At the moment, most benefits in kind are reported to HMRC after the tax year ends, on a form called a P11D. HMRC then adjusts your tax code to collect the tax, often a year or more after you received the benefit.

From 6 April 2027, under HMRC’s current plans, company cars, vans, fuel and private medical cover will be taxed through payroll instead, spread across your pay through the year, with most other benefits following in April 2028.

At larger employers, the payroll team will handle most of the work. If you’re the director of a small company with car or health cover through the business, you and your accountant usually handle it, and a few details matter more for directors than for anyone else.

Read on to find out what’s changing, how it will affect your payslip and what to sort out before April 2027.

What’s Changing To Company Benefit Taxm and When

HMRC originally planned to make payrolling compulsory for almost every benefit from April 2026, with only loans and accommodation left optional.

That was moved back to April 2027, and in June 2026 HMRC confirmed it would phase the change over two years.

The first phase covers the benefits employers provide most often, which the Association of Taxation Technicians (ATT) reports are believed to make up around 92% of all benefits. The timetable is:

Until a benefit moves onto payroll, it stays on the P11D. Benefits provided during 2026/27 that you haven’t voluntarily payrolled are reported in the usual way, with the P11D due by 6 July 2027.

For 2027/28, anything outside the first phase, including loans and accommodation, stays on the P11D unless your company voluntarily registers it for payroll. HMRC’s registration service opens in November 2026, with a deadline of 5 April 2027.

HMRC still describes its guidance as interim, and it may refine the details when it finalises the legislation this autumn. Everything below reflects its current plans.

It’s one of several changes affecting employers over the next two years, following the April 2026 changes to pay and employment rules.

What It Means for Your Payslip

Under the current system, HMRC estimates the value of your benefits and reduces your tax code to collect the tax. 

If the estimate is wrong, for example, because you changed car or your health cover became more expensive, HMRC corrects the difference after the year ends through a P800 calculation or your tax return.

How Payrolled Benefits Are Taxed

With payrolling, the taxable value of each benefit, known as its cash equivalent, is spread across your pay periods and added to your taxable pay. Payroll then works out Income Tax on your salary and the benefit together.

Adding the benefit to your taxable pay doesn’t mean you’re paid any extra money. It’s only there so payroll can work out the right amount of Income Tax.

It doesn’t affect your National Insurance or your pension either. Those are still calculated on your actual salary, so a company car won’t increase the National Insurance deducted from your pay or the amount going into your pension.

Sometimes your company won’t know a benefit’s exact value at the start of the year, for example, if the health insurance premium hasn’t been confirmed yet. In that case, it can use a sensible estimate and correct it once it knows the real figure.

What Happens to Your Tax Code

HMRC will remove the current benefits from your tax code before 6 April 2027, so you don’t pay tax on the same benefit through both your code and payroll.

Any tax you still owe on benefits from earlier years can stay in your code, though. In 2027/28, that means you may pay tax on this year’s benefits through payroll and on an earlier year’s through your code.

An Example

Take Hannah, a director whose company provides an electric car with a list price of £45,000 and private medical cover costing £1,500 a year.

In 2027/28, electric cars are taxed on 5% of their list price, so her benefits work out like this:

At a 20% tax rate, Hannah will see an extra £62.50 deducted each month. At 40%, it would be £125.

The amount of tax is the same as before. What changes is that her company’s payroll collects it during the year she has the benefit, instead of HMRC adjusting her tax code.

What Directors of Small Companies Need to Know

Most of the change is administrative, but three parts of it affect owner-managed companies more than larger employers. They relate to when your company pays National Insurance on benefits, how much tax payroll can take from a small salary, and what happens if you don’t have payroll at all.

Paying Class 1A Twice in One Year

Your company pays Class 1A National Insurance on benefits such as company cars and employer-arranged private medical cover, currently at 15%, the same rate as employer National Insurance.

Currently, it’s paid once a year by 22 July after the tax year ends. From April 2027, it will be paid in real time through payroll.

Class 1A on 2026/27 benefits is still due in July 2027 under the old system. That means during 2027/28, your company pays last year’s bill and starts paying the current year’s at the same time, an overlap HMRC’s preparation guidance acknowledges.

For Hannah’s company, that’s around £495 in July 2027 for 2026/27, when her car was taxed at 4%, plus roughly £47 a month for 2027/28. It’s a one-off cash-flow cost rather than extra tax, but it’s best to plan for it.

Low Salaries and the 50% Limit

Many directors take a small salary and the rest of their income as dividends. Payroll can’t deduct more than 50% of someone’s pay in tax in any pay period.

Tax above that limit is carried forward to the next period. Anything still unpaid at the end of the year is collected afterwards through a P800 calculation, Simple Assessment or your Self Assessment return, according to HMRC’s guidance.

For a director like Hannah, on a salary around the personal allowance, the limit won’t come into play. 

It matters more when the salary is very low, and the benefits are valuable, such as a petrol car with a high list price and free fuel for private use.

In that case, you’ll still receive a bill for the tax after the year ends.

If No One Takes a Salary

Some small companies don’t run a payroll at all, because the directors take only dividends. 

HMRC’s draft guidance says benefits for directors who receive no pay should still be reported through payroll, with the tax collected after the year ends. 

If your company provides a car or health cover but has no payroll, ask your accountant whether you’ll need to set one up before April 2027.

Getting Payroll Ready Before April 2027

You don’t need to register for the first phase, because payrolling cars, fuel, vans and medical cover is compulsory. You do need the right information in your payroll before 6 April 2027, and a plan to keep it up to date. To prepare:

• List your benefits: Go through your most recent P11D and mark which benefits fall in the first phase and which remain on the P11D for another year.
• Check your software: Confirm your payroll software will support payrolled benefits from April 2027. HMRC has said it will update its free Basic PAYE Tools, and if you’re reviewing your accounting software, make payroll part of the check.
• Gather the car details: Payroll will need more detail about each company car than most P11Ds hold, including its make and model, list price and accessories, CO2 emissions, fuel type, electric range for hybrids, the dates it was available and any contributions you make towards it.
• Decide who reports changes: A new car, new health cover, or someone joining or leaving needs reporting to HMRC as it happens, so agree who tells payroll.
• Budget for Class 1A: Set aside money for the July 2027 payment alongside the new in-year payments.

The first year comes with some leeway. HMRC has said errors in 2027/28 payroll returns caused by mandatory payrolling won’t attract inaccuracy penalties unless they’re deliberate. Late filing and late payment penalties still apply as normal.

Getting Ready With Double Point

For most directors, payrolling won’t change how much tax you pay on a company car or health cover. 

It changes when you pay it, who pays Class 1A, and who reports what. The directors who’ll notice it most are those on very low salaries, and those whose companies don’t run a payroll at all.

At Double Point, we can review the benefits your company provides, set up your payroll to handle them from April 2027 and help you plan for the Class 1A overlap in 2027/28. 

We can also review whether each benefit remains the most tax-efficient choice for you, especially if you’re considering a new company car.

Book a free consultation and we can check what your company needs to do before 6 April 2027.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

The post Changes To Company Benefit Tax From April 2027 appeared first on Double Point Accountancy.

