CBS Accountants and advisors

🚨 The P11D is on its way out — but there's a catch employers need to know now.
HMRC is scrapping the P11D system in favour of mandatory payrolling of benefits in kind from April 2027. Sounds simpler — but there's a transition trap.
If you register early or move gradually, some employees could end up taxed on TWO years of benefits at once: last year's benefit tax (still coming through their tax code) AND this year's benefit tax (now coming straight out of payroll).
That's a real hit to take-home pay — and a wave of confused staff asking payroll what happened.
👉 What to do now:
• File your 2025/26 P11D by 6 July 2026 as normal
• Watch for HMRC's registration window opening November 2026
• Brief staff on the possible "double tax" overlap BEFORE it hits their payslip
Getting ahead of this now saves you a very awkward conversation later.

🍗 The VAT case that proves nothing is too small for HMRC to fight over: dip pots.

A KFC franchisee (Queenscourt Ltd) sold meal deals bundling hot chicken with "extras" like dip pots, coleslaw, cookies and yoghurts.

The question: is a dip pot part of one standard-rated hot food supply, or a separate zero-rated item?

HMRC said single supply → 20% VAT.
Queenscourt said separate supply → 0% VAT.

In May 2026, the Upper Tribunal sided with Queenscourt. Because the meal deal already included other zero-rated cold items, HMRC couldn't cherry-pick the dip pots for standard-rating — the whole transaction had to be analysed on a consistent, item-by-item basis.

Result: dip pots are zero-rated, and HMRC's assessment was overturned.

Why it matters beyond fast food: if your business sells bundles or meal deals with a mix of VAT-liable items, this case is a reminder to check whether you're accounting for each component correctly. Get it wrong either way, and you're either overpaying VAT or sitting on a future HMRC assessment.

📌 Selling bundles? It might be worth a VAT health check and we are happy to have a chat.

Slower-burn / consultation stage

Mandatory e-invoicing rollout targeted for 2029 (VAT invoices routed via software providers, not a government platform) — early-warning content angle for anyone on manual bookkeeping.

HMRC proposals to collect tax debts directly from bank accounts in instalments (consultation closes 28 Aug).

A new criminal offence for reckless false tax statements.

Mileage rates just went up 🚗📈
If you drive for business, this is the first increase since 2011 — and it's a big one.
New rates from 6 April 2026:
✅ 55p/mile (up from 45p) — first 10,000 business miles
✅ 25p/mile after that
✅ 24p/mile motorcycles
✅ 20p/mile bicycles
✅ +5p/mile per employee passenger
Employer paying less than this? You can claim Mileage Allowance Relief on the shortfall from HMRC.
Keep your mileage log up to date 📋

Crossed £50,270 this year in your employment?

You're now in the 40% tax bracket — but you don't have to hand it all over.

Save this post for 5 legal ways to reduce what your tax. 💰

Ensure you consider your personal budget of monthly spending and impact these contributions will have on monthly take home pay.

📅 MTD for Income Tax is HERE — don't miss these deadlines!
Making Tax Digital for Income Tax (MTD ITSA) is now live. Gone is the single annual Self Assessment. Here's what you need to know:
Who's in — and when?

✅ Income over £50k → April 2026 (that's NOW)
✅ Income over £30k → April 2027
✅ Income over £20k → April 2028
Your quarterly update deadlines:
🗓️ Q1 (Apr–Jul) → 7 August
🗓️ Q2 (Jul–Oct) → 7 November
🗓️ Q3 (Oct–Jan) → 7 February
🗓️ Q4 (Jan–Apr) → 7 May

Plus your year-end:
📝 Final Declaration → 31 January (replaces your old Self Assessment return)
⚠️ Miss a deadline? Points mean penalties.
A new points-based system applies from 2027/28 — rack up 4 points and you're hit with a £200 fine.
Action steps now:
→ Check your income threshold
→ Choose HMRC-recognised software
→ Start keeping digital records today
Sole trader or landlord? This affects you. Get ahead of it. 💼

Work in Progress & Its Tax Impact

How WIP is calculated — and why it matters at tax time.

WIP Formula
Direct Materials Used
+ Direct Labour Costs
+ Manufacturing Overhead
− Cost of Goods Manufactured
= Work in Progress (WIP)

WIP Components
01
Raw Materials
Materials consumed but not yet in a finished product
02
Direct Labour
Wages of workers directly involved in production
03
Overheads
Allocated factory costs: utilities, depreciation, rent
04
Degree of Completion
% completed determines what is capitalised vs expensed

Tax Impact

↑ Higher WIP
Defers Tax Liability
Costs stay on the balance sheet — taxable income is lower in the current period.

↓ Lower WIP
Accelerates Recognition
Costs flow to the P&L sooner, increasing taxable income in the current year.

💡
Key Takeaway
WIP valuation is not just an accounting exercise — it directly shapes your taxable profit. Under absorption costing, overheads embedded in WIP reduce current-year deductions. Accurate estimation of degree of completion is critical to avoid misstatements and tax adjustments.

Tax Relief for UK Businesses

Annual Investment Allowance (AIA)
What sole traders & limited companies need to know investing in your business? You could be reducing your tax bill significantly — right now, in the same year you spend. Here's everything you need to know about the Annual Investment Allowance 👇

£1M
AIA Limit for 2025/26
Deduct 100% of qualifying plant & machinery costs from your profits — immediately.
Who can claim? Sole traders, partnerships (individual members only) and limited companies all qualify — as long as assets are used for business purposes.
What qualifies? Most plant & machinery — tools, equipment, computers, fixtures. Cars, land, and buildings are excluded.
How does it save tax? For sole traders it cuts your income tax. For limited companies it reduces your corporation tax. Both benefit immediately.
No spreading costs. Unlike Writing Down Allowances, AIA gives you 100% relief in year one — boosting cash flow and freeing capital to reinvest.
⚠️ Don't assume it's automatic. AIA must be actively claimed — on your Self Assessment (sole traders) or Corporation Tax return (limited companies). Miss it, and you miss the relief.
Thinking of a big purchase this year?
Talk to us before you buy — smart timing can maximise your relief and make a real difference to your tax bill. 📞

Thinking of closing your limited company? The route you pick can save you tens of thousands in tax — here's the quick breakdown 🧵⬇️

✅ MVL route (solvent liquidation) — distributions treated as capital, so you could pay just 14% CGT with BADR on up to £1M of gains.

❌ Strike-off above £25k — anything over £25k is treated as a dividend, taxed at up to 33.75% (higher rate) or 39.35% (additional rate). Ouch. 😬

⏰ Act before April 2026 — the BADR rate is rising from 14% → 18%. Every month counts!

⚠️ And don't forget the TAAR phoenix rule — if you restart a similar business within 2 years, HMRC can reclassify your capital gain as income. Not a fun letter to receive.

Save this post for later and tag a business owner friend who needs to know this 👇