HMRC use a range of communication methods, as do fraudsters. Consequently, it can be difficult to be certain that a call, email, letter or text which seems to come from HMRC actually does. How then do you tell if the communication is genuine?

Phone calls

Scammers may pretend that they are from HMRC and try to extract a person’s bank details by telling them that they are entitled to a tax refund. This should set warning bells ringing – HMRC will never phone someone to tell them that they are entitled to a tax rebate or that they are to be charged a penalty, or to ask for personal information.

Not all calls purporting to be from HMRC will be a scam. However, to help callers identify whether a call is genuine, HMRC publish details of their current phone contacts. The list is available on the Gov.uk website at www.gov.uk/guidance/check-if-a-phone-call-youve-received-from-hmrc-is-genuine.

However, a missed call or voicemail from 0300 200 3884 is from HMRC. 

Emails

Scammers also send emails purporting to be from HMRC. However, as with phone calls, HMRC publish a list of recent email topics, which can be found of the Gov.uk website at www.gov.uk/guidance/check-if-an-email-youve-received-from-hmrc-is-genuine.

It is advisable not to open a link in an email.

Letters

HMRC may write to taxpayers. However, it is prudent to check that a letter which seems to be from HMRC actually is. HMRC publish a list of recent letters that they are sending out, details of which can be found on the Gov.uk website at www.gov.uk/guidance/check-if-a-letter-youve-received-from-hmrc-is-genuine. Examples of genuine letters include Letter IDMS99P which tells someone that they have an overdue payment on a Simple Assessment and Letter IDMS99 which tells someone that they have a payment which is overdue. HMRC may also reply to correspondence by letter.

Texts

HMRC do communicate by text, for example, to follow up a call to a helpline or to advise someone that their Self-Assessment refund is being processed. Some texts may have HMRC branding which will show HMRC as the sender, include the HMRC logo and contain the verified sender information.

As with other forms of communication, HMRC publish details of recent text contact on the Gov.uk website (see www.gov.uk/guidance/check-if-a-text-message-youve-received-from-hmrc-is-genuine).

HMRC will never ask for personal information in a text.

While a text from HMRC may include a link to the Gov.uk website or to a webchat, recipients should not open any links or reply to a text that claims to be from HMRC and offers a tax refund in exchange for personal information.

QR code

Leaflets and letters from HMRC may contain a QR code which can be scanned to access further information or help. Details of genuine letters from HMRC containing a QR code can be found on the Gov.uk website at www.gov.uk/guidance/check-if-a-qr-code-on-a-letter-youve-received-from-hmrc-is-genuine.

More than one method of communication

HMRC may use more than one method to communicate with a taxpayer, for example, a letter followed by a phone call. Details of current contacts using more than one method of communication can be found on the Gov.uk website at www.gov.uk/guidance/check-genuine-hmrc-contact-that-uses-more-than-one-communication-method.

Reporting suspicious communication

Scam text and email messages and scam social media accounts claiming to be from HMRC should be reported. Scam emails should be forwarded to phishing@hmrc.gov.uk, scam texts can be forwarded to 60599 and scam calls can be reported online.

Stay alert

It is important to stay alert and check whether communications from HMRC are genuine.

On 21 May 2026, the Chancellor announced a temporary reduction in the rate of VAT applied to children’s meals and admission to certain attractions. It does not apply to sporting activities. The measure is intended to help families over the summer holiday period.

Children’s meals and tickets to attractions currently are liable for VAT at the standard rate of 20%. However, from 25 June 2026 to 1 September 2026 inclusive, a temporary reduced rate of 5% will apply to qualifying children’s meals and tickets to attractions. The rate will revert to 20% from 2 September 2026.

Qualifying supplies

The temporary reduced rate will apply to children’s meals, children’s cinema, theatre, show and concert tickets and admission to certain attractions.

