Tax Services Archives

What the Glasgow Restaurant VAT Fraud Case Teaches About Tax Compliance

Posted on 17 April 202617 April 2026 by Talha Zubair

In a recent case in Glasgow, two restaurant owners were found guilty of carrying out nearly a £700,000 VAT fraud scheme. This shocking case highlights the importance of maintaining proper financial records and adhering to VAT regulations.

The Glasgow Restaurant VAT Fraud Case

Two Glasgow restaurateurs were jailed after pleading guilty to large-scale VAT fraud. Antonio Carbajosa (41) and Kevin Campbell (44), involved in the Glasgow Restaurant VAT Fraud Case, ran several Glasgow venues — including Cranside Kitchen, Pickled Ginger, and Halloumi. They admitted fraudulently evading VAT for £682,882 between November 2011 and October 2016.

Their accountant, Khalid Javid (67), also pleaded guilty to submitting false VAT returns on their behalf.

Person	Role	Charge	Outcome
Antonio Carbajosa (41)	Restaurateur	Fraudulent evasion of £682,882 VAT	3 years in prison
Kevin Campbell (44)	Restaurateur	Fraudulent evasion of £682,882 VAT	3 years in prison
Khalid Javid (67)	Accountant	False statements in VAT returns (2 companies)	Pleaded guilty; sentencing pending

How Was the £700k VAT Fraud Scheme Exposed

Both owners suppressed their true sales figures and under-declared their takings. This meant their businesses kept cash that should have gone to HMRC as VAT.

HMRC investigators spotted unexplained discrepancies in the VAT returns. An inquiry called Operation Keyholder followed, with forensic accountants examining accounts from 2012 to 2016. The probe confirmed a total VAT shortfall of £682,882.

Three of their companies were never registered for VAT at all — despite having annual turnovers well above the registration threshold.

The two restaurateurs admitted they and their accountant “acted together in a co-ordinated way” to cheat the VAT system. By hiding sales, the businesses appeared smaller. As the prosecutor noted, the companies could pay bills and draw higher wages because they were pocketing VAT that should have gone to HMRC.

Recent VAT Cases in UK:

How VAT for Restaurants Work

Food and drink consumed on the premises is always standard-rated at 20% VAT
Service charges and paid tips on top of meals are also subject to VAT
Hot takeaway food is usually standard-rated.
Cold takeaways and most plain foods are zero-rated or exempt
The VAT registration threshold (since April 2024) is £90,000 of taxable turnover

Any business expecting to exceed that in a 12-month period must register and start charging VAT. Businesses must also:

Issue proper VAT invoices
Keep till receipts and bank statements
Pay all VAT collected to HMRC
Retain all records for at least 6 years

Consequences of VAT Fraud

Under Section 72 of the Value Added Tax Act 1994, fraudulently evading VAT can lead to:

Up to 7 years in prison
Unlimited fines
Confiscation (POCA) orders to seize illicit gains
Criminal records and business bans
Reputational damage

Penalties are not limited to business owners. Corporate officers and accountants can also be prosecuted — as this case shows with Mr Javid.

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How HMRC Catches VAT Fraud

HMRC uses automated data-matching and analytics to flag anomalies. In this case, HMRC noticed discrepancies in the VAT returns of two of the businesses, which triggered Operation Keyholder.

Common red flags include:

Missing till records
Undeclared cash sales
Invoices that don’t add up

HMRC cross-checks VAT returns against bank deposits, industry benchmarks, and supplier statements.

How We Help Restaurants Manage VAT and Stay Compliant

At Apex Accountants we help businesses navigate VAT rules and handle HMRC enquiries. Our services include:

VAT compliance reviews: We review your sales and records to ensure returns are correct and complete
VAT registration & planning: We advise on when and how to register, and on available VAT schemes for hospitality businesses
Support during HMRC investigations: Our experts guide you through meetings, help prepare responses, and liaise on your behalf
Forensic accounting & recovery planning: In serious cases, we reconstruct finances to clarify tax liabilities and protect your interests

Proper guidance can significantly impact the outcome of an investigation, ensuring a smooth process rather than a costly one.

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FAQs About VAT For Restaurants

Is all restaurant food subject to VAT?

Generally yes. Food eaten on-site is standard-rated at 20%. Some cold takeaway food may be zero-rated, but on-premises meals and drinks are a clear-cut VAT case.

What if I forget to register for VAT?

HMRC can backdate the VAT liability. You may owe unpaid VAT, penalties of up to 100% of the amount owed, and interest. Voluntary early disclosure usually reduces penalties; hiding it can lead to criminal investigation.

Can I get in trouble for honest mistakes?

HMRC understands errors happen. Genuine mistakes may attract lower penalties. But deliberate under-reporting or falsifying returns is treated as fraud. Even reckless inaccuracies carry serious consequences.

Do I have to repay VAT after conviction?

HMRC usually tries to recover unpaid VAT through court orders. Businesses should assume they will be held responsible for all unpaid tax.

How can I avoid VAT penalties?

Register for VAT when required
Charge the correct VAT rates on each sale
Keep all invoices, receipts and till rolls
File accurate VAT returns and pay on time
Get professional advice quickly if HMRC contacts you

How Starbucks UK Tax Credit Reached £13.7m Despite Higher Sales

Posted on 17 April 202617 April 2026 by Farazia Gillani

Starbucks UK’s tax credit situation highlights that sales growth does not necessarily lead to tax liabilities. Despite reporting a turnover of £525.6 million for FY2024, the company posted a loss before tax of £35.2 million, resulting in no current corporation tax charge. This loss was driven by deductible costs such as royalty payments and finance costs, which pushed the company into a tax-loss position. UK tax guidance allows businesses to carry forward or carry back trading losses against future profits.

The £13.7 million corporation tax credit reported in subsequent filings is most likely due to loss relief and deferred-tax accounting, rather than sector-specific credits. Starbucks’ primary business in the UK involves the retail and wholesale of coffee, tea, and related products. This case demonstrates how even profitable businesses can report a tax credit through strategic tax planning, leveraging available relief.

Starbucks UK Tax Strategy: A Strategic Overview

Starbucks UK’s tax strategy focuses on optimising loss relief and deferred tax accounting to manage its tax obligations efficiently.

Loss Relief: Starbucks UK offsets trading losses against future profits, reducing tax liabilities in profitable years.
Deferred Tax: By recognising deferred tax based on temporary differences, Starbucks adjusts its tax line to reflect future taxable profit, contributing to the £13.7 million tax credit.
Royalties and Fees: Payments for brand and intellectual property use are treated as operating costs, reducing taxable profit and potentially creating a tax loss.

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What the Latest Official Filings Show

The relevant filing path is straightforward. The FY2023 full accounts were filed on 4 April 2024, the FY2024 full accounts were filed on 14 April 2025, and the latest FY2025 full accounts were filed on 8 April 2026. That gives a clear official timeline for the story.

These dates come directly from the Companies House filing history for Starbucks Coffee Company (UK) Limited.

The table below combines the latest FY2025 headline figures tied to the 8 April 2026 filing with the FY2024 figures visible in the prior-year statutory accounts filed on 14 April 2025. The FY2024 figures are directly visible in the official accounts. The FY2025 headline figures are the figures associated with the latest filed accounts.

Key figure	FY2025 latest filing	FY2024 filed comparator	Year-on-year change
Sales / turnover	£556.3m	£525.6m	+5.8%
Corporation tax line in the accounts	£13.7m credit	£1.0m charge	£14.7m swing
Current UK corporation tax line	Check note 11 in the FY2025 filing before quoting separately	Nil	n/a
Loss before tax	£41.3m loss	£35.2m loss	Loss widened

The official FY2024 accounts also show that the business earned £321.4m from company-operated stores and £203.4m from licensing and franchising, with total turnover of £525.6m. That matters because it shows the group’s revenue mix is broader than counter sales alone.

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Why a Tax Credit Can Appear Even When Sales Rise

Corporation Tax Is Based on Taxable Profits, Not Sales

Corporation ta x is levied on taxable profits, not revenue. A business can increase its turnover but still report a tax loss after accounting for deductible trading costs, finance charges, capital allowances, and other tax adjustments. GOV.UK confirms that tax is calculated on profits, not sales.

Loss Relief

UK tax rules allow trading losses to be carried forward to offset future profits or carried back to earlier periods. This means a company can receive a tax credit even in a loss-making year if it has sufficient future profits to offset the losses.

Accounting and Deferred Tax

Starbucks UK’s FY2024 accounts mention deferred tax recognition on temporary differences. A tax credit is reflected in the accounts when there is an expectation of future taxable profits, allowing the company to recognise a deferred tax asset.

