tjb • Accountants

Second Payment on Account Due 31 July: What It Is and How to Reduce It

If you’re self-employed, a landlord, or otherwise complete a Self Assessment tax return, you may be due to make a “payment on account” this month. This is an advance instalment towards your 2025/26 tax bill, paid alongside your bill for the previous year, and it catches a lot of people out because it can make your tax bill look much higher than expected.

Payments on account apply if your last Self Assessment bill was over £1,000 and less than 80% of your tax was collected at source (for example, through your tax code). HMRC assumes your income this year will be similar to last year, so it asks for two advance instalments — one on 31 January and one on 31 July — each equal to half of your previous year’s bill.

If your income or profits have genuinely fallen this year, you may be able to reduce this payment. This can free up cash flow, but it needs to be done carefully: if you reduce the payment too far and your actual bill turns out higher, HMRC will charge interest on the shortfall from the original due date.

Before you make any changes, it’s worth speaking to us so we can help you estimate this year’s likely tax bill accurately, rather than guessing.

Making Tax Digital: Your First Quarterly Update Is Due by 7 August

Making Tax Digital (MTD) for Income Tax became mandatory from April 2026 for sole traders and landlords with combined gross income over £50,000. If this applies to you, you should now be keeping digital records and sending quarterly updates to HMRC using compatible software, rather than reporting everything after the tax year ends.

For most people in the new system, the first quarterly period ran to 5 July 2026, with the update due by 7 August 2026. Importantly, these quarterly updates do not replace your annual tax return — you’ll still need to submit that as usual, with a final declaration after the year end.

HMRC has confirmed that penalty points won’t be issued for late quarterly updates during the first year of the scheme, but it’s still important to get your records up to date and your software connected properly, since the transitional easement won’t last forever and good habits now will save time later.

If you’re unsure whether MTD applies to you, when your first submission is due, or which software to use, get in touch and we can check this for you.

Companies House ID Verification: What Directors Need to Do Now

Identity verification is now a legal requirement for new company directors and people with significant control (PSCs), and it’s rolling out to existing directors and PSCs too. If you’re setting up a new company, you’ll need to verify your identity before you can be appointed.

If you’re an existing director or PSC, you’ll generally need to verify during the transition period — typically when your company next files a confirmation statement. You can verify for free directly with Companies House using GOV.UK One Login (via an app, online questions, or a Post Office visit), or through an Authorised Corporate Service Provider such as an accountant.

Once verified, you’ll be given a personal Companies House code. This code needs to be kept secure — if we file your confirmation statement on your behalf, we may need this code before we can submit it, so please don’t lose it or share it carelessly.

If you haven’t verified yet, it’s worth doing sooner rather than later — missing the requirement can mean Companies House rejects filings or blocks new appointments.

Companies House Accounts Filing Reforms Confirmed for April 2028

Companies House has confirmed a significant set of reforms to how company accounts are filed, taking effect from 1 April 2028. While this feels a long way off, the changes are big enough that it’s worth understanding them now, particularly if you run a small company or micro-entity.

• Software-only filing: all companies will need to file accounts using commercial software — the Companies House web and paper filing services will close for accounts.
• Profit and loss accounts for all: small companies and micro-entities will need to file a profit and loss account, though there will be an option to opt out of having it published on the public register (Companies House, HMRC, and law enforcement will still see it).
• Abridged accounts removed: the option to file abridged accounts will no longer be available.
• Stronger audit exemption statements: companies claiming audit exemption will need a more detailed eligibility statement.

These reforms are part of the Economic Crime and Corporate Transparency Act 2023, aimed at improving the accuracy of the public register and tackling economic crime. There’s plenty of time to prepare, but it’s a good moment to start thinking about your accounting software and how your accounts are structured.

Earning Money from a Side Hustle? Here’s When You Need to Tell HMRC

Selling online, dog walking, tutoring, delivery driving — if you’re earning money outside your main job, you may need to tell HMRC about it, and it’s a topic that catches many people out simply because they don’t realise the rules apply to them.

There’s a tax-free trading allowance of £1,000 a year. If your total gross income from side activities is £1,000 or less across the tax year (6 April to 5 April), you generally don’t need to tell HMRC or file a return. If your income is above £1,000, you’ll usually need to register for Self Assessment and report it — new entrants for the 2025/26 tax year should normally register by 5 October 2026.

A couple of things worth knowing:

• The £1,000 threshold applies to your gross income, not profit, and it’s a combined total across all your side activities, not £1,000 per activity.
• Simply selling your own unwanted personal belongings usually isn’t “trading” — but regularly buying or making items specifically to resell for a profit generally is.
• You can either claim the £1,000 allowance, or deduct your actual expenses — not both, so it’s worth checking which works out better for you.

If you’re not sure whether your side income needs reporting, it’s much better to check now than to receive an unexpected HMRC letter later.

Need help with your Self Assessment or side hustle taxes?

Get expert advice and stay compliant with HMRC at TJB Accountants