Children’s meals

For a meal to be a ‘children’s meal’ both of the following must apply:

• the meal is held out for sale only as a meal for children; and
• the meal is supplied as part of catering by a restaurant, café or similar establishment for consumption on the premises.

It is important to note that the marketing, presentation and price determine whether a meal is a children’s meal rather than who consumes it. Consequently, the reduced rate will not apply to an adult meal consumed by a child but will apply if an adult purchases a children’s meal. It should also be noted that the temporary reduced rate will not apply to meals marketed as smaller portions, lower-calorie options, discounted versions of adult meals and shared meals intended for both adults and children. Where the same meal appears on both the adult menu and the children’s menu, the children’s version should be smaller and cheaper. However, portion size alone will not determine whether a meal is a children’s meal.

If the children’s meal is supplied as a package and includes more than one course and a (non-alcoholic) drink, the reduced rate applies to the whole package. However, separate add-ons, such as sides, retain their usual VAT treatment. Meals that include an alcoholic drink are not regarded as children’s meals.

The reduced rate does not apply to takeaway meals.

Meals that are currently exempt, such as those provided alongside a supply of education, remain exempt.

The measure will reduce the cost of a children’s meal which normally costs £12 to £10.50.

Theatre and cinema tickets

The temporary reduction in VAT will apply to children’s cinema and theatre tickets. These are tickets which are marketed and sold only as a right of admission for a child. A family ticket which provides admission for one or more children will also benefit from the reduced rate. However, group tickets which are not family tickets do not qualify. Adult tickets remain standard rated.

The measure will reduce the cost of a £30 children’s theatre ticket to £26.25.

Attractions

The temporary reduced rate will also apply to admission tickets to qualifying attractions that are suitable for families. Unlike cinema and theatre tickets, here the reduced rate applies to all admissions, regardless of the customer’s age. Qualifying attractions are amusement parks and fairs (including water and theme parks but not pay-per-ride attractions), circuses, adventure parks, museums and other cultural facilities (such as nature reserves, planetariums, heritage sites and botanical gardens), zoos, aquariums, wildlife parks and farm visitor attractions, soft play centres, indoor bounce parks and indoor play facilities and observation attractions, including viewing platforms, towers and observation wheels.

The reduced rate applies only to admissions and only during the period from 25 June 2026 to 1 September 2026.

In a personal or family company, there are often transactions between the company and the director(s). For example, the company may meet personal expenses on the director’s behalf, or the director may loan money to the company to help cash flow.

It is important to keep track of transactions between the director and the company. This is done by means of a director’s loan account.  Where the director’s loan account is overdrawn there may be tax consequences for the director and the company.

If the outstanding loan balance exceeds £10,000 at any point in the tax year, the director may face a tax charge under the benefit in kind provisions. The company must also pay Class 1A National Insurance contributions at 15% on the taxable amount.

If the account is overdrawn at the year end and remains so at the corporation tax due date nine months and one day after the year end, the company must pay section 455 tax on the outstanding loan balance. The rate of section 455 tax is aligned with the dividend upper rate – 35.75% for 2026/27.

Writing off the loan

At first sight, writing off the loan may seem a simple solution to avoiding the section 455 tax. However, this too has tax consequences.

Where a director’s loan is waived, released or written off, the director is treated as if they have received a distribution equal to the amount written off. The director is taxed at the dividend tax rates. Where the write-off takes place on or after 6 April 2026, the deemed distribution will be taxed at 10.75% where it falls within the basic rate band, at 35.75% where it falls within the higher rate band and at 39.35% where it falls in the additional rate band. The director must declare the loan write-off on their Self-Assessment tax return.

Where the director is also an employee, a tax charge could also arise in respect of the written off loan under the employment income rules. However, the distribution rules take precedence, so the director does not suffer a double tax charge.

From the company’s perspective, as the write-off is treated as a distribution, the amount written off is not deductible in computing the company’s profits chargeable to corporation tax. If the loan was one in respect of which the company had previously paid section 455 tax, that tax would become repayable nine months and one day after the end of the tax period in which the loan was written off. The repayment must be claimed.

