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Companies House Identity Verification: What Directors and PSCs Need to Do

Thu, 01 Oct 2026 06:33:29 GMT

Companies House identity verification is now a legal requirement for company directors and people with significant control, commonly known as PSCs.

The new rules began on 18 November 2025 and were introduced with a 12-month transition period for people who were already directors or PSCs. With that transition period now approaching its end, anyone who has not yet completed the process should check their individual deadline.

Here is what company owners need to know.

Why Has Identity Verification Been Introduced?

Identity verification is part of wider changes intended to improve the accuracy of the Companies House register and make it more difficult for companies to be used fraudulently.

The process allows Companies House to confirm that directors and people controlling companies are who they claim to be.

It does not replace the other responsibilities of running a limited company. Annual accounts, Corporation Tax returns and confirmation statements must still be completed separately.

Who Needs to Verify Their Identity?

You will normally need to complete identity verification if you are:

a director of a limited company;
a person with significant control of a company;
the equivalent of a director in another type of registrable organisation;
a director of an overseas company registered in the UK; or
registering as a Companies House authorised agent.

A person with significant control is generally someone who owns or controls a company. This can include someone who holds more than 25% of its shares or voting rights, although other forms of control can also qualify.

Many owner-managed businesses have one person who is both a director and a PSC. In that situation, the person must connect their verified identity to Companies House separately for each role.

When Must Existing Directors Verify?

An existing director must provide their Companies House personal code as part of the company’s next confirmation statement.

Every director must have completed identity verification before the confirmation statement is submitted. Companies House will not accept the statement if any of the directors have not been verified.

If you are a director of more than one company, you normally only need to verify your identity once. However, you must use your personal code to connect your verified identity to every directorship you hold.

It is therefore important to check the confirmation statement date for each company rather than assuming that completing the process for one business covers all your appointments automatically.

What Are the Rules for PSCs?

People with significant control must also verify their identity and provide their personal code to Companies House.

The deadline depends on the individual’s circumstances.

If you are both a director and a PSC of the same company:

your director code must be included with the company’s confirmation statement; and
you must provide the code separately for your PSC role during the relevant 14-day period.

For an existing PSC who is also a director, this 14-day period starts on the day after the company’s confirmation statement date.

If you are a PSC but not a director of the same company, your 14-day period normally begins on the first day of your month of birth.

Companies House displays the relevant identity-verification dates on the company’s public register, so it is worth checking the record rather than relying on a general deadline.

How Do You Verify Your Identity?

There are two principal ways to complete the process.

Verify directly through GOV.UK One Login

The Companies House online service is free. Depending on your circumstances, you may be asked to verify using:

a biometric passport;
a UK photocard driving licence;
a biometric residence document;
security questions; or
identity checks completed at a participating Post Office.

You should only use the official GOV.UK service and should not send identity documents to Companies House by ordinary email or post.

Use an authorised agent

You can ask an Authorised Corporate Service Provider, or ACSP, to verify your identity.

An ACSP will normally be an accountant, solicitor or company formation agent that is registered with Companies House and supervised under the UK’s anti-money laundering regulations.

An authorised agent may charge for providing this service and will require suitable evidence of your identity.

What Is a Companies House Personal Code?

After successfully completing identity verification, you will receive a personal code containing 11 characters.

This code belongs to you as an individual, not to a particular company. You use the same code for each company appointment or PSC role that needs to be connected to your identity.

You should keep the code secure. You can provide it to a trusted accountant or agent where they are completing an authorised filing on your behalf, but it should not be shared more widely.

If you verified through GOV.UK One Login, you should be able to view the code by signing in to your Companies House account using the same email address.

What Should Company Directors Do Now?

Directors and company owners should:

Check their company’s next confirmation statement date.
Review the Companies House record to identify every director and PSC.
Make sure each person has completed identity verification.
Locate and securely retain each director’s personal code.
Check the separate deadline applying to each PSC.
Allow enough time to resolve any differences between names, dates of birth or other personal details.
Give the relevant codes to the trusted person responsible for submitting the confirmation statement.

Do not wait until the confirmation statement deadline itself. If one director encounters difficulty completing verification, the company may be unable to submit the statement on time.

What Happens If You Do Not Verify?

Failure to comply with the identity-verification requirements can have serious consequences.

The company may be unable to file its confirmation statement, and an individual who continues acting as a director or PSC without complying may commit an offence. Companies House can also impose financial penalties, pursue prosecution and place a note against the individual’s name on the public register.

The new process is therefore more than an optional administrative check.

Need Help Preparing for Your Confirmation Statement?

Identity verification is now an important part of meeting your Companies House responsibilities, but it sits alongside the company’s wider accounting and filing obligations.

At Tunstall Accounting, I provide straightforward support to limited-company owners in Rotherham and the surrounding area. I can help you understand the information your company needs to maintain, identify upcoming filing dates and make sure your accounting responsibilities are dealt with properly.

This article provides general information based on the Companies House requirements in force on 1 October 2026. Deadlines can vary according to the individual’s role and circumstances, so the company’s Companies House record and current GOV.UK guidance should always be checked.

Do You Need to Register for Self Assessment by 5 October 2026?

Wed, 30 Sep 2026 08:10:34 GMT

If you need to complete a Self Assessment tax return for the 2025/26 tax year and have not previously registered, you may need to tell HMRC by 5 October 2026 .

The deadline can easily be overlooked because the online tax-return deadline is not until 31 January 2027. However, registering and filing are two separate stages. You may need to register with HMRC first so that you receive your Unique Taxpayer Reference and can submit your return.

Here is what you need to know.

What Is the 5 October Self Assessment Deadline?

The 5 October deadline applies to people who need to complete a tax return for the tax year from 6 April 2025 to 5 April 2026 and who:

have not previously submitted a Self Assessment tax return; or
were registered in the past but did not need to submit a return for the 2024/25 tax year.

