Author: Glenn

An extension of First-Year Allowances (FYA) for zero-emission cars and charge points was announced as part of the recent Budget measures.

This means that the 100% FYA for qualifying expenditure on zero-emission cars, and electric vehicle (EV) charge points will now be available until 31 March 2027 for Corporation Tax purposes, and until 5 April 2027 for Income Tax purposes. This one-year extension to the current reliefs means that eligible businesses can continue to deduct 100% of the cost of these assets from their taxable profits in the year the expenditure is incurred until the relief expires.

The FYA for cars was introduced from 17 April 2002 for low CO₂-emission vehicles, including electric cars, and was then restricted to zero-emission cars from April 2021. The FYA for electric vehicle charge points was introduced in November 2016. Both of these allowances are intended to support the UK’s move towards cleaner vehicles.

According to HMRC’s figures, this measure is expected to benefit around 13,000 incorporated businesses and 6,000 unincorporated businesses by continuing to offer 100% tax relief in the year the expenditure is incurred for qualifying expenditure on zero-emission cars and EV charge points.

As part of the Budget measures, the government confirmed plans to make some changes to the Construction Industry Scheme (CIS).

From 6 April 2026, HMRC will be able to take immediate action where a business makes or receives a payment that it knew, or should have known, was connected to fraud. In these circumstances, HMRC will have the power to remove Gross Payment Status (GPS) with immediate effect, assess the business for the associated tax loss, and impose a penalty of up to 30%. This penalty may be applied to the business itself or to its officers. Where GPS is withdrawn due to fraud or serious non-compliance, the business will also be barred from reapplying for GPS for a period of five years (an increase from the current one-year limit).

Alongside these measures, the government also plans to simplify the CIS by exempting payments to local authorities and certain public bodies. As part of this change the requirement for construction contractors to submit nil returns will be required. These changes are due to take effect from 6 April 2026 and will first be subject to technical consultation.

The CIS is a set of special tax and National Insurance rules for businesses operating in the construction industry. Under the scheme, businesses are classed as either contractors or subcontractors, and both must understand their tax obligations.

Qualifying contractors are required to deduct tax from payments made to subcontractors and pass these deductions to HMRC. The amounts deducted count as advance payments towards the subcontractor’s tax and National Insurance liabilities.

Subcontractors are not required to register for the CIS, but where they are not registered, contractors must deduct tax at a higher rate of 30%. Registered subcontractors are subject to a 20% deduction unless they qualify for GPS. Where GPS applies, no deductions are made by the contractor, and the subcontractor is responsible for paying all tax and National Insurance at the end of the tax year.

To qualify for GPS, a subcontractor must meet specific criteria, including a strong compliance history of paying tax and National Insurance on time, and carrying on a business that undertakes construction work or supplies construction labour in the UK.

A recent ruling has increased the scope of statutory protection for whistleblowers to include covered detriments against co-workers under the Employment Rights Act 1996. A Mr. Rice was dismissed by his company owner on the grounds of redundancy in February 2021. Mr. Rice asserted that his dismissal was automatically unfair, given that it was motivated by his protected disclosures. He subsequently applied to amend his claim to include a detriment claim against his owner-employer, alleging that his dismissal was a detriment in contravention of Section 47B of the Act. The core issue arose when he sought to amend his claim to include an additional complaint, specifically that his dismissal constituted a detriment inflicted by a co-worker, for which the owner was vicariously liable under the 1996 Act.

This principle states that the exclusion (Section 47B) only bars a direct detriment claim against the employer for its own act of dismissal. However, it does not bar a claim against a co-worker (under S. 47B(1A)) for the detriment of dismissal. Consequently, if a co-worker is liable for the act of dismissal as a detriment, the employer automatically becomes vicariously liable for that act under Section 47B(1B). This effectively allows the employee to bring a detriment claim against the employer for the act of dismissal itself. 

The ruling creates a crucial pathway through which employees may obtain a more comprehensive remedy for the act of dismissal, no longer solely restricting whistleblowers to a claim of unfair dismissal. This significantly increases the potential value of any award for damages, particularly in distressing cases.