National Insurance

There is also a National Insurance cost for both the director and the company in writing off a director’s loan. Although for income tax purposes, the loan write-off is treated as a distribution, for National Insurance purposes, it is treated as a payment of earnings on which Class 1 National Insurance contributions are payable by both the director and the company (as the employer).

It may be possible to argue that the write-off is shareholders’ funds rather than earnings and is not related to the director’s work for the company. If HMRC accept this to be the case, there will be no National Insurance to pay.

A better solution

If the director is taxed at the dividend upper or additional rates on the deemed distribution, it may be preferable to leave the loan outstanding and pay the section 455 tax. Unlike a loan write-off, there will be no National Insurance to pay. If the director is able to pay off the loan at a later date, the section 455 tax will be repaid.

HMRC publish mileage rates for petrol, LPG and diesel and electric cars. The rates are known as the advisory fuel rates and are updated quarterly with effect from 1 March, 1 June, 1 September and 1 December. The rates are fuel-only rates, which can be used either to reimburse employees for fuel used for business travel in a company car or where an employee needs to repay the cost of fuel used for private journeys in a company car. For petrol, LPG and diesel cars, the rate depends on the engine size, whereas for electric cars the rate depends on whether the car was charged at a home charger or a public charger.

The rates applying from 1 June 2026 are as follows:

Engine size	Petrol (rate per mile)	LPG (rate per mile)
1,400cc or less	14 pence	11 pence
1,401 cc to 2,000cc	17 pence	13 pence
Over 2,000cc	26 pence	21 pence

Engine size	Diesel (rate per mile)
1,600cc or less	15 pence
1,601cc to 2,000cc	17 pence
Over 2,000cc	23 pence

Charging location	Electric (rate per mile)
Home charger	7 pence
Public charger	15 pence

Reimbursing business travel

The rates can be used to reimburse an employee for business travel in a company car without a tax charge arising on the reimbursement. There will be no Class 1A National Insurance for the employer to pay either.

The employer does not have to use the advisory rates and can set their own rates instead. However, if the amount paid exceeds the advisory rates and the employer cannot show that the actual costs are higher than the advisory rates (and equal to the amount paid), the excess over the amount due at the advisory rates is taxable and must be included in earnings for Class 1 National Insurance purposes.

The rates should not be used to reimburse business travel in an employee’s own car. Instead, Approved Mileage Allowance Payments rates should be used. These are higher as they include an element for the costs of wear and tear, servicing and insurance.

Repaying private travel

If an employee has a company car other than an electric car, a fuel benefit tax charge will arise if the employer meets the cost of private travel. This is an all or nothing charge – the charge will apply if the employer meets the cost of any private mileage in the year. The charge can be significant as the amount charged to tax is found by applying the appropriate percentage used to work out the company car benefit by the multiplier for the year, which for 2026/27 is set at £29,200.

To avoid the charge, the employee must make good the cost of all fuel for private journeys. The amount which the employee will need to reimburse can be calculated using the advisory fuel rates. To eliminate the charge, the cost of private fuel must be repaid no later than 31 May after the end of the tax year if the benefit is payrolled and no later than 6 July after the end of the tax year if it is returned on the P11D.

The advisory rates do not need to be used if it can be shown that the employee has met the full cost of fuel for private travel by reimbursing at a lower rate.

There is no fuel benefit charge if the employer meets the cost of electricity for private journeys in an electric car, so reimbursement is not needed here.

The High Income Child Benefit Charge (HICBC) is a tax which claws back child benefit where the recipient or their partner has adjusted net income of £60,000 or more in the tax year. The charge is equal to 1% of the child benefit for the year for every £200 by which adjusted net income exceeds £60,000. Once adjusted net income reaches £80,000, the charge is equal to the child benefit for the year. Where this is the case, rather than receiving the child benefit only to pay it back later, the recipient may elect to not receive the child benefit. However, it is important to register for child benefit to secure the National Insurance credit it provides, particularly if the individual will not otherwise secure a qualifying year for state pension purposes.