Corporation Tax Rates

The current UK corporation tax rate is 25% for profits above £250,000, with a 19% rate for small profits and marginal relief in between. A company making a large loss is not subject to current tax but still must account for temporary differences and deferred tax balances at the higher rate.

Specialised reliefs like R&D or creative industry credits do not seem relevant to Starbucks UK’s activities, as its primary business is the retail and wholesale of coffee and tea.

What the Filed Accounts Already Point To

The FY2024 strategic report reveals that Starbucks UK is licensed by Starbucks EMEA Ltd to use the Starbucks brand in the UK, for which it pays royalties. The company’s principal activities are described as the retail and wholesale trade of gourmet coffee, tea, and related products in the UK.

This is important because the FY2024 accounts show significant operating costs, such as:

Royalties and licence fees: £40.368 million
Staff costs: £118.6 million
Net impairment: £28.4 million

These large charges explain why high sales figures don’t automatically lead to taxable profit.

The FY2024 profit and loss statement outlines:

Turnover: £525.6 million
Operating loss: £27.5 million
Finance costs: £6.6 million
Loss before tax: £35.2 million
Tax charge: £1.0 million
Loss after tax: £36.2 million

This confirms the business was already in a loss-making position before the FY2025 filing.

The FY2024 tax note provides additional insight, showing:

No current UK corporation tax charge
A prior-year UK tax adjustment of £455k
Deferred tax of £522k
A total tax charge of £977k

It also highlights the tax effects from fixed asset differences and movements in deferred tax assets. The balance sheet shows a deferred tax asset of £37k, down from £559k the year before, further confirming the tracking of deferred-tax balances due to losses and timing differences.

The FY2025 filing, which reports a much larger tax credit, can be understood in the context of these prior-year details. The accounts already indicated the potential for such a change.

How Tax Planning Help Businesses in UK

At Apex Accountants, we help businesses read the tax line properly, not just the sales line. For companies facing similar issues, our work usually focuses on:

Corporation tax reviews to reconcile accounting profit, taxable profit and the tax note.
Loss relief planning so carried-forward and carried-back claims are used efficiently and correctly.
Deferred tax support to test whether recognition is appropriate and defensible in the accounts.
R&D and specialist relief screening so businesses do not miss legitimate reliefs or claim the wrong ones.
Accounts and filing support for Companies House filings, tax-note drafting and year-end documentation.

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Conclusion

Under UK rules, tax is driven by taxable profit, not turnover, and the prior-year Starbucks UK retail business accounts already show the ingredients that can produce a tax-loss position: royalty charges, finance costs, impairment and deferred-tax movements. That is why a £13.7m corporation tax credit in the latest filing is not inconsistent with sales growth. It is a tax-accounting outcome, not a contradiction.

FAQs About Starbucks UK Tax Credit

Why Did Starbucks UK Receive a Tax Credit Despite Increased Sales?

Sales growth and taxable profit are not the same. UK corporation tax is based on taxable profit, which is calculated after deductible costs and tax adjustments. If expenses such as impairments, finance charges, and other adjustments lead to a tax loss, it can result in a tax credit being recorded.

Does a Tax Credit Mean Starbucks UK Received Cash from HMRC?

Not necessarily. A tax credit in statutory accounts typically refers to an accounting entry related to loss relief or deferred tax recognition. It does not automatically indicate that cash was paid out to the company.

Did Starbucks UK Pay Corporation Tax in the Previous Year?

In the FY2024 accounts, the current UK corporation tax charge was nil. However, the total tax line included a £977k charge, which accounts for prior-year adjustments and deferred tax.

Could the £13.7 Million Tax Credit Be R&D Relief?

While it’s possible for a company to claim R&D relief for qualifying science or technology projects, Starbucks UK’s filed principal activity is the retail and wholesale of coffee, tea, and related products. The public filings do not suggest R&D as the primary reason for the tax credit.

Could the £13.7 Million Tax Credit Be a Creative Industry Relief?

Unlikely. Creative industry reliefs are aimed at production companies in sectors such as film, TV, theatre, and games. As Starbucks is a coffee retail business, it doesn’t fall into this category.

What Should Readers Look for in the Accounts to Understand the Tax Credit?

To understand the tax credit, readers should refer to the FY2025 full accounts filed on 8 April 2026. Key sections to review include the strategic report, the profit and loss account, and the taxation note. Additionally, the FY2024 accounts, filed on 14 April 2025, show how royalties, impairments, finance costs, and deferred-tax movements impacted the tax position.

VAT Recovery on Business Cars Explained: Leased vs Purchased Vehicles

Posted on 17 April 202617 April 2026 by Rida Ahmed

UK VAT law imposes strict restrictions on VAT recovery for business cars that also serve private purposes. Generally, businesses cannot claim input tax on buying a car unless the vehicle is exclusively for business use or falls into special categories such as taxis or pool cars.

Leasing has different rules: usually 50% of VAT on hire charges is blocked to cover private use.
Fuel and repairs follow separate rules: VAT on repairs is recoverable if the business pays, and fuel VAT can be reclaimed if the appropriate private-use adjustment is made (using the HMRC fuel scale charge or mileage logs).

This article, based on HMRC guidance, explains the conditions for full, partial or no recovery of VAT on purchased and leased cars (mixed use), covers fuel and repair costs, recordkeeping, and disposal adjustments, and answers common questions.

VAT on purchased cars (including pool cars)

As a rule, input VAT on the purchase of a car is irrecoverable if the car can be used privately. If an owner or employee makes a car available for private use, they cannot claim VAT on its purchase price. The few exceptions are the following:

Exclusively business-use cars. The car must be used solely for business journeys and cannot be available for any private use. You must provide strict evidence, such as keeping the car at business premises and prohibiting personal use.
Pool cars. A car shared by staff (not allocated to an individual or kept at home) qualifies for full recovery. It must be normally kept at the business and not used privately.
Special-purpose vehicles. Taxis, driving-instruction cars or self-drive hire cars (used primarily for hire, with or without a driver) allow full VAT recovery on purchase.
Stock-in-trade. Cars held by a dealer or manufacturer for resale within 12 months can reclaim VAT as trade stock.
Converted to commercial or kit cars. If a car is permanently converted (e.g. to seat 12+ or built from parts), VAT can be recovered since it’s treated as a commercial vehicle.
Leaseback schemes. Special rules apply if a car is bought and leased back (100% input is allowed if output VAT is accounted for on resale).

When claiming VAT on purchased cars under an exception, maintain evidence. For example, a “business-only” car should have a written policy banning private use, be parked on company premises, and be used on verifiable business trips. HMRC’s test focuses on availability for private use.

If a car first qualifies for VAT reclaim and is later used privately, a self-supply adjustment is needed. In that case, output VAT is due on the car’s current value at the change of use.

For information on company car tax bands, read: How Company Car Tax Bands Work and What You Will Pay

VAT on leased vehicles

Leasing or renting a “qualifying car” incurs a special rule. If a business leases a car which it can also use privately, only 50% of the VAT on each lease or rental invoice can be reclaimed. This 50% block is a proxy for the private use of the vehicle. The business can reclaim the other 50%, subject to normal input tax rules (e.g., partial exemption).

Exceptions for leasing are similar to purchase:

Taxi or instructor leases. If the leased car is used primarily as a taxi, chauffeur hire, or driving instruction, 100% of the VAT on the lease charges is recoverable.
Short-term hire. A business hiring a car for no more than 10 days for purely business use need not apply the 50% block. Beyond this, the 50% rule applies from day one of hire.

All lease-related charges (rentals, extras, and optional services that aren’t separately invoiced) are subject to the 50% block. If maintenance is charged separately on the lease invoice, its VAT is fully recoverable; only the rental element gets 50% blocked.

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Value-Added-Tax on fuel and repairs

VAT on Repairs & maintenance

If the business pays for vehicle repairs, servicing or parts, the VAT is recoverable as input tax, regardless of the vehicle’s private use. (Exception: a sole trader’s car used solely privately – then no recovery.) VAT on accessories fitted at the time of purchase is blocked if the car purchase was blocked.

VAT on Road fuel

When a business buys fuel, it can claim VAT but must account for the private use of that fuel. Two main methods exist:

Fuel scale charge: Reclaim all VAT on fuel and pay an output VAT “scale charge” (a flat-rate charge based on the car’s CO₂ emissions) to cover personal use. HMRC publishes updated scale tables each year. This avoids detailed mileage splitting.
Mileage records: Reclaim VAT only on the fuel used for business journeys (proportional claim). Keep detailed logs of business vs private miles and apportion the fuel costs.

Alternatively, a business may choose not to reclaim any VAT on fuel; in that case it makes no output adjustment on private fuel use.

