If your business is planning a major UK investment, HMRC’s new advance tax certainty service could give you binding clarity on the tax position before you commit.

HMRC has recently published draft guidance on the new advance tax certainty service as part of the government’s Corporate Tax Roadmap at the Autumn Budget 2024, where the Chancellor set out plans for a new HMRC service to give major investment projects clarity on how tax law will apply in advance. As part of the Autumn Budget 2025 measures last November, it was confirmed that the new service is expected to open in July 2026.

Under the new advance tax certainty service, businesses investing at least £1 billion in the UK over the lifetime of a project can apply for a formal, binding position from HMRC on how various taxes will be applied to their specific circumstances. This applies to taxes such as Corporation Tax, VAT, Stamp Taxes, PAYE and the Construction Industry Scheme.

Unlike existing clearance routes, the advance tax certainty service is designed specifically for large and complex projects where uncertainty over tax outcomes could otherwise discourage investment. HMRC clearances issued through this service will bind the tax authority for up to five years subject to full initial disclosure of all material facts. The clearance may then be renewed for a further five years unless a material change in the law, or a court decision that clarifies its application, means that the prior clearance is no longer correct.

This service is intended to provide those investing significant amounts in the UK, confidence that the tax treatment of a project will not later be challenged.

Pre-tax year end planning is one of the most practical and controllable ways for UK businesses and higher rate taxpayers to reduce unnecessary tax exposure. Unlike long term restructuring, it focuses on decisions that can still be influenced before 5 April or, for companies, before the accounting year end. When done properly, it is not about aggressive schemes, it is about making sure allowances, reliefs and timing opportunities are not wasted.

Why timing matters

The UK tax system is sensitive to timing. Income, expenses, capital purchases and pension contributions can fall into one tax year or the next depending on when action is taken. Once the year end passes, many opportunities disappear completely.

For higher rate taxpayers, this can be particularly costly. Income drifting just over a threshold can trigger higher marginal rates, loss of allowances or reduced reliefs. Pre-year end planning allows income levels to be reviewed and steps taken to mitigate sharp jumps in tax, rather than reacting after the event.

Key benefits for businesses

For owner managed businesses, year-end planning often centres on profit extraction and investment decisions. Reviewing results before the year end allows directors to consider whether profits should be retained, extracted as salary or dividends or redirected into qualifying expenditure.

Capital allowances are a common example. If a business plans to invest in plant or equipment, bringing expenditure forward into the current year can accelerate tax relief and improve cash flow. Pension contributions made by the company can also be an efficient way to extract value, reducing corporation tax while building long term personal wealth.

Stock levels, bad debts and provisions also deserve attention. A timely review can ensure profits are not overstated simply because adjustments were overlooked.

Value for higher rate and additional rate taxpayers

Individuals paying tax at higher or additional rates face some of the steepest marginal tax charges in the system. Pre-tax year end planning can help smooth income and preserve reliefs.

Pension contributions are often central. Personal contributions can attract higher rate relief, while also reducing adjusted net income, which can help protect allowances that taper away at higher income levels. Charitable giving under Gift Aid can have a similar effect.

For those with investment income, reviewing disposals before the year end can allow better use of annual exemptions or losses, rather than triggering avoidable capital gains tax.

For many individuals and business owners, paying tax is one of the largest regular financial commitments they face. Yet tax bills often arrive as a shock, not because the amounts are unexpected, but because the funds have not been set aside in advance. Developing a disciplined approach to saving for tax can remove stress, protect cash flow and support better financial decision making.

The starting point is understanding when tax is due and how much is likely to be payable. For employees taxed through PAYE, liabilities are largely settled automatically. For the self-employed, company directors, landlords and investors, tax is often paid later, sometimes many months after the income is earned. This delay can create a false sense of affordability, leading to funds being spent rather than reserved.

A practical approach is to treat tax as a non-negotiable cost, similar to rent or wages. As income is received, a proportion should be transferred immediately into a separate savings account earmarked for tax. This creates a clear boundary between available funds and money that belongs to HMRC. For those with variable income, setting aside a conservative percentage can help ensure there is enough saved even if profits increase unexpectedly.

Using a dedicated tax savings account can be particularly effective. Keeping tax funds separate reduces the temptation to dip into them for day to day spending. Some people choose instant access accounts for flexibility, while others prefer notice or fixed term accounts if they are confident about timing and amounts. The aim is not high returns, but certainty and accessibility when payment deadlines arrive.