Where both partners have adjusted net income in excess of £60,000, the charge is levied on the one with the highest income. It does not matter who receives the child benefit – a person may be liable for the charge when the benefit is paid to their partner.

For 2026/27, child benefit is set at £27.05 per week for the first child and at £17.90 per week for each additional child.

Example

Jade and Liam have two children. For 2026/27, they receive child benefit of £44.95 per week (£2,337.40 a year). Jade is a stay-at-home parent. Liam has adjusted net income of £70,000 for 2026/27. Jade claims child benefit.

As Liam’s income exceeds the £60,000 threshold, he is liable for the HICBC. His income exceeds the threshold by £10,000. The charge is 50% of the child benefit paid to Jade (1% x (£10,000/£200)), i.e. £1,168.70.

Adjusted net income

The measure of income used to determine whether the HICBC applies is adjusted net income. This is taxable income before personal allowances, less trading losses, pension contributions and Gift Aid donations.

The charge only applies if the recipient or their partner has adjusted net income of £60,000 or more.

Keeping the child benefit

There are various steps that can be taken to eliminate or reduce the charge.

Option 1: equalise income

The charge is triggered by an individual’s income, rather than household income. A household where both parents have adjusted net income of £60,000 – household income of £120,000 – will be able to keep their child benefit in full. By contrast, a household where one parent earns £80,000 and the other does not work will pay back all their child benefit in the form of the HICBC. Consideration could be given to reducing hours or to both parents working part-time in order to prevent the HICBC applying.

Option 2: make pension contributions

Pension contributions are deducted in working out adjusted net income. Therefore, an individual can consider making pension contributions in order to reduce or eliminate the HICBC. The individual will benefit later from the pension contributions.

Example

Lucy and Olly have four children. They receive £4,199 in child benefit in 2026/27. Lucy has adjusted net income of £50,000 and Olly has adjusted net income of £75,000. The HICBC would claw back £3,149.25 of their child benefit. Olly decides to make a pension contribution of £15,000. This reduces his income to £60,000 and removes him from the scope of the HICBC.

Option 3: make Gift Aid contributions

Charitable donations made under Gift Aid are deducted in calculating adjusted net income. Consequently, it is possible to reduce or eliminate the HICBC by making Gift Aid donations to reduce adjusted net income.

Where an employee works at home, they may incur additional household expenses as a result, such as additional heating and lighting costs, the cost of business phone calls on a home phone, additional insurance costs and additional cleaning costs.

Reimbursed by the employer

The tax legislation contains a dedicated exemption which allows the employer to reimburse these costs without the employee being taxed on the amount reimbursed.

For the exemption to apply, the employee must be working at home under homeworking arrangements with the employer, rather than out of choice. Further, the costs must be reasonable and must be incurred in carrying out the duties of the employment; the exemption does not apply if the employer meets costs which would be the same regardless of whether the employee worked at home or not, such as mortgage interest or rent.

To make life easier, rather than reimbursing actual costs, which can be tricky and time-consuming to work out, the employer can make a tax-free payment of £6 per week (£26 per month) to cover the additional costs of working from home. The amount is the same whether the employee works at home one day a week or five days a week.

Costs met by the employee

Prior to 6 April 2026, the employee was able to claim a fixed deduction of £6 per week (£26 per month) to cover the additional costs of working at home under a homeworking arrangement. Employees could also claim a deduction based on the actual additional costs of working from home.

However, from 6 April 2026, this all changed. From that date, a deduction for additional household expenses is expressly prohibited regardless of whether they are wholly, exclusively and necessarily incurred in the performance of the duties.