Checklist: To maximise VAT recovery, businesses should:

Confirm if cars meet any exception (e.g., taxi or pool) before reclaiming VAT.
Apply the 50% input VAT block on leased car rentals where applicable.
Keep strict mileage records or use the HMRC fuel scale for mixed-use vehicles.
Keep all the VAT invoices for car purchases, leases, repairs, and fuel.
Maintain a log of each vehicle’s business and private use (dates, mileage, purpose).
If a car is sold after claiming VAT, account for output VAT on the sale.

Also Read: VAT on Car Hire in the UK – What Businesses Need to Know

VAT recovery by vehicle/expense type

Vehicle / Expense Type	VAT recovery	Key conditions / notes
Purchased car (private+business)	0%	Not recoverable if there’s any private availability. HMRC blocks VAT on mixed-use car purchases.
Purchased car (business-only)	100%	Recoverable only if the car is exclusively for business use (never made available privately).
Pool car (shared vehicle)	100%	Recoverable if kept on the premises, not allocated to an individual or kept at home.
Leased car (private use)	50%	Only 50% of VAT on lease rentals is recoverable; the rest is blocked.
Leased car (taxi/hire/instruct.)	100%	If used mainly for taxi hire, self-drive rental, or driving instruction, the full VAT on the lease can be reclaimed.
Road fuel (mixed use)	100%*†	All fuel VAT can be reclaimed if using HMRC’s flat-rate fuel scale or accurate mileage split (see note).
Vehicle repairs/maintenance	100%	It is recoverable as input tax when the business pays, regardless of any private use.

† Fuel scale charge: Businesses can reclaim all VAT on road fuel and then use HMRC’s CO₂-based scale charge to account for private fuel use.

Record-keeping and disposal adjustments

Invoices: Keep VAT invoices for all car-related costs (purchase, lease rentals, fuel, and repairs).
Mileage logs: Record business vs private miles if you do not use the fuel scale.
Car policy: Document any restrictions on private use (e.g., a written ban or pool-car rules).

If your business sells a vehicle with recovered VAT, you must charge VAT on the sale price and issue a tax invoice. If VAT was not recovered on the purchase, the sale is exempt (no VAT). In either case, ensure that the disposal is handled in the tax period of sale.

How We Help You With VAT Recovery on Business Cars

At Apex Accountants, we guide businesses through complex VAT rules on company cars and fuel. Our services include:

VAT advisory: Advising on reclaim eligibility for purchased or leased vehicles.
Compliance reviews: check car and fuel records to maximise lawful VAT recovery.
Audit preparation support: Preparing documentation (invoices, logs, policies) and liaising with HMRC on VAT queries.
Training & policy setup: Helping firms implement car-use policies and mileage record systems.

Our team stays up to date with HMRC notices and UK VAT law, ensuring you reclaim every pound you’re entitled to while remaining fully compliant.

YAT recovery on cars and related expenses depends on use and status. Companies should plan vehicle use and keep detailed records to support any claims. Following HMRC’s guidance can prevent common errors and unlock legitimate VAT savings.

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FAQs about VAT on Cars

Can I reclaim VAT on a company car if I sometimes use it privately?

No – if the car is available for private use by anyone, the input VAT for its purchase is blocked. Only exclusively business-use cars qualify for full recovery.

How does the 50% rule for leased cars work?

When you lease (or hire) a car for mixed use, you can reclaim only 50% of the VAT on each rental payment. This rule assumes the other 50% covers private use. The remaining 50% of VAT is irrecoverable.

Is VAT reclaimable on fuel and servicing?

VAT on vehicle repairs and servicing is always recoverable if the business pays. For fuel, a business can reclaim VAT on purchases but must adjust for personal use: either use the HMRC fuel scale charge (reclaim all VAT and then pay output VAT on private fuel) or apportion by mileage.

What evidence shows a car is business-only?

HMRC examines the car’s availability. A business-only car must never be used privately, must remain on business premises, and must not be assigned to one person. Written policies or logs can support these guidelines.

What happens when selling a business car?

If you’ve reclaimed VAT on the car (say a pool car), you must charge VAT on its selling price and account for output tax. The sale is exempt (no VAT charge) if you did not reclaim VAT at the time of purchase.

How Company Car Tax Bands Work and What You Will Pay

Posted on 17 April 202617 April 2026 by Rida Ahmed

In the UK, most company cars (and vans) used for private purposes fall under benefit-in-kind taxation. The value is calculated using the vehicle’s list price, while the applicable percentage is determined through tax bands for company cars, which are based on CO₂ emissions and the type of fuel used.

In practice, HMRC publishes percentage bands for each tax year – you multiply the car’s list price by the relevant percentage to get the taxable benefit. Low-emission vehicles attract much lower percentages, while high-emission cars top out at 37%. The taxable value is further reduced if the employee pays anything towards the cost, uses the car only part-time, or has a car has low CO₂ emissions.

How Compay Car Tax Bands Are Calculated

Benefit calculation

The BIK rate is a percentage of the car’s original list price (including VAT and options). HMRC sets the percentage in the CO₂ band. For example, a petrol/diesel car emitting 145 g/km might be taxed at 35% of its list price, whereas a new electric car is taxed at only a few percent.

Emission bands:

Cars are grouped by CO₂ emissions (g/km) and, for hybrids/plug-ins, by their electric-only range. Each band has a set percentage. Lower bands (cleaner cars) pay less tax. The table below summarises the 2025/26 and 2026/27 company car tax rates. (From April 6, 2026 new rates apply.)

CO₂ emissions (g/km) & electric range	2025/26 rate (%)	2026/27 rate (%)
Zero emission (fully electric)	3 %	4 %
1–50 (≥130 mile EV range)	3 %	4 %
1–50 (70–129 mile range)	6 %	7 %
1–50 (40–69 mile range)	9 %	10 %
1–50 (30–39 mile range)	13 %	14 %
1–50 (<30 mile range)	15 %	16 %
51–54	16 %	17 %
55–59	17 %	18 %
60–64	18 %	19 %
65–69	19 %	20 %
70–74	20 %	21 %
≥75 (all higher bands)	21 %–37 %	21 %–37 %

Table: Company car BIK rates for tax years 2025/26 and 2026/27 by CO₂ emissions and electric range.

Why Electric Cars Have the Lowest Tax Rates

Fully electric cars sit at the lowest end of the tax scale.

For the 2025/26 tax year, the rate is 3%. This increases slightly to 4% in 2026/27.

Plug-in hybrids with a long electric range (130+ miles) follow the same pattern. This makes them a strong option for reducing overall tax liability.

Also Read: VAT on Car Hire in the UK – What Businesses Need to Know

How Plug-in Hybrids and Mid-Range Cars Are Changing

Other plug-in hybrids are also seeing small increases. Each band rises by 1 percentage point depending on electric range.

For example:

70–129 miles range → slight increase
40–69 miles range → slight increase
Below 30 miles range → higher tax compared to longer-range models

Cars with moderate emissions (51–74 g/km) also move up by 1%.

A car emitting 65–69 g/km increases from 19% to 20%

Higher emissions continue to push vehicles into more expensive brackets.

When These Changes Came Into Effect

The updated rates apply from:

April 2025 (2025/26 tax year)
April 2026 (2026/27 tax year)

These changes form part of a gradual shift rather than a sudden increase.

What to Expect in the Coming Years

Tax rates for electric vehicles will rise slowly over time.

Planned increases include:

6% in 2027/28
8% in 2028/29
9% in 2029/30

Even with these changes, electric cars will remain the most tax-efficient option.

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The Highest Tax Rates for Petrol and Diesel Cars

Petrol and diesel vehicles continue to sit at the top end of the tax scale.

The maximum rate remains at 37%
This applies once emissions go above 160 g/km

In simple terms, the higher the emissions, the higher the tax.

How it works

The employee’s taxable benefit is calculated by:

This is the car’s list price, which includes any accessories and VAT.
Applying the appropriate percentage from the table above.
Multiplying by the employee’s income tax rate (e.g., 20% or 40%) to find the tax due.

Example: A £30,000 car with 0 g/km CO₂ (electric) has a 3% BIK in 2025/26. The taxable benefit is 3% of £30,000 = £900. A 20% taxpayer would pay £180 in tax (20% of £900).

Special cases:

If you pay something towards the car’s cost (e.g., contribute to the lease or petrol), such payment reduces the taxable value.
Part-time availability (less than 15 hours/week) also reduces the taxable benefit.
Employer-provided fuel for private use is a separate charge: free petrol/diesel triggers a fuel benefit (using a fixed multiplier × BIK%). For 2026/27 the fuel multiplier is £29,200 (up from £28,200). Electric charging at home is treated differently and generally has no fuel benefit charge if no fuel is given.

Staying up to date:

HMRC guidance is updated each year. For example, HMRC’s table (Appendix 2) was updated in April 2026 to include the new 4% EV rate. Always check the latest GOV.UK guidance or use HMRC’s online calculator to estimate your specific tax.

