The key dates

• 5 October 2026: tell HMRC if you need to file a return for the first time.
• 31 October 2026: deadline for paper returns.
• 31 January 2027: online return, balancing payment for 2025/26 and first payment on account for 2026/27.
• 31 July 2027: second payment on account for 2026/27.

What to gather now

• Your Unique Taxpayer Reference (UTR) and Government Gateway login.
• P60, P45 or P11D if you were employed or received benefits.
• Self-employed income and expenses, ideally from your bookkeeping software.
• Rental income and costs, including mortgage interest statements.
• Bank and building society interest, dividends and any gains from selling shares or property.
• Pension contributions and Gift Aid donations, which can reduce your bill.

Payments on account, explained

If your last bill was over £1,000 and less than 80% of your tax was collected at source, HMRC asks for two advance payments towards next year, each half of this year’s bill. The first year this happens can feel like paying 150% at once. If your income has dropped, you can ask to reduce them — but only if you are confident, because interest applies if you reduce too far.

What happens if you miss it

A late return means an immediate £100 penalty, even if no tax is owed. After three months, daily penalties of £10 start, and further penalties follow at six and twelve months. Late payment adds interest and its own penalties.

How we help

We prepare and check your return, explain the numbers before anything is filed and tell you exactly what to pay and when. File early and you will know your January bill in November, with time to plan for it.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

Who has to join

• From 6 April 2026: qualifying income over £50,000 (based on your 2024/25 return).
• From 6 April 2027: qualifying income over £30,000 (based on your 2025/26 return).
• From 6 April 2028: qualifying income over £20,000 (based on your 2026/27 return).

Qualifying income is your gross income from self-employment and property added together, before expenses. A landlord with £22,000 of rent and a sole trader business turning over £15,000 has £37,000 of qualifying income, even if profits are much lower.

What you will need to do

• Keep records of income and expenses digitally, in MTD-compatible software.
• Send a quarterly update by 7 August, 7 November, 7 February and 7 May.
• Submit a final declaration by 31 January after the end of the tax year.

Quarterly updates are summaries, not mini tax returns. They do not change what you pay, but late updates can build up penalty points.

Getting ready without the stress

• Check your qualifying income for the relevant year now.
• Open a separate bank account for the business or lettings if you haven’t already.
• Choose software that links to your bank feed so most transactions record themselves.
• Start photographing receipts as you get them, rather than in a batch at year end.

How we help

We set up the software, connect your bank, agree a simple monthly routine and file the quarterly updates for you. You keep running your business; we keep HMRC informed.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

The two tests

• Looking back: if your taxable turnover for the last 12 months goes over £90,000, you must register within 30 days of the end of the month in which you went over.
• Looking forward: if you expect your turnover in the next 30 days alone to go over £90,000, you must register by the end of those 30 days.

Check the rolling total at the end of every month. A strong summer or one large contract can tip you over.

Why timing matters

If you register late, HMRC can ask for VAT on every sale you made since the date you should have registered — whether or not you charged it to your customers. That money usually comes straight out of profit, and penalties can apply on top.

Should you register voluntarily?

Registering below the threshold can make sense if most of your customers are VAT-registered businesses, or if you buy a lot of equipment and want to reclaim the VAT on it. If you sell mainly to the public, adding 20% to your prices may cost you customers.

Schemes worth knowing

• Flat Rate Scheme: pay a fixed percentage of turnover, available if your taxable turnover is £150,000 or less.
• Cash Accounting Scheme: pay VAT when customers pay you, rather than when you invoice.
• Annual Accounting: one return a year with regular interim payments.

How we help

We monitor your rolling turnover monthly, tell you before you reach the threshold, handle the registration and file your VAT returns through Making Tax Digital software.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

Sole trader: simple and flexible

You and the business are the same legal person. Profits are taxed through Self Assessment with Income Tax and Class 4 National Insurance. Setting up takes minutes, the admin is light and you can take money out whenever you like. The trade-off: you are personally liable for business debts.

Limited company: separate and structured

The company is its own legal entity. It pays Corporation Tax on profits — 19% on profits up to £50,000, 25% above £250,000, with marginal relief in between. Directors usually take a mix of salary and dividends. Your personal liability is generally limited to what you invest.

