Expert Tax Services for Etsy Sellers in the UK Posted on 25 August 202629 September 2026 by Rida Ahmed Selling on Etsy allows creative entrepreneurs to turn their talent into a thriving business. Yet managing tax obligations can quickly become challenging as your sales increase. From VAT registration to self-assessment returns, the financial side often feels more complex than creating your products. At Apex Accountants, we provide tailored tax services for Etsy sellers across the UK, helping you stay compliant while improving profitability. Our specialists handle bookkeeping, VAT for Etsy sellers UK, and year-end planning so you can focus on running your shop with confidence. This article outlines the essential tax responsibilities for Etsy sellers, the expenses you can claim, and how professional accountants help keep your business compliant and profitable. Do Etsy Sellers Need To Pay Tax In The UK? Yes. Once your Etsy shop moves beyond a hobby and generates regular income, HMRC treats you as self-employed. You must report your profits each year through a self-assessment tax return. If you earn less than £1,000 annually from Etsy, you can use the trading allowance and skip filing. Once you go over that amount, you’ll need to declare and pay tax on your profit after expenses. What Types Of Tax Affect Etsy Sellers? Etsy sellers may face several different taxes, depending on how their business is set up. Income Tax – paid on your profits after deducting allowable business expenses. National Insurance (NI) – Class 4 NI applies when profits exceed £12,570, while Class 2 NI was scrapped in 2024. VAT (Value Added Tax) – required when turnover passes £90,000 in any 12-month period. Corporation Tax – applies if you operate through a limited company.Each tax has its own rules and deadlines, which can quickly become confusing without the right support. Each tax has its own rules and deadlines, which can quickly become confusing without the right support from experienced tax accountants for Etsy sellers. When Should An Etsy Business Register For VAT? You’ll need to register for VAT once your taxable sales exceed £90,000 within 12 months. Registration means you must charge VAT on eligible sales and submit VAT returns digitally under the Making Tax Digital (MTD) rules. Even smaller Etsy sellers sometimes register voluntarily if their supply costs include significant VAT, as it allows them to reclaim that tax on purchases. Professional guidance on VAT for Etsy sellers UK helps you understand which sales are taxable, how to record digital transactions, and when to reclaim VAT efficiently. What Expenses Can Etsy Sellers Claim? Etsy sellers can deduct many business costs before calculating taxable profit. Common examples include: Etsy listing, transaction and processing fees Raw materials and packaging Tools and equipment for making goods Website, internet and software costs Marketing and photography expenses Postage, delivery and shipping Home-office and energy use (if applicable) Professional and accounting fees Recording these expenses properly not only reduces your tax bill but also keeps your books accurate for HMRC. How Can A Tax Advisor Help Etsy Businesses? Working with specialist tax accountants for Etsy sellers can save time, stress and money. Tax professionals handle more than returns—they advise on business setup, pricing, and compliance strategies. They can help you: Register for Self Assessment or VAT Integrate Etsy data with cloud accounting tools Submit digital VAT returns on time Identify tax reliefs and allowances Plan cash flow and forecast profits A good tax advisor also ensures your business stays compliant with the latest HMRC updates and filing obligations. What Accounting Software Suits Etsy Sellers Best? Cloud accounting has become a must-have for online businesses. Platforms like Xero, paired with tools such as Link My Books, automatically import Etsy transactions and match them with bank records. This automation gives you real-time visibility of sales, VAT, and expenses—so you can focus on creating products instead of reconciling spreadsheets. What Happens If Etsy Income Isn’t Declared? Failing to report Etsy income can trigger penalties and backdated tax bills. HMRC cross-checks online marketplaces like Etsy, eBay and Shopify to find undeclared income. Honest and timely reporting protects your business reputation and avoids unnecessary investigations. When Are Etsy Tax Deadlines In The UK? 31 January – online self-assessment filing deadline 31 October – paper tax return deadline Quarterly VAT returns – depending on your VAT cycle Nine months after year-end – Corporation Tax payment (for companies) Missing a deadline leads to fines or interest charges, so digital bookkeeping helps you stay organised year-round. How Can Etsy Sellers Reduce Their Tax Bill? You can legally lower your tax bill through smart planning. Track and record every business expense Choose the best business structure for your income level Use allowances, such as the trading and personal allowances Plan purchases before the tax year ends to claim relief sooner Get advice from qualified UK tax advisors A proactive approach to tax planning means you keep more of what you earn without worrying about compliance. Why Professional Etsy Tax Services Make A Difference Selling on Etsy is creative work, but running the numbers is a professional task. With dedicated tax services, you get accurate reports, VAT support, and advice on pricing and profitability. Having experts manage your financial side means you can focus on growing your shop with confidence. HMRC Digital Platform Rules & Etsy VAT Thresholds Explained HMRC’s digital platform reporting rules mean online marketplaces such as Etsy may collect information about sellers and report qualifying seller income and transaction details to tax authorities. For Etsy businesses, this makes accurate sales records particularly important, as figures reported through the platform should be consistent with the information used in tax returns and business accounts. It is important to distinguish digital platform reporting rules from VAT registration rules. Having your sales information reported to HMRC does not automatically mean that you owe tax or need to register for VAT. For sellers of goods, platform reporting generally does not apply where both fewer than 30 sales are made during the calendar year and no more than approximately £1,700 is received. Key Etsy VAT Thresholds UK VAT Registration Threshold: UK-established Etsy businesses must normally register for VAT when their total taxable turnover exceeds £90,000 in a rolling 12-month period. Registration may also be required where the business expects taxable turnover to exceed £90,000 in the next 30 days alone. Platform Reporting Is Not a VAT Threshold: The digital platform reporting limits do not determine whether an Etsy seller must register for VAT. VAT liability is assessed separately according to taxable turnover and the applicable UK VAT rules. Keeping Etsy transaction records reconciled with accounting records can help identify differences before returns are submitted. Working with a specialist accountant can also help businesses assess VAT registration requirements and maintain accurate records where marketplace sales data may be available to HMRC. Simplify Your Finances with Apex Accountants’ Tax Services for Etsy Sellers At Apex Accountants, we work with UK-based Etsy sellers who want reliable, compliant, and stress-free financial management. Our team combines accounting expertise with an understanding of eCommerce operations, making us the ideal partner for creative entrepreneurs. From bookkeeping and VAT registration to annual tax planning, we provide practical support that keeps your business profitable and compliant. Contact Apex Accountants today to book your free consultation and get tailored tax advice for your Etsy shop. Frequently Asked Questions Q: What are the UK VAT registration thresholds for Etsy sellers, and how do marketplace rules apply?A: UK Etsy sellers must register for VAT if total taxable turnover exceeds £90,000 in any rolling 12-month period. Etsy may collect VAT on certain digital sales and low-value imported goods, but UK sellers remain responsible for VAT on domestic sales from UK stock. Q: When do UK Etsy sellers need to register for EU One Stop Shop (OSS) VAT?A: UK sellers usually use Etsy’s IOSS arrangement for eligible EU imports valued at €150 or less. OSS mainly applies where sellers hold stock in the EU and make cross-border EU sales. Q: What allowable business expenses can Etsy sellers deduct to lower their tax bill?A: Allowable costs can include Etsy fees, materials, packaging, postage, advertising, equipment, payment fees and software. Sellers can generally claim either actual expenses or the £1,000 Trading Allowance, not both. Q: Do I need to report Etsy income if I already pay tax through a PAYE employment job?A: Yes. If gross Etsy and other self-employed income exceeds £1,000 in a tax year, you must normally register for Self Assessment and report your profit to HMRC.
