Published in June 2025, the latest figures from HMRC estimate that 5.3% of taxes are going unpaid, with the tax gap now approaching £46.8 billion for the 2023–2024 tax year.

This is an increase of 0.5% and £7 billion compared to the previous figures for the 2022–2023 tax year, but as was the case before, small businesses are the worst tax offenders.

Small businesses continue to be responsible for 60% of the total missing taxes, with the Corporation Tax gap increasing from 6.4% in 2011–2012 to almost 16% in 2023–2024.

Meanwhile, the tax gap for wealthy individuals remains consistent at just 5%.

So, what does this mean for smaller businesses, and how can our Barnsley accountants help?

Why are small companies not paying tax?

It’s perhaps unsurprising that small company owners are deliberately taking steps to limit their tax liability. Not only are businesses facing higher Corporation Tax rates, but it’s also becoming increasingly difficult for business owners to extract profits.

Therefore, business owners may be using cash payments or payments in kind to avoid declaring income or claiming non-work expenditure to exploit expensing rules.

For example, owners could claim deductions for purchasing equipment like laptops, phones, or tablets that may not even be used for business purposes.

Some may even use tools to engage in electronic sales suppression, which is tax fraud.

While HMRC hasn’t had the resources for extensive tax investigations into all of these activities, this could change with the Chancellor’s new funding allocations.

High non-compliance for crypto assets

Tax non-compliance is also believed to be quite high for crypto assets, as HMRC has been struggling to keep up with this rapidly evolving sector over the years.

While HMRC may be able to identify when crypto assets are converted into cash, it’s more complicated when one type of crypto token is exchanged for a different token type, or when crypto tokens are used as payment for goods or services.

For example, transactions such as converting Bitcoin to Ethereum or using a cryptocurrency debit card would be considered disposals for Capital Gains Tax purposes.

Is your business tax compliant?

With such a large tax gap, small businesses and crypto assets are definitely on HMRC’s radar.

So, if you’re the owner of a small company, it’s crucial to make sure you’re reporting the right financial information and paying the correct amount of tax to HMRC.

Mandatory switches to Making Tax Digital software should make it easier for businesses to accurately record and report their taxable income, but only if owners get ahead of deadlines.

Professionals like the team at gbac can help businesses of different sizes with everything from bookkeeping to tax management, so outsourcing could save you a lot of time and effort.

To learn how we can ensure your small company is tax compliant, call us on 01226 298 298, or send an email to info@gbac.co.uk and we’ll be in touch.

With digital filing and public transparency changes on the horizon, will your business be ready for the new Companies House rules taking effect in 2027?

In addition to adjusted company size thresholds from April 2025 and identity verification becoming mandatory this autumn, company directors need to be aware of further changes that Companies House will be implementing from 1st April 2027.

Here’s a summary of how company accounts are changing and what gbac can do to help you.

Mandatory digital filing

If you are a director and currently submit your company accounts yourself instead of using an agent, you will no longer be able to do this via the Companies House web service or paper filing.

While the web service will remain open for filings like confirmation statements and director updates, from April 2027, you can only file company accounts using digital software.

This means directors must use suitable commercial software, which adds to the running costs of a limited company. Ideally, this software should also comply with HMRC filing requirements, as Making Tax Digital for Income Tax is expanding in 2026.

Accounts filing options

Companies House is streamlining the filing options for company accounts for micro-entities and small companies, which means that from April 2027:

• Companies can no longer prepare and file abridged accounts.
• Small companies must file a directors’ report.
• Micro-entities and small companies both have to file profit and loss accounts.

These changes will result in more company information being publicly available than before.

Despite Companies House announcing these changes, it’s still unclear whether the requirement for profit and loss filing will take effect on 1st April 2027 with the others.

Financial year end changes

Companies can currently shorten their financial year end as often as they like. However, Companies House will be restricting this to once every 5 years, unless the business has a valid reason for shortening its financial year end more often.

This will then match the rules for companies lengthening their financial year end.

Get professional help with company accounts

The government website currently provides an online service that can help different businesses find the right type of software for filing company accounts.

Alternatively, if you are looking to outsource your bookkeeping, tax management, or statutory filing processes, you can contact our Barnsley accountants for professional assistance.