Where a business is operated through a limited company, profits need to be extracted if they are to be used personally. Where the personal allowance remains available, it is generally beneficial to pay a salary equal to the personal allowance and to extract any further profits needed outside the company in the form of dividends.

In a family company, there may be a number of shareholders.

Paying dividends is not as straightforward as paying a salary or a bonus as there are company law rules which must be adhered to. The first point to note is that dividends are paid from retained profits. These are profits on which corporation tax has already been paid, and which have yet to be distributed. A company can only pay a dividend if it has sufficient retained profits from which to pay it.

The second point to note is that where there is more than one shareholder for a class of share, dividends must be paid in proportion to the shareholdings, which can be very limiting and may not give a tax-efficient result. This is where an alphabet share structure comes in.

Under an alphabet share structure, each shareholder has their own class of share, for example, A ordinary shares, B ordinary shares, etc. This allows different dividends to be paid for each class of share, making it possible to tailor the dividends to the shareholder’s personal circumstances. For example, a company may tailor dividends to mop up any unused dividend allowances and basic rate bands.

Example

Albert and Anna are shareholders in A Ltd. They each own 50% of the ordinary share capital.

The company has profits of £50,000 it wishes to distribute. Neither Anna nor Albert have used their dividend allowance. Albert has no other income in 2026/27, whereas Anna has income of £200,000 from her property portfolio.

As Anna and Albert each own 50% of the shares, each will receive a dividend of £25,000. Albert can set his dividend allowance and personal allowance against his dividend so £13,070 is tax-free. The remaining £11,930 is a taxed at 10.75% – a tax bill of £1,282.47. Anna will also receive a dividend of £25,000, of which £500 is sheltered by her dividend allowance. The remaining £24,500 is taxed at 39.35% – a tax bill of £9,640.75. Their combined tax bill is £10,923.22.

If instead they had adopted an alphabet share structure whereby Albert owned one ordinary A share and Anna owned one ordinary B share, they could have tailored the dividends to their personal circumstances. Instead of each receiving a dividend of £25,000, a dividend of £49,500 could be declared for the A share and a dividend of £500 for the B share. Albert would receive a dividend of £49,500 on which tax of £3,916.25 would be payable, while Anna would receive a dividend of £500 which would be sheltered by her dividend allowance. Their combined tax bill is over £7,000 lower where an alphabet share structure is used.

The 2025/26 Self-Assessment tax return must be filed online by midnight on 31 January 2027. However, you do not have to wait until the deadline is approaching to file your return and there can be advantages in filing early.

Before filing your return, it is important to check that you have all the information you need. If you have employment or pension income to include on your return, you may need to wait until you have your P60. You should have that by 31 May 2026. Likewise, you may also need details of payrolled benefits and those reported on your P11D.

Here are seven reasons why filing your tax return early may be a good idea:

1. You will get it out of the way and avoid the stress of having to file it at the last minute.
2. If you have trading and/or property income, you will know whether you will need to start complying with MTD for ITSA from 6 April 2027 if you are not already in it. This will be the case if your combined trading and property income before deduction of expenses is £30,000 or more in 2025/26 The earlier you know, the longer you have to prepare.
3. You will know what tax you have to pay in advance and can ensure that you have the funds available to meet the tax bills, rather than being caught out at the last minute.
4. If you are owed a tax refund, you can claim the money back sooner.
5. If you make payments on account, once you know your 2025/26 tax liability you can check whether you need to reduce them.
6. If you file your return before 30 December 2026 and owe £3,000 or less, you can opt to have the tax that you owe collected through your 2027/28 tax code. This is equivalent to an interest-free instalment option.
7. If you are looking to get a mortgage and need proof of your income, filing your tax return will provide this.

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is now a reality for individuals who had combined trading and property income of at least £50,000 in 2024/25. They will now need to keep their records digitally and file their first quarterly return by 7 August 2026.

The quarterly updates are sent to HMRC digitally using software that is compatible with MTD for ITSA. Quarterly updates must be submitted for each source of self-employment income and each source of property income.

