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December Wrapped Up – Key Finance News
December is often a time to reflect, and this year is no different for business owners. With the Autumn Budget now behind us and Making Tax Digital getting closer, there are a few updates worth being aware of as we move into 2026.
Interest Rates & the Wider Economy
The Bank of England has cut the base rate to 3.75%, helping reduce borrowing costs but also signalling a slower economy.
Lower rates can reduce borrowing costs for SMEs but may also signal slower consumer demand, which can affect cash flow planning.
This is a good time to review loans, overdrafts and cash flow plans.
Autumn Budget 2025: A Quick Reminder for Small Business Owners
The Chancellor’s Autumn Budget last month set the stage for the next few years. While we’ve already covered the key points in November’s blog, it’s worth remembering a few important measures that continue to affect SMEs:
- Income tax and National Insurance thresholds are frozen until 2030-31, meaning more people could gradually move into higher tax bands.
- Dividend tax rates will rise from April 2026, relevant for owner-managed companies.
- Corporation tax remains unchanged, and generous reliefs like the £1 million Annual Investment Allowance and full expensing still offer opportunities to invest efficiently.
For SME’s, the focus this month is less about new Budget announcements and more about planning ahead – managing cash flow, preparing for wage and tax changes, and taking advantage of investment opportunities while they last!
Employment & Staffing Costs
Minimum wage increases from April 2026 have been confirmed early, giving employers time to prepare.
This will mean an increase in staffing costs for many small businesses, particularly in retail, hospitality and care sectors.
Employers should review payroll budgets and pricing ahead of the new tax year.
There have been no changes to employer National Insurance rates, and the Employment Allowance remains available to eligible businesses.
Making Tax Digital for Income Tax: Where we are now
Making Tax Digital (MTD) for Income Tax continues to move closer.
From April 2026, MTD will apply to individuals with qualifying business or property income over £50,000. For further details, view our MTD Q&A here.
It is confirmed that penalties will not apply for late quarterly submissions during the first year, giving businesses time to adjust.
HMRC has also issued new guidance on digitally excluded taxpayers, clarifying how exemptions can be applied for where individuals genuinely cannot use digital systems due to age, disability, location or similar reasons.
Early preparation makes MTD far less stressful – contact us here for support on this.
A Positive Note: Investment Reliefs Still Available
Despite wider tax pressures, there are still good reasons to invest in your business. The Annual Investment Allowance remains at £1 million, and reliefs for equipment, vehicles, and other business assets continue.
Planning ahead can make your spending more tax-efficient and help your business grow without unnecessary costs.
Looking Ahead to 2026
December also highlights opportunities to prepare for next year. The Small Business Saturday campaign encourages local spending, giving SMEs a chance to boost cash flow and strengthen customer relationships during the festive period.
Many of the tax and wage changes announced in recent months won’t take effect immediately. But understanding what’s coming gives you time to plan, make smart decisions, and manage costs over the next 12-18 months.
If you want to talk through how these updates could affect your business, please don’t hesitate to get in touch, we’re here to help!
MAIN TAX EVENTS HAPPENING IN JANUARY: GET AHEAD
DATE
WHAT’S DUE
1 January
Corporation Tax for year to 31/03/2025, unless quarterly instalments apply
19 January
PAYE & NIC deductions, and CIS return and tax, for month to 05/01/2026 (due 22/01 if you pay electronically)
31 January
Deadline for filing 2024/25 self-assessment tax return online and paying your outstanding tax for 2024/25 and first payment on account of 2025/26 tax.
MERRY CHRISTMAS!
All of us at MJB Avanti wish our clients a very Merry Christmas and a happy, successful New Year. We look forward to working with you in 2026, and hopefully for many years beyond!
If you’re not yet a client but would like to be, you can contact us here! We’d love the opportunity to support you and be part of your business journey.
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