You must notify HMRC that you are chargeable to tax, normally by registering for Self Assessment.

If you already submit tax returns each year and remain registered with HMRC, you should not usually need to register again.

Who May Need to Register for Self Assessment?

You may need to register and submit a tax return if, during the 2025/26 tax year, you:

were self-employed and received more than £1,000 in gross trading income before expenses;
became a partner in a business partnership;
received taxable income from renting out property or land;
received untaxed income from savings, dividends, commissions or other sources;
received foreign income that needs to be declared in the UK;
disposed of an asset and need to report or pay Capital Gains Tax;
need to pay the High Income Child Benefit Charge and it is not being collected through PAYE; or
have been asked by HMRC to submit a tax return.

This is not an exhaustive list. Whether you need to file will depend on the type and amount of income you received and your individual circumstances.

You can use HMRC’s online checker if you are unsure whether you need to send a return.

What If I Already Have a Unique Taxpayer Reference?

Having a Unique Taxpayer Reference, often called a UTR, does not always mean your Self Assessment record is currently active.

If you have continued submitting returns each year, you should not normally need to register again.

However, if HMRC previously confirmed that you no longer needed to file, you may need to reactivate your Self Assessment record.

You should also check whether HMRC has issued you with a notice requiring a 2025/26 tax return. If it has, you must submit the return unless HMRC formally agrees to withdraw the requirement.

What Information Will I Need to Register?

The information required will depend on why you need to complete a return, but it may include:

your National Insurance number;
your full name and current address;
the date your self-employment began;
the nature of your business;
your existing UTR, if you have one; and
details of the income or circumstances creating the need to file.

HMRC may take time to process the registration and issue the information needed to access Self Assessment online. It is therefore sensible not to leave registration until the final few days.

What Happens After I Register?

Once registered, you can begin preparing your return for the year ended 5 April 2026.

The main deadlines are:

5 October 2026: register for Self Assessment where required;
31 October 2026: submit a paper tax return;
30 December 2026: submit online if you are eligible and want HMRC to consider collecting a small tax liability through your PAYE code; and
31 January 2027: submit an online tax return and pay the tax due.

Filing your return early does not mean you must pay the tax immediately. The normal payment deadline remains 31 January 2027, but completing the return sooner tells you exactly how much you need to set aside.

Why Is It Worth Dealing With Your Return Early?

Leaving Self Assessment until January can create unnecessary pressure, particularly if information is missing or the eventual tax bill is higher than expected.

Preparing early gives you time to:

gather bank interest, dividend and employment information;
obtain property or business records;
identify allowable expenses;
check whether payments on account will be required;
correct missing or inaccurate information;
plan for the amount payable; and
arrange support if your tax affairs are more complicated than expected.

If you are due a repayment, filing earlier may also allow it to be processed sooner.

What If I Miss the 5 October Deadline?

If you realise after 5 October that you should have registered, deal with it as soon as possible rather than waiting until January.

A late notification does not remove your obligation to submit the return or pay the tax. HMRC may consider penalties where the failure to notify results in tax not being paid on time.

The position will depend on the circumstances, the amount involved and whether there was a reasonable excuse, so take advice promptly if the deadline has already passed.

Need help with your Self Assessment?

If you are unsure whether you need to register or would like help preparing your Self Assessment tax return , I can guide you through the process.

At Tunstall Accounting, you will deal directly with me throughout. I can help you understand what needs to be declared, identify the information required and make sure your return is prepared accurately and submitted on time.

How Much Can I Earn Before I Need to Tell HMRC?

Tue, 29 Sep 2026 08:26:20 GMT

If you've started earning a little extra money from a side hustle, freelance work, selling products or providing services, you might be wondering when you actually need to tell HMRC.

A common misconception is that you only need to declare the income once you start making a significant profit. In reality, the rules generally look at your gross trading income before expenses when deciding whether you need to register for Self Assessment.

Here's what you need to know.

The £1,000 trading allowance

Most individuals can earn up to £1,000 of gross trading income in a tax year without needing to tell HMRC about it, provided the trading allowance applies to their circumstances.

Gross income means the amount you receive before deducting any expenses .

For example, if you earn £900 from a small side business during the tax year, you may not need to register for Self Assessment simply because of that income.

However, if your gross trading income is more than £1,000 , you will generally need to register for Self Assessment and declare the income to HMRC.

Is the £1,000 based on income or profit?

This is an important distinction.

The £1,000 threshold is based on income, not profit .

For example, suppose you sell handmade products and receive £1,500 from customers during the year, but spend £800 on materials.

Your profit may only be £700, but your gross trading income is £1,500 . You have therefore exceeded the £1,000 threshold.

That doesn't necessarily mean you'll have tax to pay. It means you may need to report the income to HMRC.

Does this apply to Vinted, eBay and other online selling?

It depends on what you're doing.

Simply selling your own unwanted possessions doesn't normally mean you're running a business.

However, if you're regularly buying items with the intention of reselling them for a profit, making products to sell or otherwise operating commercially, you may be trading.

If you are trading, the same £1,000 gross income threshold can become relevant.

I've explained this in more detail in my article Do I Have to Pay Tax on Vinted Sales?

What happens if I earn more than £1,000?

If your gross trading income exceeds £1,000, you will generally need to register for Self Assessment.

When calculating your taxable profit, you may be able to choose between:

Claiming allowable business expenses – deducting the actual costs incurred in running your business

Using the £1,000 trading allowance – deducting the allowance instead of your actual business expenses.

You cannot normally claim both the £1,000 trading allowance and your actual expenses against the same trading income.

Which option is better will depend on your circumstances.

For example, if your allowable expenses are £2,500, claiming the actual expenses may be considerably more beneficial than using the £1,000 allowance.

Does earning more than £1,000 mean I'll pay tax?

Not necessarily.

Registering for Self Assessment and actually having tax to pay are two different things.