We can help you with various aspects of financial management and filing obligation fulfilment, so get in touch by calling 01226 298 298 or emailing info@gbac.co.uk for bespoke support.

With lower interest rates and a record number of mortgage deals available, positive changes are on the way for the buy-to-let market in England – but is it a good time to become a landlord in 2025–2026?

If you’re thinking about investing in buy-to-let property and becoming a landlord in England within the next year, you’ll need to consider the pros and cons before taking the plunge.

Here’s what you should know about the current situation for landlords in England, and how gbac can help you manage your accounts if you decide to rent out your property.

Cons of becoming a landlord in 2025

With the Renters’ Rights Bill likely to become law by the end of this year, the rule changes it will enforce are still causing some uncertainty in the private rental market.

These new rules will impose restrictions on landlords in England when it comes to evicting tenants, increasing rent, and receiving several months of rent in advance.

Other disadvantages of being a landlord in the current market include:

• Increased property maintenance costs
• Potential for stricter energy efficiency regulations
• Significant upfront cost of Stamp Duty

Compared to relatively modest buy-to-let property price growth, some investors may prefer the reliable rate of return available on low-risk investments like fixed-rate bonds.

Pros of becoming a landlord in 2025

The main advantage of purchasing buy-to-let properties is that rents are continuing to increase, with the average rent in England going up by 7.1% between May 2024 and May 2025.

However, there can be wide differences between regions – for example, the average rent in the North East increased by 9.7%, while North Yorkshire’s average rent only increased by 3.7%.

The financing aspect is also a major benefit for potential landlords. Not only is the average two-year fixed mortgage rate the lowest it’s been since September 2022, but there are also around 1,200 more buy-to-let mortgage offers available to choose from than last year.

If you decide to become a landlord in England, after finding the right property in the right location, you must ensure you use Making Tax Digital software for tax compliance.

Financial advice for landlords in England

Becoming a landlord can be rewarding, but it’s not without hard work – including keeping comprehensive accounts, managing finances carefully, and complying with HMRC.

Thanks to our range of bookkeeping and tax consultancy services, these processes can become much easier when you outsource them to our experienced team of accountants in Barnsley.

We can also manage service charge accounts for residential and commercial developments, helping property managers and leaseholders to keep up with their legal obligations.

To find out what gbac can do for you, call us on 01226 298 298 or email info@gbac.co.uk.

Should people working in the hair and beauty industry be treated as employed or self-employed?

Salon owners renting out chairs to other businesses is a growing trend, but for those working in salons, this business model can blur the line between employment and self-employment.

HMRC recently published guidance to help people understand this important distinction, which will affect businesses who rent out chairs and the workers who rent them.

When it comes to tax liabilities, incorrect classification can result in serious consequences – especially if HMRC catches a mistake after conducting a compliance check.

So, if you work in hair and beauty, you need to make sure you’re filing and paying taxes correctly.

Self-employment classification

For some salons, the classification will be simple enough – such as situations where the owner doesn’t work in the salon themselves, but rents chairs to others who work independently.

However, in other cases, there may be a mix of working owners, salon employees, and chair renters all operating in the same salon. This will make the classification less clear, particularly if the salon presents a common brand identity for everyone working in the shared space.

If the salon hasn’t already implemented them, there are several ways to establish self-employed status that should be straightforward for chair renters to apply.

For example, chair renters should have their own:

• Business bank account
• Business insurance
• Equipment and products
• Client list and business records

As long as income is separated for each renter, a shared till or card machine shouldn’t be an issue.

Problem areas for chair renters

Workers who rent chairs in salons should ideally be able to decide the hours they work and when they can take time off. However, a salon with walk-in customers will need a minimum number of workers available during opening hours, so these decisions may be more of a compromise between salon owners and chair renters.

Similarly, chair renters should set their own prices, but if everyone in the salon offers the same services, this can become a problem. However, even if there is common pricing throughout the salon, each renter should provide their own price list and set their own prices for any exclusive services.

Are you a self-employed chair renter or an employee?

Whether you sometimes offer at-home haircuts as a side hustle or work in a professional salon, your employment status will determine your tax code, National Insurance Contributions (NICs), and tax filing obligations – including Making Tax Digital (MTD) requirements.

