Business News

How is the mansion tax distorting the housing market?

Accountants Essex Blog, Business News, Newswire
How is the mansion tax distorting the housing market?

The so-called mansion tax is already beginning to have an impact on the UK housing market, despite the surcharge not being due to come into effect until April 2028.

Under the new tax, formally known as the High Value Council Tax Surcharge, homes in England worth £2 million or more, based on their value as of April 2026, will face an annual charge on top of their council tax.

Some sellers appear to be pricing homes just under £2 million to attract buyers who want to avoid paying the incoming council tax surcharge.

How is the housing market changing?

According to a report by Tax Policy Associates, sales at exactly £2 million made up 2.70 per cent of completed sales between £1.7 million and £2.3 million from December 2025 to July 2026, down from 5.69 per cent in the same period a year earlier.

At the same time, the share of sales priced within £10,000 below the mansion tax threshold rose roughly fivefold, from 0.44 per cent to 2.27 per cent.

Tax Policy Associates describes this as clear evidence of prices bunching below the threshold, although it has not yet found evidence of a wider fall in property values.

The annual surcharge bands are as follows:

  • £2 million to £2.5 million – £2,500 per year
  • £2.5 million to £3.5 million – £3,500 per year
  • £3.5 million to £5 million – £5,000 per year
  • £5 million and above – £7,500 per year

What are the risks with an artificially low property price?

While sellers can distort their asking price in an attempt to avoid the tax, the Valuation Office is expected to use comparable sales and property characteristics to assess which properties sit above the £2 million threshold.

This means tax liabilities will depend on assessed value, calculated using a combination of sales data and technology-driven modelling, rather than simply what a property is sold for.

Therefore, sellers who artificially drop their price to below the threshold may not achieve the intended tax outcome, as the buyer may still be liable to pay the surcharge.

Buyers and sellers may try to make up the costs elsewhere, such as inflated payments for furniture or fixtures, but this is also risky.

As Stamp Duty Land Tax is levied on property transactions, HMRC scrutinises extra charges to determine if they are just and reasonable and at fair market value.

If they are deemed to be disproportionate, the buyer may face extra tax and even interest and penalties.

Do you own or are looking to sell a home worth £2 million or more? Speak to our team for advice on your tax position.

Demystifying the changes to Benefits in Kind from 2027

Accountants Essex Blog, Business News, Newswire
Demystifying the changes to Benefits in Kind from 2027

Reforms to the Benefits in Kind (BIK) system have continued to change in recent years, as the Government prepares to roll out mandatory payrolling.

From April 2027, businesses will be required to payroll BIK, but this will now be a phased approach, with the full reforms in place from April 2028.

For employers who were expecting to do away with the P11D process in the main from next year, this means that most will still need to complete and submit P11Ds for 2026/27 and, for any benefits not yet payrolled, for 2027/28.

The new phased approach to payrolling BIK

HMRC confirmed earlier this year that in April next year, employers will only need to payroll BIK for the following benefits:

  • Company cars and car fuel
  • Company vans and van fuel
  • Employer-provided medical benefits

From this date, Income Tax and employer National Insurance Contributions (NICs) on these benefits must be paid using the same real-time system as the rest of PAYE.

HMRC intends its Real Time Information (RTI) system to handle the payrolling of most BIK from April 2028.

The exceptions are employment-related beneficial loans and living accommodation.

Employers providing either of these will still need to complete P11Ds for the relevant employees each year.

HMRC is also weighing up whether to keep P11Ds for a small number of specific situations, such as internationally mobile employees on modified payroll arrangements. We are still waiting for HMRC to publish further details on this.

For 2028/29, every other benefit must be processed through your payroll, with the associated Income Tax and Class 1A National Insurance paid in real time.

What is the expected impact of the changes?

First and foremost, you will need to prepare your payroll processes to incorporate real-time reporting of BIK.

This should be relatively straightforward, but it still makes sense to ensure your team and systems are prepared.

You will need to report more information than before, on a more regular basis, which may lead to more payroll errors, so don’t leave preparations too late.

In the first year of payrolling BIK, there may also be cash flow implications for the business and employees.

In 2027/28, an employer will pay the final P11D-based Class 1A bill for 2026/27 in July 2027. In the same year, it will also pay Class 1A on 2027/28 benefits in real time. That’s roughly two years’ worth of Class 1A leaving the business within one year.

For employees, the same doubling up can happen, as the tax on benefits reported on a P11D is often collected after the event through Self Assessment the following January or through a tax code adjustment in a later year that recovers an underpayment.