The amount of Income Tax and National Insurance you ultimately pay will depend on factors including your taxable profit and any other income you receive during the year.

Someone who is employed and starts a side business, for example, may have a different tax position from someone whose only income comes from self-employment.

What records should I keep?

Even if your income is currently below £1,000, it's sensible to keep records of what you earn.

If your business grows, good records will make it much easier to work out when you've crossed the threshold and calculate your income and expenses correctly.

If you become self-employed on a larger scale, keeping accurate records throughout the year will become increasingly important.

What about Making Tax Digital?

There is an important distinction between registering for Self Assessment and having to use Making Tax Digital for Income Tax .

MTD currently applies to qualifying sole traders and landlords with total gross self-employment and property income of more than £50,000 , with the threshold reducing to more than £30,000 from April 2027 and more than £20,000 from April 2028 .

So earning more than £1,000 doesn't automatically mean you'll have to submit quarterly MTD updates.

Do I need an accountant if I start a side business?

Not necessarily.

Many people with straightforward affairs are perfectly capable of keeping their own records and completing a Self Assessment tax return.

However, as your income grows, an accountant can help make sure you're claiming the expenses and allowances you're entitled to, meeting the relevant deadlines and keeping appropriate records.

Getting advice early can also be useful if you're unsure whether what you're doing actually counts as trading or whether you need to register with HMRC.

Need help with Self Assessment?

I help sole traders and small business owners in Rotherham and the surrounding areas with Self Assessment, bookkeeping and tax.

You'll deal directly with me throughout, so if you're unsure whether you need to register for Self Assessment or would simply prefer someone to take care of your tax return for you, please get in touch with Tunstall Accounting .

Do I Need an Accountant for Making Tax Digital?

Mon, 28 Sep 2026 14:22:22 GMT

Making Tax Digital for Income Tax is bringing significant changes to the way many sole traders and landlords report their income to HMRC. But do you actually need an accountant to deal with MTD, or can you manage it yourself?

The short answer is no — you don't have to use an accountant for Making Tax Digital . However, depending on your circumstances, you may find that having an accountant takes much of the work and uncertainty out of meeting the new requirements.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (MTD) is HMRC's new system for keeping digital records and reporting information about self-employment and property income.

It is being introduced in stages. You'll need to use MTD if your total qualifying income from self-employment and property is more than:

£50,000 for the 2026/27 tax year
£30,000 for the 2027/28 tax year
£20,000 for the 2028/29 tax year

The threshold is based on your gross qualifying income before expenses , rather than your profit.

For example, if you receive £35,000 from self-employment and £20,000 in gross rental income, your qualifying income would be £55,000.

What will I have to do under MTD?

If MTD applies to you, you'll need to keep digital records using compatible software.

You'll also need to send HMRC quarterly updates containing summary information from your digital records.

The standard quarterly deadlines are:

7 August, 7 November, 7 February and 7 May.

These updates are not four additional tax returns. They provide HMRC with information from your digital records during the year.

You'll still need to complete your final tax return after the end of the tax year, and the normal 31 January filing and payment deadline continues to apply.

Can I do Making Tax Digital myself?

Yes.

If you're comfortable maintaining accurate bookkeeping records, using MTD-compatible accounting software and dealing with HMRC's reporting requirements, there's nothing to prevent you from managing MTD yourself.

For some sole traders and landlords with straightforward affairs, that may work perfectly well.

However, MTD does mean that bookkeeping needs to be kept up to date throughout the year rather than being dealt with only when it's time to prepare your tax return.

That's where some people may prefer to have help.

What can an accountant do for MTD?

An accountant can help you choose and set up suitable accounting software, make sure your bookkeeping records are being maintained correctly and deal with the required submissions to HMRC.

More importantly, having accurate and up-to-date records throughout the year can give you a much clearer picture of how your business is performing and how much tax you may need to put aside.

So MTD doesn't necessarily have to mean more administration for you.

What if I currently give my accountant my records once a year?

If you're used to collecting your invoices, receipts and bank information and giving everything to your accountant after the end of the tax year, MTD is likely to require a change in the way your records are maintained .

Because digital records need to be kept and information submitted during the year, leaving everything until January will no longer be practical for people within MTD.

The good news is that getting the right system in place can make the process considerably easier.

How can Tunstall Accounting help?

I work with sole traders and landlords in Rotherham and the surrounding areas and can help you prepare for Making Tax Digital before the new rules affect you.

I can help you understand when MTD will apply to you, get your bookkeeping and accounting software set up correctly, maintain your records if required and deal with the relevant HMRC submissions on your behalf.

You'll deal directly with me, so you'll always know who is looking after your accounts and who to contact when you have a question.

If you're unsure whether Making Tax Digital will affect you, or you'd like to get everything organised before it becomes compulsory, get in touch with Tunstall Accounting .

Do I Need a Tax Return for Rental Income?

Mon, 24 Aug 2026 17:57:16 GMT

If you receive rent from a property, you may need to tell HMRC about the income and complete a Self Assessment tax return.

However, receiving rental income does not automatically mean that you need to file a tax return. It depends on how much rental income you receive, your allowable expenses and your wider circumstances.

There is also now another consideration for landlords: Making Tax Digital for Income Tax (MTD), which is being introduced in stages from April 2026.

Here’s what you need to know.

How much rental income can I receive without telling HMRC?

Individuals can potentially benefit from the £1,000 Property Allowance.

If your gross property income is £1,000 or less in a tax year, you will normally not need to tell HMRC about it, provided you are eligible to use the allowance.

Gross income means the amount you receive before deducting expenses.

For example, if you receive £900 in rent during the tax year and qualify for the Property Allowance, you would normally have no tax to pay on that income and would not need to report it to HMRC.

There are circumstances in which the Property Allowance cannot be used, so it is important not to assume that the first £1,000 of every type of property income is automatically tax-free.

