Beam Accountancy

Alternative providers of higher and further education may be able to claim refunds of VAT following a recent Court of Appeal ruling, although the position remains subject to further legal proceedings.

HMRC recently published a brief explaining the implications of the Court of Appeal’s decision. The court ruled in favour of the college in question, overturning earlier tribunal decisions and applying principles established in an earlier case concerning fiscal neutrality.

The decision means that some educational supplies made by providers that are not eligible bodies may qualify for exemption from standard-rate VAT. This differs from HMRC’s longstanding policy that education supplied by providers that are not eligible bodies is subject to standard-rate VAT.

HMRC has received permission to appeal to the Supreme Court. In the meantime, alternative providers who believe they are in the same position as the college can submit claims for VAT refunds, pending the outcome of the appeal to the Supreme Court.

HMRC will consider claims individually, taking account of factors including unjust enrichment, partial exemption and whether overdeclared VAT has been correctly accounted for throughout the supply chain. Claims must also reflect any previously recovered input tax, and only the net amount can be claimed. All claims remain subject to normal statutory requirements and time limits.
 

Cryptoassets can create unexpected tax liabilities. HMRC’s guidance highlights several areas where mistake can be made.

• Assuming crypto-to-crypto exchanges are tax-free. Exchanging one type of cryptoasset for another can count as a disposal for Capital Gains Tax (CGT) purposes.
• Forgetting that spending crypto can trigger CGT. Using tokens to buy goods or services may count as disposing of them.
• Assuming all gifts are tax-free. Giving cryptoassets away can trigger CGT, although gifts to a spouse or civil partner are generally treated differently.
• Ignoring income from mining or staking. Cryptoassets received from mining, staking, lending or decentralised finance (DeFi) may be taxable as income, depending on the circumstances.
• Overlooking employment-related crypto payments. Tokens received from an employer may be subject to Income Tax and National Insurance contributions.
• Failing to keep transaction records. Investors should retain details of purchases, disposals, quantities, dates, costs and values. Exchange reports may not contain everything needed for tax calculations.
• Using incorrect valuations. Transactions and gains must be calculated in pounds sterling, using an appropriate and consistent valuation method.
• Failing to report taxable income or gains. Investors should check whether they need to report cryptoasset activity on a self-assessment tax return. Those who discover unpaid tax from earlier years can use HMRC’s cryptoasset disclosure service.

HMRC has revealed that it had £42.8 billion in outstanding tax debt at the end of March 2025, equivalent to 5% of total tax receipts. The figures appear in its corporate report, The HMRC tax debt strategy – update.

The report also highlighted progress in recovering unpaid tax, with HMRC resolving £48.7 billion of tax debt in the first two quarters of 2025-26, compared with £21.8 billion during the same period in 2019-20. HMRC said the outstanding debt balance had fallen as a proportion of tax receipts, despite growth in the tax base.

HMRC’s Tax Debt Strategy, published in October 2023, set out 4 strategic pillars to guide their approach to manage and resolve tax debt. The strategy is focused on preventing tax debt, tailoring interventions to taxpayers’ circumstances, improving debt recovery and being adaptable. Measures include payment reminders, improved and expanded digital services, more use of private sector debt collection agencies and additional debt management staff.

HMRC is also increasing its focus on older debts. The report states that debt more than a year old and not covered by a managed payment arrangement rose from £5.3 billion in 2020 to £18.8 billion in 2025. 

HMRC is also working to provide tailored support to taxpayers experiencing financial hardship or who have personal difficulties. Support can range from an extended time to pay arrangement to receiving one-to-one dedicated extra support.
 

You may have to pay Income Tax on your pension if your total annual taxable income exceeds your Personal Allowance. This applies whether you receive the State Pension, a workplace pension or a personal pension.

Your total taxable income can include the basic or new State Pension, Additional State Pension, private pension payments, earnings from employment or self-employment, taxable benefits and income from savings, investments or property.

The amount of tax you pay depends on your total income and the Income Tax rates and allowances that apply to you. You should therefore consider all your taxable income, rather than looking at your pension payments in isolation.

