HMRC is now providing the option to pay High Income Child Benefit Charge (HICBC) through PAYE, by having your tax code adjusted, instead of needing to file a self assessment tax return.

If you are liable to pay HICBC, and there’s no other reason for you to send in a tax return, the new service will probably be the easiest way to do this. Be aware that time limits apply, and you need to act on or before 31 January in the year after the tax year for which you need to pay the charge. So, for example, if you need to pay High Income Child Benefit Charge for the tax year starting 6 April 2025, and it’s on or before 31 January 2027, you can pay through PAYE. To start the process off, you need to notify HMRC online that you want to pay through PAYE. Do this via the HMRC app, or by searching ‘Child Benefit tax charge pay charge PAYE’ on gov.uk. This then takes you to your Government Gateway login.

The process is slightly different if you already file self assessment returns, but only do so in order to pay HICBC. Here you contact HMRC by phone, and ask to leave self assessment and then register to pay
HICBC through PAYE. Both processes require you to provide specific information listed on the gov.uk page referenced above.

We are always on hand to help you steer a way through.

New process for notifying HMRC of VAT return errors.

Errors on the VAT return will now be notified online to HMRC in most cases. The old VAT652 form, previously used for this, has been withdrawn.

How to notify HMRC

The online notification process is done via your Government Gateway log-in. The form needed can be found by searching ‘Check how to tell HMRC about VAT Return errors’ on gov.uk. You will need to have the net value of the error, and total value of sales to hand.

Businesses exempt from MTD VAT will continue to notify in writing. Note, also, that taxpayers can choose to notify HMRC in writing, instead of using the online facility, if desired.

What the rules say

It’s only the notification process that’s changed. The rules on how to correct errors remain the same.
The correction process depends on the size of the error. For errors with a net value of up to £10,000; or errors between £10,000 and £50,000 and representing less than 1% of the box 6 (net outputs) in the return period in which you find the errors, you can simply correct the next VAT return. This is known as Method 1. Other errors should be notified to HMRC directly (Method 2). You can use Method 2 for errors of any size, if you prefer. Method 2 should always be used for deliberate errors.

There is a four-year time limit from the end of the accounting period to make corrections, though this does not apply to deliberate errors.

Why getting this right matters

The importance of VAT compliance cannot be overstated. It’s not just about good practice – important though that is – it can impact your business financially, too. Interest can be charged for underdeclared VAT, and there can be penalties for errors in VAT returns that result in tax being underpaid, if HMRC considers that the error was careless or deliberate.

Careless errors can attract penalties of up to 30%. Deliberate errors can attract penalties of up to 70%. Penalties for deliberate and concealed errors can be as much as 100%. HMRC has considerable discretion over what is charged, and reductions can be made for errors disclosed without HMRC prompting; and also for the amount of cooperation given by the taxpayer when a disclosure is made.

For penalty reduction purposes, note that any error that HMRC considers careless or deliberate, regardless of size, must be formally notified to HMRC: in these circumstances, correction on the VAT return alone is not enough. If you are in any doubt as to how HMRC would categorise an error, please get in touch to discuss this with us, and we can provide further details.

A note on reasonable care

What does taking reasonable care mean? HMRC defines it as taking the ‘care and attention that could be expected from a reasonable person in the circumstances’. It’s also worth noting that as far as HMRC is concerned, the opposite is also true: not taking reasonable care amounts to being ‘careless’.

Taking reasonable care will look different for each taxpayer, depending on individual circumstances and abilities, but it includes basics like keeping sufficient records to form the basis of accurate tax returns; keeping your records safe; and taking advice if there’s something you’re not sure about.

Support when it matters

Recent research by HMRC suggests that VAT can be particularly difficult for many businesses.
We can help with a VAT compliance health check to give you confidence that you are taking reasonable care, should HMRC ever come knocking.

Please don’t hesitate to get in touch below.

Changes to the availability of agricultural property relief (APR) and business property relief (BPR) are expected from 6 April 2026. This was first announced at the Autumn Budget 2024.

Original proposals and inheritance tax impact

As originally planned, the change would have significantly increased the IHT payable on the transfer of many farms and businesses. Two recent major developments, however, now look set to considerably soften the impact.

Allowance under the original proposals

Under the original proposals, the allowance for the 100% rate of relief was set at £1 million for qualifying business and agricultural assets, with 50% relief available for assets in excess of this. This was a per person limit, and not intended to be transferable between spouses and civil partners.

Revised allowance and transferability between spouses

The position has now changed significantly, with the allowance for the 100% rate of relief increasing to £2.5 million and becoming transferable between spouses and civil partners. Any unused £2.5 million allowance on the death of a spouse or civil partner will be transferable to a surviving spouse or civil partner.