What if my rental income is more than £1,000?

Once your gross property income exceeds £1,000, you may need to tell HMRC.

HMRC currently says that if your gross property income is more than £1,000 but no more than £2,500, you should contact HMRC.

You must normally report your rental income through Self Assessment if it is:

more than £2,500 after allowable expenses; or
£10,000 or more before allowable expenses.

If you already complete a Self Assessment tax return for another reason, you will generally include your property income on that return.

Is tax charged on my rental income or my profit?

In most cases, Income Tax is ultimately based on your taxable rental profit , rather than simply the total rent your tenant pays you.

Broadly, you start with your rental income and deduct expenses that are allowable for tax purposes.

Depending on your circumstances, allowable costs might include things such as:

letting agent and management fees;
landlord insurance;
repairs and maintenance;
accountancy costs relating to the property business; and
certain other costs incurred in letting the property.

Not every cost connected with a property is deductible, however, and there are specific rules for items such as improvements and finance costs.

Alternatively, if you're eligible, yo u may choose to use the £1,000 Property Allowance instead of deducting actual expenses. You cannot claim both the Property Allowance and actual expenses against the same property income.

Can I deduct my mortgage payments?

This is a common source of confusion.

If you personally own a residential rental property, you cannot simply deduct your entire mortgage payment from the rent when calculating your taxable profit.

The capital repayment element isn't an allowable rental expense, and individual residential landlords are subject to specific rules for tax relief on qualifying finance costs.

This means that the amount of cash you have left after paying the mortg age is not necessarily the same as your taxable rental profit.

What if I jointly own the rental property?

You are normally taxed on your share of the rental income and expenses rather than necessarily declaring all of the property's income yourself.

If you jointly own property with someone else, each owner can potentially qualify for their own £1,000 Property Allowance against their share of qualifying gross property income.

There are additional rules for property owned jointly by spouses and civil partners, so it is important to establish the correct ownership and profit-sharing position.

What if I rent out a room in my home?

Different rules may apply if you let furnished accommodation in your main home.

Under Rent a Room relief, you can potentially receive up to £7,500 a year tax-free from letting furnished accommodation in your home.

The limit is normally reduced to £3,750 each where so mebody else also receives income from letting accommodation in the same property.

Rent a Room relief has its own conditions and is separate from the £1,000 Property Allowance.

When do I need to register for Self-Assessment?

If you need to complete a tax return because of rental income and you do not already file Self Assessment returns, you will normally need to register with HMRC by 5 October following the end of the relevant tax year.

For example, if you first receive rental income that needs to be reported during the 2026/27 tax year, you would normally need to notify HMRC by 5 October 2027.

The online Self Assessment filing and tax payment deadline is normally 31 January following the end of the tax year.

What if I haven't declared rental income from previous years?

Don't ignore it.

If you should have told HMRC about rental income in an earlier tax year but didn't, it may be possible to make a voluntary disclosure and bring your tax affairs up to date.

HMRC specifically says that penalties can be lower where you tell them about previously undeclared rental income yourself rather than waiting for HMRC to discover it.

The appropriate way to correct the position depends on the years involved and whether you were already submitting tax returns.

Do landlords have to use Making Tax Digital?

This has now become particularly important.

Making Tax Digital for Income Tax began on 6 April 2026 for qualifying sole traders and landlords.

You need to consider your total qualifying income from self-employment and property combined, before expenses.

MTD is being introduced in stages:

If your qualifying income is over £50,000 for the 2024/25 tax year, MTD starts from 6 April 2026,
If your qualifying income is over £30,000 for the 2025/26 tax year, MTD starts from 6 April 2027;
and if your qualifying income is over £20,000 for the 2026/27 tax year, MTD starts from 6 April 2028.

Under MTD, affected landlords need to use compatible software to maintain digital records, submit quarterly updates to HMRC and ultimately submit their tax return through the MTD system.

So even if you've been used to dealing with your rental accounts once a year, you may now need to keep your records digitally and much more regularly.

Do I need a tax return if I make a loss on my rental property?

Potentially.

Having no tax to pay does n ot necessarily mean there is nothing to report .

There can also be advantages to correctly reporting an allowable property loss because, subject to the relevant rules, it may be available to offset against future profits from the same property business.

Whether you need to submit a return will depend on the circumstances rather than simply whether the property made a profit.

So, do I need a tax return for rental income?

As a general guide:

£1,000 or less of qualifying gross property income: you may be covered by the Property Allowance and may not need to tell HMRC.

More than £1,000: you need to consider whether the income needs to be reported to HMRC.

More than £2,500 after allowable expenses or £10,000 or more before expenses: HMRC normally requires the rental income to be reported through Self Assessment.

And if your combined qualifying property and self-employment income is high enough, you also need to consider whether Making Tax Digital for Income Tax applies to you.

The important point is that rental income, taxable rental profit and the thresholds for Self Assessment and MTD are not the same thing.

Need help with tax on rental income?

If you receive rental income and you're unsure whether you need to register for Self Assessment, what expenses you can claim or whether Making Tax Digital applies to you, I can help.

At Tunstall Accounting, I provide straightforward tax and accounting support to landlords and individuals with property income.

What Are MTD Quarterly Updates?

Mon, 24 Aug 2026 17:40:41 GMT

Making Tax Digital for Income Tax (MTD) is now a reality for many sole traders and landlords. One of the biggest changes is the requirement to send quarterly updates to HMRC.

But what exactly is an MTD quarterly update? Is it another tax return? What information needs to be included, and does your accountant need to prepare four sets of accounts every year?

The good news is that quarterly updates are considerably simpler than that.

What is an MTD quarterly update?

An MTD quarterly update is a summary of the income and expenses recorded in your MTD-compatible software.

Every three months, your software adds together the digital records you have kept for your business or property income and sends totals for the relevant income and expense categories to HMRC.

Importantly, a quarterly update is not a tax return. HMRC does not require you to make all the accounting and tax adjustments that would normally be made when preparing your year-end accounts before submitting each update.

This means quarterly updates are primarily about keeping your records up to date and giving HMRC an ongoing picture of your income and expenses.

Who has to submit MTD quarterly updates?

MTD for Income Tax is being introduced in stages.

You will generally be required to use MTD if your qualifying income from self-employment and property is:

more than £50,000 – MTD applies from 6 April 2026;
more than £30,000 – MTD applies from 6 April 2027; or
more than £20,000 – MTD applies from 6 April 2028.

Qualifying income means your gross income before expenses and tax from self-employment and property combined.

So, for example, if you have £25,000 of self-employment income and £28,000 of gross rental income, your combined qualifying income would be £53,000.

What information goes into a quarterly update?

Your compatible accounting software uses the digital records you've kept throughout the period to calculate totals for your income and expense categories.

For a self-employed business, these can include turnover and categories of business expenses. Property businesses have their own relevant income and expense categories.

You don't normally need to make year-end accounting or tax adjustments before submitting the quarterly update.

That's an important distinction because an MTD quarterly update isn't the same as preparing a set of quarterly accounts.

Are MTD quarterly updates cumulative?

Yes.

This is something that can easily cause confusion.

Each quarterly update covers the period from the beginning of the tax year up to the end of that quarterly period, rather than reporting only the most recent three months.

For somebody using the standard tax-year periods, that means the updates broadly cover:

6 April to 5 July (filing deadline 7 August)
6 April to 5 October (filing deadline 7 November)
6 April to 5 January (filing deadline 7 February)
6 April to 5 April (filing deadline 7 May(

Because the figures are cumulative, corrections you make to your digital records can be picked up in a later update without having to resubmit each previous quarterly update.

Can I use calendar quarters instead?

Yes.

If your accounting period runs from 1 April to 31 March, you can choose calendar update periods. These run to:

30 June
30 September
31 December;
and 31 March.

The submission deadlines remain 7 August, 7 November, 7 February and 7 May.

Your chosen MTD software will deal with the submission process.

Do I need to submit a quarterly update for every business?

Potentially, yes.

If you have more than one self-employment or property business within MTD, quarterly updates are required for each relevant income source rather than simply sending one combined figure covering everything.

This is particularly important for people who have several sources of income – for example, somebody who is self-employed and also receives rental income.

Do MTD quarterly updated replace the tax return?

No.

This is probably the biggest misconception about MTD.

Sending four quarterly updates does not mean that your tax affairs are finished at the end of the year.

You will still need to submit a tax return after the tax year has ended. At this stage the information for the year can be checked, necessary adjustments made, reliefs and allowances claimed, and other relevant income or gains included.

The tax return and payment deadline remains 31 January following the end of the tax year .

Do I have to pay tax every quarter under MTD?

No.

Quarterly reporting does not introduce quarterly Income Tax payments.

Although your software or HMRC's online services can provide an estimate of your tax position based on the information submitted, your normal Income Tax payment deadlines continue to apply.

So don't confuse quarterly reporting with quarterly tax payments .

What happens if I miss an MTD quarterly update?

There is an important concession for the first year of mandatory MTD.

For the 2026/27 tax year, HMRC will not issue penalty points for late quarterly updates.

You still need to maintain the required digital records and send the outstanding quarterly updates before you can submit your tax return.

From subsequent tax years, the late-submission penalty regime applies to quarterly updates. A missed quarterly deadline can result in a penalty point. Once the four-point threshold is reached, a £200 penalty can be charged, with further £200 penalties possible for subsequent missed obligations while at the threshold.

Do I need accounting software for MTD quarterly updates?

Yes. MTD requires you to maintain digital records and use MTD-compatible software to send the required information to HMRC.

This is why it is worth getting your bookkeeping system organised before MTD applies to you.

Waiting until a quarterly deadline and then trying to reconstruct three months of transactions rather defeats one of the main purposes of Making Tax Digital.

What should I be doing now?

I f MTD applies to you, the biggest practical change isn't really the quarterly submission itself.

It's moving towards regular digital bookkeeping.

If your income and expenses are being recorded correctly as you go along, the quarterly submission should be relatively straightforward. If your bookkeeping has traditionally consisted of handing your accountant a year's worth of paperwork after the tax year has finished, MTD requires a much bigger change in approach.

Need help with Making Tax Digital?

Making Tax Digital doesn't need to mean doing your accounts four times a year.

At Tunstall Accounting, I can help sole traders and landlords understand whether MTD applies to them, choose an appropriate bookkeeping system and deal with the ongoing MTD requirements.

If you're unsure what you need to do, get in touch and I can talk you through it.

Do I Have to Pay Tax on Vinted Sales?

Mon, 24 Aug 2026 17:23:41 GMT

If you sell clothes, shoes or other unwanted belongings on Vinted, you may have wondered whether you need to declare the money to HMRC or pay tax on it.

The good news is that most people simply selling their own unwanted possessions on Vinted will not have to pay Income Tax on their sales.

However, the position can be different if you are buying or making items specifically to sell for a profit.

There has also been considerable confusion about Vinted and other online marketplaces reporting sellers' information to HMRC. This does not mean that everyone selling on Vinted suddenly has to pay tax.

Here's how the rules work.

Do you pay tax for selling your old clothes on Vinted?

Usually, no.

If you are simply clearing out your wardrobe and selling clothes that you originally bought for yourself, HMRC says you probably will not have to pay Income Tax on the money you receive.

For example, imagine you bought a coat for £150 two years ago but no longer wear it. You sell it on Vinted for £50.

You haven't started a business simply because you sold the coat. You are disposing of one of your personal possessions, and there would normally be no Income Tax to pay.

The same principle can apply if you sell a large number of your own unwanted clothes. There isn't a rule saying that selling a particular number of your own possessions automatically makes you a business.