Regular reviews are also important. Changes in income, tax rates, or personal circumstances can affect how much needs to be saved. Reviewing figures quarterly or alongside management accounts allows adjustments to be made before problems arise. This is especially relevant where payments on account apply, as these can significantly increase cash outflows in certain months.

Saving for tax is not just about avoiding penalties or interest. It supports better planning and peace of mind. When tax funds are already in place, decisions about investment, expansion, or personal spending can be made with greater confidence. It also reduces reliance on short term borrowing or time to pay arrangements.

In simple terms, saving for tax turns a reactive problem into a controlled process. By planning ahead and treating tax as a priority, individuals and businesses can smooth cash flow, reduce anxiety and stay firmly in control of their financial position.

If you are considering an asset purchase and are unsure which funding route is most appropriate, we can help you review the options and assess the impact on your business. A short discussion at the planning stage can often lead to a more efficient and sustainable outcome.

The Bank of England’s Monetary Policy Committee (MPC) last met on 18 December and, in a narrow 5–4 vote, decided to reduce the interest rate by 25 basis points, bringing it down to 3.75%. All four dissenting members voted to keep the rate at 4%. This marks the sixth interest rate reduction since August 2024.

Inflation continues to fall, with the latest figure at 3.2%. While this remains above the 2% target, inflation is now expected to return towards target more quickly in the near term. The Bank of England’s next meeting to consider interest rates is scheduled for 5 February 2026.

Following the interest rate cut, the late payment interest rate applied to the main taxes and duties on which HMRC charges interest will decrease from 8% to 7.75%. This change took effect on 29 December 2025 for quarterly instalment payments and will take effect on 9 January 2026 for non-quarterly instalment payments.

In addition, the repayment interest rate paid by HMRC on main taxes and duties will fall by 0.25 percentage points, from 3% to 2.75%, from 9 January 2026. The repayment rate is calculated as the Bank Rate minus 1%, subject to a minimum of 0.5%.

The Financial Services Compensation Scheme (FSCS) has raised its savings guarantee for bank deposits, increasing the deposit protection limit from £85,000 to £120,000 per person. This change came into effect on 1 December 2025 and marks a significant increase in how your bank deposits are protected in the UK.

This new deposit protection limit ensures that qualifying UK bank and building society depositors are covered if their bank fails. The FSCS compensation limit is reviewed periodically by the Prudential Regulation Authority (PRA). Following a consultation in March 2025, the PRA confirmed the increase in November 2025. Prior to this, the £85,000 limit had been in place since January 2017.

The FSCS protection applies per person, per bank or building society, which means joint account holders are eligible for double the protection, or up to £240,000 in total. In addition, savers with certain types of temporary high balances such as proceeds from a house sale, insurance payouts or inheritances can also benefit from increased protection. This limit has increased from £1 million to £1.4 million per depositor per life event. This additional coverage is available for up to six months.

For most savers, the new £120,000 limit will provide adequate protection. However, those with deposits exceeding this amount should consider spreading their savings across multiple banks or building societies to ensure all their funds are covered. It is important to note that if you hold multiple accounts within a single banking group (i.e., banks that share the same banking licence), the £120,000 limit applies to the total amount across all accounts within that banking group, not to each individual account.

You do not need to take any action to benefit from the increased protection. If your bank or building society were to fail, the FSCS would automatically compensate you up to the new limits.

As we look ahead to 2026, there is growing speculation about how the Bank of England will manage interest rates during what many economists believe will be a period of calmer inflation, steadier wage growth and a more predictable economic backdrop. After several years shaped by sharp price rises, supply chain shocks and policy responses that required rapid increases to the Bank Rate, the outlook for the coming year appears more settled and this is creating a sense that borrowing costs may edge downwards rather than upwards.

The current Bank Rate stands at around four per cent following a series of cuts through 2024 and 2025 as inflation eased gradually. Policymakers have indicated that they remain alert to any resurgence in inflationary pressure, yet they also recognise that the period of high inflation is now behind us. If this trend continues and inflation drifts closer to the Bank’s long term target, it will give the Monetary Policy Committee more room to make modest reductions during 2026. Many forecasters expect something in the region of a quarter to half a percentage point of cuts during the year, although the timing will depend heavily on the data released each quarter.

For households and businesses, this would create a slightly more comfortable lending environment. Mortgage borrowers on variable deals may feel some relief as repayments fall a little and businesses that rely on flexible credit facilities could find that their financing costs ease. Fixed mortgage rates may also become more attractive if lenders anticipate further gradual reductions. However, the broader economic impact is unlikely to be dramatic, since the Bank is not expected to deliver large or rapid cuts. The emphasis is more likely to remain on steady adjustments that avoid disrupting confidence or encouraging excessive borrowing.