What this means in practice

This means that overall, a couple will be able to pass on up to £5 million of qualifying agricultural or business assets between them, without paying IHT, on top of the existing allowances, such as the nil rate band.

Next steps

Our team can review your circumstances and explain how the revised APR and BPR changes may apply to you. Click below to get in touch with us.

MTD IT is a new obligation for some taxpayers to report income and expenses to HMRC digitally every three months. And it’s now only weeks away.

When MTD IT applies to you

Making Tax Digital for Income Tax (MTD IT) is being phased in from 6 April 2026 for sole traders and landlords with qualifying income over particular thresholds. From April 2026, sole traders and landlords with qualifying income more than £50,000 for the 2024/25 tax year will have to join MTD IT. On HMRC’s figures, that means some 864,000 taxpayers will need to get to grips with the new rules.

From April 2027, sole traders and landlords with qualifying income over £30,000 for the tax year 2025/26 will be expected to join MTD IT. From April 2028, it’s the turn of sole traders and landlords with qualifying income over £20,000 for the tax year 2026/27.

What you’ll need to do differently

Under the new rules, taxpayers must keep digital records of income and expenses. MTD-compatible software is then used to send updates of income and expenses to HMRC every three months. In addition to these quarterly updates, there is an end-of-year tax return, also filed via MTD software.

HMRC letters and what to do next

If you are affected in 2026, HMRC should have written to you confirming that you must join MTD IT. If not, you should expect to receive one in the coming weeks. The letter includes a QR code, which you can scan to access further information. You can also find out more simply by visiting here.

Concerned about what an upcoming HMRC letter on MTD IT could mean for you? We’ll explain the requirements and guide you through the steps you need to take.

Software, systems and support

MTD IT represents a major change in the way you interact with HMRC. It is important that you have the right software in place, and are confident using it. Alternatively, you will need to arrange for a competent third party to maintain the records and make the submissions on your behalf. The need to send updates to HMRC each quarter is something that moves record keeping and reporting very much closer to real time.

How we can help

We are here to help support you through your entry to MTD IT. Click below to get in touch with us.

We’re delighted to announce the promotion of Steve Foskett from Director of Client Services to Partner.

Steve joined Nyman Libson Paul in 2013 as an Audit Senior, after qualifying at a medium-sized firm in Stockport. He has since become a familiar and trusted presence across the firm.

Today, Steve splits his time between entertainment and general practice clients, supporting a broad and varied portfolio. Having spent many years working closely with Anthony, Steve has gained a front-row view of the industry and the relationships that underpin it.

As Partner, Steve Foskett is the first point of contact for many long-standing clients. A steady hand who combines approachability with assurance.

The new Fundraising Code of Practice came into effect from 1 November 2025, following a six month transitional period and sees some significant changes with the revised code adopting a principles-based approach, rather than the previous prescriptive format. This more flexible approach is intended to support organisations in applying the code more proportionately. Rather than prescribing how activities must be carried out, the Code now expects charities to make decisions guided by key values, in a similar manner to the Charity Governance Code.

The new Code is also notably shorter (approximately 45% shorter) and more streamlined making it easier to navigate and is focused on a set of core principles – fundraising must be legal, open, honest and respectful.

The code places greater emphasis on ethical behaviour, including avoiding intrusive or persistent fundraising tactics and ensuring donor protection, especially for vulnerable individuals. Oversight of third-party fundraisers has also been strengthened, with clearer expectations around due diligence, written agreements and ongoing monitoring.

Importantly, the code now requires charities to take reasonable steps to protect fundraisers from harm or harassment.

While the legal framework remains unchanged, the new Code increases accountability and encourages better governance, with Trustees reminded of their overarching responsibility to oversee fundraising practices. Charities therefore must ensure their internal policies reflect the new Code and ensure staff and volunteers are trained to meet the updated standards and any fundraising complaints are addressed in line with the new Standards.

A series of support guides accompanies the revised Code, providing further detail on key areas.

Further information: Click here

The 2025 Charity Digital Skills Report was published recently, and its findings highlight the challenge many charitable organisations are experiencing in balancing significant financial pressures alongside a need to adapt to accelerating technological change with 69% of the surveyed charities noting that strained finances remain the biggest barrier to digital progress.

Financial concerns are also impacting bandwidth, with just 44% of charities operating with a digital strategy in place compared to 50% in the 2024 survey, although the number of surveyed charities making digital progress in the year and prioritising digital in their organisations remains positive. There is also a substantial growth in AI adoption, with 76% of surveyed charities now using AI tools, up from 61% in 2024, although many also reported their AI governance is lacking, an area that may improve going forward, with 48% of charities (68% large charities) currently developing an AI policy.