It’s no longer something to put off, though. In September, three directors were fined in the first prosecutions for breaking the identity verification rules. One of them had verified his own identity, but he was convicted because he let a fellow director keep acting without verifying.

You may have seen 18 November described as the deadline for every director. It’s the date the 12-month transition period ends, but it isn’t the date most directors need to work to. 

If you were a director before 18 November 2025, you need to verify before your company files its next confirmation statement, and depending on when that’s due, your deadline could already have passed.

When Do You Need to Verify?

Identity verification became a legal requirement on 18 November 2025, as part of the ECCTA reforms. 

Anyone who has become a director since then has had to provide a personal code when filing their appointment. If you were already a director, you were given a year to verify, linked to your company’s annual confirmation statement.

In practice, that means you need to verify before your company files its next confirmation statement. Every company files one at least once a year, so if your company’s statement was due in March, you needed to verify by March. If yours is due in the next few weeks, you’re in the last group, and your deadline is almost the same as the end of the transition.

Not sure when yours is due? Search for your company on the Companies House register and you’ll see the date on its overview page. Companies House’s verification guidance sets out the deadline for each role:

Are you a director of more than one company? You only verify once, so you’ll need to do it before the confirmation statement for whichever company is due first. After that, you provide the same personal code for each directorship, with that company’s own confirmation statement.

What Happens If You Don’t Verify?

The first problem is practical. Your company can’t file its confirmation statement without every director’s personal code, so one unverified director can hold up the whole filing. 

A late confirmation statement is an offence on its own. Companies House can fine the company for it, and if the statement still isn’t filed, it can eventually strike the company off the register.

Acting as a director while unverified is also an offence, and so is the company letting it happen. That’s the part the September cases made clear. According to the Insolvency Service’s announcement, two of the directors were fined for carrying on as directors without verifying. 

The third had verified, but he knew a fellow director hadn’t, and he didn’t take reasonable steps to stop her acting. All three were also convicted of filing confirmation statements late, with fines of between £80 and £307 each, plus costs.

The fines were small, but the prosecutions didn’t wait until the transition ended. The directors involved had missed their deadlines months earlier. 

Companies House aims to have every company either compliant or facing enforcement action by the end of March 2027, and it can mark the public register against people who haven’t verified.

How to Verify Your Identity

The good news is that verifying is free if you do it yourself through GOV.UK One Login, and it’s usually quick. Companies House says its ID checking app takes under two and a half minutes on average. You’ve got three options:

• Use the GOV.UK ID Check app: Scan your photo ID with your phone, then scan your face. You can use a UK passport, a biometric passport from another country, a UK photocard driving licence (full or provisional), or a UK biometric residence permit or card.
• Verify online or at a Post Office: If the app doesn’t work for you, GOV.UK One Login may let you verify on the web by answering security questions, or in person at a participating Post Office.
• Ask an ACSP: An Authorised Corporate Service Provider, such as an accountant or solicitor registered with Companies House, can verify you instead. This is often the easiest route if you don’t have suitable ID or live overseas, although providers usually charge.

Once you’re verified, you’ll get an 11-character personal code. It belongs to you, not your company, and you can find it anytime by signing in to Companies House and going to ‘Manage account’.

Don’t Forget to Link Your Code

Verifying isn’t the end of it. You also need to link your code to every directorship and PSC role you hold, and that doesn’t happen automatically.

If you’re a director, include the code in your company’s confirmation statement. If you’re a director and a PSC of the same company, you’ll need to give it twice: once in the confirmation statement, and again through the PSC service within the 14 days starting the day after the confirmation statement date. 

That second window is short, and it’s easy to miss if you verified months ago and assumed you were done.

Before you submit your code, check that the name and date of birth Companies House holds for you match your ID. If they don’t, get the register corrected first.

Preparing for Your Next Confirmation Statement

Your company can’t file its confirmation statement until every director has a personal code.

If your statement is due before the transition ends, start collecting those codes a few weeks ahead rather than in the last few days. It also helps to put one person, usually a director or your accountant, in charge of gathering them. To get everything in place:

• Find your date: Look up your next confirmation statement date on the Companies House register.
• List your directors: Note every individual director on the register, including directors who aren’t involved day-to-day.
• Collect their codes: Ask any director who hasn’t verified to do so now and send their code to whoever is filing.
• Check the details match: Compare the names and dates of birth on the register with each director’s ID.
• File once every director’s code is in: The online Companies House fee is now £50, up from £34 before February. You can file before the due date, but filing early starts a new 12-month review period from the filing date.

If a Director Won’t or Can’t Verify

Every director on the board is at risk if an unverified director carries on acting.

If the problem is a lack of suitable ID, the director may be able to verify through an Authorised Corporate Service Provider (ACSP) instead. If they simply won’t verify, they may need to resign or be removed before the confirmation statement is due.

What’s Next From Companies House?

Directors and PSCs are only the first stage. Companies House will later bring in corporate directors and plans to require verification from anyone who files documents on a company’s behalf.

That’s part of the 2027 filing changes, which also include software-only filing for accounts, while the wider accounts reforms have been paused.

Get Verified as a Director

If your company’s confirmation statement is due in the next few weeks, or it’s already overdue because someone hasn’t verified, now’s the time to sort it out.

At Double Point, we can check the Companies House record for every director and PSC, help each person through verification and file your confirmation statement once every code is in. We can also help handle your company accounts and your other Companies House filings.

Book a free consultation, and we’ll tell you exactly what your company needs to do before its next deadline.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

The post Companies House Identity Verification: Is 18 November Your Deadline? appeared first on Double Point Accountancy.

You can file online from 6 April, as soon as the tax year ends. Even so, HMRC’s figures showed that at the start of January 2026, around 5.65 million people still hadn’t filed their return for the 2024/25 tax year.

Leaving it until January is perfectly legal, but it has costs that aren’t obvious. Filing in the autumn affects how you can pay, how much notice you get of your bill, when you receive any refund and how long HMRC has to open an enquiry. 

Each of these directly affects your money, and all depend on your filing date.

Read on so we can convince you of the benefits of filing your tax return early.

When You Can File, and When You Have to Pay

The tax year ends on 5 April, and HMRC accepts online returns for that year from 6 April. Paper returns must reach HMRC by 31 October, and online returns by 31 January. Any tax you owe is due on 31 January, whichever date you file, so filing in October doesn’t mean paying in October. 

More people are choosing to file early. HMRC reported that almost 740,000 returns for the 2025/26 tax year were filed in April 2026, a record for the month, with more than 298,900 in the first week alone. 

That’s still a small share of the more than 12 million returns HMRC expects to receive this year.

Paying Your Tax Through Your Tax Code

If you’re employed or receive a company pension, filing early can help you avoid a lump-sum payment altogether. 

HMRC will collect the tax through your PAYE tax code for the following year, spreading it across your pay, as long as you meet three conditions:

• You owe less than £3,000: The limit applies to the amount you owe when HMRC processes your return. Paying off part of a larger bill to get below it doesn’t count.
• You already pay tax through PAYE: You need a salary or company pension with a tax code HMRC can adjust.
• You file in time: Online returns must be filed by 30 December, and paper returns by 31 October.