Changes to Capital Goods Scheme for VAT: What UK Businesses Need to Know Posted on 19 July 202619 July 2026 by Rida Ahmed A client came to APEX last year partway through refurbishing a mixed-use building — offices upstairs, a partly exempt letting downstairs. The spend sat just above the old £250,000 capital goods scheme threshold, which meant ten years of annual VAT adjustments to track and defend. Under the rules that now apply, that same refurbishment would fall outside the scheme entirely. From 29 July 2026, HMRC will raise the Capital Goods Scheme threshold for land, buildings and civil engineering work from £250,000 to £600,000 and will remove computers from the scheme altogether. This is the biggest change to CGS since it was introduced in 1990, and it will pull thousands of smaller property transactions out of a notoriously complex compliance regime. Quick answer: The Capital Goods Scheme (CGS) threshold for land, buildings and civil engineering works rises from £250,000 to £600,000 (excluding VAT) from 29 July 2026. Computers and computer equipment are removed from the CGS entirely from the same date — the old £50,000 threshold no longer applies to them. The change only affects capital expenditure incurred on or after 29 July 2026; anything already committed under contract before that date follows the old rules. It’s made via secondary legislation amending regulations 113 and 114 of the VAT Regulations 1995 (SI 1995/2518) — this is a confirmed HMRC measure, not a consultation proposal. HMRC estimates the change will save affected businesses roughly £0.6 million a year in administrative costs, with negligible Exchequer impact. What is the Capital Goods Scheme for VAT? The Capital Goods Scheme for VAT is an adjustment mechanism that spreads the recovery of input tax on certain high-value assets over several years, rather than allowing a single claim at the point of purchase. It exists to stop businesses over- or under-claiming VAT when the taxable use of an asset changes after acquisition. Under current law, two categories of asset fall within CGS: Land, buildings and civil engineering works, where capital expenditure is £250,000 or more (excluding VAT) — adjusted over 10 successive intervals. Computers and computer equipment, where capital expenditure is £50,000 or more — adjusted over 5 successive intervals. Once an asset is inside the scheme, the business must revisit the VAT recovery percentage every year for the length of the adjustment period, comparing the asset’s actual taxable use against the baseline set in year one. If taxable use rises, HMRC repays more VAT; if it falls, the business repays VAT already claimed. A change of use on disposal within the adjustment period can trigger a single, larger reconciliation covering all the remaining years at once. Businesses that are fully taxable are not automatically exempt from this – a change from taxable to exempt use, such as an office building later let on an exempt basis, can still trigger a clawback even where the business recovers all its VAT elsewhere. Read: VAT on Online Marketplace Sales: What UK Sellers Need to Know About the New HMRC Consultation What’s changing under the Capital Goods Scheme simplification? HMRC is making two specific changes to CGS from 29 July 2026, confirmed in its policy paper on the simplification of the scheme. The threshold for land, buildings and civil engineering works increases, and computers leave the scheme completely. Higher property threshold: the £250,000 trigger for land, buildings and civil engineering works rises to £600,000 (excluding VAT). Expenditure below that level will no longer create a CGS item at all. Computers removed entirely: computers and items of computer equipment are taken out of the scheme’s scope. The old £50,000 threshold and 5-interval adjustment period for computer equipment cease to apply. The legal mechanism is an amendment to Part XV of the VAT Regulations 1995 (SI 1995/2518). Regulation 113(2) is amended to remove the reference to computers and computer equipment, and regulation 113(4) is amended to raise the property threshold, with consequential changes to regulations 113A and 114. When do the new CGS rules take effect? The changes take effect on 29 July 2026 and are not retrospective. Capital expenditure incurred before that date — meaning goods or services already received, or goods already imported or acquired — continues to be governed by the old £250,000 and £50,000 thresholds, even if the asset’s adjustment period runs on for years afterwards. In practice, this means: A property purchase or refurbishment where the tax point falls before 29 July 2026 is tested against the old £250,000 threshold, regardless of when the deal completes on paper. A property purchase or refurbishment where the tax point falls on or after 29 July 2026 is tested against the new £600,000 threshold. Assets already inside CGS under the old rules stay inside CGS and continue their existing adjustment period — the threshold change does not remove them from the scheme retroactively. Businesses part-way through a phased development that straddles the date should take advice before assuming which threshold applies, since the transitional rule is based on when expenditure is incurred, not when the wider project is signed off. How does the higher £600,000 threshold work in practice? A capital project only falls within CGS if its VAT-exclusive cost meets or exceeds the relevant threshold — everything below that line is recovered under normal partial exemption rules with no ongoing adjustment obligation. Here’s how that plays out for a typical partly exempt business. Example: A dental practice buys and fits out a new clinic building for £400,000 (excluding VAT), incurring £80,000 of VAT. Under the current £250,000 threshold, that expenditure falls within CGS, committing the practice to ten years of annual adjustment calculations as its mix of NHS and private (exempt/taxable) work shifts. Under the new £600,000 threshold, the same £400,000 spend falls outside the scheme entirely. The practice recovers VAT once, under its normal partial exemption method, with no ten-year tail of adjustments to monitor or defend at inspection. The same logic applies to refurbishments. A £900,000 refurbishment of an existing building still crosses the new threshold and remains a CGS item in its own right, tracked separately from the underlying property. Businesses working close to £600,000 should model the VAT position before committing to a build contract, since structuring the spend (or timing it either side of 29 July 2026) can determine whether ten years of adjustment obligations apply. Why is HMRC removing computers from the Capital Goods Scheme? HMRC says the computer category has become redundant because the cost of qualifying equipment has fallen well below the £50,000 threshold since the scheme was introduced in 1990, so it is very rarely triggered in practice. Removing it eliminates a compliance obligation that HMRC itself acknowledges delivers little practical benefit for the Exchequer. The wider reform follows a long consultation history. The government launched a Call for Evidence in July 2019, after the 2017 Office of Tax Simplification VAT review flagged CGS as unnecessarily burdensome for smaller businesses. A summary of responses was published in March 2021, and the specific threshold and computer changes were formally announced on 28 April 2025 as part of the government’s Tax Update: Simplification, Administration and Reform work. HMRC’s own impact assessment projects negligible Exchequer cost and estimates ongoing administrative savings for businesses of around £0.6 million a year, concentrated among smaller property owners who previously fell within scope simply because of rising property values. Who is affected by these changes to VAT on capital expenditure? The changes affect any VAT-registered business incurring capital expenditure on land, buildings, civil engineering works, or computer equipment. In practice, the businesses most affected fall into a few groups. Partly exempt businesses — including care providers, financial services firms, education providers and charities — who mix taxable and exempt income and have historically