If you take money from a private pension as a lump sum, you may also have to pay Income Tax on amounts exceeding your available lump sum allowances. Taking a large lump sum could push you into a higher tax band and leave you with additional tax to pay at the end of the tax year.

If your pension provider pays you money owed from previous tax years as a single lump sum, you may temporarily pay too much tax. If this happens, you can ask HMRC to recalculate your tax using a written breakdown (usually called a 'payment schedule') from your pension provider showing how much was due for each tax year.

Taxpayers who need to pay the High Income Child Benefit Charge (HICBC) for 2025-26 may be able to pay it through PAYE rather than completing a self-assessment tax return solely to report the charge.

The HICBC applies where an individual or their partner receives Child Benefit and the individual’s adjusted net income exceeds £60,000. The amount payable increases with income, reaching the full amount of Child Benefit when adjusted net income reaches £80,000.

The charge can also apply where another person claims Child Benefit for a child living with you and contributes at least an equal amount towards the child’s upkeep, regardless of whether the child is your own.

The charge can be paid through self-assessment or PAYE, depending on the taxpayer’s circumstances. HMRC allows eligible taxpayers to pay through PAYE by adjusting their tax code. Taxpayers can register using HMRC’s online service. Once registered, HMRC will adjust the tax code and notify the taxpayer and their employer or pension provider, where relevant. For the 2025-26 tax year, this must be done before 31 January 2027.

Those who have previously submitted self-assessment returns solely to pay the HICBC can also switch to PAYE. They will need to contact HMRC by telephone to leave self-assessment and register for PAYE payment. 

Anyone who must submit a tax return for another reason, such as self-employment income or taxable investment income, must continue to report and pay the HICBC through self-assessment.

Choosing to pay the HICBC through PAYE can simplify tax reporting for eligible taxpayers, avoiding the need to file a self-assessment tax return solely because of the charge.

Company directors who complete a self-assessment tax return should be aware of new mandatory reporting requirements that came into effect from the 2025-26 tax year. The changes mainly affect directors of close companies, including many owner-managed and family businesses.

Previously, directors could voluntarily identify themselves as directors of close companies on the employment pages (SA102) of their tax returns. The new requirements make this information mandatory and introduce additional disclosures to help HMRC identify income received from companies controlled by their directors.

Affected directors must provide the name and registered number of the close company, the amount of dividends received from the close company during the tax year, and the highest percentage of the close company’s share capital held during the relevant tax year.

A close company is broadly one controlled by five or fewer participators, or by participators who are directors. A participator is someone with an interest in the company’s capital or income, usually a shareholder.

The changes are intended to give HMRC a clearer picture of the relationship between directors and their companies, particularly where individuals receive dividends from businesses they own or control.

Importantly, the new rules do not mean that every company director must submit a tax return. Directors who are not otherwise required to file a self-assessment return do not have to register solely to provide this additional information.

Directors who already file returns should ensure they have the relevant company details, dividend figures and shareholding information available when preparing their 2025-26 return which is due to be submitted by 31 January 2027 at the latest.

Business confidence across the UK is showing signs of improvement, although many smaller businesses remain reluctant to commit money to new investment.

The latest British Chambers of Commerce Quarterly Economic Survey, published in October 2026, found that 47% of businesses expect their turnover to increase over the next 12 months. However, only 17% plan to increase investment in equipment, machinery or other business assets during the next three months, a post-pandemic low.

The findings suggest that business owners remain cautious despite growing optimism about future sales. Nevertheless, postponing investment indefinitely carries risks of its own.

Outdated equipment, inefficient working practices and ageing technology can gradually undermine competitiveness. Businesses that fail to invest may eventually find themselves struggling to match more productive competitors.

The important question is not simply whether a business can afford to invest, but whether the proposed investment will generate sufficient benefits to justify its cost. For example, replacing outdated equipment might reduce production costs, improve quality or release staff time for more profitable activities.

Similarly, investing in digital systems could reduce administration, improve customer service and provide better information for management decisions.

Before committing funds, business owners should prepare a straightforward investment appraisal. Estimate the initial cost, identify the expected financial benefits and calculate how long it will take to recover the expenditure. Consider the effect on cash flow and whether external finance might be appropriate.

