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MTD for ITSA: What Landlords and Sole Traders Need to Know Before April 2026

10/6/2025

From April 2026, Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will apply to sole traders and landlords with annual gross income over £50,000. This marks a significant shift in how personal income tax records are reported to HMRC.

What Is Changing?
Under MTD for ITSA, affected taxpayers must:
1) Maintain digital records using HMRC-approved software;
2) Submit quarterly income and expense updates to HMRC;
3) File a final end-of-year declaration, replacing the traditional Self Assessment tax return.

Who's Affected and When?

4) April 2026: Individuals earning over £50,000 (combined from sole trade and property);
5) April 2027: Threshold lowers to £30,000.

General partnerships and those below the threshold remain outside the regime-for now.

Why Act Now?

While the deadline may seem distant, early preparation will help minimise disruption. Adopting MTD-compliant software and adjusting your processes now can ensure a smooth transition.

At UMC Accountants, we’re already helping landlords and self-employed clients prepare for these changes-ensuring systems are in place and compliance is maintained.

Need help getting ready for MTD? Get in touch to discuss how we can support your digital record-keeping and quarterly reporting.

Airbnb Hosts: HMRC Is Cracking Down on Undeclared Rental Income

24/5/2025

HMRC is tightening its focus on short-term rental income, particularly from platforms like Airbnb. With data-sharing agreements now in place, HMRC can access host earnings directly from booking platforms, going back several years.

Why This Matters

If you’re earning income from Airbnb or similar short-let platforms-even occasionally-you may be required to:

Declare the income on your Self Assessment tax return;
Pay Income Tax and possibly Class 2/4 NICs if the activity is deemed a business;
Ensure correct treatment under Rent a Room Relief or Furnished Holiday Let (FHL) rules, where applicable.

Failure to report can lead to penalties, interest, or investigations.

What You Should Do

Review your Airbnb income for the past 4–6 years;
Disclose undeclared income under HMRC’s Let Property Campaign, if needed;
Speak to a qualified accountant to ensure tax-efficient and compliant reporting going forward.

At UMC Accountants, we help landlords and short-let hosts navigate HMRC requirements and avoid costly mistakes.

Not sure if you’re fully compliant? Contact us today for a confidential review.

Companies House to Introduce Mandatory ID Verification for Directors and PSCs

8/5/2025

As part of the Economic Crime and Corporate Transparency Act 2023, Companies House will soon introduce mandatory identity verification for all company directors, People with Significant Control (PSCs), and those filing on behalf of companies.

This is a key measure to improve corporate transparency and combat fraudulent company activity in the UK.

Who Will Be Affected?

All new and existing company directors;
PSCs (People with Significant Control);
Anyone submitting filings to Companies House on behalf of an entity (e.g. agents).

Verification will be required before incorporation (for new companies) or within a set period (for existing officers). Directors must verify their identity either:

Directly through Companies House, or
Through an Authorised Corporate Service Provider (ACSP) such as an accountant or formation agent.

What Should You Do Now?

While implementation dates are pending, businesses should begin reviewing their company structures and ensure:

All officers and PSCs have valid ID documentation;
A professional agent (like your accountant) is ready to assist with verification.

At UMC Accountants, we will be offering identity verification through the authorised agent route once the regime goes live. We’ll help ensure your compliance is smooth and on time.

Have questions about how this change may affect your company? Get in touch with us today.

2025 Tax Changes Are Impacting UK Business Owners

17/4/2025

HOW Business Owners Can Stay Ahead in 2025

The UK’s tax and accounting landscape in 2025 brings challenges for business owners - particularly with increased HMRC scrutiny, rising corporation tax rates, and upcoming Making Tax Digital (MTD) deadlines. These shifts mean it's more important than ever to have proactive financial strategies in place.

Key Risks in 2025:

Corporation tax up to 25% for profits over £250,000;

MTD for Income Tax starting April 2026—early prep needed;

Increased HMRC investigations into small businesses;

Rising costs and tighter cash flow post-inflation and higher interest rates.

Case Study: Managing Risk for a Growing Consultancy

A South London consultancy with £400,000 annual turnover and rising profits was suddenly pushed into the 25% corporation tax bracket. Their records were spreadsheet-based, leaving them unprepared for MTD compliance.

We implemented a cloud accounting system, restructured director remuneration to lower taxable profit, and initiated quarterly tax planning reviews. This not only made them MTD-ready but saved them £12,000 in tax annually, while improving cash flow forecasting.

Advisory Action Plan:

Move to digital accounting systems now;

Review tax efficiency of salary/dividend mix;

Use pension contributions or capital allowances to lower taxable profits;

Schedule quarterly reviews with your accountant.

Worried about 2025 tax changes? Let's build a plan that protects your business and your bottom line.

Is It Worth Filling Gaps in Your National Insurance Record Before April 2025?

