WELCOME TO HARBOUR KEY'S AUGUST 2026 E-NEWSLETTER
Time doesn’t stand still and since our July newsletter, where we reported on the forthcoming change in Labour leadership, the noise had already started around possible tax changes that could be made following the change of leader. Since the July newsletter, the new Labour Leader has been confirmed, the new Chancellor named, John Healey, and the Autumn Budget date announced as 28 October 2026. It is thought that the short run-up to the Budget could be the new Chancellor being wary of what can happen when choosing a later Budget date, following the rampant speculation in the run-up to Budget 2025.Some business leaders have recently met with the Chancellor, urging him not to allow “flying kites” around possible prospective policies ahead of the October Budget. Last year’s speculation around pension changes and other possible tax changes had a damaging impact on investment, savings and the economy in general. So whilst there is already plenty of noise around what may or may not be announced, hopefully the shorter run-up to the Budget will mean less time for speculation and more certainty for businesses and individuals alike.
Our position as always is don’t try and second guess what is going to happen by implementing any “knee jerk” planning actions. If you are going to undertake an action regardless of the Budget, then continue with this, but if possible look to complete this before the Budget. For the example, if selling a property, even if it's your main home, exchange contracts before the Budget. But don’t do something, just because the press says something is going or may happen.
In addition to the Budget date announcement, the Treasury released its tax update and consultations, on what is now known as Tax Day. This year, this didn’t fall on the exact day as the Budget date announcement due to the Prime Minster change and was therefore slightly earlier.
Details of the main parts of the consultation can be found HERE.
MAKING TAX DIGITAL
At the end of July beginning of August saw Harbour Key prepare and file for its clients their first Making Digital Tax (“MTD”) returns. If somehow you have missed our articles, HMRC adverts and press stories (! how) on this new tax reporting requirement for the self employed and landlords, it is now mandatory for these two classes of taxpayer who had income above £50,000 in the 2025 year ,to file quarterly returns with HMRC, with a final self-assessment. There will be a phased entry for landlords and the self-employed with income below £50,000 over the next two years. More details can be found in our article at https://www.harbourkey.com/blogs/articles/time-is-running-out-making-tax-digital
However, despite all the advertising and the long run in time before the MTD project went live, many taxpayers have still not registered. Therefore, from September, HMRC will start a process of signing up those taxpayers who they believe should have registered for MTD. This is only for those who HMRC believe were mandated for MTD for the 2026/27 tax year and have not already been registered. MTD has also had an unintended behavioural consequence, a growth in limited companies, as reported by Companies House.
Rather than adapting to MTD, many taxpayers are becoming a limited company, without any legal or tax advice, companies being outside of the MTD regime. This a strange approach to get out of MTD, which is not that onerous, as companies have their own complex filing obligations with a broader set of tax, accounting, and filing requirements, as well as complicated tax and non-tax rules.
HMRC has waived late-submission penalty points for quarterly updates during the 2026/27 transition year, but the obligation to keep digital records remains legally binding.
COMPANIES HOUSE STARTS TO FLEX ITS MUSCLE
We have reported over the last two years how the Economic Crime & Corporate Transparency Act 2023, passed in November 2023, and gradually being phased in, placing more regulation on company directors, as well as giving Companies House more powers, which we are now starting to see results regarding how these powers are being used. In the first six months of this year, 23 company directors were disqualified for persistent or serious non-compliance in respect of their director filing responsibilities. In addition, fines were issued totalling £17,810, broken down into £15,600 for non-filing of accounts and £2,200 for non-filing of Confirmation Statements.
All companies must file Annual Accounts and a Confirmation Statement in accordance with the Companies Act 2006. Directors are personally responsible for ensuring these documents are delivered on time. Where accounts are filed late, Companies House automatically imposes statutory late filing penalties. For persistent or serious non-compliance, Companies House has a range of enforcement powers, including financial penalties and criminal prosecution. In addition to the disqualification, Companies House has successfully prosecuted hundreds of directors for non-filing offences between January and June 2026.
HMRC RECOVERS RECORD TAX FROM LANDLORDS
HMRC recovered more than £104m in unpaid tax from landlords during 2025-26 years, as landlords continue to voluntarily disclose undeclared rental income through the Let Property Campaign, what we have referred to as a nudge letter (a letter from HMRC advising it believes the taxpayer has a source of income, that they have not been disclosing). The increase in the Let Property Campaign, is probably the fact that HMRC via it's Connect AI IT system, has increased the information it can obtain from the Land Registry to identify property owners. In a significant number of cases, the non-reporting involved is accidental landlords or confusion over tax rules, including changes to mortgage interest relief and allowable expenses. If you receive a nudge letter of any kind from HMRC don’t ignore it and seek advice immediately, particular where there could be a disclose of income, where tax is not paid. More details regarding HMRC’s nudge letters generally, and their purpose can be found HERE!
DATES
- Key Tax dates for the 2026 calendar year.
- 31 July 2026 - Second Payment on Account
- 31 January 2026 - Self Assessment deadline!
Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call on 01452 713277