Read: 5 VAT Strategies For Car Garages To Use In 2026

Key Points on Low-Emission Vehicles

Electric cars (0 g/km) enjoy very low tax. From April 2026, their BIK rate is 4%, up from 3% previously. The charge is based on list price, not fuel costs.
Plug-in hybrids are taxed by their declared CO₂ and electric range. A PHEV with a 100 miles range might pay 10–14%, whereas the same model with only 30 miles would pay 14–16%. The ranges and rates are in the table above.
Future changes: The government has signalled that EVBIK will rise by 2% each year until 2029. This was confirmed in the 2024 Autumn Budget. Consequently, the BIK rates for even very clean cars will gradually increase – though they will remain much lower than for fossil-fuel cars.

How We Help Businesses Manage Tax on Company Cars

At Apex Accountants, we help businesses and employees navigate company car taxation and other benefits. Our services include:

Tax planning for company cars: Advice on choosing cars, salary sacrifice schemes, and calculating company car BIK to minimise tax costs.
Payroll and Benefits administration: Managing P11D returns, payroll adjustments and ensuring the correct reporting of car benefits.
Company tax and VAT advice: Ensuring employer expenses and deductions (leasing, maintenance) are handled correctly.
Employee benefits consulting: Structuring car and fuel benefits packages that meet business needs and compliance requirements.

Whether you’re an employer arranging a fleet or an employee reviewing your company car deal, our experts can clarify the rules and optimise your tax position.

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FAQs About Tax on Company Cars

When do car tax rates change?

Company car BIK rates update every tax year (6 April). Recent uprating occurred in April 2025 and April 2026. The rates are normally set in Budget or tax announcements and then published by HMRC.

How do I know which CO₂ figure to use for my car?

HMRC gives tables in terms of grams per km under the WLTP (new) or NEDC (old) test cycles. Use the official CO₂ figure from the manufacturer’s spec. (When in doubt, HMRC’s calculator or your payroll department will use the correct value.)

What about tax on fuel costs?

If your employer pays for your private fuel, a separate fuel benefit charge applies. The car fuel multiplier is £29,200 for 2026/27. Electric charge at home generally isn’t taxed as fuel.

Can I reduce my car tax?

Yes. Paying a contribution toward the car’s value or insurance reduces the taxable benefit. Taking a cheaper car or an older car (with a lower list price) also lowers the overall tax.

Where can I find official information about tax on cars and other vehicles?

All rates and rules are published on GOV.UK. See HMRC’s Company car Benefit— appropriate percentage tables for each year and HMRC guides on company car tax.

Everything About HMRC v Colchester Institute VAT Dispute

Posted on 17 April 202617 April 2026 by Farazia Gillani

What was the HMRC v Colchester institute VAT dispute about?

Colchester Institute — a further education college in Essex — challenged HMRC over VAT on government-funded courses. The college undertook a large building project (started in 2008) and recovered VAT under the Lennartz mechanism for exempt education.

It argued that the Education Funding Agency and Skills Funding Agency’s government grants for its 16–19 courses should be treated as consideration for a supply of education services rather than general subsidies. The two sides took opposing positions:

Position	Party	Implication
Grants = payment for services	Colchester Institute	Courses are exempt business supplies → building VAT recovery under Lennartz stands
Grants = general subsidies	HMRC	Courses are non-business → college must account for output VAT and loses building VAT recovery

What did the lower courts decide?

Stage	Decision
First-tier Tribunal (FTT)	Sided with HMRC — dismissed Colchester’s claim
Upper Tribunal (UT) 2020	Overturned FTT — held funding was consideration and courses were exempt business supplies
Court of Appeal 2026	Dismissed HMRC’s appeal — confirmed UT ruling

In 2020, the Upper Tribunal ruled the grants were payment for services, allowing Colchester to keep its VAT reclaim on the buildings without charging output VAT. However, HMRC did not enforce the UT ruling and instead appealed, giving colleges a “choice” in how to treat their funding pending the outcome. The Court of Appeal resolved the stalemate in March 2026.

Read: Pre-registration VAT Recovery in UK Clarified by Tribunal Ruling – What it Means for Businesses

What did the Court of Appeal decide?

On 27 March 2026, the Court of Appeal (Foxton LJ, Arnold LJ, Asplin LJ) dismissed HMRC’s appeal. Key findings:

Public funding tied to specific courses can be “third-party consideration” under EU VAT law
The government grants were viewed as payment for teaching eligible students
The funding agreements explicitly required the college to deliver defined courses, with clawback clauses if student numbers fell short
This created a sufficient direct link between the money and the education provided
It did not matter that students themselves had not paid — VAT law allows a third party (like the state) to pay the consideration
The ruling was reinforced by EU cases (Kennemer, Rayon d’Or, Saudaçor) and UK precedent

The court also confirmed that labelling money a “grant” or “subsidy” does not decide its VAT status. What matters is how closely the funding is tied to specific services.

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What is the Lennartz mechanism, and why did it matter here?

The Lennartz mechanism (a UK implementation of EU law) allows certain non-profit or publicly funded bodies to recover VAT on capital costs of buildings used for exempt purposes. Under this mechanism:

The provider pays VAT upfront on construction
A “deemed” output VAT is then charged on the exempt service, effectively balancing the upfront recovery
If the service is genuinely exempt, the input is offset by the output

Colchester argued that since its education was a business supply (even though exempt), no output VAT was due, and its capital VAT recovery should stand. The Court agreed.

Two important limitations apply:

HMRC withdrew permission to use Lennartz for colleges in 2010
Only historic projects (like Colchester’s pre-2010 building) can use this mechanism
New builds after 2010 must use zero-rating or charity rules instead

Why does the HMRC v Colchester VAT dispute decision matter for colleges and charities?

The ruling reclassifies funded education as a business activity. This has both risks and opportunities:

Area	Impact
Charitable VAT reliefs	Zero-rating on new builds and reduced rates on utilities may no longer apply – potentially costing some colleges millions
Output tax exposure	ESFA/DfE funding may now be treated as consideration, raising the question of whether output VAT is owed on funded courses
Historic adjustments	Colleges may need to revisit past VAT filings; HMRC may challenge prior zero-rating claims going back four years
VAT recovery	Colleges with similar pre-2010 claims (e.g. Portsmouth, Cornwall, Derby) may now be able to reclaim VAT on eligible projects – but at the cost of future reliefs

Note: none of these changes happen automatically. HMRC’s 2021 guidance allowed colleges to continue treating funding as non-business until the appeal was decided. HMRC may still seek a Supreme Court appeal (deadline: 24 April 2026).

Read: UK VAT On Prize Draws Faces Scrutiny As HMRC Clarifies Tax Position

Key legal takeaways from Colchester college VAT Case

Principle	Explanation
Funding is not automatically outside VAT	“Grant” money can be VATable if it is actually payment for services
Contract wording matters	The direct link was established because the funding contracts described money as paid “in consideration” of delivering approved courses
Direct link test	Even formula-based or anticipated payments can satisfy the reciprocity requirement — payments do not need to match each student or each hour of teaching
Third-party payer	VAT consideration need not come from the service recipient — a third party (like the government) can create a VAT supply
Flat-rate funds can be consideration	As long as payments are determinable by clear criteria in advance, they can count as payment for a continuing supply

What should colleges do now?

Audit current funding and reliefs: Review all government funding contracts to determine whether payments are tied to specific courses or outputs
Reassess capital projects: Identify building or equipment projects where VAT was reclaimed under Lennartz or charity schemes, and check whether adjustments are required
Model the cash impact: If funding becomes business (even exempt), input VAT can be reclaimed but certain reliefs disappear; run scenarios to assess the net effect
Consider error corrections: HMRC’s 2021 guidance allowed institutions to submit error corrections for past VAT; professional advice is essential before acting
Seek specialist VAT advice: The law involves EU VAT principles and UK charity relief rules; a VAT expert can analyse contracts and advise on whether a change in approach is needed

How We Help Education Providers in UK

At Apex Accountants, we help education providers and charities navigate VAT complexities. Our services include:

VAT compliance and advisory: Reviewing VAT status and filings to ensure government funding and contracts are treated correctly
Education sector VAT planning: Specialist advice on VAT reliefs and the impact of changes to business/non-business status
Funding agreement analysis: Examining grant and funding contracts for VAT risks or opportunities
VAT recovery strategies: Guidance on the Lennartz mechanism, error corrections and partial-exemption methods
HMRC dispute support: Assistance with representations, refund claims and appeals

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Conclusion

The Court of Appeal’s ruling in HMRC v. Colchester College VAT has clarified that government grants tied to specific education services can be considered for VAT. For further-education colleges, funding for 16–19 courses will likely be treated as exempt business income.