If you work in the hair and beauty sector, you can check your employment status online using the guidance on the government website and the Check Employment Status for Tax (CEST) tool.

If you would prefer to have a professional advise you on your employment status and manage your tax account, our accountants in Barnsley provide a range of services that you could benefit from.

To find out how the gbac team can help you, call us on 01226 298 298, or email us at info@gbac.co.uk and we’ll get back to you with more information.

Choosing to represent yourself at a First Tier Tribunal (FTT) would probably be considered foolhardy enough. Yet, in a recent case, a taxpayer also chose to base their appeal against HMRC on artificial intelligence (AI), without human verification.

As you might expect, the results of these choices did not turn out in the taxpayer’s favour.

B Zzaman v HMRC

In April 2025, the FTT heard a case in which HMRC identified that Mr. B Zzaman didn’t notify the agency of his liability for the High Income Child Benefit Charge (HICBC) in 2018–2019, so HMRC raised a discovery assessment of an undeclared £2,501.

The FTT heard Mr. Zzaman’s appeal against this discovery assessment, which had been delayed due to uncertainties over whether HMRC could rely on a discovery assessment.

The government then legislated in the agency’s favour, meaning a discovery assessment can’t be used as the basis of a defence (although the application of this legislation is retrospective).

The taxpayer then represented himself using a defence that was written with the assistance of AI, but this defence was unreliable and not strong enough. For example, it:

• Claimed that HMRC should have notified him of the charge, when the primary responsibility for declaring tax liability lies with the taxpayer.
• Cited cases that, while not completely fictitious, were not relevant to the tax charge.

The taxpayer’s defence was therefore suspect, as the AI he used did not fully understand what was asked of it and did not provide accurate answers to support his case.

While AI can be used for research purposes, the results should always be checked for accuracy.

How does HMRC use AI?

HMRC uses AI extensively to help the agency analyse large amounts of data – for example, when a taxpayer declares income that’s insufficient to support their apparent lifestyle.

Landlords, in particular, should be aware that HMRC can use AI to search many databases – including listing websites, the Land Registry, and tenant deposit schemes – to establish whether the individual is declaring their property income correctly.

Though it’s intended for use by public bodies, the government has published an AI playbook that can be read online, which explains the limitations of artificial intelligence.

As the taxpayer in this case learned, to their own cost, relying on AI for tax expertise is likely to backfire. If you need tax advice, it’s best to speak to a qualified financial adviser.

Get expert tax advice from a real person

Here at gbac, we offer a range of tax consultancy services, and our experienced team of accountants in Barnsley can provide expert financial advice for individuals and businesses.

To talk to our human tax advisers and book a consultation, please call 01226 298 298, or send an email to info@gbac.co.uk and we’ll be in touch as quickly as we can.

With Inheritance Tax (IHT) nil rate bands unchanged for 16 years and currently frozen until 2030, more people are making lifetime gifts to reduce their estate’s IHT bill when they die.

However, anyone making lifetime gifts should be aware of the available IHT exemptions.

Regardless of size, gifts are exempt from IHT if the donor lives for another 7 years. The gift only becomes liable for IHT if the donor dies within 7 years of giving it away.

That said, it’s always prudent to make use of exemptions, especially for older donors.

The most useful ones are the annual exemption, gifts to spouses or civil partners, and gifts from income. Here’s what you should know to help you make the most of your IHT exemptions.

Gifts to a spouse or civil partner

Any gifts given to a spouse or civil partner will be exempt from IHT, as long as they live in the UK.

However, while married couples or those in a civil partnership can exchange as many gifts as they like during their lifetime, this won’t reduce their combined estate value.

If one partner is younger than the other or in better health, it would make sense for them to make family gifts, as they will be IHT-free if the donor survives for 7 years.

Annual exemption for gifts

Each tax year, an individual can give away £3,000 worth of gifts that will be exempt from IHT and won’t be added to their estate value. This can all be gifted to one person, or split between several people.

Any unused annual exemption allowance can be carried over for one tax year – so, if you didn’t use any this year, you could gift up to £6,000 the following tax year.

For example, a couple could use this annual IHT exemption to invest £6,000 a year in a Junior Individual Savings Account (JISA) for a child or grandchild.

Gifts from your income

Given that, in theory, the exemption for gifts from income is unlimited, this is probably the most useful one. However, it’s also the most complicated exemption.

