When you run a business, tax advice can come from all directions. A fellow business owner mentions something at a networking event, a social media post makes a bold claim, or someone tells you what “their accountant said”. Sometimes that advice is helpful. Sometimes it is wrong.

Tax myths can be surprisingly costly. Believing the wrong information can mean missed tax-saving opportunities, unexpected bills, poor record keeping or avoidable compliance problems.

As local accountants working with small businesses every day, we hear the same misconceptions come up time and again. Here are the most common tax myths we come across and the reality behind them.

1. If it’s for my business, it’s automatically tax deductible.

Not necessarily. For a cost to be allowable, it generally needs to be incurred wholly and exclusively for business purposes. If there is a personal element, only the business proportion may be claimable or it may not be allowable at all.

2. I don’t need to keep receipts because everything is digital now.

Digital records are absolutely fine, but you still need evidence to support your claims. That might be a scanned receipt, a digital invoice or an email confirmation. Good record keeping is still essential, whether your paperwork is in a filing cabinet or in cloud accounting software such as Xero.

3. If my business made a loss, I don’t need to file a tax return.

Making a loss does not remove your filing obligations. If you are required to file a tax return or submit company accounts, those obligations still apply whether your business made a profit or a loss. Missing deadlines can still lead to penalties.

4. HMRC won’t notice small mistakes.

HMRC receives information from multiple sources, including payroll submissions, VAT returns, banks and other reporting systems. Even genuine mistakes can lead to problems if they are not corrected, so it’s always worth ensuring your tax information is right from the outset.

5. I can claim every meal as a business expense.

This is a very common myth. Your usual lunch while you are at work is not generally an allowable expense. However, meals during qualifying business travel or in certain business-related situations may be claimable.

6. A limited company always pays less tax than being self-employed.

There is no one-size-fits-all answer here. The right structure depends on your profits, long-term plans, how you take money from the business, pension contributions, administrative costs and other factors. What works well for one business owner may not be the best option for another. Reviewing your business structure for tax efficiency and your future plans is part of our business advisory service.

7. My accountant will automatically claim every tax relief available.

Your accountant can only work with the information you share. If you’ve had significant purchases, business travel, training costs, research and development activity, home working expenses or charitable giving, make sure you mention it. The more complete the picture, the better the advice.

8. I only need to think about tax once a year.

In reality, the best tax planning happens throughout the year, not just when a deadline is looming. Being proactive about tax helps you manage cash flow, plan ahead and avoid a last-minute rush as deadlines approach.

Lastly, the biggest tax myth of all…

9. Tax is just about paying as little as possible.

‘Good tax planning is about paying the right amount of tax, while respecting the rules,’ explains Anna, Accounts and Operations Manager at Spicer & Co Chartered Accountants in Dunstable. ‘This approach enables you to minimise tax payments while remaining fully compliant. It involves understanding your options, planning ahead and making informed decisions as your business grows.’

For many small businesses, proactive tax advice can reduce stress, improve cash flow and help avoid costly mistakes.

Here’s an important update about the planned changes to company accounts filing at Companies House. The major reforms that were due from April 2027 have now been officially delayed until 1 April 2028.

For many limited company owners, the extra breathing space is good news as the planned changes are significant. Extra time to prepare for the new rules is welcome.

These reforms are part of the Economic Crime and Corporate Transparency Act 2023. This change aims to improve the accuracy of the information held at Companies House, making it harder for limited companies to be used for fraud or other criminal activity.

Ultimately, Companies House wants more complete, more reliable financial information on the public register. That will affect how many small companies prepare and file their annual accounts.

What are the accounts filing changes involved?

One of the biggest changes is for small and micro-entity companies. This impacts many owner-managed businesses and smaller limited companies, including micro-entities and small companies (with turnover of up to £1 million and £15 million respectively, subject to balance sheet and employee limits).

