Welcome to our May newsletter, bringing together practical tax and business updates to help you stay informed as the new tax year gets underway.
This month we cover how bonuses and additional payments are taxed, explain how Incorporation Relief can help defer Capital Gains Tax for those considering incorporation, and explore HMRC’s Personal Tax Account as a simple way to manage tax affairs.
We’ve also included key May and June tax deadlines to help ensure nothing is missed. Alongside our technical updates, including an update from The MGroup Corporate Finance team on the Financial 5 Pillars we share a community update from Oxford City at The MGroup Stadium, as well as a people update from across The MGroup.
How Bonuses Are Taxed
Bonuses are treated as taxable earnings, so it’s important that both employers and employees understand how they are taxed and reported.
Cash bonuses, including vouchers that can be exchanged for cash, are added to an employee’s normal pay and taxed through Pay As You Earn (PAYE). Income Tax and Class 1 National Insurance are deducted via payroll in the usual way.
Because bonuses increase pay for that period, they can push employees into a higher tax band temporarily, meaning the net amount received may be lower than expected.
For non‑cash bonuses, such as gifts or rewards, the tax treatment depends on the nature of what is provided. Items that can easily be converted into cash are generally taxed through PAYE in the same way as cash bonuses.
Other rewards may be treated as benefits in kind, with different reporting requirements. Employers should take care to apply the correct treatment, as errors can lead to underpaid tax or penalties.
HMRC provides a helpful A–Z guide to expenses
and benefits HERE
Incorporation Tax relief
When a sole trader or partnership transfers a business to a company, a chargeable gain may arise.
This is calculated by reference to the market value of the business assets at the date of incorporation (including goodwill), compared with their original base cost.
The resulting gain would ordinarily be subject to Capital Gains Tax.
In many cases, however, the transfer is structured to qualify for Incorporation Relief.
Broadly, this requires that the whole business is transferred as a going concern, together with all of its assets (other than cash), in exchange wholly or partly for shares issued by the company.
Previously where the conditions are satisfied, Incorporation Relief applied automatically and no formal claim was required.
However, this has changed from 6 April 2026 and Incorporation Relief will now have to be formally claimed in the tax return of the individual who owns the business that is incorporating.
The effect of the relief is to defer the gain by reducing the base cost of the shares received, thereby postponing the tax charge until those shares are disposed of.
HMRC have indicated that they will require specific details of the incorporation to be included in the claim.
Watch this space for further information, or contact us if you would like to discuss your incorporation plans.
Personal tax account
Your Personal Tax Account (PTA) is an easy and secure way to manage your tax online. You can use it to check your tax code, claim a refund and update your details, all in one place, without needing to contact HMRC by phone or post.
Every UK taxpayer has a PTA, but you will need to register through the Government Gateway or GOV.UK One Login to start using it.
You may also be asked to confirm your identity during the setup process. This is to keep your details safe and normally involves using photo ID such as a passport or driving license.
From our Knowledge Hub
Here we discuss the the key updates from April, highlighting important changes and reminders that individuals and businesses should be aware of as the new tax year begins.
From compliance updates and reporting obligations to areas where early planning can make a difference, it provides a concise overview of what has changed and what to keep on your radar over the months ahead.
Keep up to date with all our news HERE
Marginal Tax Trap
We discussed the marginal tax trap and why it’s set to affect more people than expected. With frozen tax thresholds and interaction between Income Tax, National Insurance and the withdrawal of allowances, some individuals may see a much higher effective tax rate as income rises. Understanding how and when this applies can make a meaningful difference to take‑home income.
Click HERE for the full article
Financial Five Pillars
Our Corporate Finance Team explored how strategic finance can enhance business value ahead of a sale, highlighting five key areas owners should focus on.
From strengthening financial reporting and cash flow to reducing risk and demonstrating sustainable performance, it explains why early, structured preparation can help maximise value and support smoother negotiations.
Click HERE for the full article
Making Tax Digital
With Making Tax Digital approaching, now is the time for self employed individuals and landlords
to understand how the changes may affect them.
The new system will require digital record keeping and quarterly updates. Preparing early can help ensure a smoother transition and avoid unnecessary disruption.
Click HERE for the full article
Life at The MGroup
We recognise three individuals whose careers have helped shape The MGroup over many decades Gerry Harvey, Jan Shean and Peter Smith.
Together, Gerry and Jan dedicated a combined 84 years of service to the firm, while Peter’s journey spans 35 years, including almost three decades as a Partner. Their contributions go far beyond length of
service alone.
Each has played a lasting role in building trusted client relationships, supporting colleagues and embedding the values that define The MGroup today.
We would like to celebrate their individual journeys and reflect on the commitment, professionalism and sense of community that continues to underpin the firm.
Peter looks ahead
Peters confidence in the firm’s future is clear.
“While I will miss the people and the day to day involvement, I know this is the right time to say goodbye.
The firm is in a great place, with a strong group of Partners and an excellent team combining experience with fresh perspectives.
I leave confident in the future and thankful to have spent my career in a firm that has been not only professionally fulfilling, but genuinely enjoyable to be part of.”
Oxford City FC Update
Congratulations to Oxford City on a fantastic run of form towards the end of the season, securing their place in the National League North.
A series of strong, determined performances at a crucial point in the campaign demonstrated real resilience, teamwork and belief throughout the squad. It’s been great to see the club finish the season with momentum and confidence, and we’re proud to support Oxford City at The MGroup Stadium as they continue to play such an important role in the local sporting community.
Tax Diary May/June 2026
1 May 2026 – Due date for corporation tax due for the year ended 30 July 2025.
19 May 2026 – PAYE and NIC deductions due for month ended 5 May 2026. (If you pay your tax electronically the due date is 22 May 2026).
19 May 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2026.
19 May 2026 – CIS tax deducted for the month ended 5 May 2026 is payable by today.
31 May 2026 – Ensure all employees have been given their P60s for the 2025/26 tax year.
1 June 2026 – Due date for corporation tax due for the year ended 31 August 2025.
19 June 2026 – PAYE and NIC deductions due for month ended 5 June 2026. (If you pay your tax electronically the due date is 22 June 2026).
19 June 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2024.
19 June 2026 – CIS tax deducted for the month ended 5 June 2026 is payable by today.
Looking ahead
As we move further into the new tax year, staying informed and planning ahead continues to be important for both individuals and businesses.
If you would like to discuss any of the topics covered, or talk through your plans for the year ahead, our team is always happy to help.