Know the rules for contractors & subs under CIS to avoid issues with HMRC.

Under the Construction Industry Scheme (CIS), HMRC applies specific tax rules to contractors and subcontractors in the construction industry. Contractors are responsible for deducting tax from payments made to subcontractors and forwarding it to HMRC. These deductions act as advance payments toward the subcontractor’s income tax and National Insurance.

A subcontractor is defined as any business or individual that agrees to perform construction operations for another business (a contractor or deemed contractor). This applies whether the work is done directly or through others such as employees or further subcontractors. Notably, a business typically considered a main contractor can be a subcontractor if hired by another contractor, such as a local authority.

Subcontractors can include:

• Companies, public bodies, partnerships and self-employed individuals.
• Labour agencies or staff bureaus that supply or employ workers for construction.
• Foreign businesses performing construction in the UK or its territorial waters.
• Local authorities or public bodies engaged in construction work for others.
• Gang-leaders who agrees with a contractor on the work to be done, and in turn receives payment for the work of the team.

Some businesses function as both contractors and subcontractors, paying others while also being paid for their services. These businesses must follow both sets of CIS rules depending on their role in each transaction.

HMRC requires businesses to maintain accurate VAT records to ensure correct tax payments. While all businesses must retain general records (such as invoices, bank statements, and receipts), a key requirement under the Making Tax Digital for VAT initiative is keeping specific VAT records digitally.

Businesses must maintain digital records of VAT charged and paid, including:

• The VAT on all goods and services that are sold (supplies made) and purchased (supplies received).
• The time and value of each supply (excluding VAT).
• Any adjustments made to VAT returns.
• Reverse charge transactions.
• VAT accounting schemes used.
• Daily gross takings when using a retail scheme.
• Items where VAT has been reclaimed for Flat Rate Scheme users.
• Total sales and VAT on those sales for those trading in gold and using the Gold Accounting Scheme.

Digital records must be kept using compatible software or spreadsheets that can connect directly with HMRC systems. Where multiple software tools are used, they must be linked digitally, manual transfer of data or ‘copy and paste’ is not allowed. Digital links can include formulas in spreadsheets, imports/exports of XML or CSV files, or uploading/downloading data.

Businesses must start keeping records from the moment they register for VAT and retain them for at least 6 years (10 years if using certain VAT schemes). Exemptions apply only to specific entities, like government departments or those eligible for an exemption from keeping digital records.

Trustees must manage assets, follow tax rules, and register with HMRC where required.

A trust is a legal arrangement in which a trustee, either an individual or a company, is entrusted with managing assets such as land, money, or shares on behalf of others. These assets, placed into the trust by a settlor, are managed for the benefit of one or more beneficiaries.

Trustees are responsible for deciding how the trust's assets are to be managed, distributed, or retained for future use. They are also accountable for reporting and paying any tax due on behalf of the trust. If the trust pays or owes tax, it must be registered with HMRC.

Income received by a trust is subject to varying rates of Income Tax, depending on the type of trust.

Discretionary (or accumulation) trusts: Trustees pay tax on the trust's income. The first £500 is taxed at the standard rate. Income above this threshold is taxed at:

• 39.35% for dividend income
• 45% for all other types of income

Interest in possession trusts: Trustees are similarly responsible for paying tax on income. The rates are:

• 8.75% for dividend income
• 20% for all other income

There are additional trust structures, for example, bare trusts and settlor-interested trusts, which are subject to different rules and tax treatments. As a result, it is essential to consider both Income Tax and Capital Gains Tax (CGT) implications from the outset when establishing or managing any type of trust.

Banks will have to give 90 days’ notice before closing accounts, giving customers more time to respond.

From April 2026, new government rules will strengthen protections for individuals and small businesses at risk of unfair bank account closures. Under the legislation, banks and payment service providers will be required to give at least 90 days’ written notice before closing an account or terminating a payment service, commonly known as debanking. A significant increase from the previous 2-month limit.

Banks will also be required to provide a clear explanation for the closure, allowing customers to challenge the decision including through the Financial Ombudsman Service. These changes are designed to protect customers, particularly small businesses, who have often found their accounts shut down without notice or reason, leaving them unable to operate or seek alternatives.

The new rules form part of the government’s wider Plan for Change, aimed at delivering economic security and supporting growth. The rules will come into force for relevant new contracts agreed from 28 April 2026 onwards and also apply to the termination of basic personal bank accounts.

There are exceptions in cases where closure is necessary to comply with financial crime laws. Existing protections which prohibit a bank from discriminating against a UK consumer based on political opinions or beliefs remain in place.

SMI loans can help pay mortgage interest for those on benefits, but repayment is due when the home is sold.