The quarterly updates will contain:

• the digital records for self-employment and property income and expenses for the previous three months; and
• the digital records which have already been created since 6 April 2026 and any corrections to those records.

After sending each update, the individual will be able to see an estimate of their tax bill.

Details of the categories under which the information provided in the quarterly update should be recorded can be found online at: www.gov.uk/government/publications/update-notice-for-making-tax-digital-for-income-tax/making-tax-digital-for-income-tax-update-notice.

If the individual has other income, such as income from employment or a pension or investment income, they do not need to report this in the quarterly update. Instead, other income is reported in the final declaration. This is the point at which reliefs are claimed too.

Update periods

Individuals have a choice whether to prepare quarterly updates using the standard periods, which correspond with tax months, or the calendar update periods.

The following table shows the periods and quarterly update deadlines.

Standard update periods		Calendar update periods
Period	Quarterly update deadline	Period	Quarterly update deadline
6 April to 5 July	7 August	1 April to 30 June	7 August
6 Pril to 5 October	7 November	1 April to 30 September	7 November
6 April to 5 January	7 February	1 April to 31 December	7 February
6 April to 5 April	7 May	1 April to 31 March	7 May

Taxpayers can choose to send updates more frequently if they wish, such as monthly.

Missed deadlines

Under the penalty regime that applies under MTD, where a deadline is missed, a penalty point is issued. Once the penalties reach the penalty threshold, which for quarterly return is four points, a £200 penalty is levied.

However, HMRC have stated that for taxpayers who are mandated for MTD for ITSA from 6 April 2026, they will not issue penalty points for late quarterly updates for the first 12 months.

Individual Savings Accounts (ISAs) are tax-free savings accounts.

There are four different types of ISAs:

• cash ISAs;
• stocks and shares ISAs;
• innovative finance ISAs; and
• lifetime ISAs.

Individuals must be at least 18 to invest in an ISA.

Cash ISAs may be with a bank or building society or with National Savings and Investments. Stocks and shares ISAs can include shares in companies, unit trusts and investment funds, corporate bonds, government bonds and long-term asset funds.

Lifetime ISAs can include cash and stocks and shares. They can only be used to save for a deposit for a first home or for retirement.

Innovative finance ISAs can hold peer-to-peer loans, crowdfunding debentures, funds where the notice or redemption period means that they cannot be held in a stocks and shares ISA or crypto-asset exchange traded notes.

A separate ISA, the junior ISA, allows a parent or a guardian with parental responsibility to save for a child who is under the age of 18 and living in the UK.

There is no tax to pay on interest on a cash ISA or on income and capital gains from investments in a stocks and shares ISA.

ISA allowance

For adults, the ISA allowance is £20,000 for 2026/27. This is the total amount that can be invested in ISAs of any type. However, the maximum that can be deposited in a lifetime ISA is capped at £4,000 a year and an individual can only have one lifetime ISA.

Example

John wishes to invest £20,000 in ISAs in 2026/27. He is using a lifetime ISA to save for retirement and can invest £4,000 of his allowance in his lifetime ISA. He also invests £10,000 in a cash ISA and £6,000 in a stocks and shares ISA.

The savings limit for Junior ISAs is set at £9,000 for 2026/27.

Changes ahead

Although the ISA limit will remain at £20,000 for 2027/28, individuals under the age of 65 will only be able to invest a maximum of £12,000 in a cash ISA. To use their full allowance, individuals under 65 will need to make non-cash investments of at least £8,000 in other types of ISA (stocks and shares, lifetime or innovative finance). The £12,000 cap will not apply to individuals aged 65 and over who will continue to be able to invest their full allowance in a cash ISA if they so wish.

Individuals under the age of 65 who wish to make the most of the opportunity to invest in cash ISAs may wish to consider investing the full £20,000 limit in a cash ISA in 2026/27 while they still can.