However, there remains a clear digital divide between large and small charities, with 68% of surveyed smaller charities noting that they are still at early stages with digital. Given the resources available to some of these organisations, this raises questions around digital equity, particularly with the developments in AI and their adoption by larger charities, which is likely to see the gap widen further.

The survey’s findings provide much for both charities and their funders and advisors to reflect on, concluding:

Further information: Click here

On 1 October 2025, the Department for Culture, Media and Sport (DCMS) announced the following changes to Charity reporting thresholds for England and Wales:

• Independent examination threshold: Raised from £25,000 to £40,000 income

• Receipts and Payments accounts option (non-company charities): Increased from £250,000 to £500,000 income

• Audit threshold: Increased from £1 million to £1.5 million income

• Asset threshold for audit: Increased from £3.26 million to £5 million (associated income threshold increased from £250,000 to £500,000)

• Group accounts preparation threshold: Increased from £1 million to £1.5 million income

These changes are expected to come into force for accounting periods ending on or after 30
September 2026.

The thresholds had remained unchanged for a number of years. The audit thresholds for corporate entities had increased significantly within the same timeframe. The planned changes will therefore help to ease the regulatory burden on smaller charities. Many had been drawn into audit requirements that felt disproportionate to their size and complexity.

However, some organisations which may now fall outside the regulatory requirement for an audit may still need an audit if it is a requirement of their governing document or requested by donors or funders. Where this may apply, trustees and management are advised to start having conversations now as to whether these arrangements continue to be
appropriate and of benefit to the Charity or whether changes need to be made.

Several thresholds related to transparency and regulatory permissions will remain unchanged, including:

• Registration threshold: £5,000

• Annual return threshold: £10,000

Filing accounts with the Charity Commission: £25,000

Overall, the proposals seek to balance regulatory efficiency with public trust, ensuring that financial scrutiny remains appropriate to charity size and resources.

Further information: Click here

The Finance Bill 2025-26 has now been published, with the following changes to Charity Compliance rules.

Previously, legacies received by Charities or CASCs were not treated as ‘attributable income’ and therefore benefited from generous inheritance tax relief without associated spending restrictions. Under the new legislation, legacies will be classified within the ‘attributable income definition’, meaning that the funds must be spent on the Charity’s charitable purposes. Failure to do so may result in a tax charge.

There are 12 investment types that the government recognises for charitable tax reliefs. Previously, one category was subject to a statutory anti-avoidance requirement (that the investment must not be made for anti-avoidance purposes). The requirements will now apply to all 12 investment categories.

The revised tainted donations rules previously considered solely the motivation or intent of the donor when determining whether a donation was tainted. The rules have now broadened to also consider the outcome of the transaction, has the donor received a financial benefit regardless of their stated or subjective motivation. The bar for establishing whether a transaction is tainted has also been lowered, with the test of ‘financial advantage’ being replaced by ‘financial assistance.’

HMRC is also updating its guidance to bolster its enforcement powers. Whilst the majority of charities meet their tax obligations, there is a minority that persistently fail to comply but still claim tax relief, such as Gift Aid. HMRC are working on changes to guidance that will improve HMRC’s powers to compel compliance through sanctioning trustees and charity managers.

The new measures will take effect for transactions that occur on or after 6 April 2026.

Further information: Legislation to introduce changes to charity tax rules – GOV.UK

Following the Upper Tribunal ruling on the Yorkshire Agricultural Society case, HMRC has broadened the scope of VAT relief for fundraising events. Whilst fundraising still needs to be a ‘primary purpose,’ it no longer needs to be just the ‘primary purpose.’ Where an organisation has two primary purposes that cannot be separated in importance, the exemption can still apply. This is provided that one of those purposes is fundraising, as in the case of the Yorkshire Agricultural Society, where the aims were to fundraise and to educate.

Looking forward, this will provide charities with greater flexibility when planning events. In particular where events may also look to serve other goals of the charity. However, charities should note HMRC’s comments on the primary purpose following the ruling:

The event must still therefore be promoted as a fundraising event. HMRC acknowledge this may not be its sole purpose.

Following the ruling, there may be scope to claim a refund for events held in the last 4 years. Where applicable, charities should apply the court decision. Then review HMRC’s guidance to determine if there have been any overpayments of VAT.

Further information: Click here and here

The Charity Commission has published its first-ever Charity Sector Risk Assessment. Designed to provide an overview of potential risks to the sector, the survey is based on information drawn from accounts and annual returns, compliance concern investigations, serious incident reports and related casework. The survey found two key risks to the sector: financial resilience and risks to public benefit.