In the first year of payrolling, an employee could still be paying off the previous year’s benefit tax while also having tax on their current benefits deducted from each pay packet.

Need help with the upcoming BIK reforms?

Businesses are being encouraged to act early on these changes to ensure they understand the cash flow implications and reporting rules of this new mandatory payroll requirement.

If you would like help updating your payroll process or need support managing your payroll, please get in touch.

IHT pension reforms now only half a year away

Accountants Essex Blog, Business News, Newswire
IHT pension reforms now only half a year away

We are now just over six months away from the long-anticipated reforms to Inheritance Tax (IHT), which will see unspent pensions included within a person’s estate from April 2027.

First announced all the way back in the 2024 Autumn Budget, the move is expected to result in 10,500 more estates becoming liable for IHT in the 2027/28 tax year.

The changes will also mean that 38,500 estates will pay a higher IHT amount than under current rules.

Uncertainty over IHT treatment of pensions has also fuelled a surge in withdrawals. Financial Conduct Authority data shows the total value withdrawn from pensions reached £91.2 billion in 2025/26, up 70 per cent from £53.6 billion two years earlier.

What do the reforms to Inheritance Tax mean?

From 6 April 2027, most unused pension funds and death benefits will count as part of your taxable estate for IHT.

Thankfully, spouses, civil partners and registered charities remain exempt from IHT on inherited pension funds, but the beneficiaries of a couple’s combined estate will face tax on any pensions that push the value of their inheritance above the current thresholds.

With the IHT nil-rate band remaining frozen at £325,000 and the residence nil-rate band of £175,000 also remaining unchanged until April 2031, this change is going to affect many families in future.

As you can see from the level of withdrawals that have already taken place, some people are acting early to reduce the size of their pension and their taxable estate.

What can I do to reduce the risk of an Inheritance Tax bill?

More people are dipping into their pension savings and this trend points to one practical measure available to anyone concerned about IHT.

Most UK savers are able to draw a quarter of their pension pot without paying tax once they reach 55. From 6 April 2028, that minimum age moves up to 57.

The amount that can be taken tax-free is capped at £268,275. Drawing a lump sum up to this figure can help people meet growing living costs, although this will only reduce the estate they leave behind if the money is spent or gifted. Cash that is withdrawn and left in a bank account still counts towards your estate for IHT.

Taking money out also opens the door to passing wealth on to family sooner than you might otherwise have intended.

Timing matters here, as if you die within seven years of making a gift, it may still count towards your estate for IHT purposes.

It is also worth pausing before treating a pension withdrawal as the obvious answer.

While it can cut your potential IHT exposure, it leaves you with a much smaller pension pot and gives up the investment growth that money might otherwise have achieved.

This is not a straightforward choice and it is one you need to be confident about before acting.

Get tax and financial advice before dipping into your pension

If you are concerned about the impact that your pension may have on your IHT bill in the future, then it is important to seek advice.

Speaking with a tax adviser, alongside an independent financial adviser, can help you to balance your retirement needs against a future tax liability for the beneficiaries of your estate.

If you would like guidance ahead of these changes in 2027, please speak to our team.

Sequencing short-term finance effectively is vital for avoiding the interest trap

Accountants Essex Blog, Business News, In the Press, Newswire
Sequencing short-term finance effectively is vital for avoiding the interest trap

For many businesses, short-term finance can provide an essential lifeline when cash flow becomes tight.

Whether a business needs support covering a gap between paying suppliers and receiving customer payments, or managing seasonal demand, the right type of finance can keep a business moving during uncertain times.

However, using short-term borrowing without a clear strategy can quickly become a slippery slope of missed payments and further injections of cash.

Choosing the right type of finance for your business

Not all types of short-term finance are designed for the same purpose, so businesses need to choose the option that best matches their needs.

An overdraft can provide a flexible cash buffer for day-to-day cash flow pressures, with interest usually charged only on the amount borrowed.

Invoice finance can help unlock cash tied up in unpaid business invoices, while a short-term loan may be more suitable for funding a specific purchase or project.

Problems can arise when businesses use one type of finance to solve an issue it was not intended to address.

A short-term cash flow gap can turn into a long-term borrowing habit, causing interest costs and fees to build up over time and reduce profitability.

How to avoid the interest trap

While short-term finance can be a valuable tool, it is important to understand the full cost of borrowing.

Some forms of finance, such as certain credit cards, bridging loans and revolving credit facilities, can have higher interest rates and shorter repayment terms.

