skip to navigationskip to main content
Business Companion Newsletter May 2026
                                               View this email in your browser    
Home |  About Us |  Software |  Services |  Resources |  News |  Contact

Welcome to our Business Companion Newsletter for May 2026

Get your Personal Tax Return in early
Do get in touch if you would like an early 2025/26 tax return. This is particularly useful if your income has gone down and you will be due a tax rebate or you want to lower your Payments On Account for July. It is also nice just to get it out of the way!

We will need details of all your income and expenses. We also need details of payments into private pensions, any Capital Gains Tax and Gift Aid donations.  

May 2026

• Payroll Update

• VAT Annual Accounting Scheme

• Should I incorporate my Property Business?

• Free Consultation

 

Payroll Update


Aakash Mehra took over processing our payrolls from April and has made a good start answering queries and getting payslips out on time. You can contact him at payroll@simpleaccounting.co.uk. 

Format of Payroll reports and Payslips
As part of the payroll change-over, we changed payroll software from Brightpay to Sagepay. However we have found that Sage is not as flexible with format of the payroll reports and payslips. Also the P32 report advising employers of PAYE due is not as user-friendly as the P30 report we are used to.

We and Aakash have spent much time trying to adapt the payroll reports to meet our needs. However we have been frustrated by the lack of flexibility, and you, our clients, have told us you do not like the changed reports. We have therefore decided to revert to Brightpay from the May payroll and onwards. There will be some further set up required this month and extra cost (the ‘improved’ Brightpay Cloud has become expensive), but we can assure you that all payrolls will be completed within deadlines in May and you do not need to take any action.
 

VAT Annual Accounting Scheme


The Basics
VAT Annual Accounting is an excellent VAT scheme.  We recommend it to most of our clients with a turnover less than the threshold of £1.35million per year  Most businesses declare VAT quarterly, but with this scheme you only have to do one VAT return per year – making it much simpler.  

If you are on VAT Annual Accounting, then during the year you pay regular instalments on an estimated basis. For example, say your VAT year is the calendar year ending on 31 December and your VAT liability in one year is £50,000 (based on your previous four quarterly VAT returns). HMRC would ask you to pay one tenth of your annual liability (£5,000) for each of nine monthly instalments (or ‘interim payments’) from April to December inclusive with the final actual balance paid as a final instalment.  It is also possible to pay three quarterly instalments during the year. The bookkeeping is easy! You book these payments to a liability account- ‘VAT Payments on account’.  To trace the outstanding balance it is easier to set this nominal account as a ‘credit card’ account type, so that it offsets to the ‘VAT Due’ ac.  During that year all of your real VAT liabilities have been building up in the ‘VAT Due’ account.   You simply compare the ‘VAT Due’ balance with the ‘VAT Payments on Account’ during the same period – you owe the HMRC the difference.

Bookkeeping at Cash Accounting Period End
The ‘VAT Due’ balance crystallises on the last day of the VAT year – in our example this is 31 December.  This is the date of the VAT return you issue to the HMRC.   You then have two months (rather than the one month & seven days that you get under quarterly accounting) to submit the VAT return and pay any balance .  Using the example above – by the filing date you will have paid £45,000 (nine months at £5,000), you then calculate the return.  Let us say that it comes to £52,000 – you then file the VAT Return and pay the balance of £7,000 at the end of February.

Annual Accounting cashflow advantage
When you start your scheme you are given a proposed payment by the HMRC based on your last four quarterly returns. Imagine you expect to significantly increase your turnover the following year. The scheme will save you cashflow for VAT on any growth that you have above the actual for the previous year. The VAT instalments you pay in the next year will be assessed on the basis of your last VAT liability. You retain the cashflow advantage until the next year, fourteen months after that point.

At the Annual Accounting Year End
When you come to the end of the year you have to consider if you are still eligible to be in the scheme.  You have to leave if your turnover exceeds £1.6m pa.  You will also have to leave if you have any HMRC debts not covered by a Time to Pay arrangement.

You can find out more in our Tricks of the Trade. 

We also have a register of the VAT forms we need.

Should I incorporate my Property Business?


We have long advised against company ownership of private rented properties, instead we have recommended that running a rental business should be done as a self-employment.  But we are now changing our minds.  

There are three main advantages of setting up your rental property business as a limited company:

1. Making Tax Digital (MTD) quarterly filing.  In 2026/27 if you are taking more than £50,000 in rents and self employment income then you now face compulsory quarterly filing.  Having to compose these detailed returns each quarter will be a burden.  Then you are required to reconcile them to the Personal Tax return. The threshold for MTD quarterly filing will be reduced to £30k in April 2027 and £20k in April 2028. 

2. The administration burden.  It used to be easier to run properties personally, now it is simpler to run them in a company. The personal tax return itself is quite complex, with requirements to breakdown profits made between each of your properties, meanwhile in a company the incomes and costs can all be pooled.  There is also the restriction on income tax reclaim against the mortgage costs to standard rate tax.  

3. Inheritance tax (IHT) advantage to company ownership.  One route to avoid IHT is to transfer the properties to the next generation.  Instead of transferring properties it can be more efficient to transfer shares in a property company that owns a whole property business.  This allows finer distinctions between descendants and provided there is a suitable structure no tax is payable on the transfers.    

There are a few disadvantages of company ownership:

a. If you own a property worth more than £500k in a company you will have to make a special report annually for Annual Tax on Enveloped Dwellings (ATED). This tax falls mainly on the value of properties that are not commercially let.  
      
b. You will have to think carefully about the other participants in the company.  

c. You face tax mainly when you withdraw funds from the Investment company – so you have to be careful about your timing.

For more detailed advice on the options please download our helpsheet. 
 

Free Consultation


We offer a Free initial Consultation. We can either come to you to help us get a better understanding of your situation at first hand or if you prefer to visit us to see our set up, that’s fine. You choose.

If you would like support please complete the form at: https://simpleaccounting.co.uk/contact/free-consultation/

Need Help?


Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.

New Clients Welcome


If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.

About Us


Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Xero.

‘All clients using these software packages can benefit from our support. Visit our website www.simpleaccounting.co.uk for a look at the resources on offer.’
If the images contained within this email do not show correctly please add this email to your safe senders list.

Legal Disclaimer


Click here for legal info
Copyright © 2026 Simple Accounting Ltd, All rights reserved.

Our mailing address is:
admin@simpleaccounting.co.uk

Want to change how you receive these emails?
You can unsubscribe from this list.