had to track CGS adjustments on modest property purchases. Property investors and developers carrying out refurbishments or fit-outs in the £250,000–£600,000 band, who will now fall outside the scheme altogether. SMEs buying or improving commercial premises, for whom the old threshold had become disproportionate as property values rose since 1990. Any business holding computer equipment previously caught by the £50,000 threshold, which will simply stop being a CGS consideration from 29 July 2026. Wholly taxable businesses are not exempt from the practical effects either — even a fully taxable business can find a change of use (for example, letting out surplus space on an exempt basis) crystallising a CGS liability, so the higher property threshold is a genuine simplification for that group too. Also Read: Getting Your Business Ready for the Summer’s Temporary VAT Cut What should businesses do to prepare? Businesses with capital projects planned for mid-to-late 2026 should establish now whether their expenditure will fall inside or outside CGS once the new threshold applies. Three practical steps matter most. Identify the tax point for any pending land, building or civil engineering spend, since that — not the completion date of the wider project — determines which threshold applies. Review existing CGS records for assets already inside the scheme under the old £250,000 or £50,000 thresholds; these continue on their original adjustment period regardless of the reform. Reassess partial exemption methods where CGS previously drove the choice of method, since removing an asset from CGS can change what special method (if any) is still worthwhile. FAQs About HMRCs Changes To Capital Goods Scheme Does the Capital Goods Scheme only affect partly exempt businesses? No. While partly exempt businesses are most exposed, a fully taxable business can still be caught if the use of an asset later changes — for example, letting out space that was originally used for taxable trading. The scheme is triggered by a change in use, not by a business’s overall VAT status at the time of purchase. What happens if I sell a capital item during the adjustment period? Selling a capital item during its adjustment period crystallises all the remaining years’ adjustments in a single calculation, made in the VAT return covering the sale. If the sale itself is a taxable supply, the remaining intervals are treated as 100% taxable use; if it’s exempt, they’re treated as 0% taxable use, which can produce a significant one-off VAT repayment or claim. Do the new thresholds apply retrospectively to buildings I already own? No. The higher threshold only applies to capital expenditure incurred on or after 29 July 2026. Assets that were already inside the Capital Goods Scheme under the £250,000 or £50,000 thresholds remain inside the scheme and continue their existing adjustment period unaffected. Is this confirmed law or still a proposal? This is confirmed government policy, implemented through secondary legislation amending the VAT Regulations 1995, with an operative date of 29 July 2026 set out in HMRC’s published policy paper. It is not a consultation or draft proposal at this stage, though businesses should always check GOV.UK for the final statutory instrument reference nearer the commencement date. Do I need an accountant for Capital Goods Scheme calculations? Most businesses benefit from professional support, particularly where a project sits close to the £600,000 threshold or where partial exemption percentages fluctuate year to year. Getting the baseline interval wrong, or missing a change-of-use trigger, can lead to VAT assessments and penalties several years after the original purchase. What if my capital expenditure is close to the £600,000 threshold? Where spend is close to the threshold, timing and contract structuring can determine whether the Capital Goods Scheme applies at all. It’s worth taking advice before committing to a build contract, since expenditure incurred just before 29 July 2026 is tested against the old £250,000 limit even if the wider project completes later. Next steps If you’re planning capital expenditure on property, refurbishment or equipment in the run-up to this change, it’s worth reviewing the VAT treatment before contracts are signed rather than after. Apex Accountants & Tax Advisors works with property owners, developers and partly exempt businesses across the UK to assess Capital Goods Scheme exposure, structure capital projects efficiently and manage existing CGS adjustment schedules. Book a consultation with our VAT team to review your position ahead of the 29 July 2026 change.
VAT on Online Marketplace Sales: What UK Sellers Need to Know About the New HMRC Consultation Posted on 13 July 202613 July 2026 by Farazia Gillani UK-based sellers trading on Amazon, eBay, Etsy and similar platforms could soon find themselves subject to a very different VAT system. A new joint consultation from HM Treasury and HMRC is looking at whether online marketplaces should become liable for VAT on domestic seller sales, not just on sales made by overseas traders. If this goes ahead, it would be one of the biggest shifts in UK marketplace VAT since the 2021 reforms. Here’s what’s actually being proposed, who it affects, and what sellers should be doing about it now. What Is the Online Marketplace VAT Liability Consultation? The consultation, titled Extending VAT Online Marketplace Liability to Combat Non-Compliance, opened on 23 June 2026 and runs for eight weeks, closing at 11:59pm on 18 August 2026. It’s a joint project between HMRC and HM Treasury, and it sits within a wider package of 40 tax measures announced by the Exchequer Secretary to the Treasury on the same date. At its core, the proposal would extend online marketplace VAT liability rules beyond overseas sellers and low-value imports, making platforms responsible for accounting for VAT on certain sales made by UK-established businesses too. No implementation date has been set. If the government decides to proceed, a further technical consultation on draft legislation would follow before anything becomes law. Why Is the Government Doing This? The short answer: money and fairness. HMRC estimates that tens of thousands of UK-based businesses trading through online marketplaces aren’t meeting their VAT obligations, with the resulting non-compliance running into the hundreds of millions of pounds each year. The concern isn’t really about VAT rates or new taxes. It’s about levelling the playing field. Sellers who dodge VAT can undercut competitors who charge it correctly, whether those competitors trade online or from a high street shop. The government has said any additional revenue raised would be channelled back into support for high street businesses through changes to the business rates system. This builds on the 2021 reforms, which made marketplaces liable for VAT on: sales by overseas sellers with goods already in the UK at the point of sale low-value imports of £135 or less, where the goods are outside the UK when sold Those changes worked well for overseas non-compliance. What they didn’t fix was VAT leakage among UK-based sellers, and that’s the gap this new consultation is trying to close. Read: The Complete Tax Guide for Online Sellers in the UK – Amazon, Vinted, eBay, and Etsy How Does Marketplace VAT Work Right Now? Before looking at what might change, it helps to understand the current rules. ScenarioWho accounts for VAT todayOverseas seller, goods already in the UK at saleThe marketplaceGoods outside the UK, consignment value £135 or lessThe marketplaceGoods outside the UK, consignment value over £135Normal import VAT and customs rules applyUK-established seller, goods in the UK at saleThe sellerSale to a UK VAT-registered business customer with a valid VAT numberThe business customer accounts for VAT in the relevant low-value import scenario A platform only counts as an “online marketplace” for VAT purposes if it does all three of the following: sets the terms of sale processes or enables payment is involved in ordering, delivery, or facilitating delivery Platforms that simply run adverts, process payments only, or redirect buyers elsewhere aren’t caught by these rules. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation What Would Actually Change for UK Sellers? This is the part that matters most to domestic sellers. Under the proposal, marketplaces would become liable for VAT on business-to-consumer sales made by UK-established sellers, where the goods are already in the UK at the point of sale. Technically, this would work through a deemed supply structure: the seller would make a zero-rated supply to the marketplace, and the marketplace would then charge VAT to the end customer and account for it on its own VAT return. A few things the proposal makes clear: It’s aimed at B2C sales only — business-to-business transactions are out of scope. It would not change VAT rates on any goods. Zero-rated items stay zero-rated. Sales through a seller’s own website or physical shop would be unaffected — the seller would keep accounting for VAT on those as normal. Input tax recovery would continue under the usual rules. For information on the trading allowance, do read: How to Use the £1,000 Trading Allowance When Selling on Vinted, eBay & Other Platforms Who Would Be Protected? The Threshold Question HMRC faces one of the trickiest challenges in this proposal: preventing the rules from affecting small sellers who do not need to register for VAT. HMRC is consulting on two main options: Option 1: A Minimum Platform Threshold A marketplace would only become liable for a seller’s VAT once that seller’s sales on that specific platform pass a set value. The lead suggestion is £90,000 — the same as the standard UK VAT registration threshold — though a lower figure is also being considered, since £90,000 per platform could still leave gaps for sellers who spread sales across several marketplaces. Option 2: A VAT rate relief Instead of a threshold, smaller UK businesses below the VAT registration threshold could get some form of rate relief on their marketplace sales. Neither option is confirmed. The consultation is genuinely asking for input on which approach works better in practice, and it’s a question sellers close to the threshold should watch closely. It’s also worth being clear about what stays the same: the standard UK VAT registration threshold remains more than £90,000 of taxable turnover across all sales channels combined. A platform-specific threshold, if introduced, wouldn’t replace that underlying obligation. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Who’s Excluded From the Proposed Rules? Private and casual sellers: Individuals selling personal possessions, not operating as a business, aren’t intended to be caught by any of this. Second-hand goods sellers — possibly: This one is still unresolved. UK businesses using the Second-hand Margin Scheme calculate VAT on the margin between purchase and sale price, which doesn’t fit neatly into a marketplace deemed-supply model. HMRC is weighing up whether to exclude second-hand sales entirely or find another way to handle them. Takeaway and Food Delivery Platforms Are Explicitly in Scope This isn’t just an e-commerce goods story. The consultation specifically names takeaway food delivery platforms, restaurants, fast food kitchens and takeaway outlets as relevant businesses. For platforms that only operate within the UK and haven’t previously had to deal with the overseas-seller marketplace rules, this could be a much bigger operational shift than for the likes of Amazon or eBay, which already run complex VAT logic for international sellers. What About the Flat Rate Scheme? The consultation directly asks about the impact on businesses using the VAT Flat Rate Scheme. If marketplace sales move to a deemed-supply model where the platform accounts for VAT, sellers on the Flat Rate Scheme could effectively lose the ability to apply their flat rate percentage to that portion of turnover. Businesses using the Flat Rate Scheme with a significant share of marketplace sales should review the impact early, as this remains an open issue rather than a confirmed rule. A detailed tax guide for eBay sellers: eBay HMRC UK Tax Rules Every Seller Should Know What Should Sellers and Their Accountants Do Now? There’s no new law yet — this is still a consultation, and the response period runs until 18 August 2026. But that’s exactly why now is the sensible time to check exposure, rather than waiting for the outcome. A practical short-term checklist: List every marketplace the business sells through Break down turnover by platform, not just as a single total Separate B2C sales from B2B sales Check how close turnover is to the £90,000 VAT threshold Review whether the business uses the Flat Rate Scheme Flag any second-hand goods activity Note which sales come through the business’s own website, since these stay outside the marketplace model Prepare for more marketplace onboarding checks and data requests going forward Review AreaWhy It MattersVAT registration statusBoth the standard threshold and the proposed platform threshold sit at £90,000Marketplace turnover by platformThe lead proposal is based on sales per platform, not combined turnoverSales channel splitWebsite and shop sales stay under the current model; marketplace sales could shiftB2C vs B2B splitOnly B2C marketplace sales are in scope of the proposalSecond-hand goodsTreatment is still undecided because of the Margin SchemeFlat Rate Scheme useDirectly flagged as an area HMRC wants evidence on How We Help You Deal With the VAT on Online Marketplace Sales and the Proposed Changes At Apex Accountants, we work with online sellers, e-commerce businesses and marketplace traders across Amazon, eBay, Etsy and food delivery platforms to keep their VAT position under control — including ahead of policy changes like this one. Our support covers: VAT registration reviews for e-commerce and marketplace sellers Turnover analysis broken down by platform and sales channel B2C and B2B VAT mapping for mixed-channel businesses Flat Rate Scheme impact reviews Second-hand goods and Margin Scheme reviews Marketplace VAT compliance checks for Amazon, eBay, Etsy and similar platforms Support with preparing and submitting responses to the HMRC consultation If you sell through an online marketplace, the sensible move isn’t to wait for the final rules — it’s to understand exactly where your VAT exposure sits today. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Conclusion This is still a consultation, not a finished piece of legislation, and the final shape of any changes won’t be clear until after 18 August 2026. But the direction of travel is unmistakable: HMRC wants marketplaces to take on more VAT responsibility for UK-based sellers, not just overseas ones and low-value imports. VAT-registered sellers may find that platforms, rather than sellers themselves, account for VAT on marketplace sales. Smaller sellers need to assess whether the final rules introduce a suitable threshold or relief. Sellers can strengthen their position by reviewing VAT registration status, platform-by-platform turnover, sales channel mix and Flat Rate Scheme use before the rules take effect. Common Questions From UK Marketplace Sellers Will this affect my Amazon, eBay or Etsy account? Potentially, yes. The proposal applies to qualifying online marketplaces that facilitate B2C goods sales. It is not limited to specific platforms and could affect sellers using major marketplace channels. Does this affect sales through my own website? No. The proposal currently focuses on marketplace sales only. VAT obligations for sales made through your own website, physical shop or direct channels would continue under existing rules. What if my turnover is under £90,000? This remains an important area under consultation. Possible protections include a Minimum Platform Threshold or VAT rate relief, but the final approach has not been confirmed. Will marketplaces ask for more information from sellers? Yes, sellers may need to provide more details. Platforms could review business location, marketplace turnover, seller status, and whether goods are new or second-hand. Are business-to-business sales included? No. The proposed changes focus on business-to-consumer sales of goods. B2B transactions are outside the main scope of the proposed marketplace VAT liability rules.
