HMRC Penalties & Investigations: What You Must Know in 2025
HMRC Penalties & Investigations What You Must Know in 2025 Whether you are a limited company, landlord, or self-employed person, receiving a call from HMRC regarding a tax investigation can be a worrying experience. In 2025, with new digital systems and stricter penalties in place, HMRC has become quicker and more precise in identifying mistakes and non-compliance. At Taxaccolega Accountants, we’ve compiled a brief, up-to-date guide to the penalties HMRC can issue and how you can avoid HMRC penalties in the UK. At Taxaccolega, we regularly deal with VAT registered businesses in Croydon, London, and across the UK who only realise something is wrong when HMRC sends a compliance letter. This guide exists to prevent that situation. Table of Contents Why Might HMRC Investigate You? What Penalties Can HMRC Charge You? 1. Errors on Your Tax Return 2. Failure to Notify HMRC About Changes 3. Penalties for Late Filing (Self-Assessment, VAT, Corporation Tax) Why Self-Assessment, VAT, Corporation Tax penalties happen (UK)? HMRC Self-Assessment Penalties (2025) HMRC penalty for VAT return (under new digital rules) 4. Late Payment Penalties (NEW for 2025) 5. Serious Tax Avoidance How to Protect Yourself from Penalties in 2025 What You Need to Do: What You SHOULD NOT Do: Help with HMRC fines and penalties Real 2025 Changes You Need to Know Real 2025 Changes You Need to Know Do You Need Help? Allow Taxaccolega to Assist Our Services: Final Word Why Might HMRC Investigate You? ● Discrepancies in your self-assessment or VAT returns ● Unexplained falls in reported income ● Third-party anonymous tips or red flags ● Unreported earnings from digital platforms (eBay, Etsy, Vinted) ● Incomplete or missing records What Penalties Can HMRC Charge You? 1: Errors on Your Tax Return ● Careless mistake: 0–30% of tax due ● Deliberate mistake (not hidden): 20–70% ● Deliberate and hidden: 30–100% What to do What to avoid Tell HMRC before they discover it (lower penalties for voluntary disclosure) Guessing figures or omitting side income Work with a tax adviser to get your return right the first time Ignoring HMRC letters or emails 2: Failure to Notify HMRC About Changes Examples: ● Your business hits the VAT threshold ● You sell a second property and owe Capital Gains Tax ● You move income offshore ● Penalties are 10% to 100% depending on whether it was an innocent mistake or intentional. What to do What to avoid Inform HMRC promptly of significant business or financial change Notifications late – the longer, the more penalties impose Maintain complete records of sale proceeds, property income, crypto trading, etc. 3: Penalties for Late Filing (Self-Assessment, VAT, Corporation Tax) Why Self-Assessment, VAT, Corporation Tax penalties happen (UK)? It happens when a business or individual fails to meet tax obligations such as filing tax returns late, paying amounts late, or submitting incorrect information. HMRC Self-Assessment Penalties (2025) ● Your business hits the VAT threshold ● You sell a second property and owe Capital Gains Tax ● You move income offshore ● Penalties are 10% to 100% depending on whether it was an innocent mistake or intentional. HMRC penalty for VAT return (under new digital rules) ● Your business hits the VAT threshold ● You sell a second property and owe Capital Gains Tax ● You move income offshore ● Penalties are 10% to 100% depending on whether it was an innocent mistake or intentional. What to do What to avoid File all returns on time using digital software Leaving it to the last minute Use digital tax software Supposing HMRC won’t notice missing returns To avoid tax return penalties in UK Set calendar reminders for key dates: 31 Jan(filing/payment), 31 July (payment on account) Ignoring penalty notices Keep good records throughout the year Not updating HMRC with changes 4: Late Payment Penalties (NEW for 2025) ● After 15 days: HMRC may charge 3% late penalty if no Time to Pay arrangement ● After 30 days: 3% penalty ● Plus, daily interest: Base rate + 4% (currently ~8.25%) Things to do Things not to do Pay your tax early or set up a Time to Pay (TTP) plan with HMRC Disregarding payment reminders Keep your business savings account separate to manage tax funds Waiting for penalty notices to be sent 5: Serious Tax Avoidance If HMRC suspects fraud or deliberate evasion, you could face: ● Criminal investigation ● Asset seizure ● Unlimited fines ● A maximum sentence of seven years in prison What to do What to Avoid Be transparent honesty significantly reduces penalties Hide income (offshore, crypto, undeclared cash) Hire a tax investigation expert (like us!) if contacted by HMRC Disregard tax submission requirements How to Protect Yourself from Penalties in 2025 What You Need to Do: ● Practise cloud accounting software like Xero or QuickBooks ● Maintain digital copies of receipts and bank statements ● Voluntarily disclose any past tax mistakes ● Keep yourself updated on Making Tax Digital (MTD) deadlines ● Consult an accountant one a quarter to review your tax position ● Register for HMRC services (e.g., VAT, Self Assessment) as soon as you become eligible What You SHOULD NOT Do: ● File tax returns late ● Estimate income without supporting documents ● Rely on outdated tax rules ● Assume “side hustle” income is exempt from tax ● Use offshore accounts or undeclared crypto wallets to avoid tax What You SHOULD NOT Do: Whether you are a limited company, landlord, or self-employed person, receiving a call from HMRC regarding a tax investigation can be a worrying experience. In 2025, with new digital systems and stricter penalties in place, HMRC has become quicker and more precise in identifying mistakes and non-compliance. Note: HMRC interest charges cannot usually be appealed — they are automatic. There must be reasonable excuse to cancel or reduce the penalty ● Like serious illness ● Fire flood or theft ● Family grief ● HMRC online service failure Real 2025 Changes You Need to Know ● Late payment penalties now apply after just 15 days
Do Limited Companies Pay Capital Gains Tax in the UK?