The survey noted over 42% of charities reporting expenditure exceeding income, with challenges around securing sustainable public funding, increased employment costs, an increased tax burden (particularly the recent changes in employers’ national insurance) and increased demand for charity services. It is important that Trustees understand and provide effective financial stewardship and look to plan and act on any ‘early warning indicators.’ Key actions highlighted by the report to help Trustees mitigate risk include:

• Taking time to plan ahead to ensure income forecasts align with operating costs

• Ensuring financial reporting is fit for purpose, regular and sufficiently detailed to inform trustee decision making

• Regularly review financial forecasting to allow for early intervention in cost or revenue variations

• Consider opportunities to deliver your charitable purpose more efficiently – e.g. collaborative bids, combining back office functions with other charities

Charities must act for the public benefit. The survey noted that compliance cases opened by the Commission based on alleged abuse of charities for private benefit had risen 23% over the last financial year, though they still represent a very small percentage of charities. The Commission’s work noted three broad areas in which concerns about private benefit can arise:

• Deliberate abuse of charitable status, such as by criminal enterprises, to diversify and legitimise other activities

• A dominant individual in a charity can affect proper oversight or challenge from the trustee board and leave the charity vulnerable to the dominant individual seeking to derive some personal benefit

• A lack of knowledge or understanding of the rules by charity personnel can leave them open to abuse, particularly for those operating in a complex regulatory framework

Key actions trustees can take to mitigate the risk include:

• Certify financial controls are fit for purpose, and no single individual can access charity funds or assets without appropriate checks and oversight

• Regular review of financial and asset transactions and remain vigilant to protect and safeguard your charity’s assets

• Confirm any payments to trustees are lawful and that any decision has been made following Commission guidance on conflicts of interest

• Make sure you are aware of your key duties and responsibilities as a trustee and follow the Commission’s guidance on good practice

• Ensure you know your charity’s purposes and understand how each purpose is for the public benefit

• Report issues or concerns to the Commission using their serious incident reporting and whistleblowing systems

The report also examines further risks associated with poor governance, safeguarding, fraud, social tensions, emerging technologies and overseas
influences.

Further information: Click here

The new Charity SORP was released on 31 October 2025. This will apply for financial periods beginning on or after 1 January 2026. The SORP introduces a number of changes aimed at improving transparency, proportionality and relevance in charity financial reporting. When drafting the new SORP, the SORP Committee also sought to think small first. They have taken into consideration the additional burden some reporting requirements can bring for smaller charities.

This thinking is visible in the new three tier structure for reporting, which looks to ensure that reporting requirements are proportionate to a charity’s size.

• Tier 1: Income up to £500,000
• Tier 2: Income between £500,000 and £15 million
• Tier 3: Income over £15 million

Charities must comply with the requirements of their own tier and all tiers below. Each SORP module clearly states which tiers it applies to. Combined with the modular layout, this should make the SORP easier for users to navigate. The tiered approach will also help ensure smaller charities are not overburdened while larger organisations provide the level of transparency stakeholders expect.

In other changes, the trustees’ annual report has been refreshed to place greater emphasis on:

• Impact reporting (within the ‘Achievements and Performance’ section)
• Sustainability (a new section required for Tier 3 charities; encouraged for others)
• Future plans, now required for all tiers

Within the Trustees’ Report, the SORP also encourages charities to explain the long-term effect of their work on beneficiaries and society.

Additional guidance is provided on reporting reserves. Where a charity is not holding reserves or has a negative net assets on its balance sheet, it must explain why it is still operating as a going concern. Charities must also explain further details of the role of volunteers within the organisation.

The changes introduced by FRS102 are also reflected in the new SORP with the modules on revenue and lease accounting. For income, there is a distinction between exchange transactions were there is an exchange of good and services (contract income) and non-exchange income (voluntary income). Exchange transactions being subject in line with FRS102 to the new 5 step revenue model for recognising income. Recognition of voluntary income is also modified, with charities needing to assess the conditions attached to determine the correct recognition basis. Income will be recognised either on receipt or when it is receivable. unless there are future performance-related conditions, in which case the income is recognised once these performance related conditions have been met. The module also clarifies treatment for subscriptions, dividends, and legacy income.

For lease accounting, there is a new module which introduces right-of-use asset accounting for operating leases. This means most leases will now appear on the balance sheet, increasing both assets and liabilities, with exemptions applying for low-value or short term leases. The SORP also provides guidance on peppercorn rents, which do not meet the definition of a lease under FRS102.