Although these products can be useful in the right circumstances, they can place additional strain on businesses with unpredictable cash flow.

Understanding the total cost of borrowing can help avoid unnecessary expense and ensure the finance remains affordable.

Matching the right type of finance to the right business need can help businesses manage cash flow more effectively and avoid falling into an expensive cycle of debt.

How can we help?

Before you fall down the slippery slope of short-term finance, get in touch with an accountant.

We understand that short-term finance can sometimes feel like the only option.

Our team can help assess your cash flow needs, review your funding options and support you in choosing a solution that helps your business grow while keeping borrowing costs under control.

For support with short-term finance options, get in touch with our team.

Inflation increases to a four-month high – How will businesses be impacted?

Accountants Essex Blog, Business News, In the Press, Newswire
Inflation increases to a four-month high – How will businesses be impacted?

The rate of inflation has hit 2.9 per cent in July 2026, up from 2.6 per cent in June, according to the latest data that has been published by the Office for National Statistics (ONS).

This is the first rise in the national rate of inflation since March 2026, with the increase in the energy price cap being partly to blame.

Businesses need to understand how this hike will affect them and what they must do to mitigate the issues.

How is inflation affecting businesses?

Higher inflation can increase the cost of running a business. Energy-intensive businesses and manufacturers are likely to feel the greatest impact, as rising energy prices can lead to higher production, transport and operating costs.

Many businesses are already dealing with tight profit margins and may find it difficult to absorb these additional costs.

Passing increased costs on to customers is not always straightforward, as consumers remain cautious about spending and may look for cheaper alternatives if prices rise too much.

Inflation can also affect employment costs. Employees may expect higher pay to help maintain their spending power, creating additional pressure on business finances.

With employment costs already rising, some organisations may take a more cautious approach to recruitment or delay planned investments.

What should businesses do to mitigate the impact of inflation?

With inflation remaining uncertain, businesses should review their budgets regularly and keep a close eye on cash flow.

Understanding where costs are rising most quickly can help businesses identify areas where savings or efficiencies can be made.

Businesses should also assess their pricing strategies to ensure they remain competitive while protecting profitability.

Investing in technology, improving efficiency and carefully managing expenditure may help reduce the impact of rising costs.

Strong financial planning and regular monitoring of business performance can help organisations remain resilient if inflation continues in the months ahead.

How can we help?

While the rate of inflation increasing to 2.9 per cent may not seem like a huge change, businesses must consider the impact that it will have on wider spending.

Our team can help you manage your cash flow by completing financial forecasting to ensure that your business stays resilient should inflation rates increase further.

For support with cash flow, get in touch with our team.

Gifting out of income – The overlooked way to reduce Inheritance Tax

Accountants Essex Blog, Business News, In the Press, Newswire
Gifting out of income – The overlooked way to reduce Inheritance Tax

For many people, giving financial support to family members is an important part of their financial planning.

Whether it is helping children with pension contributions or providing ongoing assistance, gifting can play an important role in Inheritance Tax (IHT) planning.

The normal expenditure out of income exemption under Section 21 of the Inheritance Tax Act 1984 allows for gifts to be made without being chargeable for IHT purposes, if specific conditions are met.

What are the requirements?

Under Section 21, gifts can be exempt from IHT if they are part of a person’s normal spending habits, are paid from their income and leave them with enough income to maintain their usual standard of living.

This exemption only applies to gifts made from surplus net income, not from capital or savings.

For example, withdrawals from an investment bond or the capital part of a purchased life annuity payment would not qualify.

The donor must also be able to cover their normal living costs from their remaining income and cannot give away income and then use capital to make up any shortfall.

Why is record-keeping important?

As the exemption is usually claimed after death, it is important to keep clear records of any gifts made under the normal expenditure out of income rules.

HMRC form IHT403 includes a schedule that can be used to record these gifts as they are made and can help support a future claim.

To work out whether gifts need to be reported, the donor must add together any gifts made under this exemption and any chargeable lifetime transfers made during the previous seven years.

If the total is more than the available nil rate band, all gifts must be reported to HMRC using form IHT100.

HMRC will then review whether the exemption applies and confirm its decision in writing.

If the total remains within the nil rate band, the exemption is usually reviewed only after the donor’s death, when the executors can claim the exemption using forms IHT400 and IHT403.

How can we help?

Planning for IHT helps to safeguard your family’s future, as utilising vital allowances enables you to minimise your IHT contributions.