Do limited companies pay Capital gains tax? The simple answer to this is no! The companies do not pay capital gains tax on the gains they make instead they pay corporation tax . Capital gains tax is more flexible than the corporation tax because there are reliefs available to self -employed and the sole proprietor, whereas if you are working through a limited company you will have to pay corporation tax at the flat rate. For the tax year 2022/ 2023 the corporation tax rate is 19% and you have to register for taxes as soon as you start the business. The corporation tax is set to increase from 19% to 25% in the year 2023. The individuals doing a business as a sole proprietor or as partners get a tax free allowance of £12 300 when they sell a business asset ( which includes a residential property) any gains made over this amount will attract CGT. The rate at which CGT is paid depends on the income tax rate band you fall into because of the level of income you have and the type of asset that is being sold. It is 10% or 20% depending on the income and if you are selling a residential property it is 18% or 28% depending on which income tax rate band you fall into. If you are in a property business and you are selling your buy to let property will you pay corporation tax or capital gains tax ? Well again it depends on what business structure you have. If you are self employed or in a partnership you will be paying capital gains tax on the sale of the property which is not your main home. However if you are running your property businesses as a limited company you will have to pay corporation tax on the gains. It is considered profit and will be taxed in the same way as the other profits of the company for example the trading profits or other investments. Are the profits calculated differently for capital gains tax and corporation tax? No, the chargeable gains will be calculated in the same way for both capital gains tax and corporation tax. How do we calculate chargeable gains? The chargeable gain is the difference between what you paid for an asset and what you sold the asset for .You can deduct other costs as well for example costs of improvement which will include any extensions which you did in your property. You can also deduct estate agent and any solicitor’s fees. Capital Gains Tax in high value residential property. If you pay annual tax on enveloped dwellings you must pay capital gains tax when you sell the property upto 5th April 2019 or corporation tax upto 6 April 2019. You will need to complete AETD related capital gains tax return if your company is a dwelling, is in the UK and was valued at more than £500 000. If you want to save taxes you need to do planning ahead of the tax year you should consult a tax expert to be more aware of your taxes . We at Taxaccolega have expert accountants who can help you with your tax planning If you are running a limited company or you are starting your new business and you want advice on taxes you can consult Taxaccolega and our accountants will be happy to help you. You can call us at 020 8127 0728 or send us a message here CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
How much tax will I pay on my bonus and how much will I take home?