Getting Your Business Ready for the Summer’s Temporary VAT Cut Posted on 4 June 20264 June 2026 by Farazia Gillani A temporary VAT cut of 5% will apply from 25 June 2026 to 1 September 2026 on certain children’s meals, children’s and family tickets, and admission to qualifying family attractions. Preparing your systems, menus, ticket types, and records before 25 June will make summer trading smoother and autumn VAT returns easier to manage. At Apex Accountants, we treat the task as a sales-mapping job first and a VAT-return job second. Knowing exactly which items qualify makes a busy summer manageable. What You Need To Know About The Summer VAT Cut The 5% VAT cut replaces the standard 20% rate for qualifying sales during the relief window and applies across the UK. The 5% VAT relief covers three main areas: Children’s meals sold only as children’s meals and eaten on the premises Children’s tickets for cinemas, theatres, concerts, exhibitions, and shows Admission to attractions suitable for families, including adult admissions when part of a qualifying family package A theme park ticket for adults can fall within the temporary 5% rate, but an adult-only cinema ticket does not; for cinemas and theatres, the relief focuses on children’s tickets and family packages. Examples of possible reductions if the full saving is passed on include: £20 off family theme park tickets £11 off family aquarium tickets £2 off children’s meals If your business is not VAT-registered, this is not a rate change you can apply in the usual way. Read: Everything About VAT Return Deadlines in the UK Temporary VAT Cut – Which Sales Qualify and Which Do Not Sale TypeTemporary RateNotesChildren’s meal on a dedicated menu, on site5%Must be held out for sale only as a meal for childrenFixed-price children’s meal including drink/dessert5%Whole package qualifies if sold as one mealSmaller adult portion sold cheaplyNormal rateNot eligibleTakeaway children’s mealNormal rateTakeaways do not qualifyChildren’s cinema/theatre ticket5%Must be marketed, priced, and presented as a children’s ticketAdult cinema/theatre ticket sold on its ownNormal rateAdult-only admissions stay standard-ratedFamily cinema/theatre ticket including at least one child5%Whole family package can qualifyGeneric group ticket not sold as family ticketNormal rateDoes not qualifyZoo, soft play, museum, or theme park admission5%Applies to the right of admission onlyFood, merchandise, or upgrades sold separatelyNormal rateOnly admission charge is reducedSports event entry, facility use, or participationNot coveredExcludedSeason/repeat-entry passes beyond relief periodUsually not coveredOnly fully qualifying passes within period count The key is not who buys the item, but how it is sold. Items must be marketed, priced, and presented as intended for children. A proper children’s menu is stronger than simply offering “small plates” from the adult menu A clear “family ticket” is safer than a vague multi-buy group ticket Non-alcoholic drinks included in a children’s meal can qualify. Meals including alcohol or separately priced extras from the standard menu remain standard-rated. Admission is only reduced where it would otherwise be standard-rated. Exempt admissions are not affected. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation How to Prepare Pricing, Tills, and Records Start with your stock codes and ticket codes rather than marketing. Your point-of-sale system must separate 5% sales from standard-rate sales. Staff should operate the system correctly, even during busy periods. Keeping daily gross takings by rate, adjustments, and working papers will help manage VAT efficiently. Practical Steps List every potentially affected item — children’s meals, child tickets, family tickets, adult attraction tickets, bundles, and passes Rename anything unclear to match eligibility Program separate codes for 5% and standard-rate sales Test mixed baskets such as adult ticket + child ticket + merchandise, or children’s meal + extra standard-menu item Check website wording and online booking flows to ensure descriptions match tax treatment Decide your pricing approach now to avoid mid-summer changes Diary the switch-back date so rates return to normal after 1 September Ensure receipts and VAT invoices show tax points, item descriptions, and rates VAT-inclusive pricing fractions: 1/6 for 20% and 1/21 for 5%, which affects the tax element inside a gross price. Also Read: VAT on Car Hire in the UK – What Businesses Need to Know Summer VAT Cut on Booking and Bundle Considerations Tickets bought for dates after 1 September remain standard-rated Prepaid tickets for dates within the relief window can be adjusted; credit notes may be needed Bundles (admission + meal + merchandise) must be split; only the qualifying portion can get 5% Season passes covering dates outside the relief period usually do not qualify How We Help Small Businesses Take Advantage of The 5% VAT Relief Apex Accountants helps small businesses implement clean processes for VAT changes. We assist with: Reviewing menus, ticket types, and family packages for eligibility Mapping 5% and standard-rate items in tills, EPOS, and booking systems Checking advance bookings, prepayments, and credit-note adjustments Reviewing invoices, receipts, and bookkeeping records for mixed-rate sales Preparing supporting schedules for VAT returns Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Conclusion The summer relief is useful, but it is narrow. The main focus is on how items are sold, whether the sale is really a qualifying meal or admission, and when the right of admission actually falls, so small businesses should prepare around those three tests first. The best plan is this: sort your qualifying items, fix your till and online checkout, test mixed transactions, and set a reminder for the switch back after 1 September. Done early, this is manageable; left late, it becomes a front-desk problem in the middle of your busiest weeks. FAQs on 5% VAT Cut Does the temporary 5% VAT rate start on 25 June 2026? Yes. The official relief window runs from 25 June 2026 to 1 September 2026 inclusive. Is the relief available across the whole UK? Yes. The official fact sheet states that it applies in England, Wales, Scotland and Northern Ireland. What counts as a children’s meal? It must be held out for sale only as a meal for children and supplied by a restaurant, café or similar establishment for consumption on the premises. The key test is how it is marketed, presented and priced, not simply who eats it. Does takeaway food qualify for a temporary VAT cut? No. The detailed brief is clear that takeaway meals do not qualify for this temporary reduced rate. If I sell a smaller adult portion, can I treat it as a children’s meal? Not automatically. Smaller portions, lower-calorie options and discounted adult meals are specifically excluded unless they are genuinely sold as children’s meals. Do adult cinema or theatre tickets qualify for 5% VAT? Not when sold on their own. For cinemas, theatres, concerts, exhibitions and shows, the relief applies to children’s tickets, and adult admissions remain standard-rated unless they are part of a qualifying family ticket. Do family tickets qualify even if they include adults? Yes, where the ticket is sold as a family admission that includes one or more children. In that case, the whole family package can qualify. Which attractions are covered? The official list includes attractions such as theme parks, fairs, circuses, adventure parks, museums, zoos, aquariums, wildlife parks, farm visitor attractions, soft play and observation attractions. The reduced rate applies only to the right of admission, not to separately sold food, merchandise or upgrades. Are sports events or sports facilities included? No. The relief does not apply to admission to sports events, use of sports facilities, or participation in recreational sport. What if customers booked early or bought a pass? For admissions, what matters is the date of admission within the relief window. Advance sales can use the lower rate under the existing change-of-rate rules, but tickets for admission on or after 2 September 2026 stay standard-rated, and many season or repeat-entry passes running beyond the relief period will not qualify.
