their identity when they file their next annual confirmation statement. Verification can be done through GOV.UK’s One Login service . A summary of recent and forthcoming Companies House changes can be found here . We will be reminding clients who will be effected by these changes of the need to verify their ID and obtain a personal code from Companies House over the coming months.

Annual Cycle Ride for Building Better Futures International
BBFI works in Tamil Nadu, Southern India to help marginalised women living in rural villages by providing training and education to enable them to support themselves and their children. Training is provided for tailoring, hand loom weaving and animal husbandry as well as providing tuition centres for local children.

As part of the firm’s support to BBFI, we are planning our annual cycle ride on 13 September to raise money for maintaining the training programs. For more information on the work of this charity see Building Better Futures International. If anyone would like to sponsor us please do get in touch.