Author: Glenn

The new 40% First Year Allowance came into force from 1 January 2026. This marks an important development for businesses investing in plant and machinery. The new allowance was first announced at Autumn Budget 2025 and is intended to encourage continued capital investment while changes to other capital allowance rates take effect.

This means that since 1 January 2026, businesses can claim a 40% First Year Allowance on qualifying main-rate plant and machinery expenditure. This provides an immediate deduction against taxable profits in the year the asset is acquired, improving cash flow and bringing forward tax relief.

A key feature of the new allowance is its broad availability. It applies to assets acquired for leasing, which were excluded from full expensing, and it is also available to unincorporated businesses such as sole traders and partnerships, who were unable to benefit from the full expensing regime. The allowance has been introduced on a permanent basis, providing greater certainty for long-term investment and capital planning.

The new 40% First Year Allowance sits alongside existing reliefs, including full expensing for companies and the Annual Investment Allowance. Taking advice before committing to significant investment can help maximise available reliefs and avoid any missed opportunities.

Tackling fraud in the Construction Industry Scheme (CIS) was one of the measures addressed in the recent Budget. The changes are intended to allow faster intervention where fraud is suspected, while also simplifying certain administrative aspects of the CIS.

From 6 April 2026, HMRC will be able to act immediately where a business makes or receives a payment that it knew, or ought to have known, was connected to fraud. In these cases, HMRC will have the authority to withdraw Gross Payment Status (GPS) straight away, assess the business for any related tax loss and impose penalties of up to 30%. Penalties may apply to the business itself or, in some circumstances, to its officers. Where GPS status is removed due to fraud or serious non-compliance, the business will also be prevented from reapplying for five years, a significant increase from the current one-year restriction.

The government also announced plans to simplify the operation of the CIS. Planned changes include exempting payments made to local authorities and certain public bodies from the scheme and reinstating the requirement for contractors to submit nil returns. These measures are expected to take effect from 6 April 2026, following a period of technical consultation.

The CIS applies special tax and National Insurance rules to construction businesses, with contractors generally required to deduct tax from payments made to subcontractors. Deduction rates depend on whether the subcontractor is registered and whether they hold GPS, which allows payment without deductions.

If you have not yet checked if and when you need to use Making Tax Digital (MTD) for Income Tax, you should do so as a matter of urgency. This is because from April 2026 the way many individuals report their tax to HMRC will change significantly. MTD for Income Tax represents a move away from the traditional annual self-assessment process towards a more frequent, digital approach, with taxpayers required to manage their affairs through an online tax account using compatible software.

From 6 April 2026, MTD for Income Tax will apply to self-employed individuals and landlords with qualifying income of more than £50,000 a year. A year later, from April 2027, this will extend to those with qualifying income between £30,000 and £50,000. Qualifying income is broadly the total income received from self-employment and property in a tax year, including income from multiple trades or rental properties. Other sources of income, such as employment income taxed under PAYE, dividends, pensions or partnership income, are excluded from this calculation.

Those within the scope of MTD for Income Tax will be required to keep digital records of their income and expenses and submit quarterly updates to HMRC. These updates provide summaries of income and costs and are intended to give HMRC a clearer picture of taxable income throughout the year. A final declaration will still be required after the end of the tax year, with any tax due payable by the following 31 January. A new points-based penalty system will also apply for late submissions and payments.

If you are unsure whether or when MTD for Income Tax will apply to you, or you would like help preparing for the changes, we would be happy to help.

With so many online accounts now in daily use, including banking, shopping, email and HMRC services, password security has never been more important. A weak or reused password can lead to fraud, identity theft, or unauthorised access to personal and business information.

A good first step is to use strong, unique passwords for every account. Avoid using the same password across multiple websites, as criminals often reuse stolen login details from one breach to access other accounts. Strong passwords are usually at least 12 characters long and do not rely on obvious words or personal information. Many people find passphrases easier to remember than random characters.

A password manager is one of the easiest ways to improve security. It securely stores passwords in an encrypted vault, generates complex passwords for you, and can warn you if you are using weak or repeated passwords. This means you only need to remember one strong master password.

Where possible, enable two-factor authentication (2FA). This adds a second step when logging in, such as a code from an authentication app or a prompt on your phone. Even if someone obtains your password, they may still be unable to access your account without the second factor.

Be cautious with password reset emails and links. Your email account is often the gateway to all other accounts, so secure it with a strong password and 2FA. Also watch for phishing emails and fake login pages designed to steal your details. If unsure, type the website address directly into your browser rather than clicking a link.

Finally, avoid sharing passwords by email or text message, especially in a business setting. Where possible, use separate logins for each person and restrict access appropriately.

Not every UK limited company needs a statutory audit. Many smaller companies qualify for audit exemption, but it is important to understand the rules, as an audit may still be required in certain situations.

For financial years starting on or after 6 April 2025, a company is generally audit exempt if it qualifies as a small company and meets at least two of the following conditions:

• Annual turnover of no more than £15 million
• Balance sheet total (gross assets) of no more than £7.5 million
• Average number of employees of no more than 50

If a company exceeds these limits, it will not usually lose audit exemption straight away. In most cases, the company must exceed the thresholds for two consecutive financial years before the exemption is lost.

However, some companies must have an audit regardless of size. This includes public companies and certain regulated businesses, such as banks, insurance companies, and some investment firms.

An audit may also be required if the company’s shareholders request one. Shareholders holding at least 10% of any class of shares, or 10% of voting rights, or 10% in number of members, can demand an audit. This request must be made in writing and received at least one month before the end of the financial year.

Charitable companies are subject to different rules and often face lower thresholds for mandatory audits. For example, a charity may require an audit once its gross income exceeds £1 million, depending on its circumstances.

If you are unsure whether your company needs an audit, or whether an audit could be beneficial for lenders, investors, or business planning, please get in touch and we will be happy to review your position.