Your Monthly Tax & Business Update – September 2025
Welcome to your September update from Jenners Tax & Business Advisers, your trusted source for all things tax, accounting, and business advice.
Each month, we bring you the key HMRC deadlines, hot topics in the world of finance, and practical insights to help you stay compliant and confident in your business.
Important Tax Dates – September 2025
Here are the key dates to keep in mind this month:
- 1 September – Corporation Tax payment due for companies with a 30 November 2024 year-end.
- 19 September – PAYE, NIC & CIS deductions due (postal submission); CIS300 monthly return and payment due for deductions to 5 September.
- 22 September – PAYE, NIC & CIS electronic payment deadline for month ended 5 September.
Make sure payments reach HMRC by the deadlines to avoid penalties or interest.
In the News – What Business Owners Need to Know
Booking a family holiday on the company?
You’re booking a last minute summer holiday for you and your family. As you’re a little short of cash, can you use your company’s money to pay for it, and if so what are the tax and NI consequences?
The Tax Angle…
As a company owner manager you have control of your company finances. Of course, this doesn’t mean that you should spend its money willy-nilly but there’s nothing wrong in using it to pay for goods and services for your personal use or for your family’s. However, as you’d expect there are usually tax and NI consequences for you and your company.
Your tax position
There are a number of ways in which your tax position is affected if you use company funds to make private purchases.
Company reimburses you. If you arrange and buy your holiday and your company reimburses you, the amount reimbursed counts as earnings and is taxable and liable to NI in exactly the same way as if you had been paid extra salary. This is not a tax-efficient option.
Company pays your bill. You arrange the holiday but your company pays the travel agent, airline etc. direct. This counts as earnings for NI purposes and a benefit in kind for tax purposes. It’s slightly more tax efficient than the previous option because if you’re in self-assessment you won’t have to pay income tax on the benefit until 31 January 2027.
Company arranges and pays. You arrange the holiday in your role as director of your company, and the contract with the travel agent etc. is with your company. This is one step towards being more tax and NI efficient. The arrangement is a benefit in kind so you don’t have to pay NI on it although your company must pay Class 1A NI, but not until July 2026.
Interest-free company loan. This can be the most tax and NI-efficient option. If you borrow from your company to pay for your holiday, and when added to any other borrowing during 2025/26 the total doesn’t exceed £10,000, there’s no tax or NI for you or your company to pay.
Trap. If your borrowing exceeds £10,000 in any tax year it counts as a taxable benefit in kind. However, the resulting tax is relatively modest.
Your company’s tax position
The effect of personal purchases on your company depends on how they are treated for personal tax purposes. Broadly speaking, if the purchase counts as taxable earnings or as a benefit in kind, your company can claim a corporation tax (CT) deduction for the expense, including any employer’s NI contributions. Conversely, if you borrow the money the CT position is neutral, at least initially.
Trap. If you owe your company money after nine months following the end of the financial year in which you borrow it your company must pay tax, known as a s.455 charge , equal to 33.75% of the amount of borrowing still owed.
Tip. If you borrow money from your company now to pay for your 2025 summer holiday, you can have well over a year in which to repay it and dodge the s.455 charge . Example. Your company’s financial year end is 31 March. Money you borrow now can be repaid at any time up to 31 December 2026 to prevent the s.455 charge applying.
HMRC scrutinising directors’ loans
HMRC has begun a new compliance campaign targeting company directors who owed their companies money. What’s the full story, and how should you respond?
Warning letter. HMRC says that it will shortly write to all directors that it has identified as having had one or more loans from their companies which were written off or released (waived) between April 2019 and April 2023. You’ll receive a letter if you didn’t report the details on your self-assessment tax return or notify HMRC by other means. The likelihood is that you’ll have further income tax to pay.
Taxable income. When a company writes off or waives a debt owed to it by an employee, director or shareholder it counts as taxable income. The write-off or release of a debt might be taxable as earnings or, in the case of a director who’s also a shareholder, as a distribution which is taxed in the same way and at the same tax rates as a dividend.
Tip. The tax payable is lower for a written off or waived debt taxed as a distribution compared to the tax as earnings. Which of these applies depends on whether the debt arose by reason of your employment or because you’re a shareholder.
Trap. If the debt arose by reason of employment, the company should have reported it and accounted for Class 1 NI. If it hasn’t your company might also be in hot water with HMRC.
Action required. If you’re already aware that you have overlooked reporting a written off or waived debt to HMRC, or become aware because you receive a letter from HMRC, you should report it in one of two ways. If the write-off/waiver occurred after 5 April 2023, amend your 2023/24 self-assessment tax return or, if it occurred earlier (or if it relates to 2023/24 but you didn’t complete a tax return for that year), use HMRC’s online disclosure service. Volunteering the information rather than waiting for HMRC to pressure you can reduce any financial penalty it might charge.
When will you have to register your new business for MTD?
The timetable for mandatory use of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) by existing businesses is well established. But when must you use MTD ITSA if you start a new business or create a new income stream?
MTD joining deadlines
If you were a sole trader, landlord or both in 2024/25 you might be required to sign up to and start using Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) from April 2026, 2027 or 2028 depending on your annual turnover. The turnover limits that trigger mandatory use of MTD ITSA for those years are £50,000 in 2024/25, £30,000 in 2025/26 and £20,000 in 2026/27 respectively.
Example. James has been running a plumbing business since 2010. His turnover in 2024/25 was £49,000 and in 2025/26, £42,000. He’s not required to use MTD ITSA from April 2026 as his turnover was less than £50,000. However, he is required to use it from April 2027 because his turnover for 2025/26 exceeds £30,000. So far so good, but the position for new businesses is less well known.
New businesses – turnover trouble
If you first became a sole trader in 2024/25, say on 5 October 2024, and your turnover for that tax year was £26,000, you might assume that as you didn’t reach the threshold of £50,000 you won’t be required to use MTD ITSA from April 2026 – but you’d be wrong. You would be required to join MTD ITSA from 6 April 2026 because the turnover is measured for a full year’s trading.
Trap. Where a business runs for part of a year its turnover is pro rata. Therefore, in the circumstances described above the annual turnover figure would be £50,748 (£26,000 / 187 days x 365 days) which exceeds the trigger point for MTD ITSA.
Tip. The rule of thumb for deciding if and when you must use MTD ITSA is that you won’t need to until such time as you have, or were required, to submit a self-assessment tax return which shows turnover in excess of the corresponding MTD ITSA limit.
Trap. Keep in mind that the turnover figure is the aggregate from all your trades and rental income sources. For example, if in 2024/25 your turnover from trading was £39,000 and your rental income before expenses was £13,000, the total is £52,000. As this exceeds the £50,000 trigger point, you must use MTD ITSA from April 2026.
New source of qualifying income
The position can be equally tricky where you already have an MTD ITSA qualifying source of income and begin receiving income from a new source.
Example. Jaqui has been a mobile hairdresser for many years. Her turnover in 2024/25 is £18,000 and so well below the £50,000 that would trigger use of MTD ITSA in April 2026. At the beginning of July 2025 she inherits two rental properties from her mother. The rental income before expenses in 2025/26 is £9,600. This is equivalent to annual turnover of £12,560. Jaqui’s turnover from hairdressing in 2025/26 fell to £17,000. Thus, her total qualifying turnover is £29,560. As this falls short of the £30,000 MTD ITSA trigger for 2025/26, she won’t have to use MTD ITSA from April 2027.
Trap. Even if, after joining MTD ITSA, your turnover permanently falls below the limits, you must keep using it for another two years.
If you started a new trading or rental business part way through 2024/25 or a later year, to check if your turnover reaches the trigger point for using MTD ITSA, work out what it would be for a whole year if it accrued at the same rate throughout. If that exceeds the trigger point, you must use MTD ITSA from the start of the next tax year but one.
Client Q&A – This Month’s Hot Topics
Q1: What happens if I miss the September PAYE or CIS deadline?
A: Late submissions can result in penalties starting at 3%. Always aim to submit and pay on or before the due dates.
Q2: Is a written-off director’s loan taxable?
A: Yes. When a company writes off or waives a loan to a director, it is treated as taxable income. It can be taxed either:
- as earnings (subject to income tax and potentially Class 1 National Insurance), or
- as a distribution (taxed like a dividend, usually at a lower rate).
Which applies depends on whether the loan was due to your role as an employee or your status as a shareholder.
Q3: What should I do if I’ve had a loan written off but haven’t reported it?
A: Take action now. If the write-off happened after 5 April 2023, you can amend your 2023/24 tax return. If it occurred before that, or you didn’t file a return, you should use HMRC’s online disclosure service. Proactively disclosing it can reduce penalties compared to waiting for HMRC to contact you.
Q4: Do I need to prepare for Making Tax Digital now?
A: If you’re self-employed or a landlord earning over £50k, now’s the time to speak to us about compatible software and process changes for 2026.
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