WELCOME TO HARBOUR KEY'S FEBRUARY 2026 E-NEWSLETTER
Congratulations to our self-assessment team and those who supported, who successfully filed all our clients' self-assessment tax returns by the 31 January filing deadline. Every year we comment on how this deadline gets tougher, and this year was no different. On speaking with colleagues in other practices, sharing war stories, everyone felt the pressure, in the main due to clients delivering information late.Our numbers matched what HMRC was reporting in respect of outstanding returns across the month of January, but we did file all our returns. Out of the 12.5 million self-assessment returns expected, HMRC reported that 11,489,825 were filed by the deadline, with an estimated 1 million missing the deadline. 475,722 taxpayers filed on the 31 January, with 27,456 people submitting theirs in the final hour (we had gone home by then!).
If you have not filed your tax return, you will have incurred an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time. After 3 months, additional daily penalties of £10 per day, up to a maximum of £900 are incurred, and after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater is charged.
We have noted several clients have not paid the due tax by 31 January, which means late payment interest is being charged (currently 7.75%), and if the tax is not paid by the end of February, a 5% surcharge is calculated on the unpaid tax. If you are unable to pay your tax liability, please ring HMRC as soon as possible and arrange a time to pay plan, which will not stop the interest charges, but will prevent the 5% surcharge arising. The payment plan must be in place before the end of February, and it is important that you agree a plan that you can manage comfortably to pay, as well as meeting your future tax liabilities.
While team HK was rushing around preparing personal tax returns, our two trainees received their results for exams in the Autumn. Both passed, Arya having now completed all her exams, passing all first time, and now has to complete her training experience period before qualifying.
PRE YEAR END TAX PLANNING
As we finish reporting the 2025 tax year, the end of the 2026 tax year rapidly approaches. Now is a good time to consider your financial position and check whether you have taken full advantage of the tax reliefs and exemptions that are available, as well as prepare for the new tax year. We will be contacting our corporate clients with a 31 March year-end to consider any corporate planning, which will also be a good opportunity to catch up.
Please note our planning checklist provides a guide to the opportunities that we believe may be worth considering. There are many tax-saving measures available and steps that can be taken to improve your tax position, without significant effort. We have listed some planning points to consider which may help reduce your taxes for this tax year (ending 5 April) or prepare for the next, if implemented now. The impact of taxation is only one element in looking at your financial planning, you should also be considering such issues as your savings, investment performance and succession planning. Always take professional advice when deciding your tax planning or investment strategy using a FCA regulated financial adviser.
COMPANIES HOUSE ACCOUNTS FILING
A major part of the Economic Crime and Corporate Transparency Act 2023, the act that is making significant changes to Companies House, (see our article), is to be put on hold, with the Government advising that the planned requirement for micro and small companies to file profit and loss accounts at Companies House from April 2027 being under review. This is not a total reprieve, it is believed that the measure will be brought in, but companies will be given 21 months’ notice before the measure is introduced. When asked for the reasons for the government’s decision to pause, officials said ‘accounts reforms are under review given stakeholder concerns to ensure we strike the right balance between tackling economic crime and avoiding undue burden on business’.
The one measure that has not gone away, and which we continue to chase our clients on, is the directors and persons of significant control (PSC) ID verification. If you have not done this, please can you complete asap, otherwise you risk failing to meet filing deadlines, for which penalties will be charged, and in worst cases, the Company gets struck off.
To help fund the changes at Companies House, their fees increased from 1 February 2026, the main one impacting clients’ on an annual basis, is the confirmation statement digital filing cost increasing to £50 (previously £34). A full list of the new fees can be found HERE!
BUSINESS VALUATIONS
We have advised previously, that valuations are going to become a hot topic in the future, see HERE, including how this area was being discussed in the House of Lords. Recently again the matter was discussed by the Lords, who are urging the Government to assess the impact of the death of a director on the valuation of a business for inheritance tax, as business property relief is being changed to an allowance of £2.5m.
Members of the House of Lords Finance Bill sub-committee said there was a ‘significant risk that the death of a business’s founder would result in a material reduction in its value’. The Lords recommended ‘the government should commission research into the impact of the death of a key person on the valuation of a business, with a view to considering whether further changes are needed to deal with the situation where the death results in the business having a materially reduced valuation’. In our article, and in discussions with our clients we have flagged the importance of valuations, preparing a robust report which uses a couple of valuation methodologies, to minimise the risk of challenge in the future. We are sure this matter is not going to go away quietly.
SCOTTISH BUDGET
The Scottish Budget was delivered 13 January to the Scottish Parliament. Scotland has the power to set its own taxes, including income tax rates. While the rest of the UK faces years of frozen thresholds, the Scottish Budget announced an increase of 7.4% income tax thresholds for lower earners from 6 April 2026, with the thresholds for both the basic and intermediate rates of income tax to be increased by 7.4%. The higher, advanced and top rate thresholds for income tax will be frozen.
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
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