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: PositionPartyImplicationGrants = payment for servicesColchester InstituteCourses are exempt business supplies → building VAT recovery under Lennartz standsGrants = general subsidiesHMRCCourses are non-business → college must account for output VAT and loses building VAT recovery What did the lower courts decide? StageDecisionFirst-tier Tribunal (FTT)Sided with HMRC — dismissed Colchester’s claimUpper Tribunal (UT) 2020Overturned FTT — held funding was consideration and courses were exempt business suppliesCourt of Appeal 2026Dismissed 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. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation 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: AreaImpactCharitable VAT reliefsZero-rating on new builds and reduced rates on utilities may no longer apply – potentially costing some colleges millionsOutput tax exposureESFA/DfE funding may now be treated as consideration, raising the question of whether output VAT is owed on funded coursesHistoric adjustmentsColleges may need to revisit past VAT filings; HMRC may challenge prior zero-rating claims going back four yearsVAT recoveryColleges 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 PrincipleExplanationFunding is not automatically outside VAT“Grant” money can be VATable if it is actually payment for servicesContract wording mattersThe direct link was established because the funding contracts described money as paid “in consideration” of delivering approved coursesDirect link testEven formula-based or anticipated payments can satisfy the reciprocity requirement — payments do not need to match each student or each hour of teachingThird-party payerVAT consideration need not come from the service recipient — a third party (like the government) can create a VAT supplyFlat-rate funds can be considerationAs 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 Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation 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.
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). Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation 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 TypeCan You Reclaim VAT?Clippers, scissors, razorsYesShampoos & styling productsYesCommercial rent & utilitiesYesCleaning suppliesYesStaff uniforms (protective)YesAccounting & professional servicesYes 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. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation 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.
UK Tax Allowances: Ways to Make the Most of 2025/26 Before 5 April Posted on 16 March 202618 March 2026 by Farazia Gillani As the end of the UK tax year approaches, it’s crucial to make the most of available tax allowances before the 5th of April. With inflation impacting your finances, the freezing of income tax thresholds until at least 2031, and rising living costs, optimising your UK tax allowances has never been more important. This guide will explore key allowances available for the 2025/26 tax year and how you can strategically plan your finances for the future. UK Tax Allowances You Should Use Before the End of the Tax Year Whether you’re looking to save for the future, reduce your taxable income, or pass on assets to loved ones, knowing which allowances to use before the end of the tax year is essential. Here are the primary allowances you can take advantage of: 1. Personal Allowance and Marriage Allowance Personal Allowance: For the 2025/26 tax year, you can earn up to £12,570 tax-free. However, once your income exceeds £100,000, this allowance begins to taper off and is entirely phased out by an income of £125,140. Planning for this can help mitigate higher tax liabilities. Marriage Allowance: If one spouse or civil partner earns below the personal allowance threshold, they can transfer up to 10% of their allowance to the other partner, reducing the higher earner’s tax bill. This could save up to £250 per year for eligible couples. 2. Savings Allowances Personal Savings Allowance: If you’re a basic-rate taxpayer, you can earn up to £1,000 in savings interest tax-free. For higher-rate taxpayers, the allowance drops to £500, and additional-rate taxpayers are not eligible for this relief. Starting Rate for Savings: If your non-savings income is below £12,570, you could be eligible to earn up to an extra £5,000 of interest taxed at 0%. This starts to taper off as your other income rises. 3. Capital Gains Tax (CGT) Annual Exempt Amount CGT Exempt Amount: For individuals in the 2025/26 tax year, the annual exempt amount stands at £3,000. If you’re married or in a civil partnership, both you and your partner can combine your allowances, creating a £6,000 buffer for jointly held assets. This allowance can be particularly useful when selling assets like shares, second properties, or collectibles. 4. Dividend Allowance Tax-Free Dividends: If you own shares, you can earn up to £500 in dividends tax-free in 2025/26. This allowance will gradually decrease over time, so if you have investments, using this allowance now could help reduce your tax burden. 5. Inheritance Tax (IHT) Allowances Annual Gifting Exemption: Every individual has a £3,000 annual exemption for IHT, which can be carried forward for one year if unused. You can also gift up to £250 to as many people as you like without it counting towards your £3,000 exemption. Marriage and Civil Partnership Gifts: In addition to the £3,000 annual exemption, you can gift £5,000 to a child, £2,500 to a grandchild, or £1,000 to anyone else as part of a wedding gift. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Strategic Planning for UK Tax Year-End Planning 2025/26 The end of the tax year (5 April) is the deadline for using your tax-free allowances. Here’s how to plan your UK tax year-end planning 2025/26 strategy: Use Your ISA Allowance ISAs offer a valuable opportunity to save or invest without paying tax on the returns. You can contribute up to £20,000 into an ISA in 2025/26. Contributions can be spread between Cash ISAs, Stocks & Shares ISAs, and Innovative Finance ISAs. Since this allowance cannot be carried forward, you must use it before the end of the tax year. Cash ISAs: These are best for short-term savings, as they offer competitive interest rates with tax-free earnings. Stocks and Shares ISAs: These offer the potential for higher long-term returns, although with some market volatility. They’re best used for medium- to long-term goals, such as retirement planning. Maximise Pension Contributions to Take Full Advantage of Tax Year End Allowances 2025/26 Pensions are one of the most tax-efficient ways to save for retirement. The personal contributions you make to a pension qualify for tax relief, which can significantly reduce your taxable income. The annual allowance for pension contributions is £60,000 for most people, but this may taper down for those with income over £200,000. Even if you don’t contribute the full £60,000, making regular contributions can help maximise your savings while reducing your current tax liability. Consider Capital Gains Tax Planning Capital gains tax applies when you sell assets such as stocks, bonds, property (excluding your primary home), or other investments. To make the most of your £3,000 annual exemption, consider spreading the sale of assets over multiple years or using your spouse’s exemption as well. Be aware of the tax rates on gains, which are 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. Understanding the Impact of Inflation and Income Thresholds With the UK facing rising inflation, the value of your personal savings and investments is at risk. This makes using tax allowances to reduce your taxable income and maximise growth even more crucial. The freeze on income tax thresholds until 2031 means that more individuals are being pushed into higher tax bands due to wage inflation. It’s essential to consider tax-efficient strategies to offset this, including contributions to pensions, ISAs, and gifts to reduce your taxable estate. The Importance of UK Tax Year-End Planning 2025/2026 The tax year-end planning process is crucial for securing long-term financial health. By proactively managing your allowances and tax-free contributions, you can reduce your taxable income and optimise your savings. Every year offers an opportunity to re-evaluate your financial position and ensure that you are making the most of the tax benefits available. At Apex Accountants, we can help you navigate the complexities of the UK tax system. Our expert advice ensures that you stay on track with tax-efficient savings and investments. How We Can Help You Take Full Advantage of UK Tax Allowances At Apex Accountants, we offer tailored tax planning and accounting services to ensure your financial strategy is in the best possible shape. Whether you’re looking to make the most of your tax year-end allowances 2025/26 or need assistance with long-term wealth planning, we provide expert advice and solutions. Tax Advice and Planning Our tax advisors can help you optimise your use of tax allowances, reduce your taxable income, and ensure compliance with the latest HMRC regulations. Pensions and Retirement Planning We offer guidance on pension contributions, tax relief, and other retirement planning strategies, helping you make the most of your pension pot. Capital Gains Tax and Inheritance Tax Planning Our experts can help you manage capital gains and inheritance tax efficiently, ensuring that you maximise exemptions and avoid unnecessary tax liabilities. By making strategic use of these tax year end allowances 2025/26, you can ensure that your finances are in the best possible position as we head into the next tax year. Remember, the key is to plan and make the most of every tax-saving opportunity before the 5th of April deadline. For more advice on UK tax year-end planning 2025/2026, or if you need assistance with any tax-related matters, feel free to reach out to us. We’re here to help guide you through the process and ensure you take full advantage of the tax allowances available. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation FAQs on Tax Year-end Allowances 2025/26 1. Is the personal tax allowance going up in 2025–26? No, the personal tax allowance remains at £12,570 for the 2025/26 tax year. There are no confirmed plans for an increase in the personal allowance for this period. 2. What are the tax allowances for 2025–26? For 2025/26, key allowances include the personal allowance (£12,570), savings allowance (£1,000), dividend allowance (£500), capital gains tax exemption (£3,000), and various gifting and inheritance tax exemptions. 3. Is HMRC considering raising the personal tax allowance from £12,570 to £20,000? No, HMRC has not announced any plans to raise the personal tax allowance to £20,000. It remains at £12,570 for the 2025/26 tax year without major changes anticipated. 4. What are the tax thresholds for 2025? The income tax thresholds for 2025 include the personal allowance of £12,570, the basic rate at £12,571–£50,270, and the higher rate between £50,271–£150,000, with the additional rate above £150,000. 5. What is the dividend allowance for 2025–26? For 2025/26, the dividend allowance is £500. Tax on dividends above this allowance is charged at 8.75% for basic rate, 33.75% for higher rate, and 39.35% for additional rate taxpayers. 6. Is the UK tax allowance changing in 2025? The UK tax allowance will remain the same for 2025, with the personal allowance staying at £12,570. However, it is important to note that the allowance will gradually be phased out for individuals with income above £100,000, and it will be lost entirely for those earning over £125,140. 7. What is the tax exemption limit for assessment year 2025/26? The tax exemption limit for the 2025/26 assessment year will depend on the specific type of tax relief or exemption. For example, the personal allowance remains £12,570, and the inheritance tax annual exemption is £3,000. Other allowances, like the capital gains exemption, may also apply to certain assets. 8. How much tax will I pay in 2025/26 UK? The amount of tax you will pay in the 2025/26 tax year depends on your income level and type. The personal tax allowance is £12,570, and income above this will be taxed at varying rates. For example, income between £12,570 and £50,270 will be taxed at the basic rate of 20%, while income over £50,270 is taxed at 40% and above £150,000 at 45%. Calculating your exact tax depends on your earnings, tax code, and deductions.
Are Small UK Businesses Holding Back Growth To Stay Under The £90,000 VAT Threshold? Posted on 9 March 202610 March 2026 by Farazia Gillani Fresh HMRC figures have reignited an old VAT debate: whether the UK’s compulsory VAT registration threshold is creating a “cliff edge” that nudges small firms to stay small. In the year to December 2025, 683,700 businesses reported turnover below the £90,000 VAT threshold, up from 671,000 a year earlier. Over the same period, the number in the £90,000 to £150,000 bracket fell to 280,400 from 306,300. This pattern can look like “bunching” around the threshold, especially in price-sensitive, labour-heavy sectors like hospitality, personal services and trades. A recent Business and Trade Committee report also warned the VAT threshold can discourage expansion and that cliff edges penalise firms that try to grow. Why this matters for small businesses VAT is not just a tax rate. It is a pricing decision, a cash flow issue, and an admin commitment. Once you register, you generally need to: charge VAT on most standard-rated sales (often 20%) file VAT returns (usually quarterly) keep VAT records and follow VAT rules on invoices, evidence, and adjustments For firms selling mainly to the public (who cannot reclaim VAT), adding VAT can feel like an overnight price jump. For firms selling mainly to VAT-registered businesses, registration can be neutral or even helpful, because customers can often reclaim VAT and you can reclaim VAT on your costs. The £90,000 VAT threshold: what the rules actually say The VAT registration threshold increased from £85,000 to £90,000 from 1 April 2024. The two tests that trigger VAT registration You must register if either applies: TestWhat HMRC looks atWhat happensPast turnover testTaxable turnover in the last 12 months goes over £90,000 (rolling, not tax year)Register within 30 days of the end of the month you went overFuture turnover testYou expect taxable turnover to go over £90,000 in the next 30 days aloneRegister immediately for that expected breach Key point: it is a rolling 12-month calculation, not “your year end” and not “the tax year”. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation What counts as “taxable turnover”? HMRC focuses on taxable supplies, which generally include standard-rated, reduced-rated, and zero-rated sales. Exempt and out-of-scope income is treated differently, which is where many small businesses slip up. Why businesses may cluster below £90,000 The incentive is simple: staying unregistered can keep pricing simpler and admin lighter. But it can also cap momentum. Common behaviours advisers report include: turning away work late in the year to avoid breaching the line reducing hours or pausing marketing during busy periods delaying invoicing (which can be risky if it does not reflect the true tax point) changing customer mix, focusing on zero-rated or VAT-friendly work where possible restructuring activities into separate legal entities That last point is the most dangerous if done mainly to sidestep VAT. “Business splitting” and disaggregation risk Splitting a business into multiple entities is not automatically illegal. But if it is an artificial separation, HMRC can treat the activities as a single taxable person for VAT. HMRC has detailed guidance on identifying when separate businesses are, in reality, one entity. Practical ways to handle the VAT step-up without stalling growth 1) Price and margin planning (before you register) model what happens if you add VAT to prices versus absorbing part of VAT in margin review competitors: are they VAT-registered or not check whether your customers can reclaim VAT (B2B often can, consumers cannot) 2) Consider VAT schemes that help admin or cash flow Some schemes are designed to reduce friction: SchemeWhy firms use itKey thresholdFlat Rate SchemeSimpler VAT calculation in some casesJoin if VAT turnover is £150,000 or lessCash Accounting SchemePay VAT when customers pay you, helpful for slow payersJoin if taxable turnover is £1.35m or less These are not right for every business, but they can ease the transition for some. 3) Improve record-keeping and invoicing controls keep clear evidence for VAT invoices and receipts set up bookkeeping so VAT codes are consistent avoid last-minute fixes that create errors and rework What reforms are being discussed? There is no consensus. The Business and Trade Committee has urged reform to address growth-discouraging cliff edges. Meanwhile, the Resolution Foundation has argued for a much lower threshold (around £30,000) to reduce distortions and raise revenue. Others argue the opposite: raise the threshold so that only firms with more scale face compulsory registration (one proposal reported was £115,000). A realistic outcome may involve reviewing how the cliff edge works, not just the number. How We Help Small Businesses Navigate VAT At Apex Accountants & Tax Advisors, we help growing businesses make VAT decisions based on numbers, not fear. Our VAT support typically covers: VAT threshold monitoring and registration planning pricing and margin reviews to reduce VAT shock VAT return compliance and error checks advice on suitable VAT schemes (where eligible) risk reviews around disaggregation and trading structures, aligned with HMRC guidance If you would like guidance on managing VAT thresholds or reviewing your VAT position, contact Apex Accountants or book a consultation with our team today. Conclusion The latest HMRC figures and parliamentary scrutiny suggest the £90,000 threshold still shapes behaviour. For some firms, holding turnover below the line may feel safer in the short term, but it can also limit long-term value. The better approach is to treat VAT as a planned transition, with proper tracking, pricing decisions, and systems that keep compliance tight while growth continues. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation FAQs 1. Do I have to register for VAT the moment my turnover reaches £90,000? No. You must register when your taxable turnover exceeds £90,000 over any rolling 12-month period. Once the threshold is breached, you normally have 30 days from the end of that month to notify HMRC and complete VAT registration. 2. How can I correctly track the rolling 12-month VAT threshold? Businesses should review their total taxable sales at the end of every month. Add together turnover for the previous 12 months, not the tax year. Accounting software or spreadsheets can help monitor the threshold and avoid accidental breaches. 3. What happens if my business goes over the VAT threshold accidentally? If your turnover exceeds £90,000 and you fail to register on time, HMRC may still require registration from the correct effective date. You may have to pay VAT owed on earlier sales and could face late registration penalties. 4. Is voluntary VAT registration ever beneficial for small businesses? Yes, voluntary VAT registration can be beneficial in some cases. Businesses that incur significant VAT on expenses or mainly serve VAT-registered customers may benefit because they can reclaim input VAT and appear more established to larger clients.
