Big changes are on the horizon for businesses and self-employed individuals as HM Revenue & Customs (HMRC) updates its rules for the 2025/26 tax year and beyond.
From tax reporting to VAT registration, these reforms could have an impact on how you manage your finances.
Basis period reform
By 2025, self-employed individuals and partnerships will no longer calculate taxable profits based on their own accounting period. Instead, profits will be aligned with the tax year.
This is designed to simplify reporting, but could create complications for some businesses. If your accounting year does not match the tax year, professional advice is highly recommended.
New data collection rules
From April 2025, HMRC will require more detailed reporting through Income Tax Self-Assessment and real-time returns, including:
These extra data points mean businesses will need accurate and up-to-date records to stay compliant.
Making Tax Digital (MTD) for Income Tax Self-Assessment
The next phase of the Making Tax Digital (MTD) scheme means businesses and landlords earning above a certain threshold must maintain digital records and submit quarterly updates to HMRC using compatible software.
If you have not already switched to MTD-compatible accounting software, now is the time to prepare.
VAT registration threshold increase
The VAT threshold has now increased from £85,000 to £90,000, providing some relief for small businesses.
However, if you expect your taxable turnover to exceed £90,000 within the next 12 months, you must register for VAT to avoid penalties.
What do these changes mean for you?
With tighter reporting requirements and new digital tax rules, it is more important than ever to have accurate financial records and compliant software.
If you need help navigating these updates, our tax advisers can ensure you stay on track and avoid costly mistakes.
Speak with us today to discuss how these changes will affect your business.