HMRC itself gives the example of somebody clearing unwanted possessions from their attic and says that, provided none of the items individually raises the separate Capital Gains Tax issue discussed below, it is unlikely they would need to report the income regardless of how many items they sell.

When could Vinted sales become taxable?

The position changes if what you're doing amounts to trading.

One of the clearest indicators is buying goods with the intention of reselling them for a profit.

For example, suppose you regularly:

buy discounted clothing specifically to resell on Vinted;
source items from charity shops or car boot sales to sell at a higher price;
make products specifically to sell online; or
operate your Vinted account as an ongoing profit-making activity.

You may be trading rather than simply selling your personal belongings.

HMRC specifically gives the example of someone buying items from charity shops and car boot sales and regularly reselling them online for more than they paid. That person may need to report the income.

What is the £1,000 Vinted tax rule?

This is another area where there is a lot of confusion.

There isn't a special £1,000 Vinted tax.

Instead, the UK has a £1,000 trading allowance.

If you are actually trading, you need to consider your total gross trading income from all relevant trading activities, not just your Vinted profit.

If your annual gross trading income is £1,000 or less, the trading allowance may mean that you do not need to tell HMRC about it, subject to certain exceptions. If your gross trading income exceeds £1,000, you will generally need to tell HMRC.

Importantly, the £1,000 test relates to income before expenses, rather than profit.

For example, if you buy clothes specifically to resell and receive £1,400 from customers during the tax year, the fact that the clothes originally cost you £900 doesn't reduce your gross trading income to £500 for the purposes of deciding whether you've exceeded the £1,000 threshold.

I've sold more than £1,000 of my own clothes. Do I need to pay tax?

Not necessarily — and this is probably the most important distinction in this article.

The £1,000 trading allowance does not mean that everyone who receives more than £1,000 through Vinted has become taxable.

If you sell £1,500 of clothes from your own wardrobe that you originally bought for your personal use, that is very different from buying £1,500 worth of stock specifically to resell.

You first need to establish whether you're trading.

Simply selling your unwanted personal possessions will not normally amount to a trade.

Does Vinted report my sales to HMRC?

Online platforms can be required to collect information about sellers and report it to HMRC.

Under the digital platform reporting rules, a seller of goods is generally excluded from the platform's reporting where they make fewer than 30 sales and receive less than €2,000 (approximately £1,700) during the calendar year.

This reporting threshold is often confused with the tax rules.

They are not the same thing.

A platform reporting information about you to HMRC does not mean that you owe tax. HMRC explicitly confirms this.

You could therefore have your details reported to HMRC while having no Income Tax liability at all because you were simply selling your own unwanted possessions.

Equally, somebody could have taxable trading income even if their activity did not result in a platform report.

What about expensive items sold on Vinted?

There is another tax to be aware of: Capital Gains Tax (CGT).

Personal possessions can potentially fall within the CGT rules where an individual item is sold for £6,000 or more. There are specific rules for sets of items as well.

That's unlikely to affect somebody selling ordinary second-hand clothing, but it could become relevant to particularly valuable items such as jewellery or certain collectibles.

Do I need to register for Self Assessment because of Vinted?

If you're merely selling your own unwanted possessions, usually not.

If you're trading and your gross trading income exceeds £1,000 in the tax year, however, you will generally need to tell HMRC and may need to register for Self Assessment.

Remember that you need to consider income from your other trading activities as well.

So, for example, if you earn £700 buying and reselling items online and another £600 from a separate side hustle, you shouldn't simply look at the Vinted income in isolation.

So, do you have to pay tax on Vinted sales?

For most people having a wardrobe clear out, no.

The important question isn't simply 'how much did I sell on Vinted'. It's 'am I selling my own unwanted belongings, or am I buying and making things with the intention of selling them for a profit?'.

If it's the former, there will usually be no Income Tax to pay.

If it's the latter, you may be trading and will need to consider the £1,000 trading allowance, whether you need to register for Self Assessment and whether any tax is due.

And if Vinted tells you that it has reported your information to HMRC, don't assume that means you have a tax bill. Platform reporting and tax liability are two separate things.

Need help with income from a side hustle?

If your online selling has developed into more than simply getting rid if unwanted possessions and you're unsure whether you need to register with HMRC, I can help you establish your tax position and make sure you report the right figures.

Accounting Tools of the Trade for Small Businesses in the UK

Wed, 04 Sep 2024 15:02:00 GMT

Managing finances effectively is one of the most critical aspects of running a successful small business. Whether you’re just starting or looking to streamline your operations, having the right accounting tools at your disposal can make all the difference. In this blog, we’ll explore the essential accounting tools for small businesses in the UK, focusing on software and resources that can help you stay on top of your finances, save time and avoid costly mistakes.

Cloud Accounting Software: Your Financial Command Centre

Gone are the days of manual bookkeeping and cumbersome spreadsheets. Cloud accounting software has revolutionised how small businesses manage their finances, offering a range of features that simplify everything from invoicing to tax filing. Here are some of the top choices for UK businesses:

Xero
Overview: Xero is one of the most popular cloud accounting platforms, especially for small and medium-sized businesses. It’s user-friendly, integrates with a wide range of third-party apps and provides real-time financial reporting.
Key Features: Automatic bank feeds, online invoicing, payroll integration, VAT submissions directly to HMRC and multi-currency support.
Why It’s Great for UK Businesses: Xero’s Making Tax Digital (MTD) compliance ensures your business stays on the right side of HMRC regulations.

QuickBooks Online
Overview: QuickBooks Online is another leading cloud-based accounting solution, known for its robust features and scalability. It’s suitable for businesses of all sizes and offers a range of plans to suit different needs.
Key Features: Expense tracking, payroll processing, tax calculation, invoicing, cash flow management and integration with HMRC for VAT returns.
Why It’s Great for UK Businesses: QuickBooks is tailored to UK tax requirements and integrates seamlessly with popular UK banks.