27/3/2025

As the 5 April 2025 deadline approaches, a few clients of ours are considering whether they should top up their National Insurance (NI) contributions to cover missing years as far back as 2006–07. But is it worth the money? Let’s break it down with some real-life scenarios.

Why It Matters

Your NI record directly affects your State Pension entitlement. To receive the full new State Pension, you generally need 35 qualifying years. If you have gaps, filling them can boost your pension income significantly – but only if you don’t already have (or won’t get) enough years.

Example 1: Worth Topping Up

Sally, age 55, has only 28 qualifying years and plans to retire at 66. She’ll only accrue 3 more years before retirement, totalling 31 years – 4 years short of the full pension.

Each missed year reduces her pension by about £303 per year (£6,550 ÷ 35). By paying around £824 for one year (2023/24 rate), she can get back £303 annually for life – a solid return if she lives 3+ years beyond pension age.

Conclusion: Definitely worth it.

Example 2: Not Worth It

James, age 60, already has 36 qualifying years. He’s worried he might have underpaid in 2006–07, but since he already qualifies for the full pension, paying extra won’t increase it.

Conclusion: No benefit – save your money.

Key Takeaways:

Check your NI record via your Personal Tax Account on gov.uk.

Don’t assume all gaps are worth filling – check your State Pension forecast via here

The deadline to top up for 2006–07 to 2016–17 is 5 April 2025.

Always seek tailored advice if you’re unsure.

SDLT Claim on Derelict Property

14/3/2025

Mudan & Mudan v HMRC [2024] UKUT 00307 (TCC)

In the realm of Stamp Duty Land Tax (SDLT), the classification of properties as 'residential' or 'non-residential' significantly impacts the tax rates applied. A pivotal case that has recently shed light on this distinction is Mudan & Mudan v HMRC [2024] UKUT 00307 (TCC)

Case Overview

In August 2019, Amarjeet and Tajinder Mudan purchased a property in London, initially paying SDLT at residential rates. Subsequently, they sought a partial refund, asserting that the property's dilapidated condition rendered it unsuitable for use as a dwelling at the time of purchase. The property's issues included non-functional utilities, absence of a boiler, dampness, dangerous electrical defects, and evidence of vermin infestation. Despite these conditions, the Upper Tribunal upheld HMRC's stance that the property remained 'suitable for use as a dwelling,' thereby subjecting it to residential SDLT rates.

Legal Reasoning

The Tribunal emphasised that a property does not need to be immediately habitable to be considered a dwelling for SDLT purposes. The key determinant is whether the property retains the fundamental characteristics of a dwelling and can be rendered habitable through repair or renovation without necessitating demolition. The Tribunal noted that while the property was not ready for immediate occupation due to safety concerns, the required remedial works were not so fundamental as to strip the property of its character as a dwelling.

Implications for SDLT on Derelict Properties

The Mudan case clarifies that properties in disrepair, which can be made habitable through reasonable repairs, will still be classified as residential for SDLT purposes. This interpretation aligns with HMRC's guidance, which distinguishes between truly derelict properties requiring demolition and those needing substantial yet feasible renovations. Therefore, purchasers cannot assume that a property requiring significant repairs qualifies for non-residential SDLT rates. Each case will hinge on the property's condition at the time of purchase and the extent of work required to restore its habitability.

Conclusion

The Mudan ruling underscores the importance for property purchasers to carefully assess the condition of a property and seek professional advice when determining its SDLT classification. Misinterpretations can lead to unexpected tax liabilities and potential disputes with HMRC.

How SDLT Group Relief Helps Property Transfers Within a Group

2/3/2025

Using SDLT Group Relief for Tax-Efficient Property Transfers

When restructuring a corporate group, transferring property assets between group companies can trigger significant SDLT. However, SDLT group relief allows qualifying businesses to transfer properties without incurring SDLT, as long as they meet HMRC’s 75% common ownership rule and maintain the structure for at least three years.

Key benefits of SDLT group relief:

No SDLT charge - Eligible property transfers within a group are exempt from SDLT, reducing tax costs.
Improved asset management - Allows businesses to centralise property ownership for better financial and tax planning.
Facilitates business restructuring - Useful for mergers, demergers, and strategic asset reallocation without excessive tax burdens.

Case Study: How we saved a client £150,000 in SDLT

A property investment company with three subsidiaries needed to transfer a £3M commercial property from one entity to another to improve operational efficiency. Normally this would incur an SDLT charge of £150,000 (5% on £3M). By qualifying for SDLT group relief, we facilitated the transfer tax-free, ensuring compliance with HMRC’s conditions. The restructuring enabled better asset protection and financing flexibility and making the business more scalable.

Planning a property transfer within your group? Get in touch with us.

Strategic Business Valuation for a Real Estate Management Buyout

1/3/2025

How to Value a Real Estate Business for a Management Buyout.