HMRC won’t use this route if you don’t have enough PAYE income, if you’d end up paying more than half your PAYE income in tax, or if you’d pay more than twice as much tax as you normally do. It applies automatically unless you opt out on your return. Your employer receives the new tax code, but not the reasons behind it.

The result is an interest-free instalment plan. Laura is a higher-rate taxpayer who lets out a flat and owes £1,800 on her rental profit. If she files online by 30 December, HMRC reduces the tax-free allowance in her tax code by £4,500 for the next tax year. 

At 40%, that amounts to £1,800, collected as 12 monthly deductions of £150. Because most of her tax is already collected through her salary, she doesn’t have payments on account either, so there’s nothing to pay on 31 January.

Knowing Your Payments on Account Before January

Payments on account are advance payments towards next year’s tax bill. HMRC asks for them if your last Self Assessment bill was £1,000 or more, unless more than 80% of your tax was already collected at source. 

Each payment is half of the previous year’s Income Tax and Class 4 National Insurance, with one due on 31 January and the other on 31 July. Capital Gains Tax and student loan repayments aren’t included in the calculation.

They cause the most difficulty in someone’s first year of Self Assessment, because the first January bill includes the full tax for the year just ended plus the first payment on account for the current year. 

Tom started freelancing, and his first year’s tax bill is £6,000. On 31 January he owes £9,000, followed by another £3,000 on 31 July. Filing in October gives Tom three months to plan for that figure, instead of discovering it a few days before it’s due.

Filing early also helps if your income has fallen. Once you know what HMRC will ask for, you can reduce your payments online or on form SA303, as long as you claim by 31 January after the end of the tax year. If you reduce them too far, HMRC charges interest on the shortfall from each original due date. 

To spread the cost of future bills instead, you can set up a budget payment plan with weekly or monthly Direct Debits, provided you’re up to date with your previous payments.

Getting a Refund Months Sooner

HMRC can repay overpaid tax only after you’ve filed a return showing it. That matters for anyone whose payments on account exceeded their final bill, and for people who had too much tax deducted before they were paid. 

Construction Industry Scheme subcontractors are a common example, since they usually have 20% deducted from their payments before any expenses are taken into account.

A return filed in October starts the repayment process more than three months earlier than one filed on 31 January. For a subcontractor owed £2,500, that can mean having the money before Christmas rather than in February or March.

How Filing Early Affects HMRC Enquiries

Some people delay filing because they believe an early return attracts more HMRC attention. 

There’s no published rule linking filing date to selection, and the enquiry window favours filing early. When you file on time, HMRC has 12 months from the date it receives your return to open an enquiry, according to its Self Assessment manual. 

File on 15 October and that window closes on 15 October the following year. File on 31 January, and it stays open until the following 31 January.

Filing early doesn’t stop you from correcting mistakes. You can amend your return up to 12 months after the 31 January deadline, so you can still update an October return if you find a missing figure later. 

HMRC can also raise a discovery assessment outside the enquiry window in some circumstances, such as where tax was underpaid because of carelessness, so accuracy matters more than timing. Our guide to HMRC’s error checks explains how returns may be selected for review.

What You Need Ready to File in the Autumn

By October, most of the paperwork for the previous tax year has already arrived. Gathering it in one go makes the return quicker to complete and easier to check. For most people, that means:

• Employment details: Your P60 for the year, and any P11D showing taxable benefits such as a company car.
• Business records: Income and expenses for your accounting period, including mileage and use-of-home claims.
• Property figures: Rent received, letting costs and statements showing the mortgage interest you paid.
• Savings and investments: Interest and dividend statements, and details of any shares or property you sold during the year.
• Reliefs: Pension contributions and Gift Aid donations made during the year.

Filing Your Return With Double Point This Autumn

Filing a return in October or November gives you time to plan your January payment, apply to reduce payments on account, and receive any refund sooner. For employees and pensioners with a small bill, it can mean no January payment at all.

At Double Point, we prepare and file Self Assessment returns throughout the autumn. We’ll tell you exactly what you owe and when it’s due, check whether your tax can be collected through your tax code, and review whether your payments on account should be reduced.

Book a free consultation and we’ll check which of these options apply to you.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

The post Why Filing Your Tax Return Before Christmas Can Save You Money appeared first on Double Point Accountancy.

The most common assumption is that limited liability protects a director personally in every situation. 

In most cases it does, but there are specific circumstances where a director’s own money, or their ability to run a company in future, is at risk. 

Read on to work through those circumstances, along with the checks and habits that prevent the most common first-year problems.

What Limited Liability Doesn’t Protect You From

A limited company is a separate legal person. The company’s debts are its own, and a shareholder’s loss is normally limited to what they paid for their shares. Your duties as a director, however, are personal.

The Companies Act 2006 sets out seven general duties, including acting within the company’s constitution, promoting its success, exercising independent judgement and avoiding conflicts of interest.

In August 2026, the Insolvency Service added a page on director misconceptions to its Director Information Hub, and several of its points surprise new directors. 

Every director is accountable, including those who take no part in day-to-day decisions. A lack of financial knowledge isn’t a defence, because all directors are expected to understand and monitor the company’s finances. 

Anyone who acts as a director, or controls decisions from behind the scenes, can carry the same responsibilities as a formally appointed director.

Where liability can become personal, it’s usually in one of these situations:

• Personal guarantees: Banks, landlords and some suppliers ask directors of new companies to guarantee the company’s debts. If the company can’t pay, the lender can pursue you for the amount guaranteed.
• Wrongful trading: If you carry on trading after you knew, or ought to have concluded, that the company couldn’t avoid insolvent liquidation, a court can order you to contribute to its debts.
• Unpaid tax in serious cases: HMRC can issue a personal liability notice for National Insurance the company failed to pay because of a director’s fraud or neglect. It can also issue joint liability notices where tax is lost through avoidance, evasion or repeated insolvency.
• Disqualification: Misconduct can lead to disqualification from acting as a director for up to 15 years.

These risks matter most when a company is struggling. Once a company is insolvent or close to it, directors must consider creditors’ interests and treat creditors equally. That means not repaying your own loans, or debts you’ve personally guaranteed, ahead of other creditors.

Verifying Your Identity Before You’re Appointed

Since 18 November 2025, anyone becoming a director must verify their identity with Companies House before the appointment is notified. 

For a new company, that means before incorporation. Acting as a director without verification is a criminal offence, both for the individual and for the company that allows it.

Verification is free through GOV.UK One Login, using the app or the online service, or you can pay an authorised corporate service provider to do it for you. Either way, you’ll receive a Companies House personal code, which you’ll use for every company role you hold.

If you’re joining an existing board, check that the other directors have verified too. Directors appointed before 18 November 2025 must provide their personal code with the company’s next confirmation statement, and the 12-month transition period for existing directors ends in mid-November 2026. 

A missing code can stop the company filing its confirmation statement at all. 

Taking Money Out of the Company

If you’ve moved from sole trader to a limited company, the biggest adjustment is that the money in the business account belongs to the company. You can only take it out in a few ways, and each one has its own paperwork and tax consequences.

