Author: Glenn

Providing the right information when you start a new job helps ensure your tax code is correct from the first pay day and avoids the risk of paying too much tax.

When starting a new job or taking on additional employment, your new employer will usually send your income details to HMRC, which are used to calculate your tax code. If this information is not provided in time, or you choose not to share it, you may be placed on a temporary emergency tax code.

To avoid this, you should provide your new employer with your P45. If you do not have a P45 or do not wish to supply it to your new employer then you should complete HMRC’s starter checklist.

You can check your employment details via HMRC’s online services or mobile app, ensuring only one employer is using the standard 1257L tax code and that your estimated income is accurate. This should be available to view within 6 weeks after your first pay day.

If your records are incorrect or incomplete, you can update your employer details, add or remove employers and amend your estimated income or benefit information directly with HMRC. These updates can help prevent underpayment or overpayment of tax.

These changes may or may not affect your tax code. If the changes result in a change, HMRC will notify your employer.

The new 40% First Year Allowance (FYA) for qualifying main-rate plant and machinery expenditure first announced at Autumn Budget 2025 has now come into force.

Effective from 1 January 2026, the new FYA applies to qualifying main-rate plant and machinery expenditure. It was also announced at the recent Autumn Budget 2025 that the main rate writing down allowances would be reduced to 14% (from 18%) from 1 April 2026 for Corporation Tax purposes and from 6 April 2026 for Income Tax purposes.

These changes mean that:

• Businesses can claim a 40% FYA on qualifying main-rate plant and machinery.
• The allowance applies to assets acquired for leasing, which did not qualify from full expensing.
• Unincorporated businesses, including sole traders and partnerships can also benefit from the FYA. These businesses did not benefit from full expensing.
• The allowance is permanent, providing long-term certainty for investment and capital planning.

The new FYA complements the existing full expensing regime, which remains in place for incorporated businesses. Full expensing allows companies to deduct 100% of the cost of qualifying plant and machinery from taxable profits in the year of acquisition, delivering tax savings of up to 25p for every £1 invested, in line with the current Corporation Tax rate.

Understanding how the new 40% FYA interacts with existing allowances, including full expensing and annual investment allowances, will be important when considering expenditure going forward.

HMRC’s figures show thousands of taxpayers are filing over the festive period, but leaving your return until late January risks penalties, stress and avoidable payment problems.

A new press release by HMRC has highlighted that 4,606 taxpayers took the time to file their tax return online on Christmas Day with a further 10,479 taxpayers completing their tax returns on Boxing Day. In total, 37,435 self-assessment returns were filed between 24 and 26 December and a further 54,053 returns between New Year’s Eve and New Year’s Day. HMRC even joked that festive filing has, for some, become as much a Christmas tradition as watching the King’s Speech or avoiding the washing up!

HMRC’s Chief Customer Officer, said:

‘Millions of customers have already completed their tax returns and can start 2026 with one less thing to worry about. For anyone yet to file, don’t leave it until the last minute. Filing now means you know exactly what you owe and have time to arrange payment. Search ‘Self-Assessment’ on GOV.UK to get started.’

If you are filing online for the first time you should ensure that you register to use HMRC’s self-assessment online service as soon as possible. Once registered an activation code will be sent by mail. This process can take up to 10 working days. 

We would encourage our readers to complete their tax return as early as possible to avoid the last-minute stress as the 31 January 2026 filing date looms. If you miss the filing deadline then you will be charged a £100 fixed penalty (unless you have a reasonable excuse) which applies even if there is no tax to pay, or if the tax due is paid on time. There are further penalties for late tax returns still outstanding 3 months, 6 months and 12 months after the deadline. There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, 6 months and 12 months.

While company cars often come with tax implications, there are specific situations where the associated benefits may be exempt. There are circumstances where it can be possible to offer employees car benefits that are exempt from tax.

Exempt expenses and benefits include the following:

• Business-only use: This rule has been the subject of much case law over the years, but it has generally been established that to qualify for VAT recovery the car must not be available for any private use. This means that the car should only be available to staff during working hours for employment related duties or to travel to a temporary workplace. The business must also clearly tell their employees not to use the vehicle for private journeys and check that they don’t.
• Adapted vehicles for disabled employees: These cars are exempt if the only private use is for journeys between home and work and for travel to work-related training.
• Fuel paid by employees: The fuel benefit is removed when an employee pays for all their private fuel use or if the employer pays and the employee reimburses the amount (during the tax year).
• ‘Pool’ cars: Employers are not required to pay or report on 'pool' cars. These are cars that are shared by employees for business purposes only and normally kept on your premises. Employers must ensure the ‘pool’ car rules are properly adhered to.
• Privately owned vehicles: Employers do not have to pay anything on cars that directors or employees own privately.

Proper documentation and compliance are required in order to maintain these exemptions.

The trivial benefits legislation provides a simple and practical tax exemption that allows employers to give small non-cash benefits to employees without triggering tax or National Insurance charges.

To qualify as a trivial benefit, the cost to the employer must not exceed £50 per item. The benefit must not be cash or a cash voucher and must not be provided as a reward for work or as part of the employee’s contractual entitlement. It must also not be provided in recognition of particular services performed. Typical examples include modest gifts such as flowers, a bottle of wine, a meal voucher or a small seasonal gift.

Where these conditions are met, the benefit is exempt from Income Tax, employer’s and employee’s National Insurance and does not need to be reported to HMRC.

For directors of close companies, an additional annual cap applies. Such individuals are limited to £300 of trivial benefits per tax year, calculated as an aggregate of qualifying items. This limit does not apply to ordinary employees.

The rules are designed to reduce administrative burdens and provide clarity, but care is needed. Regular provision of benefits, or benefits that appear linked to performance, can fall outside the exemption.

Used correctly, trivial benefits offer a straightforward way for businesses to reward staff in a tax-efficient and low-compliance manner.