FreeAgent
Overview: FreeAgent is designed with freelancers, contractors and small business owners in mind. It’s a simple yet powerful tool that covers all the basics while keeping things straightforward.
Key Features: Time tracking, expense management, invoicing, project management and tax forecasting.
Why It’s Great for UK Businesses: FreeAgent is MTD-compatible and comes free with certain NatWest and Royal Bank of Scotland business accounts, making it a cost-effective option for many UK businesses.

Sage Business Cloud Accounting
Overview: Sage is a well-established name in accounting software and its cloud offering is perfect for small businesses looking for a reliable, feature-rich solution.
Key Features: Invoicing, cash flow management, automated bank reconciliation, VAT compliance and inventory management.
Why It’s Great for UK Businesses: Sage’s strong reputation and comprehensive UK-specific features make it a trusted choice for many small businesses.

Invoicing and Payment Tools: Get Paid Faster

Efficient invoicing and payment processing are vital for maintaining a healthy cash flow. Here are some tools that can help you get paid faster and reduce the hassle of chasing payments:

GoCardless
Overview: GoCardless is a popular solution for collecting recurring payments via Direct Debit. It’s ideal for businesses that offer subscription services or have regular clients.
Key Features: Automated payment collection, low transaction fees and integration with accounting software like Xero and QuickBooks.
Why It’s Great for UK Businesses: GoCardless is fully compliant with UK banking standards and makes managing Direct Debits easy.

Stripe
Overview: Stripe is a versatile payment processing platform that allows businesses to accept payments online, in person and via mobile devices.
Key Features: Wide range of payment options, customisable invoicing, recurring billing and integration with accounting software.
Why It’s Great for UK Businesses: Stripe supports all major UK payment methods, including credit cards, debit cards and digital wallets, making it easy for customers to pay.

SumUp
Overview: SumUp offers a simple, affordable way for small businesses to accept card payments in person. It’s a great option for those who sell products or services face-to-face.
Key Features: Mobile card readers, transparent pricing, no monthly fees and integration with invoicing tools.
Why It’s Great for UK Businesses: SumUp is perfect for market stalls, pop-up shops and mobile businesses, offering flexibility and ease of use.

Expense Management Tools: Keep Track of Every Penny

Tracking business expenses accurately is crucial for both financial management and tax purposes. Here are some tools that make expense management a breeze:

Receipt Bank (now Dext)
Overview: Dext is an expense management tool that helps you capture, process and store receipts and invoices digitally, reducing the need for manual data entry.
Key Features: Automatic data extraction, integration with accounting software and secure cloud storage.
Why It’s Great for UK Businesses: Dext simplifies the expense reporting process and ensures you never miss a tax-deductible expense.

Expensify
Overview: Expensify is a comprehensive expense management solution that streamlines the process of tracking receipts, creating expense reports and reimbursing employees.
Key Features: Receipt scanning, mileage tracking, corporate card reconciliation and real-time expense reports.
Why It’s Great for UK Businesses: Expensify is perfect for businesses with employees who need to submit expenses regularly, ensuring compliance and efficiency.

Pleo
Overview: Pleo provides smart company cards for your team, allowing you to manage expenses in real-time while maintaining control over spending.
Key Features: Virtual and physical company cards, automatic expense categorisation, spending limits and integration with accounting software.
Why It’s Great for UK Businesses: Pleo eliminates the need for traditional expense reports and helps prevent overspending by setting clear limits.

Payroll Software: Pay Your Team with Ease

Managing payroll can be complex, especially as your business grows. Payroll software automates this process, ensuring your employees are paid accurately and on time

BrightPay
Overview: BrightPay is an award-winning payroll software that’s designed specifically for UK businesses. It’s easy to use and offers comprehensive features at an affordable price.
Key Features: Automatic payroll calculations, HMRC submissions, pension auto-enrolment and employee self-service.
Why It’s Great for UK Businesses: BrightPay is fully compliant with UK payroll regulations and integrates seamlessly with most accounting software.

Gusto
Overview: While Gusto is more widely known in the US, it’s increasingly popular in the UK for its user-friendly interface and comprehensive payroll features.
Key Features: Payroll processing, employee benefits management, compliance support and integration with accounting software.
Why It’s Great for UK Businesses: Gusto simplifies payroll for small businesses, ensuring accuracy and compliance with UK regulations.

HMRC Basic PAYE Tools
Overview: This free tool from HMRC is designed for small businesses with fewer than 10 employees. It allows you to manage payroll, calculate tax and NICs and submit PAYE data to HMRC.
Key Features: Simple payroll processing, real-time information (RTI) submissions and automatic tax code updates.
Why It’s Great for UK Businesses: For micro-businesses, HMRC’s Basic PAYE Tools provides a cost-effective way to manage payroll and ensure compliance.

Reporting and Analytics: Turn Data into Insights

Understanding your business’s financial performance is key to making informed decisions. Reporting and analytics tools help you turn raw data into actionable insights:

Fathom
Overview: Fathom is a powerful financial analysis and reporting tool that integrates with accounting software to provide in-depth insights into your business’s performance.
Key Features: Customizable reports, financial KPIs, cash flow forecasting and scenario planning.
Why It’s Great for UK Businesses: Fathom’s detailed reporting capabilities are ideal for small businesses looking to understand their financial health and plan for the future.

Spotlight Reporting
Overview: Spotlight Reporting offers a suite of tools designed to provide visual, easy-to-understand reports that help you track performance and make strategic decisions.
Key Features: Budgeting and forecasting, multi-currency support, consolidation for multiple entities and integration with Xero and QuickBooks.
Why It’s Great for UK Businesses: Spotlight Reporting’s visual reports are perfect for business owners who want clear, concise insights into their financial data.