Salary

A salary is paid through PAYE, so the company must register as an employer before the first payday, and it can’t register more than two months beforehand. Directors’ National Insurance is usually calculated over the whole year rather than for each pay period, and payroll software needs to be set up for that. 

Dividends

Dividends can only be paid from distributable profits, which broadly means accumulated realised profits after deducting accumulated losses. 

A dividend paid without enough profits is unlawful. A shareholder who knew, or had reasonable grounds to believe, that it was unlawful must repay it, and the directors who approved it can be held responsible. Each dividend should be supported by up-to-date figures, a board minute and a dividend voucher.

From 6 April 2026, dividends above the £500 allowance are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. If you receive more than £10,000 in dividends in a year, you’ll need to file a Self Assessment return.

Director’s Loans

Any money you take that isn’t salary, a dividend or a repayment of expenses is recorded in your director’s loan account. If you owe the company money at its year end and don’t repay it within nine months and one day, the company pays section 455 tax on the balance. For loans made from 6 April 2026, the rate is 35.75%. 

The company can reclaim the tax once the loan is repaid, but only nine months and one day after the end of the accounting period in which the repayment happens. A loan above £10,000 can also create a taxable benefit for you.

Take Priya, who sets up a consultancy company and transfers £1,500 a month to her personal account without declaring a salary or dividends. 

By year-end, she owes the company £18,000. If that balance is still outstanding nine months and one day later, the company owes £6,435 in section 455 tax, and Priya may also face a benefit-in-kind charge because the loan exceeded £10,000. Our guide to section 455 tax explains the options for clearing a loan balance.

The Deadlines That Start at Incorporation

A new company’s deadlines are calculated from different dates, which is one reason first-year directors miss them. 

Some run from incorporation, some from the date the company starts trading and some from the end of its accounting period. The main obligations are:

The first set of accounts can cover more than 12 months, but a Corporation Tax accounting period can’t. A company whose first accounts run for 15 months will usually file two Company Tax Returns for that period, and pay Corporation Tax on two separate dates.

Every company also needs a registered office at an ‘appropriate address’, where post can be received and acknowledged, and a registered email address for Companies House correspondence. 

The confirmation statement costs £50 to file online, and our guide to confirmation statements explains what it contains.

The Records and Filings Every Director Is Responsible For

Running a company involves formal records and filings that sole traders never deal with. None of them is complicated on its own, but together they’re where new directors most often fall behind, and several carry automatic penalties. These are the main ones, and what each involves.

Board Decisions and Minutes

Directors make most decisions about the business, from signing contracts to paying interim dividends, and the law requires a record of them. Minutes of directors’ meetings must be kept for at least 10 years. Under the model articles most companies use, the same applies to decisions directors make without holding a formal meeting.

Company law is less explicit about sole directors, because a meeting usually involves more than one person, but keeping the same record is standard practice and your best evidence of what was decided. 

If you’re the only director and you decide to pay a dividend, approve the annual accounts or sign a lease, the decision should be written down, dated and signed. Minutes don’t need to be long. They should record who was present, what was decided and the reasons for any significant decision, particularly where the company pays money to a director.

Shareholder Resolutions

Some decisions belong to the shareholders rather than the directors, even when you’re both. 

Shareholders make these decisions by passing a resolution, either at a general meeting or, in a private company, as a written resolution circulated for signature. Private companies don’t have to hold an annual general meeting unless their articles require one.

An ordinary resolution needs more than half the votes, and a special resolution needs at least 75%. For a written resolution, those percentages apply to the total voting rights of all eligible shareholders, not just those who reply. The decisions new directors most often need are:

Special resolutions, and some ordinary ones, must be filed at Companies House within 15 days of being passed. Minutes of general meetings and copies of written resolutions must be kept for at least 10 years.

The loan row matters more than it looks. An overdrawn director’s loan account is a loan, so once yours goes above £10,000, you generally need shareholder approval before you draw down the money, subject to statutory exceptions. That’s easy to overlook when you also own all the shares, but you still need to record the approval in writing.

Your Company’s Own Records

Since 18 November 2025, companies no longer have to keep their own registers of directors, directors’ home addresses, secretaries or people with significant control. 

The Companies House record now serves that purpose, so companies must file any change there within 14 days. The exception is the register of members, the list of shareholders and their holdings, which every company must still keep and update whenever shares are issued or transferred.

The company must also keep accounting records that show its transactions and financial position at any time. Company law requires a private company to keep them for three years, but HMRC requires six years from the end of the accounting period they relate to, so six years is the practical minimum.

The Confirmation Statement

The confirmation statement is an annual check that the information Companies House holds about your company is correct. It contains no financial figures. 

According to Companies House guidance, you must file changes to the registered office, registered email address, officers, or people with significant control separately before you submit it. The statement itself confirms:

• Company details: The registered office, which must be an ‘appropriate address’ where post can be received and acknowledged, the registered email address and the SIC code describing what the company does.
• Shares and shareholders: The statement of capital, and any changes to shareholders since the last statement.
• People with significant control: Anyone holding more than 25% of the shares or voting rights, or who otherwise controls the company.
• Lawful purpose: A statement, required since March 2024, that the company’s intended future activities are lawful.

During the identity verification transition, it’s also where existing directors provide their personal codes. You must file at least once every 12 months, within 14 days of the end of the review period, and it costs £50 online. 

Failing to file is an offence, Companies House can issue a financial penalty, and it can strike the company off the register. Our guide to confirmation statements explains the process in more detail.

Annual Accounts

Every company must prepare annual accounts, and directors must approve and sign them before sending them to shareholders and filing them at Companies House. After the first set, the filing deadline is nine months from the end of the accounting period. 

Smaller companies can file simplified versions. A micro-entity, meaning a company that meets at least two of three limits (turnover up to £1 million, a balance sheet total up to £500,000 and no more than 10 employees, for financial years starting on or after 6 April 2025), can file a very brief balance sheet, and most small companies are exempt from audit.

Late filing penalties are automatic and charged to the company. They’re £150 if the accounts are up to one month late, £375 up to three months, £750 up to six months and £1,500 after that, and they double if the company files late two years in a row.

Corporation Tax

Corporation Tax is charged on the company’s taxable profit. That’s the profit in its accounts, adjusted for items the tax rules treat differently. Client entertainment, for example, isn’t deductible, and equipment usually qualifies for capital allowances instead of depreciation.

The rate is 19% on profits up to £50,000 and 25% on profits above £250,000. Between those figures, marginal relief applies, which gives a marginal tax rate of 26.5% on additional profits within that band. Both limits are divided between associated companies and reduced for accounting periods shorter than 12 months.

The company files its Company Tax Return (CT600) online, together with its accounts and tax computations, within 12 months of the end of the accounting period. Payment is due earlier, nine months and one day after the period ends, for companies with profits under £1.5 million.

For returns due on or after 1 April 2026, HMRC’s late filing penalties are £200, rising to £400 after three months, with further penalties of 10% of any unpaid tax at six and 12 months late. A company that files late three times in a row pays £1,000 penalties instead of £200. Late payment is charged interest at the Bank of England base rate plus 4%.

