Taxpayers who are self-employed or receive rental income should check whether they will be subject to Making Tax Digital for Income Tax (MTD for IT) from next month. The new rules significantly change how affected individuals report their income to HMRC.

The first cohort subject to MTD for IT from 6 April 2026 are those whose qualifying income exceeded £50,000 in the 2024–25 tax year. This figure is important because HMRC is using the income declared on 2024–25 self-assessment tax returns to determine who must join MTD from April 2026. Anyone above this threshold will normally be required to keep digital records and submit information to HMRC using compatible software.

Qualifying income broadly refers to the total gross income from self-employment and rental income before expenses are deducted, also referred to as ‘turnover’. This can include income from multiple sources of self-employment and property income. However, all other types of income are not included when determining whether the threshold is met. For example, employment income taxed through PAYE, pension income, dividends and partnership income do not count towards the MTD income limit.

A second phase of the rollout will follow in April 2027, when MTD for Income Tax will extend to individuals with qualifying income between £30,000 and £50,000.

With the end of the 2025–26 tax year approaching on 5 April 2026, there is still time for taxpayers to increase their pension savings and benefit from valuable tax relief. Pension contributions remain one of the most tax-efficient ways to save for retirement, with relief available at a taxpayer’s highest marginal rate.

Tax relief on private pension contributions is generally available on contributions of up to 100% of relevant earnings, subject to certain limits. The relief effectively reduces the cost of saving into a pension. Basic rate taxpayers benefit from 20% tax relief, while higher rate taxpayers can claim 40% relief and additional rate taxpayers can receive 45% relief on their contributions.

For basic rate taxpayers, the initial 20% relief is usually applied automatically by the pension provider. Higher and additional rate taxpayers can claim the extra relief through their self-assessment or by contacting HMRC if they do not normally file a return.

Most individuals can contribute up to the annual allowance of £60,000 each tax year while still benefiting from tax relief. Contributions above this limit can trigger an annual allowance charge. However, it may be possible to contribute more by using the carry forward rules, which allow unused pension allowances from the previous three tax years to be used, provided they made pension contributions during those years.

After the end of its financial year, a private limited company must prepare full annual accounts and submit a company tax return. In most cases, the tax return must be filed within 12 months of the end of the accounting period it covers, and filing must be completed online.

There are penalties for the late submission of company tax returns. The filing penalties will increase for company tax returns where the filing date falls on or after 1 April 2026.

The penalties are designed to encourage companies to file their Corporation Tax returns by the required deadline. Fixed penalties for late filing were originally set in 1998 and have remained unchanged since then. Over time, inflation has significantly reduced the real value of these penalties and therefore their deterrent effect. In real terms, the penalties are now worth roughly half of what they were when first introduced.

The increase in company late filing penalties has seen the doubling of fixed penalties. Since 1 April 2026, a return that is filed late will attract a penalty of £200 instead of £100. If the return is more than three months late, the penalty is now £400, compared with the previous £200. Higher penalties will continue to apply where a company repeatedly files late returns. Where there are three successive failures to file on time, the penalty will be £1,000, and where the return is more than three months late after three consecutive failures, the penalty will be £2,000.

Ensuring that company tax returns are submitted on time will help companies avoid unnecessary penalties and additional compliance costs.

Reducing energy intensity is one of the most practical ways for small businesses to protect themselves from rising energy costs, particularly if global energy markets remain unstable because of the ongoing conflict involving Iran. Oil prices have already surged sharply due to disruption in key supply routes such as the Strait of Hormuz, raising concerns about higher inflation and energy bills worldwide.

For many businesses, energy is a significant operating cost. Surveys suggest that two thirds of UK businesses spend between 5 per cent and 20 per cent of their total outgoings on energy, meaning even modest price increases can have a noticeable impact on profitability

One of the most effective responses is to reduce energy intensity, which means using less energy to produce the same level of output. The first step is often to review how energy is actually used within the business. Installing smart meters or carrying out a simple energy audit can reveal waste that may otherwise go unnoticed. For example, heating and lighting frequently remain on outside working hours, particularly in offices and retail premises.

Lighting is usually one of the quickest improvements. Switching to LED lighting and installing motion sensors or automated timers can cut electricity consumption significantly. Many small firms have already taken this step, with research showing that around 69 per cent of SMEs investing in energy efficiency have upgraded their lighting systems.

Heating and insulation are another important area. Poorly insulated buildings lose heat quickly, meaning boilers or electric heating systems must run for longer periods. Improving insulation, installing programmable thermostats, and maintaining heating equipment can all reduce energy demand. Guidance from energy advisers suggests that better heating controls and reduced heat loss are among the most effective workplace efficiency measures.

Businesses can also review equipment and production processes. Older machinery, refrigeration units, and computers often consume significantly more electricity than newer models. Regular maintenance and gradual replacement of inefficient equipment can therefore produce long term savings.

Finally, some businesses are investing in on site renewable energy such as solar panels. While this requires an initial investment, generating electricity directly can reduce reliance on volatile energy markets and provide greater cost stability.

In uncertain times, improving energy efficiency is often the most reliable hedge against rising energy prices. Businesses that reduce their energy intensity not only cut costs today but also strengthen their resilience against future shocks in global energy markets.

The speed with which a business can achieve a return on investment is often just as important as the size of the return itself. When investments begin generating benefits quickly, the financial impact can be felt much sooner, improving cash flow and strengthening overall business resilience.

In periods of economic uncertainty, including times when input costs such as energy, materials, or finance are rising, faster payback periods become particularly valuable. Projects that recover their costs quickly reduce risk because the business is exposed to changing economic conditions for a shorter period of time. Once the initial investment has been recovered, any continuing savings or additional income effectively becomes a financial gain.

For example, many energy efficiency improvements such as LED lighting, improved heating controls, or better insulation can often pay for themselves within a relatively short period. After the initial costs have been recovered, the continuing reduction in energy bills becomes a direct improvement to profitability.

A faster return on investment can also free up capital for further improvements. Once the first project has repaid its cost, the savings generated can be reinvested into other efficiency measures or growth opportunities.

For business owners, this highlights the importance of prioritising investments that deliver early financial benefits. Quick wins not only improve profitability but also create momentum for further improvements across the business.