What changes the decision

• Profit level: at lower profits, the tax saving from a company is often small or disappears once extra costs are counted.
• Dividend tax: from April 2026 the ordinary and upper dividend rates rose to 10.75% and 35.75%, which narrows the gap for some owners.
• Risk: if you sign leases, employ staff or take on large contracts, limited liability matters more.
• Clients: some larger customers prefer or require working with a company.
• Admin: companies file annual accounts and a confirmation statement at Companies House, a Corporation Tax return and usually run payroll. Directors also need to verify their identity with Companies House.

A practical approach

Many owners start as sole traders and incorporate once profits are steady and they don’t need all the money they make. The right moment is a numbers question, not a feeling.

How we help

We model your likely profit under both structures, include every cost and compare the money you would keep. If a company makes sense, we form it, register it for tax and set up payroll.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

Costs you can usually claim

• Office costs: stationery, printer ink, postage and software subscriptions.
• Phone and internet: the business share of your bills.
• Travel: fuel, parking, train fares and hotels for business trips — but not your regular commute.
• Stock and materials you buy to sell or use in your work.
• Professional fees: accountants, solicitors and trade body memberships.
• Insurance: public liability and professional indemnity.
• Marketing: your website, advertising and business cards.
• Training that updates skills you already use in the business.

Simplified expenses

Instead of working out actual costs, you can use flat rates for some items:

• Vehicles: 45p per business mile for the first 10,000 miles, then 25p.
• Working from home: £10 a month for 25 to 50 hours, £18 for 51 to 100 hours and £26 for more than 100 hours.

Common mistakes

• Claiming everyday clothing. Only uniforms and protective clothing count.
• Forgetting small, regular costs such as bank charges and app subscriptions.
• Mixing personal and business spending in one account, which makes the business share hard to prove.

Keep the evidence

Keep receipts and invoices for every claim. A photo in your bookkeeping app is enough, and it saves hours at year end.

How we help

We review your costs, make sure nothing allowable is missed, and flag anything HMRC is likely to question — before your return is filed.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

The 2026/27 numbers that matter

• Personal Allowance: £12,570, frozen until April 2031.
• Employer National Insurance: 15% on salary above £5,000 a year.
• Employee National Insurance: 8% on earnings above £12,570.
• Dividend Allowance: £500.
• Dividend tax: 10.75% basic rate, 35.75% higher rate and 39.35% additional rate.

Why a small salary helps

A salary is a business expense, so it reduces Corporation Tax, and it can count towards your State Pension record. Many directors set salary around the National Insurance thresholds. The best level depends on whether your company can claim Employment Allowance — a company where the director is the only employee usually can’t.

How dividends work

Dividends are paid from profits after Corporation Tax. You can only pay them if the company has enough retained profit, and each one should be backed by board minutes and a dividend voucher. They aren’t subject to National Insurance, which is where the saving usually comes from.

Things to plan for

• Personal tax on dividends is paid through Self Assessment, often months later. Put money aside as you go.
• The higher dividend rates from April 2026 mean last year’s plan may no longer be the best one.
• Pension contributions paid by the company can be an efficient alternative for money you don’t need now.

How we help

We work out your salary and dividend mix at the start of each tax year, run the director’s payroll, prepare the dividend paperwork and tell you how much to save for your tax bill.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

Before they start

• Check their right to work in the UK and keep a copy of the evidence.
• Give them a written statement of employment particulars on or before their first day.
• Get employer’s liability insurance — it is a legal requirement for most employers, with at least £5 million of cover.

Register and set up payroll

• Register as an employer with HMRC. You can do this up to four weeks before the first payday.
• Use payroll software to report pay to HMRC in real time, on or before each payday.
• Pay employees at least the National Minimum Wage. From April 2026, the National Living Wage for workers aged 21 and over is £12.71 an hour.
• Pay PAYE and National Insurance to HMRC by the 22nd of the following month if you pay electronically.

Employer National Insurance

Employers pay 15% National Insurance on earnings above £5,000 a year. Employment Allowance can reduce the bill for many small employers, so check whether you qualify.