Colleges should not assume anything changes automatically – HMRC may update its guidance or seek a Supreme Court appeal – but it is prudent to act now. Reviewing existing contracts, VAT claims and reliefs are essential. In some cases, colleges will be entitled to recover VAT on historic building costs but may also lose future VAT breaks on capital projects.

If you are concerned about how the Colchester decision affects your institution, our VAT specialists can explain what it means for your funding and help ensure your VAT affairs are in order.

Tax Defaulting in Croydon: HMRC’s Crackdown on Non-Compliant Businesses

Posted on 6 April 20266 April 2026 by Farazia Gillani

Tax defaulting in Croydon has moved back into focus following an update to HM Revenue & Customs’s (HMRC) “current list of deliberate tax defaulters” on GOV.UK. The list was updated on 26 March 2026 and publishes details where HMRC has charged penalties for deliberate defaults involving more than £25,000 of tax and where the taxpayer did not secure the maximum penalty reduction by fully disclosing the defaults.

In the latest publication, several entries are linked to Croydon addresses, including a BOXPARK-linked food business: WTP Croydon Ltd (formerly trading as What the Pitta). HMRC’s published figures for that entry show £146,629.43 of tax on which penalties were based and a £64,150.37 penalty for a period of default from 1 July 2017 to 31 January 2023.

HMRC’s deliberate defaulters list really means

HMRC’s deliberate defaulters publication is not a general “late payment” list. It is a specific legal regime that allows HMRC to publish identifying details after an investigation, after deliberate-default penalties are charged, and once those penalties are final (for example, once an appeal window has passed, an appeal is determined, or a contract settlement is agreed).

Publication is permitted where the penalties involve tax of more than £25,000 and the person did not achieve the maximum reduction available through full disclosure. In other words, disclosure behaviour matters: people can keep their details off the list by cooperating and fully disclosing from the outset of a compliance check.

A few points that are easy to miss but crucial for reading the list correctly:

Addresses are time-specific. HMRC explicitly warns that the address shown is the one associated with the person or business at the time of the default—and that current occupants at that address may have no connection to the published person/business.
The figures are not “total debt”. HMRC notes the amounts shown relate to the tax/duty on which penalties are based, and the list “does not necessarily represent the full default of the taxpayer”.
Publication is time-limited. Details remain on GOV.UK for a maximum of 12 months, with HMRC typically reviewing and updating the list quarterly to keep within that legal limit.

HMRC also makes clear that the list itself is time-bounded and not archived for the National Archives, reinforcing that it is designed as a deterrent mechanism rather than a permanent record.

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Tax defaulting in Croydon – The BOXPARK case study

The BOXPARK-linked entry matters because BOXPARK is not just another high street unit—it is a highly visible venue. BOXPARK Croydon was developed as a container-based food and drink destination beside East Croydon station, with the council publicly backing the regeneration narrative around a “gateway” location.

Council-backed launch and funding context

Croydon Council published its intention to support bringing a Boxpark marketplace to Ruskin Square, explicitly describing the stripped and refitted shipping-container design and the aim of creating a year-round events courtyard.

A council key-decision document (April 2015) records approval of a £3,000,000 loan to support delivery, alongside references to a programme of council-backed activity and operational support (including a five-year pop-up programme and a viability grant).

Later local reporting also describes the council redirecting an “Ambition Festival” budget towards BOXPARK-related launch/event activity and refers to additional subsidies in the first years of operation.

Vendor pressures in the early years

It is important to separate venue trading conditions from tax conclusions. HMRC’s listing is about deliberate defaults and closed penalty positions; it does not, by itself, explain why a business got into difficulty or how cash flow was managed.

That said, contemporary reporting from 2018–2019 describes pressure points commonly faced by street-food operators in container venues: significant fixed costs, footfall volatility, and churn among traders. For example, one report described monthly rents and service charges totalling £2,750 (£2,000 rent plus £750 service charge) for a trader at the time and noted a sharp reduction in listed outlets between late 2016 and early 2018.

A later report quoted tenants discussing typical combined rent/service-charge costs of around £3,000 per month (plus electricity), alongside complaints about footfall and event-day disruption.

Croydon entries on the HMRC list updated 26 March 2026

The table below summarises the Croydon-linked (address-associated) entries visible on HMRC’s current list updated 26 March 2026, including the BOXPARK-linked takeaway and other sectors (commercial vehicle sales, property development, care, and property income).

Listed name (as published by HMRC)	Trade/occupation (HMRC description)	Address context (HMRC wording)	Period of default	Tax on which penalties are based	Penalty charged	Penalty as % of tax (calculated)
WTP Croydon Ltd (formerly trading as ‘What the Pitta’)	Takeaway	Formerly of Unit 9, Boxpark, 99 George Street, Croydon, CR0 1LD	1 Jul 2017 to 31 Jan 2023	£146,629.43	£64,150.37	~43.8%
J-Mech Waste Solutions Ltd	Commercial vehicle sales	Formerly of 93 Southbridge Road, Croydon, CR0 1AJ	1 Mar 2022 to 30 Sep 2022	£598,945.00	£568,997.75	95.0%
Lionwood Ltd	Building developer	Formerly of 29 Banstead Road, Purley, CR8 3EB	1 Aug 2023 to 31 Dec 2023	£50,258.21	£42,719.45	~85.0%
Leiston Old Abbey Ltd	Residential care home	Formerly of 4 Arkwright Road, Sanderstead, CR2 0LD	1 Apr 2019 to 31 Mar 2021	£44,410.75	£31,087.52	~70.0%
Maria Jose De Souza Campos	Property income	Formerly of 31 Hardcastle Close, Croydon, CR0 6XQ (and another address)	6 Apr 2017 to 5 Apr 2020	£34,940.40	£20,178.06	~57.8%

Two practical cautions are worth repeating when an address is high-profile (like BOXPARK):

HMRC states that the address is the one associated at the time of the default, and current businesses trading at the same site may be unrelated.

Underpaid tax, penalties, and what the published figures do not tell you

The “nearly £150k” framing seen in local discussion is consistent with the published tax figure for WTP Croydon Ltd: £146,629.43 is close to £150,000, and that can be enough to trigger strong public reaction because publication is designed to deter deliberate non-compliance.

But there are three important technical limits to what you can conclude from the published table:

HMRC Publishes Only the Tax and Penalty Figures

HMRC releases two key numbers in each entry:

The amount of tax or duty on which the penalty is based
The penalty charged by HMRC

However, the list does not explain the underlying issue. For example, it does not state whether the case involved the following:

VAT underpayments
Corporation Tax errors
PAYE or payroll failures
A combination of several tax issues

This means the published entry gives only a financial snapshot rather than a detailed narrative of the compliance failure.

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The Published Tax Figure May Not Reflect the Full Default

Another important clarification is that the amount labelled as “tax” in the list does not necessarily represent the total liability discovered during HMRC’s investigation.

HMRC explicitly notes that:

The figures shown relate only to the tax on which the penalty calculation is based.
The actual amount owed to HMRC may be higher.
Additional liabilities may have been settled separately during the investigation process.

Because of this, readers should not assume that the tax figure shown equals the full underpayment identified in the case.

Penalty Percentages Can Vary Widely

The relationship between the tax amount and the penalty can differ significantly across cases.

For example, Croydon-linked entries on the March 2026 list show penalties ranging from around 44% to 95% of the tax involved.

This variation occurs because HMRC calculates penalties based on several factors, including:

The behaviour of the taxpayer (careless vs deliberate actions)
Whether the taxpayer disclosed the issue voluntarily
The level of cooperation during the investigation
The timing of disclosure and corrective action

Businesses that make an early disclosure and cooperate with HMRC often receive lower penalties and may avoid public naming altogether.

If you are checking the list for due diligence (suppliers, landlords, franchise partners), here is the approach we recommend in practice:

Treat the list as a risk flag, not a complete case file.
Cross-check publication timing. HMRC only keeps details up for 12 months and updates regularly (often quarterly). A person may disappear because the legal time limit expired, not because the situation “improved”.
Remember there is no right of appeal against the decision to publish (separate from appeal rights on tax/penalty decisions), so the correct moment to manage exposure is early—before penalties become final and publication criteria are met.

How We Help Businesses in Croydon Stay Tax Compliant

At Apex Accountants, we help Croydon businesses reduce the risk of painful compliance surprises and reputational damage.

We typically support clients with:

Tax compliance health checks (VAT, PAYE, and CIS where relevant) to spot weaknesses before HMRC does.
Bookkeeping clean-ups so returns are supported by reliable records and the right evidence trail.
Disclosure support where errors are discovered, focusing on early, complete, and well-structured disclosure in line with HMRC expectations.
Penalty and appeal support by working with your legal/tax advisers on the evidence and timeline behind HMRC decisions (especially where deliberate behaviour is alleged).
Cashflow planning around tax liabilities, including support preparing information that can help with HMRC engagement when a business is under pressure.