Certain conditions must be met, as exempt gifts must be:

• Made out of income and not capital (income after tax, which becomes capital after 2 years, according to HMRC)
• Part of the donor’s regular expenditure (habitual spending from sufficient income)
• From qualifying surplus income (leaving enough for the donor to maintain their normal standard of living)

For example, a grandparent could use this exemption to pay for a grandchild’s school fees as a gift. However, they couldn’t use it to help with a house deposit, as this gift would be irregular.

Get advice on managing IHT

If you’re thinking about making lifetime gifts to reduce IHT, you should make sure you know the rules, as missteps could cost your estate. A basic guide to how IHT works is available on the government website, which includes details of the different exemptions.

From tax planning and managing IHT liabilities during your lifetime to creating a well-written will for optimised estate management after you pass away, we can help you here at gbac.

Our experienced accountants in Barnsley can assist with lifetime gift accounting, asset appraisals, tax reliefs, and more. Give us a call on 01226 298 298 to speak to our team.

Alternatively, you can email us at info@gbac.co.uk and we’ll be in touch to arrange a consultation.

From April 2026, it will become mandatory for sole traders and landlords to file tax returns through Making Tax Digital (MTD) if they earn more than £50,000 a year.

The annual income threshold for moving to MTD will then drop to £30,000 in April 2027 and £20,000 in April 2028, by which time most sole traders must use suitable MTD software.

Despite the introduction of quarterly filing with MTD being less than a year away for those over the £50,000 income threshold, a recent survey of sole traders (excluding landlords) revealed that nearly a third were still unaware of the requirements to join the digital tax platform.

Even amongst the sole traders who did know about the upcoming changes, many of them were yet to make any preparations. Considering there are an estimated 3 million sole traders in the UK, this means a worrying number of self-employed people aren’t ready for MTD.

Sole trader attitudes to Making Tax Digital

In recent years, the number of self-employed people in the UK fell considerably, but it’s now rising again. This is mostly due to people continuing to work beyond retirement age, as nearly a quarter of self-employed traders are 60 years old or above.

It’s these older sole traders who may struggle with the new digital system the most, as the aforementioned survey found that 25–34 year olds were more likely to be prepared for MTD. In fact, a majority of this age group believed MTD will positively impact their tax filing approach.

Meanwhile, some sole traders have deliberately been keeping their income below the £90,000 threshold for VAT registration – but anyone who does this is unlikely to welcome the additional administrative requirements of the three-line account approach.

Are you prepared for MTD as a sole trader?

The impact of being unprepared for MTD can’t be overstated, as the deadlines for quarterly submissions are tighter than the 10-month deadline for self-assessment tax returns.

This leaves just over a month to file each quarterly submission, but if you fail to meet the new deadlines, late submissions and late payments will lead to penalties and interest charges.

To avoid being caught out, sole traders of all ages and income levels should read HMRC’s online guidance to learn if and when they’ll be required to register for and use MTD for Income Tax.

It’s better to get to grips with MTDbefore it becomes mandatory – so if you need help setting up MTD for your small business, why not speak to our accountants in Barnsley?

Here at gbac, we can provide a range of tailored financial services to ensure your tax accounts are always up to date and compliant with the latest regulations and systems.

Simply call us on 01226 298 298 or send an email to info@gbac.co.uk to discuss our services.

In June 2025, HMRC will be sending out simple assessment letters to taxpayers who aren’t obligated to file full self-assessment tax returns – which might come as a surprise to some.

Here’s a summary of what taxpayers should know about simple assessments in 2025.

Who will get a simple assessment letter?

You are likely to receive a simple assessment letter from HMRC if you owe:

• Income Tax that isn’t automatically taken out of your income
• £3,000 or more to HMRC
• Tax on your State Pension

If you don’t have a PAYE code or the tax you owe can’t be collected by adjusting your tax code, then HMRC is also likely to send you a letter about this.

What is a simple assessment letter?

If you haven’t completed a full self-assessment tax return, but still owe tax, then HMRC will send you a letter regarding the tax you owe for the 2024–2025 tax year.

