By the time this issue reaches you, the Chancellor will have delivered his first Budget, and we’ll pick through what it means for business owners next month. In the meantime, three things won’t wait for the dust to settle: a Companies House deadline many directors still haven’t met, January’s tax bill, and the annual question of how generous you can be at Christmas without HMRC taking a share.
Companies House identity verification
Identity verification became compulsory from 18 November 2025, beginning a twelve-month transition for existing directors and people with significant control (PSCs). As that rollout reaches its final stages, check your own deadlines rather than assuming everyone has until the same date.
Existing directors must provide their Companies House personal code with their company’s next confirmation statement during the transition. A company cannot file that statement unless all its directors have verified.
PSCs have separate requirements. Existing PSCs who are also directors generally have a fourteen-day window starting the day after their company’s confirmation statement date. Those who are not directors generally have the first fourteen days of their birth month. Check the Companies House register for your particular dates.
You can verify directly through GOV.UK One Login or through an Authorised Corporate Service Provider, such as an appropriately registered accountant. Successful verification gives you a personal code, but that is only the first step: the code must then be supplied for each relevant role.
If you are both a director and a PSC, you must submit it separately for each capacity. If you hold several directorships, it must be linked to every company.
January’s tax bill
For many self-employed people and landlords, 31 January 2027 brings two payments: any remaining tax for 2025/26 and the first payment on account towards 2026/27.
Payments on account are normally each half of the previous year’s relevant Income Tax and Class 4 National Insurance liability. They exclude Capital Gains Tax and student loan repayments. Exceptions apply, including where the relevant bill is below £1,000 or more than 80% of the tax was collected outside Self-Assessment.
A stronger trading year can therefore produce a substantial January bill. Suppose a sole trader’s relevant liability rises from £8,000 to £12,000, having already paid £8,000 on account. January brings a £4,000 balancing payment plus a £6,000 payment on account: £10,000 altogether. Another £6,000 follows on 31 July 2027.
If you reasonably expect this year’s liability to be lower, you can apply to reduce the payments on account. Be realistic: interest is charged if you reduce them too far.
Preparing your return now gives you time to budget. If payment looks difficult, contact HMRC early to discuss whether a Time to Pay arrangement is available.
Your return also helps establish your Making Tax Digital position. Subject to exemptions, sole traders and landlords whose combined gross self-employment and property income exceeded £30,000 in 2025/26 must use Making Tax Digital for Income Tax from 6 April 2027. That threshold relates to income before expenses, not profit.
Christmas parties and gifts
A staff Christmas party can be entirely tax free, provided the cost is no more than £150 per head, including VAT, and the event is open to all staff, or all staff at a particular location. The £150 is an annual figure covering all such events. It’s worked out by dividing the total cost, including transport and accommodation, by everyone attending, partners included. Treat it as a cliff edge rather than an allowance: go £1 over and the whole amount becomes taxable, not just the excess. The cost is still deductible for corporation tax, and VAT on the staff element is generally recoverable.
Gifts to employees fall under the trivial benefits rules. A gift costing £50 or less is tax free as long as it isn’t cash or a cash voucher, isn’t a reward for work or performance, and isn’t something the employee is contractually entitled to. A turkey, a bottle of wine or a store gift card all qualify. Directors of close companies are capped at £300 of trivial benefits a year.
Client gifts are less generous. They’re only deductible if they cost no more than £50 per person a year and carry a conspicuous advertisement for your business. Food, drink, tobacco and vouchers never qualify, however well branded. The branded diary passes; the hamper doesn’t. Client entertaining, including inviting customers to your party, is never deductible, and the VAT on it can’t be reclaimed either.
None of this is complicated, but each of these areas catches people out every year. A little planning in November makes for a much quieter January, and if the Budget brings any surprises, we’ll cover them next month.
WatkinsonBlack have considerable experience in all areas of taxation and business services. This includes providing a very cost-effective payroll bureau service, as well as assisting to ensure compliance with the latest Making Tax Digital legislation. If you are employed or self-employed either as a sole trader, partnership or limited company and want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us by telephone on 01925 413210 or by e-mail to info@watkinsonblack.com. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