Conclusion

The March 2026 HMRC publication puts a sharper lens on tax defaulting in Croydon, not because the borough is unique, but because the list makes deliberate compliance failures visible—often with headline figures that are easy to misunderstand without context.

For local readers, the BOXPARK-linked entry is a reminder of two parallel truths: high-profile venues can amplify reputational fallout, and the published figures are still a narrow slice of a wider compliance story (time-bounded, address-specific, and not necessarily the full amount owed).

FAQs about the HMRC deliberate tax defaulters list

1. What is the HMRC deliberate defaulters list?

It is a GOV.UK publication where HMRC can publish identifying details of people or businesses that have been charged penalties for deliberate defaults involving more than £25,000 of tax, once penalties are final.

2. How often does HMRC publish or update the list?

HMRC reviews the list regularly and says changes are usually made on a quarterly basis, partly to ensure entries are not published longer than the 12‑month legal maximum.

3. How long do names stay on the list?

A defaulter’s details are held on GOV.UK for a maximum of 12 months from the date first published.

4. Can you avoid being named and shamed?

HMRC advises taxpayers involved in a compliance check to disclose errors early, cooperate, and resolve the check promptly—because that affects penalty reductions and publication risk.

5. Can you go to jail for tax evasion in the UK?

Being on the deliberate defaulters list relates to civil penalties and is not the same as a criminal conviction. Separately, serious tax fraud offences can be prosecuted and can carry substantial custodial sentences, with the Sentencing Council noting maximums that include 14 years’ custody for certain fraudulent evasion offences, and life imprisonment for “cheat the public revenue.”

UK Tax System for Expats Explained – Who Must Still Pay UK Tax?

Posted on 3 April 20263 April 2026 by Nida Umair

Many people move abroad and assume that ends their UK tax position. In practice, it often does not. The UK tax system for expats can still apply in several situations. At Apex Accountants, we regularly see expats caught by UK tax rules because they still have UK income, return to the UK too often, keep a home here, sell UK property, or come back after a short period overseas. UK tax is driven mainly by residence status and specific UK connections, not by where you feel permanently settled.

The key point is simple. You can live abroad and still be drawn into the UK tax system in several different ways. You might become a UK tax resident again under the Statutory Residence Test. You might stay non-resident but still have to pay UK tax on rental income, wages for UK workdays, or gains on UK property. You might also face extra rules if you return to the UK after a short spell overseas.

Understanding the UK Tax System for Expats

Why many people still get caught by UK tax for expats

The most common mistake is thinking there is one simple “day count” that keeps you safe. There is not. The UK uses the Statutory Residence Test, which looks at automatic overseas tests, automatic UK tests and then the sufficient ties test. Your position is tested tax year by tax year. That means someone can be non-resident one year and resident the next, even if their lifestyle feels broadly the same.

The first route: becoming UK tax resident again

For many expats, the biggest risk is drifting back into UK residence without realising it. HMRC says non-residents only pay UK tax on their UK income, while residents normally pay UK tax on all their income, whether it comes from the UK or abroad. That is why residence status matters so much.

A quick guide to the residence rules for expats

Rule area	What it means
Automatic overseas tests	These can keep you non-resident if you meet strict day and work limits
Automatic UK tests	These can make you resident automatically
Sufficient ties test	If no automatic test applies, your UK ties and UK day count decide the outcome

HMRC’s automatic overseas tests include two headline day limits that expats often rely on. If you were a UK resident in one or more of the previous 3 tax years, you usually need to spend fewer than 16 days in the UK to meet the first automatic overseas test. If you were not a UK resident in any of the previous 3 tax years, the second automatic overseas test usually requires fewer than 46 days in the UK. There is also a third overseas test for people working sufficient hours overseas, provided UK workdays stay below 31 and total UK days stay below 91.

On the UK side, the clearest trigger is 183 days or more in the UK in the tax year. There is also a home test. HMRC says you may become a resident if there is at least one 91-day period in which you have a UK home and spend enough time there, while spending fewer than 30 days in any overseas home.

Also Read: Could Returning to the UK Trigger a Returning Expatriates UK Tax Bill? What You Need to Know

The “ties” that catch expats out

If none of the automatic tests settle your status, HMRC applies the sufficient ties test. This is where many expats run into trouble. The number of ties needed depends on how many days you spend in the UK and whether you were a resident in any of the previous 3 tax years. For someone recently resident in the UK, even 46 to 90 UK days can be enough if they have at least 3 ties.

The main ties include the following:

Family tie: for example, a UK resident spouse, partner or child under 18 in the UK in the relevant way.
Accommodation tie: a place to live in the UK available for at least 91 continuous days, with enough nights spent there.
Work tie: UK workdays can matter, especially where more than 3 hours of work are performed on enough days.

This is why casual visits can become risky. Staying with family, keeping a UK flat, doing a few work trips, or spending more time here during school holidays can shift the result.

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The second route: staying non-resident but still paying UK tax

Many expats are surprised to learn that leaving the UK does not remove UK tax from UK income. GOV.UK is clear that you usually have to pay tax on your UK income even if you are not a UK resident. That includes things like pension income, rental income, savings interest and wages.

Common areas where tax still applies

Income or asset	Why it matters
UK rental income	Usually remains taxable in the UK
UK workdays	UK tax for expats can apply to work performed here
UK property sales	Non-residents must report all disposals of UK property or land
UK pensions and other UK income	Treaty relief may help, but the UK position still needs checking

Rental income is one of the most common traps. You need to pay tax on UK rental income if you rent out a property here. If you live abroad for 6 months or more per year. HMRC classifies you as a non-resident landlord for these purposes, even if you are still a UK resident for tax. Tax may be deducted by a letting agent or tenant unless HMRC approves gross payment through the relevant application route.

Double taxation agreements can help if the country where you live also taxes that income. GOV.UK says you may be able to claim full or partial relief, depending on the treaty. But that does not mean you can ignore the UK side. It means you need the position reviewed properly.

The third route: selling UK property while abroad

This is another major area where expats get caught. If you are not resident in the UK, you must report all sales of UK property or land even if you have no tax to pay. That applies to residential and non-residential property.

For UK residential property sold on or after 27 October 2021, the reporting and payment deadline is generally within 60 days of completion. GOV.UK warns that you should not wait until the next tax year to deal with it, because interest and penalties may apply.

This is often missed because people assume no tax means no filing. That assumption is wrong for non-residents selling UK property. Even where a loss arises, or relief means little or no tax is due, the reporting duty can still apply.

The fourth route: returning to the UK too soon

Some expats leave the UK, realise gains or receive income abroad, and then return within a few years expecting those transactions to stay outside the UK tax net. HMRC’s temporary non-residence rules are designed to stop that. HMRC states that when an individual returns to the UK after a period of temporary non-residence, they may be charged to tax on certain income and gains received during that period.

A person can be temporarily non-resident if, among other conditions, they had sole UK residence before departure, were solely UK residents in 4 or more of the 7 tax years before leaving, and their period of non-residence is 5 years or less. HMRC also states that for these special rules not to apply, the period of non-residence must exceed 5 years, in effect at least 5 years and 1 day.

For capital gains in particular, gains arising during a period of temporary non-residence can become chargeable to Capital Gains Tax in the period of return. This is a key trap for expats who sell assets while abroad and then move back sooner than planned.

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Split-year treatment can help, but it is not optional

When someone leaves or arrives in the UK during a tax year, split-year treatment may apply. HMRC explains that a split year divides the year into a UK part and an overseas part. The UK part is taxed broadly as resident, while the overseas part is taxed broadly as non-resident for most purposes.

However, this is not something you simply choose because it suits you. If you meet the conditions for one of the split-year cases, it applies. If you do not, it does not. That makes it essential to review the facts carefully rather than relying on assumptions.

New rules on foreign income and gains

Since 6 April 2025, the old remittance basis has been replaced by the 4-year foreign income and gains regime. If you qualify and claim under this regime, you will not pay tax on eligible foreign income and gains covered by the claim. To qualify, you must be a UK tax resident under the Statutory Residence Test and still be within your first 4 years of UK tax residence after at least a 10-year period of non-UK tax residence.

This matters for expats returning to the UK after a long period abroad. The new regime may offer relief, but it has conditions and limits. GOV.UK also says unused years cannot be rolled forward. So a returning expat should review their position as soon as they become a UK resident again, not years later.