Joining the Board of an Existing Company

Being appointed to a company that’s already trading carries a different kind of risk. You’re not normally responsible for decisions made before your appointment, but from the day you join, you share responsibility for dealing with any problems the company already has.

The Insolvency Service also warns against agreeing to act as a director on someone else’s behalf, since you take on full legal responsibility and could be prosecuted if that person isn’t allowed to be a director.

Before you accept an appointment, check the following:

• Filing history: Search the company on Companies House for overdue accounts or confirmation statements, and confirm the existing directors have verified their identities.
• Tax position: Ask whether Corporation Tax, VAT and PAYE are up to date, and whether the company has any payment plans in place with HMRC.
• Director’s loan accounts: Find out whether any director owes the company money, and how much section 455 tax could be due as a result.
• Recent management accounts: Review the latest figures so you understand the company’s cash position before you share responsibility for its decisions.
• Insurance and guarantees: Ask whether the company holds directors’ and officers’ insurance, and whether you’ll be expected to give a personal guarantee.

Resigning Doesn’t End Your Responsibility

Resigning as a director ends your future duties, not your past ones. You remain responsible for decisions taken while you held the role, and the Insolvency Service can investigate the conduct of every director of an insolvent or dissolved company, including those who resigned before it failed.

A personal guarantee also continues after you resign unless the lender agrees to release you, so ask for a written release as part of leaving. 

The company must notify Companies House of your resignation within 14 days, and you should check the public register afterwards to confirm the change has been recorded.

Setting Up Your First Year as a Director Properly

Most first-year problems start with arrangements made in the first few weeks. Money drawn without a decision on how it’ll be treated, a registration nobody made, or a dividend paid without current figures can all create costs that are hard to reverse later.

At Double Point, we help new directors set up payroll, dividend paperwork and a clear record of their director’s loan account from the start, and we track every filing deadline for the company. If you’re joining an existing board, we can review the company’s accounts and tax position before you accept. 

Our company accounts team also prepares your first-year accounts and Company Tax Returns.

If you’ve recently become a director, or you’re about to, book a free consultation and we’ll check what needs to be in place.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

The post New Company Director? Your Ultimate Gude to Compliance and Responsibilities appeared first on Double Point Accountancy.

Making Tax Digital for Income Tax became mandatory on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. 

The threshold reduces to £30,000 from April 2027 and £20,000 from April 2028. If your gross income from self-employment and property is more than £20,000 a year, quarterly digital reporting is likely to apply within a year or two of registering.

Knowing when that will happen, and setting up your records for it now, spares you a difficult changeover later. Start by checking whether you need to register at all.

Who Needs to Register for Self Assessment by 5 October?

You may need to register if you received income in 2025/26 that HMRC hasn’t already taxed through PAYE, although not every type of untaxed income requires a tax return. For most first-time filers, the reason for registering is one of these three:

• Self-employment: You earned more than £1,000 from working for yourself, which is the tax-free trading allowance limit.
• Property: Your property income was more than £2,500. If it was between £1,000 and £2,500, you contact HMRC instead of registering for Self Assessment.
• A partnership: You became a partner in a business partnership during the year.

This includes people who work for themselves alongside a salaried job. Our guide to side hustles explains when that extra income needs reporting.

If you’re not sure whether you need to register, HMRC’s online checker will tell you. If you registered in the past but didn’t need to file a return for 2024/25, you’ll need to reactivate your account by the same 5 October deadline.

You can register with HMRC online, and the route depends on your situation. Sole traders register as self-employed, which also registers them for National Insurance on their profits. Landlords and others with untaxed income use a separate route, and partners use a third. Our guide to registering as self-employed covers the sole trader route step by step.

Registering gives you a Unique Taxpayer Reference, or UTR. HMRC’s improved registration service, launched in September 2026, delivers it to your Personal Tax Account within 72 hours, compared with up to 15 days by post.

Registering after 5 October doesn’t automatically lead to a penalty. If you also haven’t paid all your tax by 31 January, though, HMRC may charge a ‘failure to notify’ penalty based on the amount still unpaid.

How Making Tax Digital Changes What Happens Next

Until this year, registering for Self Assessment meant one tax return a year, filed by 31 January. Making Tax Digital keeps that annual return and adds digital record-keeping and quarterly reporting for anyone over the threshold. Your tax bill, the tax rules and your payment dates stay the same. What changes is how you report, and how often. Once you’re in the scheme, you’ll need to meet three obligations:

• Digital records: You keep a record of your income and expenses in software that works with Making Tax Digital, updated as the year goes on.
• Quarterly updates: Every three months, you send HMRC a summary of your income and expenses for each business you run. These are summaries, not tax returns, prepared by your software. Each update covers the tax year to date, not just the latest three months, so you can correct earlier figures without resending an old update.
• An annual tax return: After the tax year ends, you confirm your figures, add any other income such as a salary or dividends, and submit your return through the same software by 31 January.

Who Has to Join, and When

HMRC decides whether you need to use Making Tax Digital by checking your qualifying income on an earlier tax return. The threshold is being introduced in three stages:

What Counts as Qualifying Income

Your qualifying income is your gross income from self-employment and property combined, meaning your turnover before any expenses are deducted. Employment income, dividends, pensions, savings interest and your share of partnership profits don’t count. If you own a property jointly, only your share of the rent is included.

Because the two sources are added together, you can be in scope even when neither is large on its own. 

Take James, who started freelancing as a photographer in 2025/26 and invoiced £18,000 that year, while also receiving £14,000 in rent from a flat. Neither figure exceeds £30,000, but James’s qualifying income is £32,000, so James must use Making Tax Digital from 6 April 2027.

When a First-Time Filer Joins Making Tax Digital

HMRC can’t require you to use Making Tax Digital until you’ve filed at least one Self Assessment return, so your first return is always an ordinary annual one. 

If you started earning in 2025/26, the earliest you can be required to join is 6 April 2027, and that depends on your 2025/26 figures.

For someone in that position whose qualifying income was over £30,000, the next two years look like this:

If your 2025/26 qualifying income is £30,000 or less, HMRC will test your 2026/27 income against the £20,000 threshold, which applies from April 2028.

If You Started Part-Way Through the Year

Most new businesses don’t start on 6 April, so HMRC scales part-year figures up to a full year before comparing them with the threshold. For sole traders, HMRC annualises the income itself where it has the information. Six months of trading, for example, is doubled. Landlords have to annualise their property income themselves.

This can bring you into scope sooner than your actual earnings suggest. A sole trader who started in October 2025 and invoiced £16,000 by 5 April 2026 has around six months of income, which annualises to £32,000.

That’s over the £30,000 threshold, so they would join Making Tax Digital in April 2027, even though they only earned £16,000.

No Grace Period for the 2027 Group

People who joined Making Tax Digital in April 2026 received a concession for their first year. HMRC won’t issue penalty points for late quarterly updates during 2026/27. That concession doesn’t extend to anyone joining in April 2027.

From 2027/28, each missed quarterly deadline earns a penalty point. Once you reach four points, HMRC charges a £200 penalty, and another £200 for each deadline you miss after that. For the April 2027 group, penalties can apply from the very first update on 7 August 2027.