In the future, these businesses are expected to file a profit and loss account with Companies House. Companies may opt out of having their profit and loss account published on the public register, so these details can be kept private if preferred. (Details of how to do this are to be confirmed.) The option to file abridged accounts is also being removed, making accounts filing more consistent for all companies.

This means that filing your limited company’s accounts will become more detailed, transparent and publicly visible.

What happens now?

Although the start date has moved, the reforms themselves have not gone away. Your company will still need to:

• meet stricter filing requirements,
• submit more digital filing, and
• have less flexibility over what can be left out of accounts submitted to Companies House.

‘The delay should be seen as a useful opportunity to get prepared,’ says Max, an accountant with Spicer & Co Chartered Accountants in Dunstable. ’If your bookkeeping or year-end process could be more organised, now is a good time to review things. Also, it’s helpful to confirm any filing exemptions your company currently relies on. Getting your records in order early will make life much easier when the new requirements arrive.’

Running a small business is demanding. Rising costs, staffing pressures, cashflow concerns and changing technology are all demanding your attention. That’s why the UK Government’s new “Backing Your Business” plan is worth considering.

It was launched almost a year ago, in July 2025, yet businesses are simply not taking advantage of the benefits offered by the scheme. Governmental departments’ action plans go through to 2028, with some financial commitments extending to 2030. There’s time to explore and take advantage of this initiative.

The Department for Trade and Industry states: ‘Growth is this government’s number one mission and SMEs are the engine room. Our plan is to make the UK the best place to start and grow a business, with a culture that supports entrepreneurship in every community and high street.’(gov.uk, March 2026)

“Backing Your Business” is designed to support SMEs with practical measures around finance, skills, late payments, digital growth and high street investment. However, many businesses are simply unaware of the support available and could miss valuable opportunities.

Why does this initiative exist?

SMEs impact the UK economy hugely. There were around 5.64 million SMEs in 2025, making up 99.9% of all UK businesses. Together, they employ 16.6 million people and generate an estimated £2.8 trillion in turnover. (FSB)

What’s in the “Backing Your Business” plan?

The government’s plan focuses on several key areas:

• Tackling late payments
• Improving access to finance
• Supporting digital and AI adoption
• Reducing red tape
• Revitalising local high streets
• Improving business skills and training

One of the biggest opportunities is finance. The government is working with the British Business Bank and lenders to improve funding access for growing businesses. Recent UK Finance figures showed SME lending increased during 2025, with lending to firms turning over under £2 million rising by more than 25% year-on-year. (The Times)

However, many SMEs are still not taking advantage of the support available. Government research suggests 86% of SMEs say they have no desire to borrow, even though access to funding can help accelerate growth, invest in technology and improve resilience. (gov.uk)

How good financial planning helps

As accountants, we already help our business clients review whether they could benefit from:

• growth funding or finance applications
• tax-efficient expansion
• cashflow forecasting
• business structure reviews
• preparing for future digital tax changes

‘The “Backing Your Business” plan signals a stronger, long-term focus on SMEs,’ says Max, an accountant with Spicer & Co Chartered Accountants in Dunstable. Business owners who stay informed and proactive are often best placed to realise advantages for their companies.’

If you are unsure what support may apply to your business, now is a good time to review your plans for the next 12–24 months.

Explore the potential!

Acting now can avoid pressure later, and ensure your business makes the most of the support available.

Is your limited company a family-run business?

Working with relatives adds an extra dimension to your business. We know from first-hand experience … Spicer & Co Chartered Accountants is a family-run accountancy practice! Some of our clients are family businesses too. Is your business one of the UK’s five million family-run enterprises?

(Source: Family Business UK)

Every family is unique and has its own dynamic and characters that impact the business. Overall there are significant strengths to promote and enjoy, with cautionary issues affecting the company too. With our specialist work and our family in mind, here are the issues to be aware of when working with your family.

Five Advantages of a Family-Run Business

1.Commitment

Family members often have a strong commitment to the business’s success, driven by personal and emotional ties. This dedication can lead to hard work and an ability to overcome challenges.

2. Long Term Perspective

Family businesses usually consider the long term view, with the goal of growing the business for future generations. This can contribute to stability and resilience.

3. Quick Decision-Making

A shared business vision enables family businesses to respond quickly to opportunities and market conditions.

4. Strong Working Relationships

The close-knit nature of family businesses can foster strong relationships and trust among family members and employees. This can lead to a more cohesive and committed team.

5. Flexibility and Adaptability

Decision-making within a family business is often flexible, thanks to fewer layers of bureaucracy and shared goals for the business. This agility can increase proactivity regarding competitiveness and market changes.

Whilst a family-run organisation can harness these strengths, it’s important to note that the nature of these businesses creates some unique challenges:

Four Challenges of a Family-Run Business

1. Succession Planning

Changing leadership and ownership can be complex, potentially causing tension and business instability. Choosing a successor and managing the transfer of power should be discussed and planned in advance. 62% of employees say they would be “significantly more engaged” with their role if they knew their employer had a clearly defined succession plan in place. (Vistage research)

2. Conflict of Interest

Family dynamics may sometimes interfere with business decisions. This is especially true when family members have different visions for the business.

3. Limited Skill Set

Family businesses may face limitations in terms of the skill sets available within the family. This can be a challenge when it comes to implementing best practices and maintaining a high standard of performance. Hiring external talent might be necessary to fill gaps in expertise, but this can be resisted due to a desire to keep the business within the family.

4. Difficulty in Separating Personal and Business Matters

Family businesses can find it challenging to separate personal matters from business decisions, leading to emotional decision-making and potential conflicts.

‘The success of a family-run business relies upon harnessing the unique strengths available whilst proactively addressing the challenges involved,’ says Suzanne Spicer, founder of Spicer & Co Chartered Accountants. Suzanne runs the Dunstable-based accountancy practice with her husband, Steve. She adds: ‘From the specialist support we offer clients and our own experience, I suggest three keys to success: open communication, recognising when to outsource and clear succession planning.’

Business owners across the UK are facing continued pressure from rising fuel prices and motoring costs. After 15 years without change, the Government has approved an increase to the HMRC advisory mileage rate for cars and vans used for business travel.

This update is a welcome and much-needed change, offering some financial relief when employees use their own vehicles for work.

Understanding the mileage rate change

From April 2026, the approved HMRC mileage allowance for business journeys increases from 45p to 55p per mile. This applies to the first 10,000 business miles travelled in a tax year.

Once the 10,000-mile threshold has been reached, the rate will reduce to 25p per mile for additional business travel. This rate for higher mileage has not changed.

HMRC only allows claims for genuine business journeys. Ordinary commuting still doesn’t qualify. It’s important to remember that you can claim mileage using HMRC’s approved rates or claim fuel costs for a business journey.

Employers – do you reimburse the full mileage rate?

Some employers choose not to use the full HMRC mileage rate. If your company currently reimburses below the approved HMRC rate, employees may be entitled to claim tax relief on the shortfall. For example:

• HMRC approved rate = 55p per mile
• Employer pays = 35p per mile
• Difference = 20p per mile difference

The tax relief may not make up the shortfall, however it can still be beneficial if employees are regularly driving to meetings or work locations.

Next steps for businesses

With the new rates coming into effect, now is a good time for employers to review:

• Mileage reimbursement policies
• Payroll settings
• Expense claim procedures
• Employee travel policies

Updating these systems early can help avoid payroll errors and ensure employees are reimbursed correctly. Bookkeeping software such as Xero should also be updated to reflect the new mileage rate.

‘As a first step, employers should review and update their mileage policy and payroll systems to reflect the new rate,’ says Claudia, Payroll Manager with Spicer & Co Chartered Accountants in Dunstable.

‘It’s important to remember that the change is backdated to April 2026, so additional payments for mileage from April onwards may be needed.’

As businesses grow, managing the company’s finances becomes more complex. Cash flow forecasting, budgeting, financial reporting, and strategic planning all require expertise. However, working with a full-time Finance Director is often too expensive for small and medium-sized businesses.

More than 60% of small businesses operate without strategic financial guidance. This is where a Virtual Finance Director (VFD) can make a real difference, giving your business a competitive, profitable edge. (Source: ACCA, Finance Evolution)

What is a Virtual Finance Director?

A Virtual Finance Director is an experienced financial professional who works with your business remotely. They provide high-level financial guidance without the cost of employing a full-time, high-level employee. Working with a VFD enables you to access expert financial leadership exactly when you need it.

Your Virtual Finance Director takes a more strategic role within your company. They help you understand the numbers behind your business and use that knowledge to make informed decisions. Many business owners use their accountant as their VFD. This works well when the accountant involved offers a business advisory role alongside compliance services such as tax returns and annual accounts. (The Spicer & Co Chartered Accountants team is happy to help by acting as your VFD.)

What does a VFD do?

A Virtual Finance Director can assist with a wide range of services, including cash flow management, budgeting, forecasting, profit improvement, financial reporting, pricing strategies, and business growth planning. They can also liaise with banks and investors, support funding applications and help prepare your business for expansion or sale.

• Flexible input

Whether you need support one day a week, a few hours a month, or help with a specific project, Virtual Finance Director services can be tailored to suit your requirements.

• Cost-effective expertise

You only pay for the time or services required without full-time salary costs. This means you can access highly experienced chartered accountants who might otherwise be unaffordable.

• Strategic insight

Often, business owners and managers are too involved with running a business to look at their direction strategically. Your VFD provides an objective, “bird’s-eye view” of your company’s financial health to support growth and decision-making.

• Real-time support

Technology has also made virtual financial support more effective than ever. Cloud accounting software such as Xero allows your Virtual Finance Director to access real-time financial information securely. This means they can provide timely advice and up-to-date reporting wherever they are based.

• Reassurance

Many business owners are experts in their own trade or profession but do not feel comfortable with financial planning and strategic decision-making, especially as their businesses grow. Working with a VFD lets you focus on running your business while knowing your finances are carefully monitored and managed.

Adding value

Ultimately, a Virtual Finance Director offers businesses strategic financial expertise, improved financial clarity and better decision-making. You access this expertise without employment overheads, providing great value and flexibility.

‘For growing businesses looking to strengthen their financial position and plan confidently for the future, working with a VFD can be an extremely useful investment,’ says Steve Spicer, Director of Business Development at Spicer & Co Chartered Accountants in Dunstable. ‘We can fulfil this role, offering strategic advice while helping your business to face financial challenges and maximise opportunities.’

Significant changes to expenses and benefits reporting are approaching, making now an ideal time for employers to review and update their current processes.

What are Benefits in Kind?

Benefits in Kind (BiK) are non-cash perks provided by employers that have a taxable value but are separate from an employee’s salary. Common examples include company cars, private medical insurance, low-interest or interest-free loans and employer-provided accommodation.

Important deadlines

The deadline to register for payrolling benefits for the 2026/27 tax year was 5 April 2026. If your business is not registered, the standard reporting process still applies. This means you must:

• Submit a P11D form for every applicable employee.
• Submit a P11D(b) form to report Class 1A National Insurance contributions.
• File both forms online by 6 July 2026.

Both forms must be submitted together and filed electronically. Late and/or inaccurate returns can lead to penalties and interest payments, so early preparation is essential.

For businesses already registered, HMRC’s online system allows you to manage employee benefits, amend records and keep reporting up to date throughout the year.

