Busy Bee Accountancy

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13/06/2026

DIRECTORS: HMRC IS NOW ASKING MORE QUESTIONS ABOUT DIRECTOR'S LOANS

If your company lends money to a director and the loan is not repaid within 9 months and 1 day of the year end, the company could face an additional tax charge of 35.75% of the outstanding balance.

Although this tax can usually be reclaimed once the loan is repaid, it can create an unnecessary cash flow problem for the business.

HMRC is now increasing its focus on director's loans and may ask directors to confirm:
• That loans reported as repaid were genuinely repaid by the stated date.
• That no further loans were made shortly before or after the repayment.

This means accurate records are more important than ever.

If you have taken money from your company and are unsure whether it is a salary, dividend or director's loan, now is the time to check.

Getting it wrong could result in unexpected tax charges and unwanted attention from HMRC.

06/06/2026

Here are 5 simple rules of thumb for limited companies:

• A company can retain profits in the business, which can often be more tax efficient than taking all the money personally.

• Companies can provide certain tax-free benefits and perks to directors and employees.

• In many cases, taking profits as dividends can be more tax efficient than taking everything as salary.

• Limited companies can often find it easier to attract investment and raise finance.

• Some tax reliefs and planning opportunities are only available to limited companies.

Every business is different, and the right structure depends on your circumstances, income levels and future plans.

If you're not sure whether a limited company is right for you, speak to an accountant before making a decision.

30/05/2026

Being VAT registered comes with responsibilities.

HMRC requires businesses to keep proper VAT records, including:

• VAT invoices
• Purchase records
• Import and export records
• Credit notes and debit notes
• Records of zero-rated and exempt sales
• Details of any VAT that cannot be reclaimed

HMRC can visit your business to inspect your records and bookkeeping systems. If your records are not accurate or up to date, penalties may apply.

Good bookkeeping is not just about staying organised — it helps protect your business and ensures your VAT returns are correct.

This is why keeping proper accounting records throughout the year is so important.

24/05/2026

This is one of those cases that shows why people shouldn’t automatically accept HMRC penalties without understanding why they were issued.

In this case, someone filed several tax returns very late and HMRC issued £4,500 of penalties. On the surface, that sounds straightforward.

But HMRC couldn’t prove they had actually issued valid notices requiring the returns to be filed in the first place.

That changed everything.

The tribunal found that the returns were voluntary returns, which meant the late filing penalties shouldn’t have applied at all.

A lot of people assume HMRC is always right. They’re not always wrong either — but mistakes do happen, and sometimes penalties need to be questioned.

Always get proper advice before paying a penalty you don’t fully understand.

23/05/2026

HMRC has increased the tax-free mileage allowance for employees and workers using their own car or van for business journeys.

This is the first increase in 15 years and has been backdated to 6 April 2026.

Updated HMRC Mileage Rates for 2026/27:

• Cars & Vans: 55p per mile for the first 10,000 miles
• Cars & Vans: 25p per mile after 10,000 miles
• Motorcycles: 24p per mile
• Bicycles: 20p per mile
• Passenger allowance: 5p per mile for carrying fellow employees on business journeys

If you use your own vehicle for work, make sure you are claiming the correct amount and keeping accurate mileage records.

17/05/2026

From 6 April 2025, HMRC introduced additional reporting requirements for directors of close companies.

If you’re already in Self Assessment, you now need to disclose extra information such as your company details, dividends received (even if none were taken), and your shareholding percentage.

I can already see this catching people out because many directors assume their tax return stays the same year after year.

It doesn’t. Rules change regularly, and missing something small can lead to unnecessary penalties.

It’s worth understanding what applies to you before filing your return.

16/05/2026

A lot of directors treat their company bank account like a personal bank account… until tax time exposes the problem.

“We’ll sort it at year end.”
“I’ll just take it out now and repay it later.”
“It’s my company anyway.”

This is how director’s loan accounts quietly become a mess.

Here’s what many people don’t realise:

If your Director’s Loan Account is in credit → the company owes you money.

If it’s overdrawn → you owe the company money.

And if that overdrawn balance is still outstanding 9 months after your year end, HMRC can step in with:

• An additional corporation tax charge under Section 455
• Benefit in kind issues if the loan is interest-free above the threshold

What makes this frustrating is that many directors don’t realise they have an overdrawn loan account until their accountant starts preparing the year-end accounts. By then, the tax issue may already exist.

And no — calling it a dividend doesn’t automatically fix it. You need enough distributable profits for that.

The simplest solution?

Know what you’re taking from the business.
Keep proper records.
Review your numbers regularly.

And don’t wait until year end to find out you owe HMRC more tax than expected.

10/05/2026

Let`s say you have a company making £50,000 profit

You’re a higher rate taxpayer

You’re the only employee (so no Employment Allowance)

You decide to take everything as salary/bonus.

Here’s how tax is worked out:

• Salary: £44,130
• Employer’s NI: £5,870
• Corporation tax: £0

Then personally:

• PAYE tax: £17,652
• Employee NI: £2,525

Total tax and NI: £26,047

That’s an effective tax rate of 52.1%

More than half your profit — gone.

This is exactly why the right approach usually involves a mix of salary, dividends and tax-efficient benefits — tailored to your situation.

If you’re not planning this properly, you’re likely overpaying tax.

09/05/2026

Salary or dividends in 2026/27?

The answer is not as simple as “just take dividends.”

The most tax-efficient way to pay yourself from your limited company depends on several factors:

• Do you have other personal income?
• What tax band are you in?
• Does your company qualify for Employment Allowance?
• What rate of corporation tax is your company paying?
• Can income be split with a spouse or partner?
• Do you need to maintain your entitlement to state pension benefits?

For many directors with no other earnings, paying a small salary can help preserve entitlement to certain state benefits.

After that, the salary/dividend balance often depends on whether you are a basic rate or higher rate taxpayer.

And many directors completely overlook tax-efficient benefits your company may be able to provide for you and your family.

There is no universal formula.

What works for one business owner could be tax inefficient for another.

Good tax planning should be based on your personal circumstances, company profits and long-term goals.

05/05/2026

HMRC is getting more aggressive with expense claims — and this case proves it.

An NHS locum doctor claimed huge travel and subsistence expenses on his tax returns:

• £54,630 (2019–20)
• £43,480 (2020–21)
• £64,010 (2021–22)

HMRC opened an enquiry and asked for evidence.

That’s where things started to fall apart.

The doctor provided very limited records and said some documents were unavailable due to the passage of time.

HMRC then identified major red flags:

Claims suggested he was working more than 7 days per week
Mileage claims exceeded his vehicle’s MOT records by 30,000 miles
The figures on his tax returns did not match later spreadsheets he provided
Supporting evidence was weak

The tribunal agreed with HMRC.

The expenses were disallowed and penalties for deliberate inaccuracies were upheld in Mr Nwaneri v HMRC [2026] TC09844

The lesson?

Just because you submit a tax return doesn’t mean HMRC won’t check it later.

If you’re claiming travel, mileage or subsistence expenses:

Keep proper records
Keep receipts
Ensure claims are reasonable
And never guess figures

Poor record keeping can be expensive. Deliberate inaccuracies can be even worse.

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