How much tax will I pay on my bonus and how much will I take home? The bonus you will get is considered your earnings so you will be taxed in the same way as your income. You will pay income tax and National insurance on your bonus in addition to that any student loans will also be deducted. Look at this example below: Mr J has an annual income of £100 000 (which is his base salary) and he received a bonus of £10 000 in a particular year. How much tax and NI will he pay? Income Tax on base salary Annual income £100 000 Personal Allowance(2022/2023) (£ 12 570) Taxable income £ 87 430 Tax payable at (40%) £ 34 972 As you can see above Mr J as he is earning £100 000 he is a higher rate taxpayer and therefore the bonus he will earn will also be taxed at 40% Income tax on bonus Bonus for the year £ 10 000 Tax payable £ 4000 Bonus after income tax £ 6000 National Insurance on bonus Bonus for the year £10000 National Insurance (after April 2022 is 3.25%) £325 Bonus after deducting NI £9675 If we add Mr J`s bonus for the year to the base salary the total income for the year will cross the £100 000 threshold. This means that there will be a reduction in the personal allowance, The HMRC rule is that your personal allowance goes down by £1 for every £2 that your adjusted net income is above £100 000. This means your allowance is 0 if your income is £125 140 or above. In the above example Mr J will have to pay an extra income tax on £5000 because of the reduction in his personal allowance due to his income being £10 000 above £100 000. As a result he will be paying extra tax of £2000 (40% of 5000) Look at the summary of the taxes you will be paying on your bonus: £ Income tax on the bonus 4000 National Insurance 325 Extra tax due to reduction in NI 2000 Total Deductions 6325 If you get a bonus of £10 000 or more and you are a higher rate tax payer you will be bringing home only £3 675 as cash, paying more than half of your hard work to the treasury. However, if you are a basic tax rate payer (earning between £12 571 to £50 270) and after getting the bonus you stay in the same band you will be paying tax on the bonus at 20% and you will be able to use your personal allowance fully. If you are Basic Tax rate Payer For example if you are a basic tax rate payer earning £40 000 and you get a bonus of £10 000 in a particular year you will pay income tax of £2000 on the bonus and NI will be £1350 £3350 so your take home bonus will be £6650 . How to save taxes on your bonus? So Tax is a complex topic and how much you pay depends on your individual circumstances. One way to save taxes on your bonus is to put it in your pension pot. Although you will be saving money as you won’t have to pay taxes, you will not be getting any cash in hand until you reach your retirement age. If you want to know more about taxes contact Taxaccolega here or call us at 020 8127 0728 and our expert team of accountants will be happy to help you by discussing the tax reliefs available to you and can also help in filling your self assessment and offer information on our annual accounts service. We also have a helpful article explaining the change in the income tax additional rate threshold for you to look at! CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
How to close a limited Company
How to close a limited Company There can be different reasons as to why you want to close your limited company. This could be because one of the following: ● The company doesn’t have any more business and is no longer trading ● The company cannot pay its bills (the company is insolvent) ● The director of the company wants to retire or has died ● The way you close your limited company depends on whether the company is solvent or not. ● HMRC gives us detailed guidance on how we can close a limited company in various circumstances, the costs involved and the accounting responsibilities . In the following blog we have tried to compile some information, How to close a company if the company cannot pay its bills (Insolvent) The way to close a limited company which is solvent is to arrange liquidation with your creditors. The director can propose to close the limited company and to initiate the proposal a winding up resolution must be passed. The passing of the resolution means that 75% of the shareholders (by value of shares) has agreed to the winding up process. Director’s responsibilities: Once the resolution is made the director should do the following: ● Appoint an authorized insolvency practitioner(liquidator) to take charge of liquidating the company ● Send the resolution to the companies house within 15 days ● Advertise the resolution within 15 days Liquidator`s responsibilities ● Once the liquidator is appointed the director should hand over all the information related to the company to the liquidator, for example the company’s financial record and all the information related to the assets. ● The director can no longer act on behalf of the company and the appointed liquidator will take the responsibility of the company. This means that the liquidator will be responsible to meet the deadlines of all the paperwork and they will be responsible to meet all the accounting and taxation deadlines. The liquidator is supposed to act in the interests of the creditors and they will be involved in the decisions where necessary. The liquidator is expected to set off company assets and pay the money that is owed to the creditor. The final VAT bill will be paid and the company will be removed from the company register. Compulsory Liquidation: If your company is unable to pay its bills and you are not able to reach an agreement with the creditors, you can apply to the court for compulsory liquidation. It should be proven to the court that the company cannot pay its debt of £750 or more. And that 75% of the shareholders agree that the company can be wound up by the court. This can be done by filling in the winding up petition and sending it to the court. If the company is Solvent If the company is solvent that means it is able to pay its bills but you don’t want to run the company for example you want to retire you have 2 options: 1. Get the company struck off the register of companies. 2. Start a member’s voluntary liquidation. 3. Striking off the company You can only strike off your company if the following conditions apply: 1. The company has not traded in the last 3 months. 2. Has not changed its name in the last 3 months 3. Has no agreements with the creditors. If the company does not meet the criteria of striking off a limited company can be dissolved by members voluntary liquidation, Before you apply to strike off the company you should close the company down legally. This involves informing your plans to all the interested parties including HMRC, treating your employees according to the rules and making sure nothing unfair happens to them and dealing with company assets and accounts. Once this is done the application to strike off should be filled and copies should be sent to anyone who might be a stakeholder for example: members, creditors, employees, any directors who didn’t sign the application. If you run a limited company and you want professional advice in making accounts, dissolving the company you should contact Taxaccolega and our team of accountants will be happy to help you. Source: https://www.gov.uk/strike-off-your-company-from-companies-register/close-down-your-company CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *