Author Archive: Muhammad Zia

HMRC’s cryptoasset rules are now in effect: What does this mean?

Since 1 January 2026, the way HMRC monitors and taxes cryptoassets has changed significantly.

With the introduction of the Crypto Asset Reporting Framework (CARF), crypto is no longer operating in a grey area and is now treated as a financial asset.

If you or your business buys, sells, transfers, swaps, mines, stakes or holds cryptoassets, these new rules will affect you.

What has changed under the new cryptoasset rules?

Under CARF, cryptoasset service providers must now collect and report detailed customer information directly to HMRC.

This applies to providers based in the UK or overseas, as long as they follow the same international reporting standards.

Users of crypto platforms are required to provide:

  • Full name
  • Date of birth
  • Residential or business address
  • Tax identification number (National Insurance number or Unique Taxpayer Reference)

This information will be automatically shared with HMRC or the relevant overseas tax authority.

Why have these rules been introduced?

HMRC’s objective is to ensure crypto income and gains are being properly declared and taxed.

This includes:

  • Capital Gains Tax on profits from selling or transferring crypto
  • Income Tax and National Insurance on crypto received from employment, mining or staking

CARF forms part of a global agreement aimed at preventing tax evasion and crypto will now be subject to the same scrutiny as traditional assets.

How will the changes to the cryptoasset tax rules affect investors?

You must comply with the new rules if you deal with:

  • Exchange tokens like Bitcoin or Ethereum
  • Non-Fungible Tokens (NFTs)
  • Stablecoins
  • Utility tokens
  • Security tokens

You must ensure every crypto platform you use has accurate and up-to-date personal or business details.

Failing to provide this information or providing misleading details could result in penalties of up to £300 per provider.

HMRC will also have unprecedented access to transaction data, including cross-border activity and this will make it easier for them to spot any undeclared income or gains.

What should you be doing now?

To stay compliant under the new regime, you must act now and not wait until HMRC gets in touch or you are faced with unexpected costs.

You need to:

  • Review past crypto activity to check whether any tax is due
  • Maintain detailed records of all transactions, including dates, GPB values and any fees paid
  • Report crypto correctly in your Self-Assessment, including the new dedicated crypto sections
  • Understand taxable events, such as swapping tokens or spending crypto, as this can create CGT liabilities
  • Consider voluntary disclosure if you have failed to report crypto in previous years

Voluntary disclosure is always viewed more favourably than waiting for HMRC to raise concerns.

How can we support you?

It can be overwhelming to know what you need to declare, but you must seek financial support now that the rules are already in place.

Our expert team can review your crypto activity and calculate your taxable gains and income accurately.

We can ensure that your Self-Assessment returns are completed correctly with CARF reporting and assist you with voluntary disclosures if necessary.

HMRC is tightening the net around cryptoassets, but with the right guidance, you can be confident that your crypto is compliant.

If you need further advice on your crypto tax obligations, contact us today.

Making Tax Digital for Income Tax is almost here: Why you must act now

Making Tax Digital (MTD) for Income Tax is no longer a distant reform.

With less than a few weeks until it becomes mandatory for many sole traders, landlords and self-employed individuals, the countdown is well and truly on.

HMRC has begun sending thousands of letters to sole traders and landlords, warning them that they will soon be required to comply with new rules.

If you have received one of these letters, you must take it seriously as your tax reporting obligations are about to change.

What is MTD for Income Tax?

MTD for Income tax is part of HMRC’s move towards a fully digital tax system.

If you are affected, you will need to:

  • Keep digital records of your income and expenses
  • Use HMRC-compatible software
  • Submit quarterly updates to HMRC
  • Complete an end-of-year declaration

Quarterly reporting does not replace your annual tax return, but it will mean that you will have more regular interaction with HMRC.

Who will be affected by MTD for Income Tax?

MTD for Income Tax will be introduced in stages based on your gross income from either your self-employment or rental property or both.

The stages are:

  • From April 2026 – income over £50,000
  • From April 2027 – income over £30,000
  • From April 2028 – income over £20,000

Those entering MTD in April 2026 will need to submit their first quarterly update by 7 August 2026 and your digital records must be accurate from the very start of the tax year.

You will then need to submit a final tax return, bringing together all sources of income for example, savings interest, dividends and other relevant income by 31 January 2027.

This will be similar to the Self-Assessment tax return you are required to complete now.

Will the due dates for paying tax change under MTD?

The due dates for paying tax will not change under MTD for Income Tax.

Tax will continue to be payable by 31 January following the end of the tax year, with payments on account for the following year remaining due on 31 January and 31 July, where applicable.

What are the HMRC MTD letters?

The recent letters from HMRC have been sent to individuals who fall into the first phase of MTD for Income Tax.