In other changes, the requirement to produce a cashflow statement will now only apply to Tier 3 charities. Those charities that do not qualify as small under FRS102, exempting the majority of charities with income below £15m from needing to produce a cashflow statement.

There is also a new module covering provisions, contingent liabilities and assets. This includes
accounting for funding commitments, clarified guidance on measuring the value of donated heritage assets and the simplification of social investments into one new category where previously such investments were split between programme related investments and mixed motive investments.

It is important that all charities review the new SORP requirements to understand how the changes will impact their organisations, Particularly the changes to accounting for income and leases, to determine any action they need to take now, including consulting with their accountant/auditor. Similarly, the changes to the Trustees Report provide an opportunity to refresh how the information is presented, what message you want to convey with the narrative reporting, and thinking about the impact of your work and how this can be best reflected in your report. This will likely require additional time to plan and collate the required information.

Further information – Home – SORP

Businesses have been given more time to prepare for the change to compulsory Payrolling Benefits in Kind. The start date has been moved from April 2026 to April 2027.

What Employers Need to Know

From April 2027, most benefits in kind must be reported under Real Time Information (RTI) and employers will also need to pay Income Tax and Class 1A National Insurance contributions (NICs) during the tax year.

To make this possible, HMRC will expand the number of RTI data fields. These extra fields will hold data that is currently reported in forms P11D and P11D(b).

Some benefits are not yet included in mandatory payrolling. Employment-related loans and accommodation remain outside the rules for now. For these, the P11D and P11D(b) process will continue temporarily, however, employers can choose to payroll them voluntarily.

To payroll benefits voluntarily for the 2026/27 tax year, you must register in advance. For the tax year starting 6 April 2027, registration will be open from November 2026 to 5 April 2027.

How Benefits Will Be Calculated

The taxable value of a benefit in kind will be calculated as follows:
• Take the annual cash equivalent of the benefit.
• Divide it by the number of relevant pay periods for each employee.
• The resulting figure will be liable to Income Tax and Class 1A NICs each pay period.
• Employers must report this figure alongside employee earnings in each period.
If the value of a benefit is not known at the start of the year, employers must use a reasonable estimate.

HMRC’s Further Guidance

HMRC has highlighted specific situations:
• Globally mobile employees within modified PAYE arrangements: HMRC is considering keeping the P11D and P11D(b) processes for these cases.
• Employees and directors receiving no income: Employers will still need to provide details of benefits in kind and expenses via an FPS. Class 1A NICs will be due in the same way as for employees with income. The FPS will show no payments of earnings and no tax paid. Any uncollected tax will be recovered through the P800 reconciliation process, simple assessment, or self assessment.

What Employees Should Expect

For employees, the change means tax on benefits will move into real time. Employers will need to explain this clearly to staff. In the first year of mandation, some employees could face a cash flow impact if they are already paying tax on benefits from a previous year.

Next Steps for Employers

More information is expected from Autumn 2025 onwards. In the meantime, it may be worth considering voluntary payrolling of benefits in 2026/27. This would give businesses a chance to test the system before it becomes compulsory. Advance registration is required for voluntary payrolling.

We are happy to advise on voluntary payrolling or any other steps you need to take to prepare for the change.

The government is extending Right to Work Checks to the gig economy and zero-hours workers. The change will form part of the Border Security, Asylum and Immigration Bill.

Although the Bill is not yet law, businesses should prepare now. The introduction of right to work checks for gig workers and zero-hours staff represents a major shift. Government figures suggest that between 2.5 million and five million additional working arrangements will fall within scope.

What’s Changing

Until now, right to work checks have applied to traditional employment contracts only. Flexible arrangements were not covered. The new rules will affect sectors that rely heavily on non-traditional working models, such as:

• Construction
• Food delivery
• Beauty salons
• Courier services

Some companies, including Deliveroo, already run right to work checks and other verification procedures.

Why the Change Matters

Right to work checks are carried out by employers. They prove a person’s immigration status and confirm they can legally work in the UK.

Penalties for Non-Compliance

The new rules are backed by strict enforcement. Businesses that fail to comply could face:

• Civil penalties of up to £60,000 per worker
• Business closures
• Director disqualification
• Prison sentences of up to five years for knowingly employing someone without the right to work

Beyond legal risks, reputational damage can also be severe.

Preparing for New Responsibilities

Employment legislation is already complex. A recent Home Office survey showed that 80% of employers got at least one question wrong when asked about right to work checks. The new rules will add yet another compliance layer for businesses to manage.

We are here to help you prepare. Please contact us if you have any questions about right to work checks or your responsibilities under the upcoming rules.