The simple assessment letter will cover all the key information, such as:

• Detailed calculations showing the amount of tax due
• The latest date you need to pay the tax by
• How you can pay the tax to HMRC
• What you should do if you disagree with HMRC’s calculations

For the 2024–2025 tax year, the deadline for paying any tax due will be 31st January 2026.

Why are more taxpayers receiving simple assessment letters?

While some people receive these letters every year, for many first-time recipients, they’ll seem to come out of the blue. This is because HMRC is sending letters to more and more people due to frozen Personal Allowances affecting their tax brackets.

The annual tax-free Personal Allowance has been stuck at £12,570 since 2021 and will remain the same until 2028. The basic old and new State Pensions may be below this level in 2025, but if you have the additional State Pension (which increased by 6.7% last year) or deferred your State Pension for an increased payment, this could be enough to exceed the allowance.

Additionally, if you owe tax on interest earned through a bank or building society account, HMRC could send you two simple assessment letters for the same year. If this happens, the second assessment will be based on the latest information and independent from the first.

Will you receive a simple assessment letter next year?

If the State Pension increases by 5% or more from the current level by April 2028, the basic new pension will exceed the Personal Allowance alone, pushing even more people into paying tax.

With inflation currently above 3% and earnings growth at around 5.5%, this pension increase could be reached during the 2026–2027 tax year, causing even more complications for HMRC.

You can learn more about simple assessments on the HMRC website. Should you need help with managing tax bills and communicating with HMRC, our accountants in Barnsley would be happy to offer assistance from the range of financial services we offer at gbac.

Call 01226 298 298 or email info@gbac.co.uk to benefit from our tax planning services!

Previously, HMRC told UK taxpayers that the agency would use personal interest information from banks and building societies to calculate taxable personal interest for the 2023–2024 tax year, then adjust individual tax codes or issue Simple Assessments.

While the aim was to avoid an influx of tax returns due to increased interest rates that year, HMRC has struggled to collect all of the income tax on personal interest for 2023–2024.

As a result, HMRC is issuing a warning to anyone who’s still relying on the tax agency to sort out their personal interest tax for them – reminding taxpayers that, ultimately, the responsibility for reporting interest income and paying any tax owed lies with the taxpayer.

The effects of frozen thresholds and inflation on personal interest tax

A common strategy used by the UK government to increase tax revenue is to freeze tax bands and allowances. As income increases with inflation, more people are brought into the tax system and existing taxpayers end up paying more tax, which is known as fiscal drag.

The Personal Savings Allowance (PSA) has stayed the same since it was introduced back in 2016, which allows people to earn the following amounts of interest income tax-free:

• £1,000 a year for basic rate taxpayers
• £500 a year for higher rate taxpayers
• £0 a year for additional rate taxpayers

Until 2022, if the Bank of England interest rate was below 1%, the PSA could cover interest on a five-figure deposit – meaning most savers wouldn’t owe any tax on their interest earnings.

However, rising inflation resulted in an average Bank of England rate of around 5% in the 2023–2024 tax year, meaning savers earned more interest while their PSA remained frozen.

Unfortunately for HMRC, the consequences of these conditions included such a significant volume of calculations that the agency didn’t finish issuing Simple Assessments until March 2025 – more than a month after the regular deadline for filing 2023–2024 tax returns online.

On top of this, HMRC has also been unable to match around 20% of the 130 million reports it received to the relevant taxpayer records. As a result, the tax agency is now instructing savers to check their interest income tax situation if they haven’t heard from HMRC.

Will the same problems apply to 2024–2025 interest tax collection?

The 2024–2025 tax year that ended recently also saw Bank of England rates reach as high as 5%, which means the same issues are likely to pop up again for savers and HMRC.

However, as the government is focusing on restricting cash ISAs after freezing the ISA allowance for another five years, it’s unlikely that PSA thresholds will be adjusted.

This could potentially make things even worse, so if you’re likely to be affected by a higher personal interest tax bill or already have been, then you should check in with HMRC urgently and take steps to ensure you’re reporting your income accurately and on time.

Here at gbac, we know that managing taxes can be a hassle, which is why our accountants in Barnsley offer tax consultancy services to support individuals and businesses.

So, if you need help with current or future tax planning or liaising with HMRC regarding previous tax years, you can call our team on 01226 298 298. If you prefer, you can send a query by email to info@gbac.co.uk and we’ll get back to you soon with more details.