Author: Glenn

Do you know what your 2025–26 tax code means? It affects how much tax is taken from your pay or pension. Check now to make sure you're on the right code and not overpaying! Here's what the letters and numbers really mean.

You can find your tax code:

• by checking your tax code for the current year online – you’ll need to sign in to or create an online account
• on the HMRC app
• on your payslip
• on a ‘Tax Code Notice’ letter from HMRC if you get one

The tax codes are updated annually. The basic personal allowance for the 2025-26 tax year is £12,570. The corresponding tax code for an employee entitled to the standard tax-free Personal Allowance 1257L. This is the most common tax code and is used for most people with one job and no untaxed income, unpaid tax or taxable benefits (for example a company car).

There are a lot of other numbers and letters that can appear in your tax code. For example, there are letters that show where an employee is claiming the marriage allowance (M) or where their income or pension is taxed using the Scottish rates (S). If your tax code numbers are changed this usually means your personal allowance has been reduced.

There are also emergency tax codes (W1 or M1) which can be used if a new employee doesn’t have a P45. These codes mean that an employee’s tax calculation is based only on what they are paid in the current pay period.

If your tax code has a 'K' at the beginning this means that deductions due for company benefits, state pension or tax owed from previous years are greater than your personal allowance. However, the tax deduction for each pay period can’t be more than half your pre-tax pay or pension.

It is important to check your 2025-26 tax code to ensure the correct information is being used. 
 

Gross profit is one of the clearest indicators of how well your business is performing. It’s the amount left after deducting the cost of goods sold (COGS) from your sales revenue. Managing your gross profit returns well is crucial because it directly affects your bottom line and helps you understand whether you’re pricing correctly, controlling costs, and making enough to cover your overheads.

What Exactly Is Gross Profit?

Let’s start with the basics. Gross profit = Sales – Cost of Goods Sold. It doesn’t include things like rent, wages (unless they’re directly related to producing the goods), marketing, or admin costs. This figure tells you how much you’re making on the actual product or service before general running costs are factored in.

A healthy gross profit gives you the buffer to pay your bills, reinvest, or take a wage. Poor gross profit might mean your pricing is too low, your suppliers are charging too much, or your operations aren’t efficient.

Why It Matters

Many businesses keep an eye on sales and bank balances, but gross profit tells a deeper story. You might be selling a lot, but if your margins are tight, you could still be in financial trouble. Regularly checking your gross profit margin (usually shown as a percentage) gives you early warning signs if things start slipping.

Improving Gross Profit

There are several ways to manage and improve your gross profit returns:

• Review Pricing: Are your prices competitive and profitable? Don’t undersell your value.
• Reduce COGS: Negotiate with suppliers, buy in bulk where sensible, or streamline production.
• Control Waste: In retail or food businesses, waste is a silent profit killer. Keep a close eye on stock control.
• Focus on Bestsellers: Promote your highest-margin products or services more heavily.

Regular Monitoring Is Key

You should be reviewing gross profit monthly at least. Use accounting software or simple spreadsheets to track changes and spot trends. If you see margins slipping, act quickly. The sooner you fix it, the better your long-term prospects.

Supply line interruptions can be a nightmare for any business. Whether it’s a delay in deliveries, a shortage of materials, or problems with international shipping, things can grind to a halt fast. But with a bit of planning and a calm approach, you can keep things ticking over and reduce the impact.

1. Know your supply chain inside out

The first step is understanding exactly where your goods are coming from and how they get to you. Who are the suppliers? Are they reliant on overseas shipping? Do they have a history of delays? Map it all out so you can spot weak points before they become full-blown problems.

2. Build strong relationships with suppliers

Good relationships matter. If you’ve got a solid connection with your supplier, they’re far more likely to keep you in the loop if issues arise. It also makes it easier to negotiate alternatives or push your order to the top of the queue when things go wrong.

3. Keep a buffer stock if you can

Holding a bit of extra stock can be a lifesaver, especially for critical items. It might tie up a bit of cash, but it gives you breathing space if something doesn’t arrive on time. It’s all about balance – enough to cover a delay, but not so much that it eats into your profits.

4. Have a Plan B (and maybe a Plan C)

Diversify your supply sources where possible. If one supplier can’t deliver, having an alternative ready can mean the difference between a minor hiccup and a major crisis. Even just knowing who else you could call on helps you react quicker.

5. Stay informed and flexible

Keep an eye on news that might affect supply chains – like strikes, border issues, or economic changes. The sooner you know something’s up, the quicker you can respond. And stay flexible. Can you switch to a different product? Delay a launch? Being adaptable is key.

Final thoughts

Supply line interruptions aren’t always avoidable, but they don’t have to derail your business. With a bit of foresight and some strong backup plans, you can weather the storm and keep moving forward – even if the lorries aren’t.

If you're facing financial difficulties and owe tax, HMRC’s Time to Pay service may offer breathing space. From self-assessment to PAYE and VAT, eligible individuals and businesses can spread payments and avoid immediate enforcement.

Businesses and self-employed individuals experiencing financial challenges and with outstanding tax liabilities may qualify for support through HMRC's Time to Pay service. This service helps with unpaid taxes, duties, penalties, or surcharges that cannot currently be paid.

Self-assessment taxpayers with liabilities of up to £30,000 can use the online Time to Pay service to arrange instalment payments for their tax bills. This service is available without needing to speak directly to an HMRC advisor and can be accessed within 60 days of the payment deadline.

To be eligible for the online service, taxpayers must meet the following conditions:

• No outstanding tax returns
• No other unpaid tax debts
• No existing HMRC payment plans

The self-serve option is also available for qualifying PAYE and VAT debts up to £100,000. For taxpayers who don’t qualify for the online option, alternative payment plans can be arranged, typically tailored to the individual’s or business's specific situation and liabilities. These plans allow for debt repayment in instalments over an agreed period.

HMRC generally provides extended payment terms if they believe the taxpayer cannot pay in full immediately but will be able to do so in the future. If HMRC determines that additional time won’t resolve the issue, they may require immediate payment and begin enforcement actions if the debt remains unpaid.

Business Asset Disposal Relief (BADR) provides a reduced Capital Gains Tax (CGT) rate on the sale of a business, shares in a trading company, or an individual's interest in a trading partnership. This relief can still provide substantial tax savings for business owners exiting their businesses.

As part of the Autumn 2024 Budget measures, the CGT rate for BADR gains will increase from 6 April 2025. The new CGT rate is 14% (from 10%) for disposals made on or after that date. Furthermore, the rate is set to increase again to 18% for disposals made on or after 6 April 2026.

Where BADR applies to a disposal made on or after 6 April 2025 but before 6 April 2026, all or part of it is charged to CGT at a rate of 14%. Where BADR applies to disposals falling on or after 6 April 2026, the rate applying is 18%. There are anti-forestalling rules that apply to the changing rates.

The lifetime limit for claiming BADR is currently £1 million, allowing business owners to possibly qualify for the relief multiple times. In contrast, the lifetime limit for Investors’ Relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. The CGT rates for Investors' Relief align with those of BADR.