Inheritance Tax can still follow some expats after they leave

Income Tax and Capital Gains Tax are not the only issues. From 6 April 2025, GOV.UK says the old domicile and deemed domicile rules for Inheritance Tax were replaced by long-term UK residence rules. If you are a long-term UK resident, your overseas assets may be subject to Inheritance Tax.

A person is a long-term UK resident if they were a UK tax resident for either the previous 10 consecutive years or for 10 years or more in the previous 20 years. GOV.UK also says you can keep long-term UK residence for up to 10 tax years after leaving the UK, although that tail can be shorter depending on how long you lived here before departure.

That means some expats can leave the UK and still remain exposed to UK Inheritance Tax on overseas assets for years afterward. This is a major point that is often missed in international estate planning.

Key deadlines expats should not miss

Obligation	Main deadline
Tell HMRC you need a return	By 5 October after the relevant tax year
Paper Self Assessment return	By 31 October
Online Self Assessment return	By 31 January
Self Assessment tax payment	By 31 January
UK residential property CGT report	Usually within 60 days of completion

GOV.UK says HMRC must receive your tax return and any money owed by the deadline. Missing these dates can trigger penalties and interest.

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How We Can Help You

At Apex Accountants, we help expats and internationally mobile individuals understand exactly where they stand before problems build up.

Our support includes:

reviewing your UK residence position under the Statutory Residence Test
checking whether split-year treatment may apply
reviewing UK rental income and non-resident landlord obligations
handling UK property disposal reporting
advising returning expats on temporary non-residence risks
assessing whether the 4-year foreign income and gains regime may apply
reviewing longer-term Inheritance Tax exposure for former UK residents

Each case turns on detailed facts. A few extra days in the UK, a family connection, a retained home, or a return to Britain sooner than expected can change the outcome.

Conclusion

Yes, expats can absolutely be dragged into the UK tax system. Sometimes that happens because they become UK residents again. Sometimes it happens because UK income and UK property remain taxable even while they live abroad. In other cases, the issue only becomes clear when they return to the UK, sell property, or begin reviewing their estate planning.

The rules are not impossible, but they are technical. The safest approach is not to assume. It is to review your residence status, income sources, property exposure and future plans early using current HMRC guidance. If you are unsure how these rules apply to you, contact Apex Accountants for professional guidance. Our specialists can review your circumstances and help you manage your UK tax position with confidence.

How to Claim Tax Relief on Donations in the UK

Posted on 31 March 202631 March 2026 by Nida Umair

If by “renew tax relief on donations” you mean keeping your charity tax relief claims correct and up to date, the main UK route is still Gift Aid. There is no annual renewal process for donors. Instead, you claim relief by using the right method, keeping records, and following HMRC’s time limits. Since 6 April 2024, relief on donations to non-UK charities has ended, so eligibility now depends much more clearly on the charity meeting the UK tax definition.

At Apex Accountants, our view is simple. This area is often treated like a small admin point, but it can affect your tax return, your adjusted net income, your Higher Income Child Benefit Charge position, and, in some cases, your Inheritance Tax planning. HMRC’s own guidance shows that the rules are straightforward once you separate them into the correct relief route.

Claiming Tax Relief on Donations in UK

For most individuals, tax relief on donations is claimed through one of these routes:

Donation route	How relief works	Who benefits first
Gift Aid	Charity reclaims 25p for every £1 donated	Charity first; the donor may claim extra if there is a higher or additional rate.
Payroll Giving	Donation comes out of pay or pension before Income Tax	Donor gets relief at the source.
Shares, land or buildings	Donor can deduct the value from taxable income and may also avoid Capital Gains Tax on qualifying gifts	Donor
Gifts in a will	Gift is taken off the estate before Inheritance Tax is calculated, and 10% or more to charity can reduce the IHT rate on some assets to 36%	Estate

What Gift Aid actually does

Gift Aid lets a charity or Community Amateur Sports Club reclaim 25p for every £1 you donate. So a £100 donation is treated as £125 gross for tax purposes. It does not cost the donor anything extra at the point of giving.

To use Gift Aid, you must give the charity a Gift Aid declaration. That declaration can cover:

current donations
future donations
donations made in the last 4 years

That point matters. Many people think they need to “renew” Gift Aid every year. Usually, they do not. What matters is that the declaration remains valid and that you still pay enough qualifying UK tax.

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Tax Rules for Donors

The tax condition many donors miss

You must have paid enough Income Tax or Capital Gains Tax in the tax year to cover the amount the charity reclaims. HMRC says your Gift Aid donations must not be more than 4 times the tax you paid in that year. If the charity reclaims more than you paid, HMRC may ask you to pay the difference.

This is one of the most important compliance points. A donor can complete a declaration in good faith, then later stop paying enough tax. HMRC says you must tell the charities you support if that happens.

Can higher-rate and additional-rate taxpayers claim more?

Yes. If you pay tax at 40% or 45%, you may claim the difference between the basic-rate relief already given to the charity and your higher rate of tax. HMRC explains that this relief is given by increasing your basic rate band and higher rate band by the grossed-up amount of your gifts.

The following example shows the mechanics clearly:

donate £200
charity treats it as £250 gross
a 40% taxpayer can claim £50
a 45% taxpayer can claim £62.50

How to claim the extra relief

If you complete a Self Assessment return, enter your qualifying charitable giving on the return using HMRC’s charitable giving guidance and helpsheet HS342. If you do not normally file a return, you can contact them and ask for your tax code to be adjusted.

If you are claiming tax relief on donations of £10,000 or more without sending a tax return, HMRC says you need to tell them the following:

the date of the donation
who you donated to

Can you claim for past donations?

Yes, but the route depends on timing.

1. Past donations under a Gift Aid declaration

A declaration can cover donations made in the last 4 years. That helps the charity reclaim Gift Aid on qualifying donations if the declaration is valid.

2. Carrying back a donation to the previous tax year

HMRC allows certain Gift Aid donations made after the tax year ends to be treated as if they were made in the previous tax year, but only if you make that claim on the original return and submit it by the filing deadline. HMRC is clear that it cannot accept a first claim or a higher claim in an amended return for that carry-back treatment.

3. Correcting an overpayment through HMRC

If the issue is not carry-back but overpaid tax more generally, HMRC’s overpayment relief rules may be relevant. That is a separate claims process and not a way to reopen the specific carry-back rule after the deadline.

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What changed from April 2024?

This is the key policy change.

From April 2024, non-UK charities and CASCs are no longer eligible for UK charitable tax reliefs. GOV.UK states that only charities falling within the relevant UK court jurisdictions now qualify under the UK tax definition. HMRC also states in HS342 that you no longer get relief on gifts to non-UK charities after 5 April 2024.

So if you previously gave to an EU or EEA body and expected UK tax relief, you now need to re-check eligibility carefully. That is one of the main reasons people feel their donation relief needs to be “renewed” or revisited.

Other donation tax relief routes people often overlook

Payroll Giving

Payroll Giving works differently from Gift Aid. The donation is taken from wages or pension before Income Tax is deducted. HMRC says that to donate £1, a basic-rate taxpayer pays 80p, a higher-rate taxpayer 60p, and an additional-rate taxpayer 55p.

This donation tax relief route can be simpler for regular donors because the relief is built in through payroll. You do not then claim the same higher-rate difference separately in the way you do with Gift Aid.

Gifts of shares, land or buildings

HMRC says you can claim relief by deducting the value of the gift from your total taxable income for the tax year in which you made the gift or sale to charity. For qualifying shares and securities, HMRC also states that the relief is in addition to the Capital Gains Tax exemption on such gifts.

If the charity asks you to sell the asset on its behalf, you can still claim relief, but HMRC says you must keep the records of the gift and the charity’s request. Without them, you might have to pay Capital Gains Tax.

Gifts in your will

A gift to charity in your will is deducted from your estate before Inheritance Tax is worked out. If you leave 10% or more of the net value of the estate to charity, HMRC says the Inheritance Tax rate on some assets may reduce to 36%.

Does Gift Aid affect adjusted net income?

Yes. When working out adjusted net income, you deduct the grossed-up value of Gift Aid donations. For every £1 donated under Gift Aid, you take off £1.25 from net income.

That can matter where income-linked thresholds apply. Adjusted net income is used for rules such as the Personal Allowance taper and the High Income Child Benefit Charge.

Record-keeping rules

Good records are essential. You need to keep records of donations if you want to take them off your taxable income. For land, buildings and shares, you should keep the legal transfer papers and any document showing the charity asked you to sell on its behalf. Individual taxpayers normally need to keep records for at least 22 months from the end of the tax year.

For charities, Gift Aid declarations must be kept for 6 years after the most recent donation is claimed.