Workplace pension

Automatic enrolment duties start from the employee’s first day. Eligible staff — aged 22 to State Pension age and earning over £10,000 a year — must be enrolled into a qualifying pension, with a minimum total contribution of 8% of qualifying earnings, at least 3% from you. You also need to complete a declaration of compliance with The Pensions Regulator.

Keep the records

Keep payroll records for at least three years after the end of the tax year they relate to.

How we help

We register you as an employer, run payroll every pay period, send payslips, handle pension enrolment and tell you exactly what to pay HMRC each month.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

The minimum periods

• Sole traders and partnerships: at least five years after the 31 January submission deadline for the tax year.
• Limited companies: at least six years from the end of the financial year the records relate to.
• VAT-registered businesses: VAT records for at least six years.
• Employers: payroll records for at least three years after the end of the tax year.

Keep them longer if a return is late, under enquiry, or if an asset you own will be sold in future.

What counts as a record

• Sales invoices, receipts and till records.
• Purchase invoices and receipts for expenses.
• Bank statements for every business account.
• Loan agreements, leases and hire-purchase paperwork.
• Payroll, pension and dividend paperwork for companies.
• Mileage logs if you claim vehicle costs.

Paper or digital?

Digital records are fine, as long as they are clear, complete and readable. For Making Tax Digital, many businesses must keep records in compatible software anyway. A clear photo of a receipt, stored against the transaction in your bookkeeping app, is enough.

A simple routine

• Use one business bank account and connect it to your software.
• Match receipts to transactions weekly, not annually.
• Back up your files, and keep a list of where older years are stored.

How we help

We set up cloud bookkeeping with bank feeds and receipt capture, and review your records each month so year-end accounts become a formality.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

Making Tax Digital applies to rental income

MTD for Income Tax covers landlords as well as sole traders. It started on 6 April 2026 for people with qualifying income over £50,000 and extends to over £30,000 from April 2027 and over £20,000 from April 2028. Qualifying income is gross rent plus any self-employment income — before expenses. If you own property jointly, you count your share.

Once you’re in, you keep digital records, send quarterly updates and file a final declaration after the year end.

New property income tax rates from April 2027

From April 2027, property income will be taxed at its own rates: 22% basic, 42% higher and 47% additional — two percentage points above the standard Income Tax rates. For many landlords, that means a higher bill on the same rent.

Steps worth taking now

• Check your qualifying income and whether you are already inside MTD.
• Separate rental money from personal money with a dedicated bank account.
• Review how property is owned. Ownership between spouses, or through a company, changes who pays tax and at what rate — but moving property can trigger Capital Gains Tax and Stamp Duty Land Tax, so get advice first.
• Keep a full record of finance costs, repairs and letting fees; none of it helps if you can’t prove it.
• If your rental income is small, the £1,000 property allowance may be simpler than claiming expenses.

How we help

We look after landlords’ records, quarterly updates and returns, and model the effect of the 2027 rate changes on your portfolio so you can plan rather than react.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.

Set it up

• Open a spreadsheet with 13 columns, one for each week.
• Start with today’s bank balance.
• List money coming in, in the week you expect it to arrive — not the week you invoice.
• List money going out: wages, rent, suppliers, loan repayments, subscriptions and tax.
• Work out the closing balance for each week. It becomes next week’s opening balance.

Don’t forget the tax dates

• PAYE and National Insurance: by the 22nd of each month if you pay electronically.
• VAT: one month and seven days after the end of each VAT quarter.
• Corporation Tax: nine months and one day after the company’s year end for most small companies.
• Self Assessment: 31 January and 31 July for payments on account.

Read the results

Look for weeks where the balance dips low or turns negative. That is your early warning. Common fixes include chasing overdue invoices, agreeing shorter payment terms with customers, spacing out supplier payments, or asking HMRC about a Time to Pay arrangement before a deadline, not after it.

Keep it rolling

Update the forecast every week: replace estimates with actual figures and add a new week at the end. Ten minutes a week is usually enough once the structure exists.

How we help

We build your first forecast from your bookkeeping data, connect it to your tax calendar and review it with you monthly — so cash decisions are made with numbers, not nerves.

This article is general guidance based on the rules for the 2026/27 tax year. It isn’t personal advice — talk to us before you act on it.