January Newsletter 2026

As we begin 2026, individuals and businesses face several important tax updates and regulatory developments. In this month’s newsletter, we outline upcoming changes to the Construction Industry Scheme, including tougher compliance measures and proposed simplifications due to take effect from April 2026. We also explain Capital Gains Tax considerations for non UK residents selling UK property and highlight when Private Residence Relief may still apply.

We also summarise key reforms to the Venture Capital Trust and Enterprise Investment Scheme rules. These changes will allow qualifying companies to raise more capital, while investors will need to consider the reduced level of Income Tax relief. With the 31 January self assessment filing and payment deadline fast approaching, we include a reminder of key obligations, penalties for late submission and recent HMRC statistics. Finally, our January and February tax diary sets out upcoming deadlines to help you plan ahead and stay compliant.

Happy New Year from The MGroup

As we start 2026, we would like to wish all our clients, contacts and partners a very Happy New Year.

January often provides a chance to pause and look ahead. While the start of a new year can feel busy, it is also a good time to reset plans and consider what the months ahead may bring. With continued changes across tax, compliance and regulation, staying informed and planning early can make a real difference.

As always, our focus remains on providing clear advice, practical support and a steady approach to help you navigate the year ahead. We look forward to working with you throughout 2026.

Construction Industry Scheme changes

As part of the Budget measures, the government has confirmed several changes to the Construction Industry Scheme (CIS).

From 6 April 2026, HMRC will be able to take immediate action where a business makes or receives a payment that it knew, or should have known, was connected to fraud. In these cases, HMRC can remove Gross Payment Status (GPS) immediately, assess the associated tax loss and impose a penalty of up to 30%. The penalty may apply to the business itself or its officers. Where HMRC withdraws GPS due to fraud or serious non compliance, the business will also face a five year ban on reapplying for GPS, an increase from the current one year limit.

Alongside these measures, the government also plans to simplify the CIS. It will exempt payments to local authorities and certain public bodies and remove the requirement for contractors to submit nil returns. These changes are due to take effect from 6 April 2026 and will first be subject to technical consultation.

The CIS sets out special tax and National Insurance rules for businesses operating in the construction industry. Under the scheme, businesses fall into two categories, contractors and subcontractors, and both must understand their tax responsibilities.

Qualifying contractors must deduct tax from payments made to subcontractors and pass those deductions to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance liabilities.

Subcontractors do not need to register for CIS. However, where they do not register, contractors must deduct tax at a higher rate of 30%. Registered subcontractors face a 20% deduction unless they qualify for GPS. Where GPS applies, contractors make no deductions and the subcontractor pays all tax and National Insurance at the end of the tax year.

To qualify for GPS, a subcontractor must meet specific conditions. These include a strong compliance history, timely payment of tax and National Insurance, and carrying on a business that undertakes construction work or supplies construction labour in the UK.

Supporting our communities in 2026

Alongside our work with clients, supporting charitable causes remains an important part of life at The MGroup. As we move into 2026, we are pleased to continue supporting the following charities:

• SeeSaw, supporting children and young people in Oxfordshire who have experienced the death of a parent or sibling
• Sobell House, providing compassionate hospice care and support for patients and families across our local community
• African Children’s Fund, helping vulnerable children and families access education, healthcare and long term opportunities

These organisations carry out vital work every day, often quietly and behind the scenes. We are proud to continue supporting their efforts in the year ahead. Ollie Squire

Selling your UK home and living abroad

If you live abroad and sell your UK home, you may need to pay Capital Gains Tax (CGT) on any gain made since 5 April 2015. Only the portion of the gain made after that date is taxable. One of the most valuable CGT exemptions is Private Residence Relief (PRR), which applies when a property has served as your main family home. Investment properties that have never been your main residence do not qualify for PRR.

Non UK residents may still qualify for PRR, but additional conditions apply. You may avoid CGT for any tax year in which you, your spouse or civil partner spent at least 90 days in the UK home, provided you meet the conditions and nominate the property as your only or main home when reporting the sale to HMRC.

Certain features may reduce the relief. These include areas let out, parts used exclusively for business or grounds larger than 5,000 square metres. You also receive automatic relief for the final nine months of ownership, or 36 months if you are disabled or in long term care.

Regardless of whether any tax is due, you must submit a Non Resident CGT return and pay any CGT within 60 days of completion. Penalties apply if you miss the deadline. Even where no CGT is payable, you must still file the return on time.

VCT and EIS changes

New rules will allow companies to raise more capital through the Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS). Investors should consider these opportunities carefully, as the changes also reduce the level of VCT Income Tax relief.

VCTs and EIS aim to encourage private investment into trading companies. Both schemes support business growth while providing tax incentives to investors.

The government announced several changes at Budget 2025, all of which will apply from 6 April 2026.

The main changes include:

• Increased gross asset limits
• Higher annual investment limits
• Higher lifetime investment limits
• A reduction in VCT Income Tax relief

These increases apply only to qualifying companies that meet the scheme conditions. Investors should factor in the reduced VCT relief when assessing whether an investment remains suitable.

The MGroup Stadium and Oxford City FC

Our sponsorship of Oxford City Football Club remains an important part of our connection with the local community. Although the club currently sits 22nd in the table, there is still plenty to play for as the second half of the season unfolds.

Football seasons rarely follow a straight path. Momentum can change quickly, and we remain hopeful that the coming months will bring a stronger run of form and positive results.

The MGroup Stadium continues to serve as a focal point for Oxford City FC and the wider community. We are proud to support the club through the remainder of the season.

Less than one month to self assessment filing deadline

There is now less than one month to the self assessment filing deadline for 2024 to 25 tax returns. We encourage anyone who has not yet completed their return to act soon and avoid the pressure of last minute preparation ahead of the 31 January 2026 deadline.

You must also pay any tax due by this date. This includes the remaining balance for the 2024 to 25 tax year and the first payment on account for 2025 to 26.

Earlier this year, more than 11.5 million people filed their 2023 to 24 self assessment returns by the deadline. Of these, over 730,000 submitted on the final day, with more than 31,000 filing in the last hour.

HMRC has also introduced a new digital PAYE service for the High Income Child Benefit Charge. This allows some claimants who previously used self assessment solely for this purpose to pay the charge through their tax code instead.

If you are filing online for the first time, you should register for HMRC’s self assessment service as soon as possible. HMRC sends activation codes by post, and the process can take up to ten working days.

Missing the filing deadline triggers a £100 fixed penalty, unless you have a reasonable excuse. This applies even if no tax is due or you have already paid the tax. Further penalties apply for returns that remain outstanding after three, six and twelve months, as well as for late payment of tax.

Tax Diary, January and February 2026

• 1 January 2026 – Corporation Tax due for the year ended 31 March 2025
• 19 January 2026 – PAYE and NIC deductions due for month ended 5 January
• 19 January 2026 – CIS300 monthly return filing deadline
• 19 January 2026 – CIS tax deducted payable
• 31 January 2026 – Final date to file 2024 to 25 self assessment returns
• 31 January 2026 – Balance of self assessment tax and first payment on account due
• 1 February 2026 – Corporation Tax due for year ended 30 April 2025
• 19 February 2026 – PAYE, NIC and CIS deadlines

Looking ahead

As we move further into 2026, the issues covered in this newsletter will continue to shape decisions for individuals and businesses. Planning ahead, staying informed and seeking advice early can help reduce uncertainty and avoid unnecessary stress.

If you would like to discuss any of the topics covered, or simply talk through plans for the year ahead, our team is always happy to help.

We wish you a successful and positive year ahead.