Don’t overlook the P11D(b)

The P11D(b) is used to summarise the total Class 1A National Insurance contributions (NIC) owed on employee benefits. You’ll usually need to submit a P11D(b) if:

• You have submitted any P11Ds.
• You have payroll employee benefits or expenses.
• HMRC has requested a P11D(b) to be submitted.

Even if there is no Class 1A NIC liability to report, employers may still need to submit a nil return. Failing to respond can still result in penalties, so it’s important not to ignore HMRC notifications.

Mandatory payroll of Benefits in Kind is on the way

HMRC plans to introduce mandatory payrolling for most Benefits in Kind. Employers who are not already reporting benefits and expenses through the Full Payment Submission (FPS) process will need to register by 6 April 2027.

The FPS system is already used to submit salary and payroll information to HMRC, and the change is designed to reduce end-of-year paperwork while increasing real-time reporting through payroll systems.

‘The move to mandatory payrolling should simplify year-end reporting and create a more streamlined payroll process,’ explains Claudia, Payroll Manager at Spicer & Co Chartered Accountants in Dunstable. ‘Employers should begin reviewing their systems now so they have plenty of time to adapt before the deadline.’

A wide range of bookkeeping systems is available to businesses. Clients often ask the team at Spicer & Co Chartered Accountants to recommend a software platform. Our advice is … Xero. This is especially true now that Making Tax Digital has expanded to cover income tax.

Why we recommend Xero

Xero is built for the cloud, which means you can access your financial information anytime, anywhere. Whether you’re a sole trader, landlord or a limited company, having real-time visibility over your finances is enormously helpful when making business decisions.

Online bookkeeping systems offer advantages over traditional desktop software. There’s no need for manual backups, software updates or being tied to one device. Everything is live, secure and accessible.

Compared with other providers, Xero offers distinct benefits:

• Unlimited users.Unlike competitors that restrict access by pricing tier, Xero allows unlimited users across all plans, facilitating better collaboration with team members and accountants.
• User-friendly interface.Xero has a more intuitive dashboard and easy navigation.
• Superior bank reconciliation and feeds.Xero features automated, reliable bank feeds that sync daily, enabling fast and efficient transaction reconciliation.
• Strong reporting. Financial reporting may be customised as needed.
• App integration. Xero integrates with over 1,000 third-party applications in its marketplace, providing a great opportunity to make the most of the software for your business.

Xero for Making Tax Digital

Making Tax Digital for Income Tax is changing how many sole traders and landlords manage their finances. The first phase is now live (as of 6 April 2026), involving those with qualifying turnover and/or rental income over £50,000pa.

Does this include you? Instead of submitting one annual tax return, you’ll soon need to keep digital records and submit quarterly updates to HMRC.

Xero is fully compatible with MTD requirements, making it much easier to:

• Keep accurate digital records.
• Categorise income and expenses in real time.
• Submit information directly to HMRC through compliant integrations.

Ease of use

‘One of the biggest advantages of Xero is how easy it is to use,’ says Shivani, a trainee Chartered Accountant with Spicer & Co, Chartered Accountants in Dunstable. ‘Many clients have little or no bookkeeping experience; however, they quickly feel confident using the platform.

‘As our accounting firm is a Xero Platinum Partner, we can access your data in real time, which means we can work together much more efficiently. This ongoing visibility often leads to better decision-making and fewer surprises.’

A future-proof choice

With regulatory changes like MTD and the increasing move towards digital processes, choosing the right bookkeeping software is extremely important.

‘Xero consistently strikes the right balance between usability, compliance and scalability,’ explains Shivani. ‘It’s a solution we trust for our clients as it meets their current requirements and can evolve with them.

‘We can work effectively with your existing software system, however if you decide to change to Xero, we offer a free switching service, which most accountants usually charge for.’

Artificial Intelligence is changing how businesses handle their finances, including tax. Many tools promise to automate calculations and reduce admin time, ultimately preparing tax returns.

For directors of limited companies, this raises an important question: In the age of AI, does your company need an accountant to complete your tax returns?