Float
Overview: Float is a cash flow forecasting tool that integrates with your accounting software to help you predict future cash flow based on real-time data.
Key Features: Scenario planning, budget vs. actuals comparison and automatic updates from your accounting software.
Why It’s Great for UK Businesses: Float’s focus on cash flow management is invaluable for UK businesses looking to avoid cash shortages and plan for growth.

Resources for Staying Informed and Compliant

In addition to the right tools, staying informed about accounting and tax regulations is crucial for any UK business. Here are some valuable resources:

HMRC Website
Overview: The HMRC website is your go-to source for all things tax-related. It provides comprehensive guidance on tax obligations, deadlines and compliance requirements.
Key Features: Tax calculators, online filing systems and up-to-date information on tax rates and allowances.
Why It’s Great for UK Businesses: HMRC’s resources ensure that you stay compliant with UK tax laws and avoid penalties.

Companies House
Overview: Companies House is responsible for registering and dissolving companies in the UK. It also provides a wealth of information on company law and filing requirements.
Key Features: Company registration services, filing deadlines and access to company records.
Why It’s Great for UK Businesses: Companies House is essential for ensuring your business meets its legal obligations, especially if you operate as a limited company.

The Federation of Small Businesses (FSB)
Overview: The FSB is the UK’s leading business organization for small businesses, offering support, resources and lobbying on behalf of its members.
Key Features: Legal and financial advice, business banking, insurance and networking opportunities.
Why It’s Great for UK Businesses: Membership with the FSB provides access to a wealth of resources and support tailored to the needs of small businesses.

The right accounting tools can significantly impact the efficiency and success of your small business. From cloud accounting software to expense management and payroll solutions, these tools are designed to help you manage your finances with ease and confidence. By leveraging these resources, you can stay compliant, make informed decisions and ultimately drive your business towards long-term success.

Remember, choosing the right tools depends on your specific business needs, so take the time to explore your options and select the ones that best align with your goals. With the right toolkit, you’ll be well-equipped to navigate the financial complexities of running your business and achieving success.

10 Reasons Why Your Small Business Needs a Great Accountant

Sun, 01 Sep 2024 11:13:48 GMT

Running a small business comes with its own set of unique challenges, from managing daily operations to ensuring long-term growth. One of the most critical aspects of a successful business is effective financial management. Here’s why having a skilled accountant by your side is not just a luxury but a necessity.

Ensure Financial Accuracy and Compliance

Avoid Costly Mistakes: Mistakes in your financial records can lead to significant fines, penalties or even audits. An experienced accountant ensures that all of your financial transactions are accurately recorded and compliant with the latest regulations.
Stay Updated on Tax Laws: Tax laws are constantly changing. An accountant stays up-to-date on the latest tax changes and ensures that your business complies, reducing the risk of non-compliance penalties.

Maximise Tax Savings and Plan Ahead

Optimise Your Tax Strategy: Accountants are experts at finding deductions, credits and other tax-saving opportunities. They work with you year-round to plan your taxes, ensuring that you only pay what’s necessary.
Prepare for Tax Season Stress-Free: With a good accountant tax season becomes much less stressful. They prepare and file your taxes accurately, on time and with minimal hassle.

Strategic Financial Advice for Growth

Guided Financial Planning: Accountants provide insights based on your financial data, helping you to create realistic budgets, set financial goals and plan for future growth.
Informed Decision-Making: With accurate financial reports and analysis, you can make data-driven decisions that steer your business in the right direction.

Effective Cash Flow Management

Maintain Healthy Cash Flow: Cash flow is the lifeblood of your business. An accountant helps you manage your cash inflows and outflows, ensuring that you have enough funds to cover your expenses and invest in growth opportunities.
Avoid Cash Shortfalls: Accountants can identify potential cash flow problems before they become critical, giving you the chance to address them proactively.

Detailed Financial Reporting and Analysis

Understand Your Financial Health: Accountants provide clear, detailed financial reports that give you a snapshot of your business’s performance, helping you to understand where you stand financially.
Identify Trends and Opportunities: Through financial analysis, accountants can spot trends and highlight areas where your business can cut costs or increase revenue.

Mitigate Financial Risks

Risk Assessment: Accountants help to identify potential financial risks, whether from poor cash flow management, excessive debt or external economic factors. They advise on strategies to mitigate these risks and protect your business.
Financial Controls: By setting up effective financial controls, an accountant helps safeguard your business from fraud, errors and financial mismanagement.

S upport for Business Growth and Scaling

Planning for Expansion: If you’re looking to grow your business, an accountant can help you plan for expansion by forecasting financial needs, securing funding and setting up scalable financial systems.
Navigating Complexities: As your business grows, financial management becomes more complex. An accountant ensures that your financial infrastructure evolves with your business.

Save Time and Reduce Stress

Focus on Your Business: Managing finances can be time-consuming. By handling your financial management, an accountant frees up your time, allowing you to focus on running and growing your business.
Peace of Mind: Knowing that a professional is managing your finances gives you peace of mind, reducing stress and allowing you to focus on what you do best.

Prepare for Audits and External Reviews

Audit-Ready Financials: An accountant ensures that your financial records are well-organised, accurate and ready for any audits or external reviews, minimising disruptions and potential issues.
External Reporting: If your business needs to report to investors or lenders, an accountant prepares the necessary financial statements and documents, ensuring transparency and trust.

Assist with Loans and Funding Applications

Access to Capital: Whether you’re applying for a loan, seeking investment or applying for grants, an accountant can help to prepare the financial documents required to secure funding.
Manage Debt Effectively: An accountant advises on the best ways to manage debt, structure repayments and maintain a healthy balance sheet.

In today’s competitive business environment, having a great accountant is more than just a smart decision; it’s an essential part of running a successful small business. From ensuring compliance to providing strategic financial advice, a skilled accountant is your partner in achieving financial stability and growth. If you haven’t already, consider hiring a professional accountant to take your business to the next level.