VAT on UK Private School Fees Survives Latest Legal Challenge Posted on 9 March 202616 March 2026 by Farazia Gillani The Court of Appeal has rejected the latest legal challenge to adding VAT on UK private school fees, confirming that the government acted within its powers under the Finance Act 2025. In a judgement handed down on 27 February 2026 in London, senior judges ruled that applying the standard 20% VAT rate to most independent school tuition fees is lawful. The claim was brought by parents and faith-based schools who argued that the measure disproportionately affected families seeking religious education and risked forcing smaller schools to close. The court dismissed those arguments, holding that Parliament is entitled to determine tax policy and that there is no legal right to a particular type of education free from taxation. Why this matters The decision provides legal certainty for HMRC and the independent education sector. Unless overturned by the Supreme Court or reversed by future legislation, VAT at 20% will continue to apply to private school fees. For schools and families, the financial impact is immediate. The removal of VAT exemption changes fee structures, cash flow, and compliance obligations for institutions that were previously outside the VAT system. Key points The Court of Appeal dismissed the challenge on 27 February 2026. The change was introduced under the Finance Act 2025. Most independent school tuition fees are now subject to 20% VAT. The VAT registration threshold remains £90,000 taxable turnover. Further appeal to the Supreme Court is possible. What has happened For decades, private education supplied by eligible bodies was treated as VAT-exempt under the Value Added Tax Act 1994. The Finance Act 2025 removed that exemption for most fee-paying independent schools. The Court of Appeal confirmed that: Tax exemptions are created by statute and can be withdrawn by Parliament. The European Convention on Human Rights does not guarantee tax-advantaged private education. The Government’s policy falls within its fiscal discretion. This follows an earlier High Court ruling reaching the same conclusion. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Background and context of private schools VAT case VAT is charged at the standard rate of 20% unless a supply is exempt or zero-rated. With the exemption removed, tuition fees now fall within the standard rate. Schools exceeding the £90,000 VAT registration threshold must: Register with HMRC File quarterly VAT returns under Making Tax Digital Account for output VAT on fees Apply partial exemption rules where relevant VAT registration also allows recovery of input VAT on certain business costs, although this is subject to complex calculations. Who is affected The ruling on VAT on private schools affects: Independent day and boarding schools Faith-based and lower-fee schools Parents facing higher gross fees Suppliers connected to education services Smaller schools operating on narrow margins may face greater strain, particularly where fee increases cannot be fully passed on. Apex Accountants Insight The judgement reinforces a central tax principle: VAT treatment is a matter of legislation, not entitlement. Legal challenges to tax policy face a high threshold. However, the operational impact is significant. Schools newly within the VAT regime must manage: Partial exemption calculations Capital expenditure planning Contractual updates with parents Cash flow implications of quarterly VAT payments Where implementation has been rushed, compliance risks increase. HMRC penalties can arise from incorrect returns, late registration or errors in tax point treatment. Why this matters for UK businesses The consequences extend beyond the education sector. Increased fees may alter enrolment patterns. State schools could experience capacity pressure. Local economies linked to independent schools may see indirect effects. Professional advisers must factor policy risk into long-term planning. The measure illustrates how fiscal policy can reshape established sectors quickly. What businesses should do Independent schools and related organisations should: Confirm VAT registration status. Review fee structures and parent contracts. Conduct a partial exemption assessment. Model cash flow under quarterly VAT reporting. Seek specialist VAT advice where capital projects are involved. Early action reduces financial and compliance exposure. How We Help UK Schools Apex Accountants & Tax Advisors supports independent schools and charities with: VAT registration and compliance Partial exemption and capital goods scheme advice Contract and invoicing reviews HMRC correspondence and dispute resolution Our advice is grounded in current UK tax legislation and HMRC guidance. Get expert guidance on private school VAT today. Contact us now to ensure your school or charity stays fully compliant. Conclusion The Appeal Court’s decision on adding VAT to UK private school fees confirms that the policy is legally sound. The focus now shifts from litigation to compliance and financial resilience. Schools must adapt to operating within the VAT system. Careful planning and technical advice will be essential in managing the long-term impact. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation FAQs About VAT on Private Schools 1. When did VAT start applying to private school fees? VAT at 20% started applying to private school fees from 1 January 2025, following legislative changes in the Finance Act 2025. Prepayments made on or after 29 July 2024 for terms starting on or after this date are also subject to VAT. 2. What VAT rate applies to school fees? The standard VAT rate of 20% applies to education, boarding, and vocational training services provided by private schools or connected persons. 3. Do all schools have to register? No, registration is required only where taxable turnover exceeds the £90,000 threshold in any rolling 12-month period monitored by HMRC. 4. Can schools reclaim VAT on costs? Yes, registered schools can reclaim input VAT on attributable business costs, subject to partial exemption rules where mixed taxable and exempt supplies exist. 5. Can the ruling be appealed? Yes, the claimants may seek permission to appeal the Court of Appeal’s 27 February 2026 decision to the Supreme Court. 6. Are private schools closing due to VAT? No widespread closures are confirmed solely due to VAT; historical annual closure rates were around 3%. Government analysis predicts a 12% long-term sector cost reduction through efficiencies and moderated demand, not mass shutdowns. 7. Is there a legal challenge to VAT on private schools? Yes, a human rights challenge by parents and faith-based schools was dismissed by the Court of Appeal on 27 February 2026, upholding the policy under Finance Act 2025. A Supreme Court appeal remains possible. 8. Can I claim VAT back on private school fees? No, parents and individuals cannot reclaim VAT paid on private school fees as it forms part of the taxable fee. Schools may recover input VAT on their own costs, subject to partial exemption rules.