Common mistakes to avoid

Assuming Gift Aid must be renewed every tax year
Claiming relief for donations to a non-UK charity after 5 April 2024
Signing a Gift Aid declaration without paying enough Income Tax or Capital Gains Tax
Missing the filing deadline for a carry-back claim
Forgetting that Payroll Giving and Gift Aid work differently
Failing to keep donation evidence and supporting records

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How We Help Claim Tax Relief on Donations in UK

At Apex Accountants, we help clients review charitable giving from a tax and compliance angle, not just a paperwork angle. That includes:

checking whether Gift Aid declarations still work for your current tax position
reviewing higher-rate and additional-rate relief claims
checking whether adjusted net income has been calculated correctly
helping with Self Assessment reporting of charitable donations
reviewing whether a current-year donation can still be carried back
advising on gifts of shares, land or buildings
Reviewing Inheritance Tax planning where charitable legacies are involved
helping directors and owner-managed businesses separate personal giving from company giving rules

We also help clients avoid simple errors that can create HMRC problems later, especially where there are large donations, changing income levels, overseas charities, or missed filing deadlines.

Conclusion

The main point is this: tax relief on donations in the UK does not usually need “renewing”, but it does need checking. The right claim depends on the donation method, the tax year, the charity’s eligibility, and your own tax position. Since the April 2024 restriction to UK charities, it is even more important to confirm that a donation still qualifies before you rely on relief.

If you are unsure how your charitable donations affect your tax position, contact Apex Accountants today. Our team can review your donations, confirm eligibility under HMRC rules, and help you claim the correct tax relief on your Self Assessment return.

FAQs About Tax Relief on Donations

Do I need to renew Gift Aid every year?

No. In most cases, a valid Gift Aid declaration can cover current donations, future donations, and donations made in the last 4 years. What you must keep under review is whether you still pay enough qualifying tax.

Can I claim tax relief on donations without Self Assessment?

Yes. Higher-rate taxpayers who do not complete a return can contact HMRC and ask for a tax code adjustment instead.

Can I amend an old return to carry back a Gift Aid donation?

Not for a first or higher carry-back claim once the deadline has passed. Carry-back must be claimed in the original return for that year.

Do donations to overseas charities still qualify?

Usually no, for UK charitable tax relief purposes after 5 April 2024. GOV.UK states that non-UK charities and CASCs are no longer eligible after that point.

Can Gift Aid help if my income is over £100,000?

It can. Gift Aid donations reduce adjusted net income using the grossed-up amount. That can affect income-linked tax positions such as the Personal Allowance taper.

Is Payroll Giving the same as Gift Aid?

No. Payroll Giving gives tax relief through your pay before Income Tax is deducted. Gift Aid lets the charity reclaim basic-rate tax, and higher-rate donors may then claim extra relief separately.

VAT For Barbers: UK Guide for 2026

Posted on 19 March 202619 March 2026 by Farazia Gillani

VAT For Barbers is a critical area of understanding for every barber and salon owner in the UK. Whether you’re self‑employed, running a barbershop, or managing a team, VAT can impact pricing, cash flow, and overall financial planning. This comprehensive guide will explore VAT registration, key tax implications, and how employment status affects VAT obligations for barbers. By the end of this guide, you’ll have a deeper understanding of your VAT obligations, making sure you’re fully compliant and optimising your business structure.

When Do Barbers Have to Charge VAT?

The answer depends on your VAT registration status. VAT is an indirect tax applied to most services and goods in the UK, including barbering. If your business turnover exceeds the VAT threshold (currently £90,000 in any rolling 12-month period), you must register for VAT and charge it on services like haircuts, shaves, and product sales.

If you’re below the VAT threshold, you’re not required to register, but you can choose to do so voluntarily. Voluntary registration allows you to reclaim VAT on purchases like clippers, shampoos, and salon equipment, which may be beneficial in some cases.

When you’re VAT registered:

You must add 20% VAT to taxable services and product sales.
VAT must be paid to HMRC, and VAT returns are filed quarterly.
VAT is charged on all taxable services – including cuts, styling, and any products you sell.

VAT Threshold for Barbers in the UK

Understanding VAT Registration Requirements For Barbershops

In UK VAT threshold for barbers is £90,000 in taxable turnover. Once your turnover reaches this amount, you must register for VAT within 30 days

Here’s how VAT registration for barbershops work:

Monitor your taxable turnover. All sales (services like haircuts and products) contribute to the VAT threshold.
If you exceed £90,000 in sales during a 12-month period, you must register and begin charging VAT on all taxable supplies.
You must also register if you expect to exceed the threshold in the next 30 days.
Once registered, you must submit VAT returns to HMRC quarterly.

However, if your business’s turnover falls below £88,000 in a 12-month period, you can choose to deregister from VAT (if you no longer want to reclaim VAT or charge VAT on sales).

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VAT Considerations for Barbers

There are a few key points that every barber needs to understand when it comes to VAT:

Standard VAT vs Flat Rate Scheme

Once your barber business is VAT registered, you have two main options for VAT accounting:

Standard VAT Scheme: You charge 20% VAT on services, reclaim VAT on purchases, and pay the difference to HMRC. (gov.uk)
Flat Rate Scheme: A simplified system where you pay a set percentage (around 13% for barbers) of your turnover as VAT. This option is available if your annual turnover is below £150,000 and it reduces the admin burden of calculating VAT separately on each transaction.

Which scheme should barbers choose?

The standard VAT scheme is typically better if your business makes significant purchases (e.g., equipment, products). However, the flat-rate scheme may be beneficial for small barbershops with lower expenses, as it simplifies VAT calculations.

VAT Implications for Self‑Employed vs Employed Staff

The employment status of your staff can affect VAT charges and reporting. Let’s explore how:

If Stylists Are Employed

VAT is charged on services provided by the barbershop.
You must account for VAT on all taxable services your salon provides (cuts, styling, etc.).
Stylists do not charge VAT on their individual earnings since they are employees of the salon.

If Stylists Are Self‑Employed

In a self‑employed chair rental arrangement, VAT treatment depends on the contractual relationship.

If the stylist contracts directly with customers, they are responsible for their own VAT registration if their turnover exceeds the threshold.
If the barbershop rents out chairs, VAT may apply to rental income.

HMRC uses various operational tests to decide whether VAT applies to services provided by self‑employed contractors in barbershops. This could include the stylist’s business structure and whether they have direct customer contracts.

List of Barbershop Purchases Eligible for VAT Refunds

Once you’re VAT registered, your business can reclaim VAT on eligible purchases that are used for business activities. Here’s a list of common items that barbershops can reclaim VAT on:

Item Type	Can You Reclaim VAT?
Clippers, scissors, razors	Yes
Shampoos & styling products	Yes
Commercial rent & utilities	Yes
Cleaning supplies	Yes
Staff uniforms (protective)	Yes
Accounting & professional services	Yes

Restrictions:

You cannot reclaim VAT on non‑business items or personal expenses.
VAT cannot be reclaimed on motor vehicles used for business unless certain conditions are met. (gov.uk)

Reclaiming VAT helps reduce your operating costs and can significantly improve cash flow, but remember, you must keep detailed records of all VAT transactions.

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Tax-Saving Strategies for Barbers:

As a VAT-registered business, barbers can take several steps to optimise their tax position:

Utilise VAT Reclaims: Reclaim VAT on business-related purchases, such as equipment, cleaning supplies, and professional services, to reduce overall costs.
Choose the Flat Rate Scheme: If your business has low overheads, the Flat Rate Scheme could be a more efficient option, simplifying VAT reporting and potentially saving on tax.
Maximise Allowable Expenses: Ensure you’re claiming all allowable expenses, such as utilities, business insurance, and office supplies, to reduce taxable profits.

How We Help Barbers

At Apex Accountants, we specialise in helping barbershops and salon owners navigate VAT complexities. Our services include:

VAT Registration and Compliance: We guide you through the registration process and ensure you’re compliant.
Taxation Advice: We provide clear advice on how VAT impacts your business model, whether you’re self‑employed, employing others, or operating as a limited company.
Reclaiming VAT: Our team assists with reclaiming VAT on business purchases to improve your cash flow.
VAT Schemes Advice: We help you select the right VAT scheme for your business.
Quarterly VAT Returns: We manage your VAT submissions to HMRC, ensuring deadlines are met and returns are accurate.

If you need assistance with VAT or other accounting services for your barbershop, contact us today.

Conclusion

VAT is an essential aspect of your business’s financial structure. Whether you’re approaching the VAT threshold, considering registration, or managing VAT obligations for self-employed and employed staff, understanding your responsibilities is key to staying compliant and efficient.

By staying on top of your VAT registration, knowing the key factors that affect your business, and reclaiming VAT on eligible purchases, you can optimise your operations and minimise tax risks.

Let Apex Accountants help simplify your VAT process, allowing you to focus on providing excellent service to your clients.