When issuing invoices, it is important to apply the correct VAT treatment. In some cases, that means not charging VAT at all. Although most UK businesses charge VAT at the standard rate of 20%, there are other rates and categories that may apply. Understanding these distinctions can help you avoid costly errors and penalties.

In addition to the 20% standard rate, there is also reduced VAT rate (5%) and a zero VAT rate (0%). Even though zero-rated supplies are charged at 0%, they are still within the VAT system and must be recorded correctly on your VAT return.

There are two main categories where VAT is not charged: exempt supplies and supplies that fall outside the scope of VAT. Although no VAT is charged in either case, the rules and reporting requirements are different.

Exempt supplies are goods or services on which no VAT is charged. Common examples include insurance, postage stamps and health services provided by doctors. If your business only makes exempt supplies, you cannot register for VAT and you are not able to reclaim VAT on your business costs.

Supplies that are outside the scope of VAT fall completely outside the UK VAT system. In these cases, VAT cannot be charged and VAT on related costs cannot usually be reclaimed. Examples of supplies outside the scope include goods or services bought and used outside the UK, statutory fees such as the London Congestion Charge and goods sold as part of a private hobby.

If VAT has been charged incorrectly, the error must be corrected. The process for doing so depends on the amount involved and when the mistake occurred. Acting promptly can minimise disruption and potential penalties.

If you are unsure whether VAT should be charged on a particular supply, we would be happy to help guide you on this issue.

When planning pension funding, inflation is often acknowledged but not always fully reflected in contribution decisions. Using an average inflation rate of around 5% over recent years helps to illustrate why this matters so much. Even when inflation appears to be easing in the short term, its long-term effect on retirement income can be significant.

Inflation erodes purchasing power. A pension pot that looks comfortable today may buy far less in real terms by the time retirement arrives. At an average inflation rate of 5%, prices double roughly every fourteen years. This means that someone planning to retire in twenty years’ time will need close to twice the income they might intuitively expect, just to maintain the same standard of living. Ignoring inflation risks building a pension fund that appears adequate on paper but falls short in practice.

Inflation also affects investment returns. Pension growth is often discussed in nominal terms, but what really matters is real growth, that is growth after inflation. A fund growing at 6% per year sounds healthy, but if inflation is averaging 5%, the real increase in value is modest. This has implications for asset allocation, contribution levels and the balance between growth and lower risk investments as retirement approaches.

For those making regular contributions, inflation should influence both the starting level and how contributions increase over time. Flat contributions that are not reviewed regularly lose real value year by year. Linking contribution increases to inflation or at least reviewing them periodically in light of inflation trends, can make a material difference to the eventual outcome.

Finally, inflation uncertainty reinforces the importance of flexibility. Retirement may last twenty or thirty years, during which inflation will vary. Building in a margin of safety, through higher contributions or diversified investments, can help protect against prolonged periods of higher inflation.

Taking inflation seriously is not about pessimism. It is about realism. Factoring an average inflation rate of 5% into pension planning leads to better informed decisions and a greater chance that retirement income will meet expectations when it is most needed.

The government has announced a new package of measures designed to improve access to finance for creative businesses across the UK. The initiative aims to support firms operating in areas such as film, television, music, design, publishing, gaming and digital media, many of which face unique challenges when seeking external funding. The package forms part of the wider Creative Industries Sector Plan and is intended to help businesses grow, innovate and attract long term investment.

A central element of the announcement is an expanded role for the British Business Bank in supporting creative enterprises. This includes targeted investment activity under its Industrial Strategy commitments, with funding directed towards specialist investors that understand the commercial potential of creative ventures. The intention is to increase the availability of early stage and growth capital for businesses whose value is often tied to intellectual property rather than physical assets.

Alongside direct investment, the government is exploring ways to make better use of financial guarantees to encourage lenders to support creative businesses. This includes looking at how intellectual property can be more effectively recognised within lending decisions, which could help unlock finance for businesses that have strong ideas and brands but limited tangible security.

To make the funding landscape easier to navigate, a new single access point for creative businesses is being developed. This will provide clearer guidance on finance options, support services and growth opportunities, backed by practical resources and real world case studies.

The creative industries already make a substantial contribution to the UK economy and continue to grow faster than many other sectors. By improving access to finance and reducing barriers to investment, this package is intended to help creative businesses realise their full potential and strengthen the UK’s position as a global creative hub.

If you believe that you have overpaid tax to HMRC, you may be entitled to claim a tax refund. Overpayments can occur for a variety of reasons, including changes to employment, incorrect tax codes or unclaimed allowances. The process for making a claim will depend on whether you submit a self-assessment tax return and how long ago the tax was overpaid.

According to HMRC, you may be able to claim a refund if you have paid too much tax on:

• pay from a job
• job expenses such as working from home, fuel, work clothing or tools
• a pension
• a self-assessment tax return
• a redundancy payment
• UK income if you live abroad
• interest from savings or payment protection insurance (PPI)
• income from a life or pension annuity
• foreign income
• UK income earned before leaving the UK

HMRC provides an online tool to help individuals check their eligibility and make a claim for a tax refund. This can be accessed at https://www.gov.uk/claim-tax-refund/y.

Claims can usually be backdated for up to four years after the end of the tax year. This means that claims still be made for tax refunds dating back as far as the 2021-22 tax year which ended on 5 April 2022. The deadline for making claims for the 2021-22 tax year is 5 April 2026. It is important to ensure that all information provided is accurate and that claims are made within the required time limits.

If you have not yet checked whether you need to use Making Tax Digital (MTD) for Income Tax, you should do so urgently. HMRC has issued a timely reminder that for many self-employed and landlords the way to report tax to HMRC will change significantly from 6 April 2026.

MTD for Income Tax is a significant move away from the traditional annual self-assessment process towards a more digital and frequent approach, requiring taxpayers to manage records and submit updates through recognised software. The new system is being gradually rolled out over the coming years.

More than 860,000 sole traders and landlords earning over £50,000 from self-employment or property need to start using digital reporting from April 2026. MTD for Income Tax requires users to keep digital records and send quarterly updates of income and expenses. These updates are not additional tax returns and are created by recognised and approved software providers. A full tax return will still be required by the following 31 January after the tax year, i.e., the first MTD tax return, covering the 2026-27 tax year, will be due by 31 January 2028.

HMRC’s Director of Making Tax Digital, said:

‘With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available, and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.

This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.

Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.’

Taxpayers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates for the first 12 months, giving time to adjust. There are also exemptions available for those who genuinely cannot use digital tools.

We would be happy to help if you need assistance getting started with MTD for Income Tax.