How AI supports limited company accounting

There’s no doubt that AI can be useful for limited companies, particularly when it comes to streamlining processes. It can help with:

• Automating bookkeeping and transaction categorisation.
• Generating basic financial reports.
• Flagging inconsistencies in data.
• Speeding up corporation tax calculations.

Some AI-powered tools can significantly reduce the time spent preparing accounts, helping business owners focus on growth rather than admin. For straightforward businesses with simple structures, this can be a helpful starting point.

Why AI alone isn’t enough for limited companies

Limited company tax is rarely simple. From corporation tax and dividends to allowable expenses and director responsibilities, there are multiple areas where mistakes can be costly. AI tools:

• don’t fully understand your company’s unique structure or goals,
• may apply generic tax rules that don’t maximise efficiency,
• can miss strategic opportunities for tax planning, and
• still require human review to ensure accuracy.

Importantly, HMRC makes it clear that responsibility for tax accuracy always lies with the company, not the software used.

So if something goes wrong, the liability remains with your company … with you.

How accountants add value for limited companies

A qualified, experienced accountant goes beyond preparing your accounts, offering valuable, proactive business advice to help you increase efficiency and profitability. They can:

• Ensure full compliance with UK tax laws and deadlines.
• Advise on tax-efficient ways to pay yourself (salary vs dividends).
• Identify allowable expenses to reduce your corporation tax bill.
• Provide strategic guidance as your company grows.
• Liaise with HMRC on your behalf.

According to industry experts KPMG, safe AI adoption involves human oversight to ensure compliance and reduce risk.

AI and accountants: the ultimate combination

While AI can improve efficiency, it doesn’t replace the expertise required to properly manage company tax. Therefore, the technology is ideal for automation and efficiency. This can be blended with accountants’ expertise, strategic thinking, and knowledge of current tax rules.

This combination enables limited companies to save time while ensuring their finances are handled correctly.

The Spicer & Co team is incredibly proud to share some exciting news … we have officially achieved Xero Platinum Partner status!

Xero assigns partner tiers (Starter, Bronze, Silver, Gold and Platinum) based on a firm’s experience, client base and level of training and certification. This milestone surpasses our previous Gold Partner level.

Platinum status represents the highest level, awarded to accountants who demonstrate extensive expertise in using Xero software to support their clients. Now, this includes our Dunstable-based accountancy practice.

‘We would like to thank our clients for helping us to achieve this impressive Xero Platinum Partner level,’ says Amali, who is in charge of  VAT and bookkeeping at Spicer & Co Chartered Accountants in Dunstable. ‘Their willingness to embrace cloud accounting with us and adopt new ways of working supported our move from Gold to Platinum status.’

What does Xero Platinum Partner status mean?

Xero awards partner status levels based on a combination of factors including the number of clients using Xero through a practice, as well as the level of expertise and support provided.

• Gold Partner Status recognised our strong adoption of Xero and our ability to support clients effectively.
• Platinum Partner Status, however, places us among the top tier of Xero advisors. It represents a significantly higher level of experience, deeper product knowledge and a larger base of satisfied clients using the platform.

What this means for our clients

Achieving Xero Platinum Partner status directly benefits our clients in several ways:

1. Recognised expertise
   Our team has extensive experience with Xero across a wide range of industries. Whether you’re a sole trader or landlord complying with Making Tax Digital for Income Tax, a VAT-registered organisation or a growing limited company, we can help you get the most from the platform.
2. Priority support & insights
   As a Platinum Partner, we have closer access to Xero’s support teams and updates. This means quicker resolutions, early insights into new features and expert guidance.
3. Smarter, more efficient processes
   With deeper knowledge of Xero, we can help streamline and automate your accounts and bookkeeping, saving you valuable time.
4. Scalable solutions for business growth
   As your business evolves, we’re equipped to help you scale with confidence, from integrating apps to improving reporting and cash flow management.