It is worth noting that a full return to the ultra-low interest rate environment seen before the pandemic is not expected. Structural changes in the UK economy, global supply conditions and the government’s fiscal position all point towards a future in which interest rates remain higher than the levels seen in the decade prior to 2020. Even so, a move towards slightly lower borrowing costs in 2026 would be consistent with a maturing recovery and a gradual balancing of supply and demand across the economy.

Overall, the most probable outcome for 2026 is a measured reduction in interest rates that supports economic stability without risking a renewed surge in inflation.

The daily charge for driving within the London Congestion Charge zone will rise from £15 to £18 from 2 January 2026. This is the first increase in several years and forms part of Transport for London’s wider plan to manage traffic levels, improve air quality and support sustainable travel across the capital.

Transport for London has said that without an updated charge the central zone is likely to experience a noticeable increase in vehicle volumes during the next year. The higher charge is intended to discourage unnecessary journeys, smooth traffic flow and reduce delays that affect both businesses and individuals.

A significant change for drivers of electric vehicles is also being introduced. The current 100% discount for electric cars will end on 25 December 2025. From January 2026 electric cars registered for Auto Pay will move to a reduced rate that reflects a new tiered discount structure. Electric vans, heavy goods vehicles and quadricycles will also have revised discounted rates. This marks a shift away from the long-standing full exemption that has been used to encourage uptake of electric vehicles.

Residents who live within the congestion charging zone will continue to receive a 90% discount, although new applicants from March 2027 will only qualify for this reduction if they drive an electric vehicle. Existing residents with the discount will keep their entitlement regardless of vehicle type.

For business owners, delivery companies and anyone regularly travelling into central London, these changes will require some forward planning. Vehicle choice, travel habits and the cost of regular visits to the zone may all be affected. It may be useful to review travel arrangements ahead of the January 2026 increase in order to understand the cost impact on budgets and operations.

HMRC offers a helpful online tool that allows agents and taxpayers to check when they can expect a response to a query or request that they have made. The online tool is updated weekly with the latest information.

The full list of taxes the tool can currently be used for are as follows:

Agents can also check how long it will take HMRC to:

The online tool can be accessed at the following address, and you do not have to be logged in to receive an answer: https://www.tax.service.gov.uk/guidance/Check-when-you-can-expect-a-reply-from-HMRC/start/are-you-an-agent.

The free HMRC tax app now provides quick access to tax codes, income history, self-assessment details, National Insurance records and even payment options, all from your phone.

HMRC’s free tax app is available to download from the App Store for iOS and from the Google Play Store for Android. The latest version of the app includes some updated functionality.

To set up the tax app for the first time, open the app and enter your Government Gateway user ID and password. If you do not have a user ID, you can create one within the app. After signing in, you can access the app easily using a 6-digit PIN, fingerprint or facial recognition.

The app can be used to see your:

The app can also be used to complete a number of tasks that usually require the user to be logged on to a computer. This includes to:

Where cryptoasset tokens (also known as cryptocurrency) are held personally, this investment is usually undertaken in the hope of making a capital appreciation in its value or to make particular purchases. 

HMRC is clear that these holdings will usually be subject to Capital Gains Tax (CGT) if there is a gain when disposing of these assets by: 

If you have unpaid tax on cryptoasset gains, there is a specific voluntary disclosure service that can be used. This service can be used for exchange tokens (such as bitcoin), NFTs (non-fungible tokens) and utility tokens.

Before making a voluntary disclosure, you will need to: 

The number of years you must disclose unpaid tax depends on why it was not paid correctly. If you took reasonable care but still underpaid, you must disclose and pay for the last four years. If you did not take care, you must disclose for six years. However, if you deliberately failed to pay or knowingly gave incorrect information, you must disclose and pay for up to 20 years of unpaid tax.

Your disclosure must include all unpaid tax, interest and penalties. You can use HMRC’s calculators to work out the correct interest and penalty amounts. Once you submit your disclosure, HMRC will usually issue a payment reference number within 15 working days, and you must pay the full amount within 30 days of submitting a disclosure.

After reviewing your disclosure, HMRC will either send you a letter confirming acceptance of your offer or contact you if it cannot be accepted. If HMRC finds that you knowingly provided false or incorrect information, they may reopen your tax affairs and can impose higher penalties.