Accounting Espresso #1 - New Tax Year 2025–2026: What’s New and What You Shouldn’t Ignore
- Eva Viola Tedeschi
- May 21
- 3 min read
Welcome to the first edition of Accounting Espresso, your go-to weekly roundup of essential accounting news and tax changes. In this issue, we break down what’s new in the 2025–2026 tax year — what’s coming into effect, and what you can do about it now to stay ahead.
📅 1. Making Tax Digital (MTD) is Expanding Further
What is it? Making Tax Digital (MTD) is HMRC’s ongoing plan to digitise tax reporting. Businesses and self-employed individuals will need to submit quarterly updates using HMRC-compliant software.
What’s changing:
From April 2026, mandatory for those earning over £50,000
From April 2027, for incomes over £30,000
From April 2028, will apply to incomes over £20,000
What to do: If you haven’t already, this is the year to start migrating to digital tools like QuickBooks, Xero or FreeAgent. Waiting until it becomes mandatory might mean rushed decisions and missed learning opportunities.
💸 2. VAT Late Payment Penalties: Automatic Fines Are Coming
What is it? From April 2025, VAT-registered businesses will be subject to stricter penalty rules for late payments.
What’s changing:
3% penalty if payment is 15 days late
An additional 3% if 30 days late
After 30 days, a 10% annual penalty will apply on the outstanding amount
What to do: Plan your VAT obligations well in advance. Avoid last-minute submissions and maintain a separate VAT savings pot if needed.
👩🎓 3. Employer NICs Are Increasing
What is it? Employer National Insurance Contributions are the NICs paid by companies when they employ staff.
What’s changing from April 2025:
Employer NICs rate increases from 13.8% to 15%
The ‘Secondary Threshold’ drops from £9,100 to £5,000
The Employment Allowance rises to £10,500
What to do: If you're planning to hire, factor this into your staffing budget. The increased Employment Allowance helps, but only if you're eligible.
🤖 4. HMRC Is Investing in AI and Expanding Compliance Teams
What is it? HMRC announced in the Spring Statement the recruitment of 1,100 new compliance officers and investments in AI-powered data systems.
What this means for you: Expect more digital monitoring and faster response to underpayments, inconsistencies, or filing delays — even for sole traders and micro Ltds.
What to do: Keep your records clean, your filings on time, and respond promptly to any HMRC notifications. No more flying under the radar.
⏳ 5. Time to Pay: Easier Access to Payment Plans
What is it? Time to Pay is HMRC’s scheme allowing you to spread your tax payments over a longer period if you can’t pay in full.
What’s changing:
From 2025, more taxpayers will be able to set up payment plans online for up to 12 months
No need to call HMRC unless your situation is complex
What to do: If you think you may struggle to meet your Self Assessment or VAT deadlines, explore this option early to avoid penalties.
📝 Want to go deeper?
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Back next Monday with another espresso. Strong and to the point.
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