Preparing Your Records Before Making Tax Digital Applies

Nothing stops you keeping your records the Making Tax Digital way from your first month of trading, and doing so turns the eventual switch into a minor adjustment. Once you’ve filed your first return, you can also sign up voluntarily and practise before HMRC requires you to join. Late quarterly updates don’t attract penalty points while you’re volunteering. Whether you volunteer or not, these habits will make the transition much easier:

• Open a separate bank account: Keeping business income and costs apart from personal spending makes each quarterly update quicker to prepare and easier to check.
• Choose compatible software early: Picking a package that works with Making Tax Digital now means you won’t have to transfer a year of records later. Our accounting software guide compares the main options.
• Record transactions every month: Entering and categorising income and expenses monthly, rather than once a year, matches the rhythm quarterly updates will require.
• Keep receipts digitally: Scanning or photographing receipts when you receive them avoids a backlog of paper at the end of each quarter.

Getting Your First Return and MTD Set Up Properly

The record-keeping system you set up in your first year is usually the one you keep, so registration is the best time to organise things with Making Tax Digital in mind. Getting it right now means your first return is straightforward, and your first quarterly update is routine rather than a rush.

At Double Point, we register new clients for Self Assessment, prepare and file their Self Assessment return, and work out when Making Tax Digital will apply based on their figures. We’ll help you choose software and set up your records. Once you’re in the scheme, we’ll handle your quarterly updates and annual return. Our full MTD guide covers the wider rules in more depth.

If you need to register by 5 October, or you’re not sure whether you do, book a free consultation. We’ll check your position and make sure you’re registered in time.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

The post Registering for Self Assessment by 5 October: What’s Different Now MTD Has Started appeared first on Double Point Accountancy.

You may be just starting out, revenue is beginning to trickle in, and you’re asking people to invest real money in what is of course a risky proposition.

So, naturally, why would anyone say yes?

For a lot of UK start-ups, the answer is SEIS – the Seed Enterprise Investment Scheme. It’s a government scheme built to make investing in early-stage companies worthwhile, and it does that by offering your investors some of the most generous tax reliefs in the system. 

Those reliefs are why SEIS has become the usual way for a young company to raise its first proper round of funding, up to £250,000.

Read on to learn about SEIS and how you may be able to benefit. 

What is SEIS? And How Does SEIS Work?

SEIS is one of a small group of government schemes designed to encourage private investment in small, high-risk companies – the kind banks won’t lend to and most investors won’t consider. 

The key point is that it rewards the investor, not the company. So to see why SEIS matters to you as a founder, you need to understand what it offers the people you’re asking to invest.

An investor who backs a SEIS-qualifying company gets a set of reliefs about as good as anything in UK tax:

• 50% income tax relief: An investor can reduce their income tax bill by 50% of what they invest – up to the £200,000 annual limit, and as far as they have income tax to set it against. On a £20,000 investment, that’s £10,000 off their bill.
• Tax-free growth: Hold the shares for at least three years, and if the company does well, any profit on selling them is free of Capital Gains Tax.
• Reinvestment relief: An investor who funds the shares from another taxable gain can exempt half of the amount they reinvest from Capital Gains Tax – so reinvesting £20,000 of a £50,000 gain exempts £10,000, not half the whole gain – subject to the scheme’s limits.
• Loss relief: If the company fails, the investor can set the loss against their income or other gains, which softens a failure considerably.

Add it all together, and the effect is striking. Whichever way the company goes, an investor has far less of their own money genuinely at risk than the amount they put in, because relief covers so much of it. That’s what makes people willing to back companies they’d normally avoid entirely.

SEIS Has Limits

SEIS has firm limits, because it’s built for the very first stage of a company’s life:

• £250,000 for the company: You can raise up to £250,000 through SEIS over the company’s whole lifetime – the “first £250,000” the scheme is designed to provide. Some state aid you’ve had in the previous three years counts towards this figure, so if you’ve taken grants, check how much room you actually have.
• £200,000 for each investor, each year: An individual can invest up to £200,000 across SEIS companies in a tax year and claim the relief.

The £250,000 is a lifetime limit for the company, not a yearly one. Most founders use it once, for the first round, then move on to the Enterprise Investment Scheme (EIS) – SEIS’s bigger sibling – as the business grows. 

The order is fixed, though. SEIS comes first, because once a company has taken EIS money, the company can no longer use SEIS.

Who Qualifies For SEIS?

SEIS is only for genuine early-stage companies, so yours has to meet a set of conditions when it issues the shares:

• Trading for less than three years. The company’s qualifying trade must have been carried on for no more than three years – the company itself can be older.
• No more than £350,000 in gross assets just before the investment.
• Fewer than 25 employees.
• A qualifying trade. Most trades count, but a few are excluded – among them dealing in land, financial activities and property development.
• No previous EIS or VCT money. The company mustn’t already have raised money under EIS or a Venture Capital Trust.
• UK-based and independent. It needs a permanent establishment in the UK, and mustn’t be controlled by another company.

The shares matter too. They have to be new, full-risk ordinary shares – so no right for your investors to get their money back ahead of other shareholders, and only limited rights to dividends. 

Your investors take the same risk as everyone else on the share register. And you have to spend the money you raise, within three years, on a qualifying business activity – the trade the relief was given for.

What Do Investors Get Out Of SEIS?

Say an investor backs your company with £20,000, and pays tax at the higher rate.

Straight away, they claim 50% income tax relief, cutting their income tax bill by £10,000 – as long as they’ve got at least that much tax to set it against. So their £20,000 has really cost them £10,000. If the company does well and they sell at a profit after three years, that whole profit is theirs, free of Capital Gains Tax.

Now imagine it goes the other way. The company fails, and the shares are worth nothing. They’ve already reduced their tax bill by £10,000 through income tax relief. On the £10,000 they’ve actually lost, they can claim loss relief against their income – at 40%, another £4,000. 

So even a complete write-off has cost them £6,000 on a £20,000 investment. A small, capped loss on the downside against an unlimited gain on the upside – that’s why SEIS investors are willing to take the bet.

Visualising How SEIS Works

Here’s the whole typical SEIS process, from advance assurance to your investors claiming their relief:

What Comes After SEIS: EIS

For many companies, the Enterprise Investment Scheme (EIS) is the natural next step after SEIS. It’s designed for larger, slightly later-stage businesses that are still raising growth capital but have moved beyond SEIS.

The investor relief is lower than under SEIS – 30% rather than 50% – but the funding limits are much higher. From 6 April 2026, most qualifying companies can raise up to £10 million a year under EIS and £24 million over their lifetime.

Knowledge-intensive companies can raise more. Investors can normally claim EIS Income Tax relief on up to £1 million of investment a year, rising to £2 million where the excess is invested in knowledge-intensive companies.

If you plan to use both schemes, the order matters. SEIS has to come first, because a company can’t use SEIS once it has already received EIS or VCT investment. SEIS funding also counts towards the wider venture capital scheme funding limits, so it’s worth thinking about the sequence of your fundraising before you start taking investment.

Getting Set Up With SEIS

For a founder, the single most useful step is advance assurance. This is HMRC confirming, before you raise anything, that an investment in your company is likely to qualify for SEIS. 