The letter explains that those affected must begin reporting their income digitally, submit quarterly updates and use MTD-compatible software to do so.

The letter outlines:

  • What MTD for Income Tax is
  • When taxpayers will need to start using it
  • How quarterly reporting will work
  • Changes compared to the current Self-Assessment process
  • What steps taxpayers should take now

HMRC is issuing letters in batches between February and March to taxpayers who qualify based on their submitted returns.

What should you do if you receive a letter?

If you receive a letter, you do not need to panic, but you must not ignore it.

You should first check that you are affected, based on your qualifying income.

While HMRC’s data is usually accurate, it is your responsibility to confirm whether MTD applies to you.

You will then need to:

  • Choose MTD-compatible software to keep digital records and submit quarterly updates
  • Sign up for MTD for Income Tax yourself, as HMRC will not do this automatically
  • Begin digital record-keeping now
  • Share the letter with your accountant or bookkeeper, as they will not have received a copy

What if you didn’t receive an MTD letter?

Not receiving a letter does not mean you are exempt from MTD for Income Tax obligations.

HMRC has been clear that the responsibility rests with taxpayers. You may still be required to comply if your income exceeds the thresholds, even if no letter arrives.

What should you be doing now to prepare for MTD?

The clock is ticking and you should have chosen suitable MTD software by now and have digital record-keeping in place.

You need to have moved away from spreadsheets and paper records and understand your new obligations to reduce the risk of errors or penalties.

You do not have to manage MTD for Income Tax alone and we are here to help you understand your requirements and ensure you have reliable processes in place.

We can help take the pressure off by managing your quarterly submissions for you, giving you peace of mind that your tax returns remain fully compliant. We can also recommend software that best suits your needs.

If you need further advice on staying compliant with MTD for Income Tax, contact us today.

What you need to know about VAT – FAQ Factsheet:

As of March 2025, ONS reported that there were 2.73 million Value Added Tax (VAT) registered businesses in the UK. Despite this, many business owners are still unsure of their VAT obligations.

To help reduce the risk of non-compliance, we have created this VAT fact sheet to answer some of the most frequently asked questions.

What is VAT?

VAT is a tax charged on a lot of goods and services in the UK, but not all. VAT rules can be complex and even well-intended businesses can make mistakes.

For Business-to-Consumer (B2C) transactions, VAT is usually included in the advertised price.

For Business-to-Business (B2B) transactions, VAT is typically shown separately.

VAT is commonly charged at the rate of 20 per cent on applicable goods and services.

However, a reduced rate of five per cent applies to certain items such as home energy and children’s car seats.

There is also a zero-rate VAT, which applies to items such as food and children’s clothing. Although no VAT is charged on these items, it may still be possible to reclaim VAT input on related costs.

Other goods and services must be carefully assessed so that the correct VAT is applied.

When does a business need to register for VAT?

A business’s VAT obligations will depend on its taxable turnover.

If your taxable turnover exceeds £90,000 in any 12-month period, you must register for VAT. You should also register if you expect to exceed this threshold in the near future.

If you expect to cross the threshold within the next 30 days, you must register immediately. If you exceed the threshold unexpectedly, you must register within 20 days of the end of the month in which this occurred.

Failure to register on time could put you at risk of penalties from HMRC.

Any business can choose to register voluntarily, often to reclaim VAT on purchases or in anticipation of future growth.

Once registered, you will receive a unique VAT number, which should be kept secure.

Can a business deregister for VAT?

A business must deregister for VAT within 30 days if it stops trading, unless it continues as a going concern.

It may also be possible to deregister if taxable turnover falls below the threshold. The deregistration threshold is £88,000 of annual taxable turnover and creates a buffer to prevent frequent switching between VAT registration and deregistration.

How is VAT managed?

Once registered, you need to remain compliant with Making Tax Digital (MTD) for VAT.

VAT returns must be completed and submitted using MTD-compatible software. VAT returns are usually completed quarterly, although some businesses can submit monthly or annually.

How do I calculate VAT?

Adding VAT to the cost of any product or service is straightforward.

For supplies subject to the standard VAT rate, all you need to do is take the price without VAT and multiply it by 1.2 to get the VAT inclusive price.

To work out the reduced VAT rate, take the price without VAT and multiply it by 1.05.

How do VAT penalties work?

Failing to meet VAT obligations can result in penalties for several reasons.

These include:

  • Failing to register for VAT on time
  • Late submission of VAT returns
  • Late payment of VAT liabilities

Penalties will often depend on how the issue is handled.

Genuine mistakes are still penalised, but they are less severe than deliberate non-compliance.

Late registration penalties are based on the length of the delay and are calculated as a percentage of the VAT that is owed.

For delays up to nine months, the penalty is five per cent.