Our team of accountants can support you with gifting out of income so that you can provide for your family’s future.

Get in touch with our team for support with Inheritance Tax planning.

Reckless tax statements: How could an honest mistake become criminal?

Accountants Essex Blog, Business News, In the Press, Newswire
Reckless tax statements: How could an honest mistake become criminal?

In June 2026, the Government published a document to gather views on the introduction of a criminal offence for making reckless or untrue statements relating to tax.

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the proposal risks confusing taxpayers and discouraging voluntary disclosures.

Instead, the ICAEW has advised HMRC to make ‘better use of its current powers,’ before criminalising ‘reckless offences.’

Is the offence needed?

The Government has justified the offence as a way of providing consistency between indirect and direct offences, mirroring what is in place for indirect taxes.

For example, untrue statements relating to VAT and customs can be prosecuted, or where an individual has submitted incorrect documents knowingly and recklessly, without HMRC having to prove dishonesty.

No equivalent exists for direct taxes.

The Government argues the new offence would create an enforcement tool that could be used in direct tax cases where dishonesty is unable to be established, but a sanction is needed.

This would not only apply to taxpayers, but also agents who recklessly make a statement or declaration to HMRC on someone else’s behalf.

How does the ICAEW view the proposed change?

The ICAEW strongly opposes the introduction of the new offence. It noted that the equivalent offence for indirect tax offences is rarely used, which raises doubts over whether it is even effective.

ICAEW suggests the change should be scrapped, as it views HMRC as already possessing the powers it needs to handle non-compliance.

The larger worry is with the definition of ‘reckless’, with the ICAEW suggesting most taxpayers and advisers might struggle to understand how it could be applied.

As the current tax system already categorises behaviour into careless, deliberate and fraudulent, another definition might cause added confusion.

Where the line is hard to draw, compliance checks will be hard to enforce.

Speaking to an accountant

Reaching out to an accountant can help ensure that statements are evidenced when you file, alongside clear records of the decisions and checks made.

If a claim or treatment might be deemed as uncertain, seeking advice before it is submitted can help you flag potential issues before a compliance check arises.

Reach out to an accountant to make sure your tax claims are properly evidenced.

Apprenticeship funding has changed – What does this mean for your next hire?

Accountants Essex Blog, Business News, In the Press, Newswire
Apprenticeship funding has changed – What does this mean for your next hire?

New funding rules for apprenticeships have been introduced, impacting any apprenticeships starting after 1 August 2026.

This could affect more employers than before as apprenticeships are becoming increasingly popular, with 308,770 starts between August 2025 and April 2026, up 8.7 per cent year-on-year.

With results season over and September intakes finalised, employers weighing up apprenticeships need to understand how these changes might impact them.

How does the apprenticeship levy currently work?

Any employer with an annual UK payroll of more than £3 million pays 0.5 per cent of that pay bill into the levy each month via PAYE.

This applies regardless of sector, and connected companies or charities share a single £3 million allowance across the group.

Levy contributions go into a digital account, which can be accessed via the government’s Apprenticeship Service and are topped up by Government contributions.

This funding can only be spent on approved apprenticeship training and assessment for employees, not wages, travel or other costs.

Employers draw down from this pot to pay training providers directly to ensure the funds are used appropriately.

What are the new rules?

The rules for apprenticeship funding change most years, so it is essential to keep up to date and be aware of how apprenticeships will be affected.

The 2026/27 rules establish that:

  • The minimum number of off-the-job hours training apprentices must complete is an absolute minimum of 187 hours – the actual minimum may vary based on the apprenticeship.
  • Employers must keep the PAYE information in their Government apprenticeship service account accurate and up to date.
  • Individualised learning records and planned end dates must not change when submitted – this applies even if the apprenticeship agreement is extended.
  • Off-the-job training and active learning do not include English and maths as standalone qualifications, even if the apprentice requires it to do their work.

At the end of the apprenticeship programme, the employer, provider and learner must agree that the training plan has been effectively delivered.

How do funding changes affect the apprenticeship levy?

For employers that pay the apprenticeship levy, the changes might be an added financial burden.

The Government no longer makes a supplementary payment of 10 per cent and this is no longer added to new funds entering apprenticeship levy accounts.

Where an employer does not pay the levy and the apprentice is older than 25, the employer co-investment rate is 5 per cent.

However, if the levy payer was to have insufficient funds in their apprenticeship service account, the employer co-investment rate is 25 per cent.