It isn’t compulsory, but in practice it’s close to essential, because investors almost always want to see it before they commit – it’s their reassurance that the reliefs they’re counting on will really be there. 

HMRC won’t consider a purely speculative request, so you’ll usually need to show genuine investor interest, with names and rough amounts, before it will assure anything.

Once the investment is complete, there are three key steps:

• You ask HMRC for permission to certify: The company submits form SEIS1. You can’t do this the moment the cash arrives – you have to have either traded for four months, or spent at least 70% of that share issue, first.
• HMRC authorises the company: If all conditions are met, HMRC gives the company authority to issue certificates.
• You issue the certificates: The company fills in a SEIS3 form for each investor, and they use it to claim relief on their own tax return.

Getting the groundwork right before you apply makes this easier: a properly structured company, clean accounts, and a clear plan for the money.

Our founder’s guide to raising funding covers the wider job of getting investment-ready.

Get SEIS-Ready

SEIS can turn a maybe into a yes – but only if your company qualifies and the paperwork is right, and a mistake at the setup stage can cost your investors the very reliefs that attracted them.

That’s where we help. At Double Point, we get founders SEIS-ready from the start: checking your company meets every condition, structuring it correctly, preparing and submitting your advance assurance application, and running the compliance so your investors get their certificates without a problem. 

Done properly, SEIS becomes one of the most powerful tools you have for raising that first £250,000.

If you’ve got a raise coming up, book a free consultation, and we’ll help you make the most of it.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

The post SEIS Explained: How Start-Ups Raise Their First £250,000 appeared first on Double Point Accountancy.

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Truthfully, often it isn’t. But for the right business, a holding company can protect what you’ve built, move cash to safety, and save a large amount of tax when you eventually sell. So it’s very smart to be aware of what a holding company is and how they work. 

This guide explains what a holding company structure is, why people set them up, and the tax implications you’ll need to watch. 

What a Holding Company Structure Is

A holding company – a “holdco” – is a company that exists mainly to own other companies, rather than to trade itself.

In the simplest version, you own the holding company, and the holding company owns your trading company. Your trading business carries on exactly as before. 

So instead of owning your trading company directly, you have a company in between. That company holds the shares in your trading business, and it can also hold assets – cash, property, or intellectual property – separately from the business that earns them.

You usually create the structure through a “share-for-share exchange”. You hand your shares in the trading company to a newly formed holding company, and in return it issues you shares in itself.

You end up owning the holdco, the holdco owns the tradeco, and – done correctly – there’s no tax due on the swap itself. More on that below.

Why Owner-Managers Use a Holding Company

There are many reasons why holding companies exist and their various uses, but four of the most widely relevant are:

Protecting Assets from Trading Risk

A trading company takes on risk – contracts, employees, suppliers, the occasional dispute. If something goes wrong, the assets inside that company are exposed to whoever it owes money to. That’s acceptable for the everyday tools of the trade, but less so if the same company is also sitting on very expensive assets, years of retained profit, or owns your premises.

A holding company helps you separate the two. You can move surplus cash and valuable assets into the holdco or into a separate subsidiary alongside the trading company, so they aren’t in the entity that bears the commercial risk.

It isn’t a magic shield – it has to be done properly and in good time – but it can add distance between your risk and your assets. Be aware that there are legal nuances to steer and this is not something you do lightly or without professional advice. 

Moving Profits Up Without a Second Corporation Tax Charge

Moving cash ‘upward’ can be efficient. Your trading company pays Corporation Tax on its profits in the normal way. When it then pays some of that after-tax profit to the holding company as a dividend, there’s no further Corporation Tax to pay, because the profit has already been taxed once in the trading company.

So, to make this clear, there is usually no dividend tax or dividend thresholds between companies:

• Company to company (tradeco up to holdco): Corporation Tax rules, exemption applies, no limit, no allowance, no personal rates.
• Company to you (holdco out to yourself): personal income tax rules, £500 allowance, then 10.75% / 35.75% / 39.35%

Suppose your trading company, Trade Ltd, has accumulated £600,000 of surplus cash over several good years, and you’re uneasy that a single bad contract or a client dispute could expose all of it. You form a holding company, Hold Ltd, to own Trade Ltd, and each year Trade Ltd pays its surplus profit up to Hold Ltd as a dividend.

Over time, the cash accumulates in Hold Ltd rather than in the trading company – one step removed from Trade Ltd’s creditors and available for reinvestment.

There’s one thing this won’t achieve. It doesn’t give you the money personally without tax. When you take cash out of the holding company for yourself, as salary or dividends, you pay exactly the same tax as you would taking it from any company. The structure lets money move between your companies without a further charge; it doesn’t change what you pay when you eventually take it out for your own use.

Selling the Business: the Substantial Shareholding Exemption

This is the big one for anyone thinking about selling up eventually. If your holding company sells your trading company, the profit it makes on the sale can be completely exempt from Corporation Tax, under a relief called the Substantial Shareholding Exemption, or SSE.

Two main conditions have to be met:

• A large enough stake, held for long enough: the holding company must have owned at least 10% of the trading company’s ordinary shares – with a matching entitlement to at least 10% of its profits, and of its assets if it were wound up – for a continuous 12 months at some point in the six years before the sale.
• A genuine trading company: the company being sold has to be a trading company, not an investment company.

Meet both, and a gain that might otherwise face Corporation Tax at 25% is exempt, automatically, with no claim required.

The 12-month rule matters if a sale is already on the horizon. In some reorganisations, earlier ownership can count towards the 12-month period, but not always.

In one tribunal case, a company transferred its existing trade to a newly formed subsidiary and sold the subsidiary less than 12 months later. SSE was refused because the subsidiary had not been part of the group for long enough, and the company could not count the period before the subsidiary existed.

The practical point is simple: if you may sell in the next few years, put the structure in place early rather than assuming an earlier trading history will always count.

If a sale might happen in the next few years, create the structure early so the 12-month period is already underway.

The bottom line is, SSE can suit an owner who wants to sell one business and reinvest the proceeds through the company, or to sell a single subsidiary and continue running the others.

An owner who simply wants the cash for themselves might do better selling their shares personally and claiming Business Asset Disposal Relief, which, for 2026/27 taxes, qualifies gains at 18% on up to £1 million, compared with Capital Gains Tax of up to 24% without the relief.

Group Relief and Running Several Businesses

A group also allows a loss incurred by one company to reduce the tax paid by another. If one subsidiary makes a loss in the same year that another makes a profit, “group relief” can let you set the qualifying loss in the first against the qualifying profit in the second, so the group is taxed closer to its overall net position.

It doesn’t happen automatically – there are conditions to meet, and current-year losses and carried-forward losses follow different rules – but it’s most useful where you run more than one trading business.

That points to another common reason to form a holding company – to serve as an umbrella over several trading subsidiaries. Each business is kept separate from the others’ risks; you can bring an investor into one without giving away any of the others, and a new venture can begin as its own subsidiary instead of becoming entangled with an existing business.