This increases to 10 per cent for delays between nine and 18 months and then 15 per cent after this period.

Late submissions can result in penalty points.

Once the threshold is reached, a £200 penalty applies for each late return.

The current points threshold is:

  • Threshold for monthly: Five points
  • Threshold for quarterly: Four points
  • Threshold for annual returns: Two points

Penalty points do expire after two years if limits are not exceeded. If the threshold is reached, points only expire after your outstanding returns are submitted and compliance is maintained for a set period.

Late payments will incur interest and may even attract surcharges. Although there is a 15-day grace period before penalties apply.

Time to Pay arrangements can be set up, but interest will still be charged.

Any late payments between 16 and 30 days will incur a three per cent penalty.

After 30 days, an additional three per cent penalty applies, plus a daily penalty calculated at 10 per cent every year until the balance is paid.

Can VAT be reclaimed?

VAT can generally be reclaimed on goods and services used wholly and exclusively for business purposes. Some exceptions apply, including entertainment costs.

VAT cannot be reclaimed on items used exclusively for personal purposes.

The ability to reclaim VAT is one of the main reasons why many businesses voluntarily register when their income is below the threshold.

Businesses with minimal VAT-incurring expenses may choose to deregister when possible. In some cases, the Flat Rate VAT scheme may be more suitable.

Every business is different and seeking professional advice can help you assess your VAT obligations.

Can I get support with VAT?

VAT is detailed and often complex, therefore, it is essential to understand your responsibilities.

Our experienced team can support you with your queries on VAT and help you stay compliant.

Speak to our team today for tailored VAT support.

Spring Statement offers little comfort for businesses amidst growing international uncertainty, says Rotherham Taylor Limited

The latest Spring Statement has done little to steady the nerves of firms in Preston, with Chancellor Rachel Reeves declining to set out fresh measures to ease mounting financial strain on UK companies, according to leading accountancy practice Rotherham Taylor Limited.

In calmer circumstances, the Office for Budget Responsibility’s (OBR) Spring Forecast might have provided a measure of reassurance, as would the Chancellor’s decision to leave things unchanged.

Instead, escalating tensions in the Middle East and the threat of a wider US-Israel conflict have cast a long shadow over the figures presented to Parliament.

Rebecca Bradshaw, Director at Rotherham Taylor Limited, said: “The Chancellor was clear this would not be a major fiscal event, as promised in Labour’s manifesto. That may suit the Treasury’s timetable, though it does little for businesses dealing with rising costs now and in the near future.

“There were no fresh measures to ease the immediate pressures facing employers, no tax changes to stimulate investment and no additional support for firms exposed to rising input costs. The only comfort was that there were no new compliance requirements or tax hikes to contend with.”

The OBR expects economic growth of 1.1 per cent in 2026, down from the 1.4 per cent forecast in November’s forecasts, before rising to 1.6 per cent in 2027 and 2028. Growth is then expected to fall back to 1.5 per cent each year through to the end of the decade.

However, against that backdrop, businesses are grappling with sharply rising energy prices.

“At a time when conflict in the Middle East is pushing up wholesale gas prices and unsettling global markets, many had hoped for clearer recognition of the risks to the UK economy.

“Higher energy prices feed directly into transport, manufacturing, oil and food supply chains. The impact of such a significant ongoing conflict will eventually show up in inflation and borrowing costs.

“Businesses in Preston are already contending with higher employer National Insurance Contributions, increased wage bills, new regulation requirements, tax increases and tighter margins. If energy costs rise again and interest rate cuts are delayed, cash flow will tighten further, creating more difficult decisions for UK business owners.”

The Chancellor used her Statement to highlight the Government’s ongoing trade discussions with India, the US and the EU, reforms aimed at backing entrepreneurs and the £820 million earmarked for apprenticeship reform.

While the Government has consistently pledged to bring down the cost of living, a prolonged conflict in the Gulf would make that objective significantly harder to achieve.

Rebecca added: “There is a clear determination from the Government to present a message of stability. The difficulty is that stability at home cannot insulate us from volatility overseas.

“Clients are telling us they need clarity on tax, energy and employment costs to plan with confidence and we agree.”

Rebecca continued: “In the absence of new policy support, firms need to take control of what they can. That means stress-testing cash flow against higher energy and financing costs, reviewing pricing strategies, exploring qualifying tax reliefs and revisiting capital expenditure plans to help them get a more accurate picture of what the next 12 months will look like for them.

“Professional advice and early action will make the difference if conditions deteriorate nationally or on a global scale.”

For tailored support on tax planning, compliance and business strategy, contact Rotherham Taylor Limited at www.rtaccoutants.co.uk.

Spring Statement 2026

Going into the latest Spring Statement, the Chancellor made it very clear that this would not be a full fiscal event and that any new policy changes would be off the table.

Rising to her feet in Parliament that is exactly what Rachel Reeves delivered, but it was against a back drop of rising economic uncertainty that she could not have predicted when she set the date for her forecast.

In her opening words to the MPs gathered, she made it very clear that the ongoing conflict in the Middle East was adding considerable obstacles to improvements in the global economic outlook.

Already, oil and gas prices have surged and many of the world’s leading trading floors have recorded significant downturns, but nevertheless Reeves painted a picture of a UK economy that would continue to grow.

Some businesses and individuals may be thankful for little or no change, but others are likely reviewing the Statement and wondering why Reeves didn’t do more to lay the ground for help with a new, looming cost crisis.

Economic outlook

The Chancellor was keen to demonstrate that the Government’s existing plans would deliver “economic stability in an uncertain world.”

The Office for Budget Responsibility (OBR) report, delivered to The Treasury on 26 February, already painted a picture of slow growth prior to any knowledge of a growing global conflict.

The OBR’s report shows that the nation’s growth forecast has been reduced in 2026 to 1.1 per cent – down from the 1.4 per cent growth forecast in November’s Autumn Budget.

However, from 2027, growth is forecast to increase to 1.6 per cent (up from 1.5 per cent from last year’s forecast) and will grow at a similar rate in 2028, before slowing slightly to 1.5 per cent in 2029 and 2030.

Whilst the Government may be focused on this positive growth, the predictions are still far below GDP growth seen in the years ahead of the 2008 financial crisis – almost two decades ago.

Despite this weaker economic performance and the anticipated rising costs from global conflict, the OBR has forecast that inflation will actually drop to 2.3 per cent in 2026, down from the 2.5 per cent forecast in the Autumn Budget. It believes that the UK will still meet its target of 2 per cent inflation by 2027.

As many economic pundits have already pointed out, this forecast may have already been out of date at the time it was delivered due to the impact of global conflicts.

Combined, these events create a powder keg of economic uncertainty, which could restrict investment and decision-making within many businesses.

Unemployment rising

Unemployment is expected to rise at a far quicker rate this year – increasing from 4.75 per cent in 2025 to a peak of 5.3 per cent in 2026.

This is quite a significant rise, given that the last forecast in November had expected unemployment to only increase to 4.9 per cent this year.

The OBR has also raised its forecast for unemployment in 2027 to 4.9 per cent, from 4.6 per cent previously.

In its report, the fiscal watchdog said that “subdued hiring demand” meant that fewer jobs were available, with the Chancellor pointing out that more would be done to tackle unemployment, in particular, to help young workers into a career.

Long-term, the forecasts predict that the unemployment rate will fall gradually to 4.1 per cent by 2030/31.

The biggest barrier to this may remain the challenges businesses face when hiring. Experts, like the Bank of England, have suggested that the Government’s previous fiscal policies, including increases to the National Minimum Wage and the National Insurance hike, have caused employment costs to rise.

The impact of conflict

We can’t ignore the elephant in the room and neither did the Chancellor, but the current conflict in the Middle East is likely to have significant financial ramifications.

Rachel Reeves recognised that the actions of those involved, including the closure of one of the world’s most important waterways – The Straits of Hormuz – would have a knock-on effect on oil and gas prices.

The Chancellor promised no more austerity and confirmed that the public purse now had greater headroom to sustain spending, without having to borrow as much.

Whether this means fewer tax rises in future is not yet clear, but what is, is that the longer the current conflicts roll on, the greater the impact on global business.

This will have a trickle-down effect on many aspects of our lives, from energy costs to the price of transportation, all of which will add additional cost to the way we live.

The Government's plans

The fact that the Chancellor didn’t address the challenges ahead by creating any new fiscal policies, including support for SMEs, may be questioned by some.

She was trying to sell a picture of stability, by confirming that in future the single fiscal event – promised in the Labour manifesto – would mean longer periods without disruptive change.

However, given the events of recent days, some may query why the Chancellor didn’t use this opportunity to provide greater reassurance or outline proposals that might help businesses weather the economic storm ahead.

In two weeks’ time, Rachel Reeves will speak again as she delivers her next Mais Lecture. During her statement she confirmed that this speech would “set out three major choices that will determine the course of our economy into the future.”

Preparing for an uncertain future

Whilst many businesses will welcome the lack of change within the Spring Statement for the stability it brings, the wider world of finance is less certain and will be dependent on a number of factors outside the control of the UK Government.

That is why it is more important than ever for businesses and individuals to have a clear picture of their financial health, especially ahead of the fairly significant tax changes within the next few tax years outlined in the previous Autumn Budget.

To read the Chancellor’s full speech, please click here, or to read the OBR’s economic and fiscal outlook here.