Employees can now pursue the individual co-worker who carried out the dismissal – in this case, the owner of the firm. This is an important concession, especially where a company becomes insolvent, as the personal liability remains. Employers should be wary of their conduct toward whistleblowers, as they may find themselves personally liable for their words and deeds.

Cash flow remains one of the most pressing concerns for small businesses, even where trading appears stable. Many businesses are finding that rising costs, cautious lenders and slower customer payments are combining to create ongoing pressure on day to day finances. In our experience, cash flow issues rarely arise from a single event. They tend to build gradually, which is why early visibility and proactive management are so important.

Operating costs have increased across most sectors, and these increases now feel structural rather than temporary. Wages, energy, insurance and supplier costs remain significantly higher than they were only a few years ago. For businesses with limited pricing power or fixed contracts, margins can be squeezed quickly, leaving less room to absorb delays in customer payments or unexpected expenses.

Access to finance has also become more restrictive. Overdrafts and short term lending are more expensive, reviews are more frequent and approval processes can take longer. This makes it harder to rely on borrowing as a flexible buffer when cash inflows are uneven. As a result, businesses need a clearer understanding of their cash position and greater control over the timing of payments in and out.

Late payment continues to be a major contributor to cash flow stress. Even well run businesses can struggle if customers consistently pay late or extend terms without discussion. When receipts are delayed, pressure quickly passes through to VAT, PAYE and Corporation Tax liabilities. What begins as a timing issue can escalate into missed deadlines, penalties or the need for time to pay arrangements with HMRC.

Credit control is another area where small improvements can have a meaningful impact. Prompt invoicing, clear payment terms and consistent follow up should be standard practice. Strong credit control is not about damaging relationships. It is about setting clear expectations and protecting the financial health of the business.

If you are experiencing cash flow pressure, or if you simply want greater confidence in your numbers, we can help. Please contact us to review your cash flow position, explore practical options and put a plan in place before issues become more difficult to manage.

Acquiring new assets is often essential for small businesses looking to grow, improve efficiency or remain competitive. Whether the investment is in vehicles, machinery, IT systems or specialist equipment, choosing the right funding method can have a significant impact on cash flow, tax efficiency and overall financial resilience. Understanding the main options available allows business owners to make more informed decisions.

Using existing cash reserves is the most straightforward option. Paying outright avoids interest costs and keeps administration simple. However, it can leave the business exposed if working capital is reduced too far. For many businesses, preserving cash for day to day operations, tax liabilities and unexpected costs is just as important as the asset purchase itself.

Bank loans remain a common funding route. Term loans allow the cost of an asset to be spread over its useful life, helping to align repayments with the income the asset generates. While interest rates are higher than in previous years, loans can still be suitable where cash flows are predictable, and the business has sufficient headroom to meet repayments. It is important to consider any security requirements and the impact on future borrowing capacity.

Asset finance is widely used for equipment, vehicles and machinery. Hire purchase and finance lease arrangements allow businesses to acquire assets with limited upfront cost, spreading payments over an agreed period. In many cases, the asset itself provides the security, which can reduce the need for personal guarantees. Asset finance can also offer flexibility, particularly where technology changes quickly or assets need regular replacement.

Operating leases are another option, especially for assets that depreciate rapidly or become obsolete. Rather than owning the asset, the business pays for its use over a fixed term. This can reduce balance sheet exposure and help manage cash flow, although ownership does not pass to the business at the end of the agreement.

For owner managed companies, director loans or additional capital introduced by shareholders may be considered. While this can avoid external borrowing, it still requires careful planning around tax, repayment terms and the long term impact on personal finances.

Each funding option has different accounting and tax implications, including capital allowances, interest relief and balance sheet treatment. The right choice will depend on the type of asset, the strength of the business cash flow and the wider financial objectives.

A short discussion at the planning stage can often lead to a more efficient and sustainable outcome.