The Catch: Filling the Group With Investments Can Cost You Reliefs

There’s a tension here that’s easy to overlook. The very step that protects your assets – moving surplus cash, investments, or property into the group – can weaken certain valuable reliefs, as several of them depend on your company being a genuine trading business rather than an investment business.

There are three relevant, separate reliefs with trading requirements, and each one tests it differently, so you have to consider them individually rather than as a single pass-or-fail:

• The Substantial Shareholding Exemption requires the company you sell to be a trading company.
• Business Asset Disposal Relief, on a personal sale of shares, applies its own trading test – broadly, non-trading activity shouldn’t constitute more than a modest part of the company’s activities, and too much of it can jeopardise the relief.
• Business Relief (also called Business Property Relief), which can reduce the Inheritance Tax due on a trading business when you die, applies a different test again, and is refused where a company mainly holds investments.

Business Relief has also become less generous. From 6 April 2026, a £2.5 million allowance generally limits 100% Business Relief, combined across Business Relief and Agricultural Relief, and qualifying value above that allowance usually qualifies for relief at 50% rather than 100%.

So even a trading business may not escape Inheritance Tax entirely, and the way you structure and value the group directly affects the outcome.

None of this means you can’t hold assets within the group. It means you have to judge each relief against its own conditions – and a group that accumulates too much retained cash and investment can weaken its position under one or more of them. That’s another reason to take advice rather than allow cash to build up unmanaged.

The Tax Traps in Setting Up a Group

You can create a group and move assets into it without triggering a tax charge, but only if it’s handled correctly – and there are traps that can turn a straightforward reorganisation into an unexpected bill.

Inserting the Holding Company: Share-for-Share Relief

Forming a holding company above your trading company is usually free of tax, but only if two separate reliefs apply:

• Capital Gains Tax: The share-for-share exchange is treated as not a disposal where the statutory conditions are met, so you pay no tax on the paper gain in your shares. There’s an anti-avoidance rule to consider first – for exchanges from late November 2025, it asks whether one of the main purposes of the arrangement is to reduce or avoid Capital Gains Tax – and it’s common to ask HMRC for advance clearance that the rule won’t apply. That clearance only confirms the anti-avoidance point, though; it doesn’t confirm that the technical conditions for the relief itself are met, so you still need to check those separately.
• Stamp duty: The 0.5% that would normally apply when the holding company acquires the trading company’s shares can also be relieved, under a separate relief. Broadly, the holding company has to acquire all the shares, issue only its own shares in return, and leave ownership unchanged before and after the transaction. Separate anti-avoidance conditions also apply.

Get any of this wrong, and you can face a tax charge where there should be none, so it isn’t something to attempt without advice.

Moving Property: SDLT Group Relief

If you move property between companies in your group – transferring your premises from the trading company up to the holding company, for example – Stamp Duty Land Tax would normally apply. But group relief can remove it for transfers within a 75% group.

There’s a condition to watch. If the company that received the property leaves the group within three years – most obviously because you sell it – HMRC can withdraw the group relief, and the Stamp Duty Land Tax can become payable after all. So if you move a property into a subsidiary you might later sell, the tax you saved can return. (These rules apply in England and Northern Ireland; Scotland and Wales have their own equivalents.)

Moving Assets: No Gain, No Loss and Degrouping

Most assets can move between group companies without an immediate tax charge on a “no gain, no loss” basis. (Companies pay Corporation Tax on their gains, rather than Capital Gains Tax, and goodwill and most intellectual property fall under a separate regime for intangible assets, which has its own version of these rules.)

If a company then leaves the group within six years while still holding an asset it received from elsewhere in the group, “degrouping” rules can bring the postponed gain back into charge.

There’s an important exception, though. Where the company leaves because someone buys its shares, the degrouping amount is generally added to the gain on that share sale – and if the share sale qualifies for the Substantial Shareholding Exemption, the exemption usually covers the degrouping amount too.

So the charge is far from automatic, but it’s another reason to plan a group reorganisation and a future sale together.

The Cost of a Holding Company, and When to Skip It

A holding company isn’t free. Creating one takes legal and accounting work, along with the HMRC clearances that accompany the reorganisation. From then on you’re running more than one company, which means more sets of accounts, more Corporation Tax returns, and more Companies House filings every year.

There’s another cost that owners often don’t expect, and it stems from how Corporation Tax rates work. The 19% small profits rate applies to profits up to £50,000, the 25% main rate applies to profits above £250,000, and a marginal rate of 26.5% applies in between.

But you have to share those two thresholds across any “associated” companies – broadly, the active companies in your group, together with some others under your control. Trade through a single company and you keep the full thresholds. Add companies, and each active company’s share of the thresholds becomes smaller:

• One company: the full £50,000 and £250,000.
• Two associated companies: £25,000 and £125,000 each.
• Three associated companies: roughly £16,667 and £83,333 each.

So, across a group, profits reached higher rates sooner. A genuinely passive holding company can sometimes be left out of the count, but that exclusion is narrow, so you shouldn’t rely on it without checking.

For all these reasons, a holding company isn’t right for every business. Consider a single, straightforward trading company with no significant assets to protect, whose owner takes most of the profit out each year and has no near-term plans to sell. It gains little from a group and incurs cost and complexity in return for that little.

The bottom line? A holding company earns its place where you have something to protect, more than one business to run, profit to reinvest, or a sale on the horizon.

Worked Example: Selling a Subsidiary with SSE

To show what’s at stake, imagine your holding company sells your trading company for £2 million, having created the group years earlier. After costs, the gain comes to £1.8 million.

Without the Substantial Shareholding Exemption, that gain would face Corporation Tax at 25% – a bill of £450,000.

With the exemption – because the holding company had owned the trading company for well over 12 months, and the trading company was a genuine trading business – the whole £1.8 million is exempt, and the full proceeds remain in the holding company to reinvest.

That single relief is why so many owners planning a sale create a holding company well in advance.

Is a Holding Company Right for Your Business?

There’s no single answer – it depends entirely on your circumstances. A holding company deserves serious thought if:

• You hold valuable assets – cash, property, intellectual property – inside a company that also carries trading risk.
• You run, or plan to run, more than one business, and want to keep them separate.
• You’re building up profit you’d rather reinvest than take out.
• You can see a sale coming in the next few years.

If none of that applies to you, a simpler structure is probably right for now. What it should never be is a decision made on a hunch, or copied from another business owner. The reliefs that make it work depend on meeting their conditions and obtaining their clearances, and the traps – the Stamp Duty Land Tax clawback, the degrouping charge, the shared tax thresholds – are real. Take proper advice before you commit either way.

How Double Point Can Help

At Double Point, we help owner-managers determine whether a group structure is right for them and create it properly when it is. That means weighing the protection and the tax savings against the cost, handling the share-for-share exchange, obtaining the right HMRC clearances, and confirming that you meet the technical conditions for each relief.

Once the group is running, we’ll keep its accounts and returns in order, and keep an eye on the things that matter later – the trading-status tests and the shared Corporation Tax thresholds – as part of your wider tax planning.

If you’re wondering whether a holding company would work for your business, book a free consultation and we’ll talk it through.

Disclaimer: General information only, not advice. Rules and figures can change. Take advice on your own circumstances before acting.

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