Support for Mortgage Interest (SMI) is a government-backed loan provided by the Department for Work and Pensions (DWP) designed to assist homeowners receiving certain benefits in covering the interest on their mortgage or home loans. The loan is intended solely to help with interest payments on a qualifying mortgage or home loan, and repayment is typically not required until the property is sold, or ownership is transferred.

Interest on the loan is charged monthly using compound interest which means that the total amount owed will increase over time. Despite this, the SMI loan may still be a more affordable alternative compared to borrowing from banks or credit unions.

Before applying, individuals are advised to assess their financial situation. SMI may not cover the full mortgage payment and so applicants may still need to pay the remaining balance. Those who have missed payments, are managing other debts, or share ownership with someone not included in their benefit claim should seek professional advice prior to applying.

Eligible applicants may borrow against up to £200,000 of their mortgage if they receive working-age benefits, or £100,000 if they are on Pension Credit, this can increase to £200,000 in certain transitional cases. For joint mortgages, entitlement may be limited. There is no credit check for the SMI loan, so applying will not affect benefits or credit scores.

To apply, individuals must complete an SMI application form. However, it is recommended that they explore all available options first, including discussions with their mortgage lender and support services such as Citizens Advice.

HMRC’s Time to Pay lets eligible taxpayers spread tax bills over time, avoiding immediate enforcement. 

If you owe tax to HMRC, you may be able to set up an online ‘Time to Pay’ payment plan depending on the type of tax debt and your circumstances. For self-assessment, you can create a payment plan online if you’ve filed your latest tax return, owe £30,000 or less, are within 60 days of the deadline and have no other debts or payment plans with HMRC.

For employers’ PAYE contributions, online payment plans are available if you’ve missed a payment deadline, owe £100,000 or less, aim to repay within 12 months and have no other debts with HMRC. Additionally, all due PAYE and Construction Industry Scheme (CIS) submissions must be filed.

If you owe VAT, you could set up a payment plan online if you missed the deadline, owe £100,000 or less, intend to pay within 12 months, have filed all tax returns and the debt relates to an accounting period starting in 2023 or later. Businesses on the Cash Accounting Scheme, Annual Accounting Scheme or those making payments on account are not eligible to set up a plan online.

For Simple Assessment debts, online payment plans are possible if you owe between £32 and £50,000, have no other debts with HMRC, and can pay it off within 36 months.

If you are not eligible for an online plan, you must contact HMRC directly. They will ask for details about your income, expenses, other tax liabilities, and any savings or assets, which they may expect you to use toward your debt.

HMRC will offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full but will be able to pay in the future. If HMRC do not think that more time will help, then they can require immediate payment of a tax bill and start enforcement action if payment is not forthcoming.

A recent ruling has provided a timely reminder that substance trumps form in employment status disputes, and the mere insertion of a clause does not automatically change the employment status of workers. This case concerns an appeal by BCAL, a company that provides vehicle collection, inspection, delivery, and transportation services. The core dispute revolves around the employment status of hundreds of individuals who work as drivers for BCAL.

The standard-form contract contained a term that permitted the drivers to make use of a substitute. However, a central issue in this case was whether the substitution clause was indeed "genuine". 

BCAL instructs drivers via an app, and they generally have no choice over job location, number, or type, although they can decline jobs. However, the Tribunal found evidence of a practice of punishing drivers for refusing work on available days. BCAL sets the fees for each job, with no power of negotiation available to drivers, and drivers are obligated to pay weekly administration and insurance contributions. BCAL pays for and issues DVLA trade plates to drivers, which are essential for driving unregistered/untaxed vehicles for business, and the drivers cannot obtain these themselves. Drivers are provided with branded items in the form of a badge, a hi-vis vest, a phone with an app, a fuel card, inspection equipment, and PPE. Newly recruited drivers must undertake a mandatory four-day in-person training course and receive a detailed training manual, which is regularly updated.

The Tribunals both found that the substitution clause in BCAL's contracts was not "genuine". This case strongly reiterates that the written terms of a contract, particularly a substitution clause, are not conclusive when determining employment status, as tribunals will rigorously examine the true intentions of the parties and the reality of the working relationship. If a contractual right, such as substitution, is not genuinely intended to be exercised or is an "unrealistic possibility" in practice, it will be disregarded.

Companies cannot simply insert a substitution clause into their contracts and assume this guarantees self-employed status. Instead, the right to substitute must be genuine, practicable, and exercised. This ruling carries profound importance for companies that employ people remotely via apps, as merely inserting a clause to infer that such employment is truly flexible can be overturned if it isn’t exercised.

For many small business owners, the focus is on day-to-day operations. However, building long-term value is just as important, whether your aim is to sell in the future, attract investors, or secure better financing.