For employers who do not pay the levy, they will benefit from the Government funding all the apprenticeship training and assessment costs, up to the maximum amount.
This applies to apprentices aged between 16 and 24 at the start of their training.

Speak to an accountant

Reaching out to an accountant can help you budget for the cost impact of the changes to apprenticeship funding, whether you pay or don’t pay the levy.

Accountants can integrate apprentice hiring into cash flow forecasting and recruitment planning, tracking start dates and ages so employers can access the funding and incentives available.

Reach out to our team for guidance on how the new apprenticeship funding rules might impact your business.

£4.4bn lost to the heat: Is your business ready for the next heatwave?

Accountants Essex Blog, Business News, In the Press, Newswire
£4.4bn lost to the heat: Is your business ready for the next heatwave?

With temperatures breaking 30 degrees on multiple occasions in 2026, scorching heat is becoming the new normal.

Consecutive heatwaves have wiped £4.4 billion from the UK economy, according to research from think tank Verdant.

Heatwaves are predicted to become more common and more intense, likely costing UK employers further billions of pounds unless they are able to prepare.

Where do the losses come from?

After experiencing the fifth heatwave of the year, the Met Office reported that summer 2026 is on course to be the hottest on record.

Every one degree over 30 has been linked to a three per cent fall in average output per hour, according to analyst calculations.

The projected cumulative losses in productivity are expected to reach £25.6 billion by 2030 if trends in extreme heat continue.

While the losses primarily come from reduced worker productivity, extreme heat can cause infrastructure and equipment malfunctions.

Elsewhere, supply chains can be impacted through damage to roads and vehicles overheating.

How could SMEs prepare?

While there is no statutory maximum workplace temperature, there have been calls for the Government to compensate employees who are unable to work in the heat.

The pre-existing legislation, outlined in the Health and Safety at Work Act 1974, stipulates that workplace temperatures should not harm employee health.

However, as heatwaves become more regular, there is a chance a maximum workplace temperature will be introduced.

SMEs could begin to implement climate control in the workplace to prepare for future heatwaves, ensuring workers are comfortable during extreme heat.

Creating heat plans for your company can help identify hazards early, with pre-prepared policies to be rolled out when the weather is hot.

This might include a relaxed dress code, hydration breaks, flexible working hours and homeworking triggers that are agreed in advance.

Where productivity is expected to dip, financial modelling can allow you to see what a few weeks of reduced output might mean for your company – the same approach taken to seasonal dips.

Speaking to a specialist

Accountants can build heat disruption into cash flow models to enable you to mitigate the impact of lower productivity on your revenue.

A specialist can check whether businesses might be eligible for capital allowances to invest in cooling and ventilation equipment, providing added funding or tax reliefs.

Contact our team for advice on how to protect your business from the next heatwave.

Invoice financing – Liberating cash tied up in late payments  

Accountants Essex Blog, Business News, Newswire
Invoice financing – Liberating cash tied up in late payments  

SMEs in the UK have struggled with late payments for years and cash tied up in unpaid invoices can put pressure on your business’s ability to operate effectively.

Invoice financing can release funds locked up in late payments, giving a business an instant cash flow injection until the outstanding balance is settled.

Consistent late payments can significantly stunt business growth, especially for SMEs with thinner cash reserves.

What is invoice financing?

Invoice financing works by a lender using unpaid invoices as collateral for funding.

Lenders can advance up to 95 per cent of an invoice’s total value almost immediately, instead of waiting 30 days, 60 days or longer for payment from a customer.

The remaining balance of an invoice’s value can be settled once the customer has paid and lenders will deduct a service charge and discount depending on the value of the loan.

This means SMEs can instantly access capital that would be otherwise trapped, allowing them to offer more payment flexibility to clients.

When is it worth it?

This method of securing working capital is a great fit for firms that experience long waits for payment, either due to contract terms or overdue invoices.

Invoice financing helps keep cash flow healthy to cover running costs, begin new projects and reinvest money into business growth.

However, invoice financing is not a silver bullet. Businesses with narrow margins might not be able to use these services, as the fee structures can sometimes dent profitability.

Likewise, businesses with a small volume of invoices that are high value might face disproportionately high costs for advancing payments.

Also, if a business typically receives quick payment turnaround, a short-term overdraft loan may be more appropriate.

Seeking advice

Whether invoice financing is the right choice for you will depend on a number of factors, so getting a second opinion from a specialist can help you decide.

Our accountants can assess your position and advise which options will work best, helping you overcome the frustration of late payments.

Get in touch to find out more about invoice financing.


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