It is also sensible to consider what happens if anticipated benefits take longer to materialise. Economic uncertainty is unlikely to disappear completely. Waiting for ideal conditions could mean missing worthwhile opportunities. Carefully planned investment, supported by realistic financial forecasts, can help businesses improve efficiency, protect profitability and prepare for future growth.

Late payment of invoices remains one of the most persistent problems facing UK small businesses, and recent research suggests the situation is becoming increasingly difficult. 60% of UK small and medium-sized businesses report that customers are taking longer to settle invoices than they were a year ago. The average amount owed in outstanding invoices is now £72,000.

For smaller businesses, delayed payments can create serious financial difficulties, even when sales are increasing and the business is profitable. A business may have sufficient orders, healthy profit margins and a growing customer base, but none of these advantages will prevent cash shortages if customers consistently pay late.

The consequences can be considerable. Businesses may struggle to pay suppliers, meet payroll commitments or fund essential investment. In extreme cases, late payments can threaten their survival.

Fortunately, there are practical steps business owners can take to reduce their exposure. 

• Start by reviewing payment terms. Are customers clear about when invoices must be settled? Are invoices issued promptly and do they contain all the information customers need?
• Next, establish a consistent credit control process. Send reminders before invoices become overdue and follow up outstanding amounts quickly. Where appropriate, consider requesting deposits or staged payments. 
• It is also worth reviewing customer credit limits, particularly where payment patterns have deteriorated.
• Finally, prepare a rolling cash-flow forecast covering at least the next three months. This can highlight potential shortages early enough for corrective action.

Late payments may be beyond the complete control of individual businesses, but the consequences need not be.

HMRC’s latest Corporation Tax statistics show that receipts from corporate taxes passed £100 billion for the first time in 2025-26.

The main statistics are as follows:

• Total receipts from all corporate taxes were £100.4 billion in 2025-26, an increase of £3.5 billion (4%) compared with the previous year. The total includes Corporation Tax together with the Bank Levy, Bank Surcharge, Residential Property Developer Tax, Energy Profits Levy and Electricity Generator Levy.
• Onshore Corporation Tax receipts were £92.9 billion, up £3.9 billion (4%), while offshore Corporation Tax receipts increased by £0.2 billion to £2.2 billion.
• Financial and insurance activities were the largest contributor to Corporation Tax receipts, generating £25.3 billion, or 27% of the total. Wholesale and retail trade contributed £9.5 billion and professional, scientific and technical activities £8.6 billion.
• Corporation Tax liabilities increased by £4.5 billion (5%) to £87.9 billion in 2024-25. HMRC says the increase was mainly attributable to the full implementation of the 25% main Corporation Tax rate.
• Around 7,670 companies had Corporation Tax liabilities of more than £1 million in 2024-25. Although these represented only 0.5% of companies with an amount of tax to pay, they accounted for 60% (£52.7 billion) of total Corporation Tax liabilities.
• In contrast, around 1.1 million companies had liabilities of less than £10,000, accounting for 4% (£3.4 billion) of the total.
• Total capital allowances claimed, after balancing charges, were £155 billion in 2024-25, down £11 billion (7%) from the previous year.

Businesses using the Trader Support Service (TSS) to move goods between Great Britain and Northern Ireland need to prepare for a new platform launching soon. From 20 October 2026, all goods movements must be submitted using the new TSS platform.

Businesses are being asked to pre-enrol before the switchover. From 1 October, existing TSS users will receive an email explaining how to pre-enrol for the new platform. They will also be given access to a test environment so they can familiarise themselves with the new system before it becomes mandatory.

The TSS is a free digital service that supports businesses moving goods between Great Britain and Northern Ireland and helps them comply with the Windsor Framework.

Businesses will need to create a new password and check that their business details and permissions are up to date. HMRC says that updating a profile should generally take between 5-30 minutes, depending on the size of the business and the information available.

From 20 October, the existing TSS platform will no longer accept new goods movements. Businesses that have not completed the switchover could therefore be unable to submit declarations through the service.

The customs processes and legal obligations for businesses are not changing. However, the new platform is intended to provide improved functionality and support.