Focus on profitability and cash flow
Strong profits are essential, but reliable cash flow is often more important to potential buyers or lenders. Keep tight control over expenses, reduce debtor days, and ensure pricing reflects the value you provide.

Develop recurring revenue
Income that is predictable and repeatable, such as subscription models or service contracts, increases business stability and value. It also makes forecasting more accurate and planning easier.

Strengthen your customer base
Avoid over-reliance on one or two major customers. A broad, loyal client base reduces risk and makes your business more attractive to others.

Build a strong management team
A business that depends too heavily on its owner can be harder to sell and less valuable. Train and empower staff so that the business can operate smoothly without you.

Protect your brand and processes
Invest in your reputation, intellectual property, and efficient systems. Documenting processes and having clear contracts with suppliers and customers adds professionalism and reduces uncertainty.

Plan ahead
Value is built over years, not months. Regularly review your strategy and financial performance and seek advice from your accountant to ensure every decision supports long-term growth.

With the next UK Budget approaching, there is speculation about changes to tax rates, allowances, and reliefs. Acting now can help secure current benefits before any new rules take effect.

Key areas to review:

• Personal allowances – make sure you are using your Personal Allowance, savings allowance, dividend allowance, and Capital Gains Tax (CGT) exemption. Consider transferring assets between spouses or civil partners to maximise allowances.
• Income or gains – if you expect changes to tax rates, you may benefit from bringing forward dividends, bonuses, or planned asset sales into the current tax year.
• Pension contributions – pensions remain highly tax-efficient. Using your current year’s allowance now can lock in today’s tax relief rates.
• Business investment – review any planned purchases of plant or equipment to take advantage of existing capital allowances.
• Inheritance tax – making gifts now can start the seven-year clock and use current IHT exemptions.

The period before the Budget is a valuable opportunity for tax planning. Contact us as soon as possible to discuss your position and take advantage of existing rules before any changes are announced.

The Bank of England has knocked the main interest rate down to 4% today, cutting it by a quarter‑point from 4.25%. It’s the fifth cut in a year and brings the rate to its lowest since March 2023.

The decision was a close call: the nine‑member Monetary Policy Committee split 5‑4, requiring an unusual second round of voting to reach agreement. Bank governor Andrew Bailey cautioned that future cuts will have to be gradual and careful, especially given expectations that inflation may still hit 4% by September.

This cut offers relief to homeowners with tracker‑rate mortgages, reducing monthly repayments, but savers are likely to see lower returns on easy‑access accounts.

HMRC’s new Q&A tool guides you through each step of a compliance check.

The free interactive online tool is designed to help individuals and businesses better understand what happens during a tax compliance check. Available on GOV.UK, the Interactive Compliance Guidance tool brings together key guidance and video content in one place, making it easier to navigate the process.

The tool explains:

• What an HMRC compliance check is.
• Why certain information or documents are requested.
• How to get extra support due to personal or health issues.
• How to appoint someone to act on your behalf.
• What to do if you disagree with HMRC’s decision.
• How to pay a tax assessment or penalty.

It uses a simple question and answer format with clear guidance videos, step-by-step explanations and links to other relevant guidance. The tool was developed with input from stakeholders like the Low Incomes Tax Reform Group to ensure it meets the needs of unrepresented and vulnerable taxpayers.

This guidance supports the government’s Plan for Change, aiming to improve taxpayer confidence, simplify access to information, and promote economic growth. The guidance and interactive tools are intended solely for informational purposes. Using them does not result in tax registration and HMRC does not collect or store any user information.

If your property has changed or seems mis-banded, you may have the right to request a Council Tax review.

Properties in England and Wales are assigned Council Tax bands based on their value as of 1 April 1991 (England) or 1 April 2003 (Wales). If you believe your property is incorrectly banded, you may challenge this through the Valuation Office Agency (VOA).

You have a legal right (known as ‘making a proposal’) to challenge if:

• You have paid Council Tax for less than 6 months.
• The VOA changed your band in the last 6 months.
• Your property or local area has undergone significant change (e.g. structural alterations, change of use, or redevelopment).

If you don’t have a legal right, you may still request a band review by submitting evidence such as:

• Sale prices of similar properties around the valuation date.
• Up to five comparable properties in lower bands, matching on type, size, age, and location.

Challenges can be made online, by form, phone, or email. Council Tax payments must continue during the review. VOA decisions may take up to 6 months (legal right) or 12 months (band review). Appeals are permitted only where a legal challenge was made.

If you live in Scotland, then you need to use the Scottish Assessors portal website to check your Council Tax band and if necessary, lodge a claim with them (known as a proposal).