For real estate businesses considering a management buyout (MBO), an accurate valuation is crucial to ensure a smooth and profitable transition. As a management accountant, we help business owners and their teams assess the true worth of their company and create a viable financial structure for the buyout.

Key steps in business valuation for MBO:

Assessing financial health – Reviewing past financial statements, rental income, asset values, and liabilities to determine a clear financial position.

Choosing a valuation method – Using EBITDA multiples, net asset valuation/ Discounted Cash Flow (DCF) to establish a fair market price.

Structuring the buyout – Identifying financing options such as seller financing, bank loans, or private investors to facilitate the purchase.

Optimising cash flow – Ensuring the business remains profitable post-buyout by restructuring expenses and maximising operational efficiency.

Case Study: A Real Estate Agency’s Successful Buyback

A South London-based real estate agency with £5M in annual revenue wanted its senior management team to take over ownership. We conducted a full valuation using EBITDA and asset-based valuation, placing the business worth at £2.5M. By securing a mix of vendor financing (50%) and private investment (50%), the buyout was structured with minimal upfront cost. Post-buyout, cash flow forecasting and cost restructuring helped the team improve profitability, making the transition seamless.

Considering a management buyout? Get in touch to find out your business value and create a strategic plan!

Navigating the 2025 SDLT Changes: What Property Investors Need to Know

22/2/2025

As of 1st April 2025, significant changes to the UK's Stamp Duty Land Tax (SDLT) will come into effect, directly impacting property investors and second-home buyers. These adjustments are designed to address housing market dynamics and influence purchasing behaviours.

Understanding the New SDLT Rates
The revised SDLT structure introduces changes in tax rates and thresholds for additional property acquisitions:

Up to £125,000: 5%
£125,001 to £250,000: 7%
£250,001 to £925,000: 10%
£925,001 to £1.5 million: 15%
Over £1.5 million: 17%

These rates apply to the portion of the property price within each band. Notably, the initial tax-free threshold has been removed for additional properties, meaning all purchases are now subject to SDLT from the first pound.

Comparative Example: Before and After the Change
Consider an investor purchasing a second property valued at £350,000:
Before 1st April, 2025:

First £250,000: 5% of £250,000 = £12,500
Next £100,000: 10% of £100,000 = £10,000

Total SDLT: £12,500 + £10,000 = £22,500
On or after 1st April, 2025:

First £125,000: 5% of £125,000 = £6,250
Next £125,000: 7% of £125,000 = £8,750
Remaining £100,000: 10% of £100,000 = £10,000

Total SDLT: £6,250 + £8,750 + £10,000 = £25,000
In this scenario, the SDLT liability increases by £2,500 under the new rates.

Implications for Property Investors
The updated SDLT rates are poised to influence investment strategies:

Increased acquisition costs: Higher SDLT may reduce immediate returns on investment.
Portfolio reassessment: Investors might reconsider the viability of expanding their property holdings.
Market dynamics: Potential cooling of investment activity could affect property prices and rental yields.

Investors are encouraged to consult with tax advisors to navigate these changes effectively and explore potential tax planning opportunities.

The Key Benefits of Regular Cash Flow Forecasting for Businesses

22/2/2025

Why Regular Cash Flow Forecasting is Essential for Your Business

Cash flow is the lifeblood of any business, and without proper forecasting, even profitable businesses can face financial trouble. As management accountants, we help businesses anticipate cash shortages, manage expenses efficiently, and optimise financial planning, ultimately saving them money.

Key Benefits of Regular Cash Flow Forecasting:

Improves financial stability – Forecasting helps identify cash shortfalls before they become critical, ensuring the business remains solvent.
Reduces unnecessary costs – Identifying patterns in cash flow allows for better budget control, reducing late payment penalties and overdraft fees.
Enhances decision-making – Knowing when cash is available allows businesses to invest wisely in growth opportunities without financial strain.
Strengthens supplier & lender relationships – Businesses that manage cash flow well can negotiate better terms with suppliers and lenders, reducing costs.
Prepares for unexpected events – A well-prepared cash flow forecast helps businesses mitigate risks, such as economic downturns or unexpected expenses.

Example: How we saved a business £20,000 in a Year

One of our clients, a small retail business, faced frequent cash shortages due to inconsistent sales cycles. By implementing a monthly cash flow forecast, we identified excess inventory tying up cash and adjusted purchasing schedules accordingly. This freed up working capital, reduced storage costs, and helped them avoid costly short-term loans - saving them over £20,000 annually.

Want to optimise your cash flow and save money? Let’s talk!

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HOW Business Owners Can Stay Ahead in 2025

Using SDLT Group Relief for Tax-Efficient Property Transfers

How to Value a Real Estate Business for a Management Buyout.

Why Regular Cash Flow Forecasting is Essential for Your Business

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