Designed for non-VAT registered businesses, we'll do your bank reconciling so you can relax knowing it's done right, and on time.

Bank reconciliation - non-VAT registered companies

A 12-month plan designed for new business owners who may want some extra guidance around business structure, accounting software setup and training, and more.

We will provide you with guidance and support on what you'll need to do to establish and commence running your new business

We can provide advice on the best business structure for your needs and take care of establishment and registrations

Set up your Xero file so it's optimised for you and give you initial training so you start off in the right way

Preparation of a budget tailored to your business and input into Xero so you can track how you're going

Starter Pack

We will help get your business officially incorporated

Company formation

Designed for sole trader businesses, we'll do your bank reconciling so you can relax knowing it's done right, and on time. Take one less task off your plate.

Bank reconciliation - sole trader businesses

A 12 month plan designed for established businesses. Additional support in the form of management accounts and time with your accountant

Completing quarterly management accounts tailored to your business requirements and aligned to your VAT quarters

Quarterly meetings with your accountant to chat business planning, strategy, or questions about your management accounts

Success pack

The initial setup of your Xero accounting software tailored to your business's needs, plus a one hour training session where you'll learn the best practices for bookkeeping and financial tracking.

Xero setup & training

We prepare your quarterly VAT returns ready for you to review and pay.

Prepare VAT

Learn how short-term rental income is taxed in the UK, what expenses you can claim, and how to stay compliant.

TAX  •  30 SEPTEMBER 2025  •  4 MIN READ

Learn how Airbnb income is taxed in the UK, what expenses you can claim, and how to stay compliant with HMRC rules for short-term rental hosts.

UK Tax Guide for Airbnb & Short-Term Rentals

The rise of platforms like Airbnb has made it easier for people to earn income from renting out a spare room or a separate property. In the UK, this is often referred to as a "short-term rental" or "holiday let". If you're considering this, you need to understand the tax consequences.

*For the ease of reading, we’ll refer to this as Airbnb income for the rest of the article.

You must declare any property or self-employment income that exceeds £1,000 in a tax year. Your rental income, like any other income source, is subject to income tax. 

There are two main tax allowances that might apply to your Airbnb income:

Rent a Room Scheme: if you rent out a furnished room in your main residence, you can earn up to £7,500 per year tax-free under this scheme. This allowance is automatically applied if your gross receipts are less than the limit. If you jointly own the property with a spouse or civil partner, the allowance is split equally, meaning you can each earn up to £3,750 tax-free. If your rental income is higher than the allowance, you have a choice: either pay tax on your gross receipts over the allowance (with no expenses claimed) or pay tax on your actual profit (gross receipts minus expenses). You can't claim both the tax-free allowance and expenses.

Trading Allowance: this allowance is for individuals who rent a separate property that is not their main residence. It allows you to earn up to £1,000 in property income per tax year without having to declare it to HMRC. If your allowable expenses are less than £1,000 it is more tax-efficient to claim this allowance instead of your expenses.

You must register for Self Assessment and declare your earnings if your gross income from property is more than £1,000. The deadline to register is 5 October following the end of the tax year in which you first started earning rental income.

HMRC now receives income data directly from platforms like Airbnb, so they are aware of your earnings. It's crucial to be transparent and accurate when filing your return to avoid penalties.

You can reduce your taxable profit by deducting allowable rental expenses. These may include:

Utilities such as gas, electricity and water

Mortgage interest (since April 2020, relief is restricted to the basic rate of income tax, which is 20% tax credit).

While previously a beneficial tax regime, the Furnished Holiday Lettings (FHL) tax scheme has been abolished as of 6 April 2025. This means that the special tax treatments that applied to FHLs, such as full mortgage interest relief and certain Capital Gains Tax reliefs, are no longer available. From the 2025/26 tax year onwards, you will follow the same rules as other landlords when renting out property.

You must register for VAT if your taxable turnover for the last 12 months goes over the threshold of £90,000. If you have to register, you will need to charge VAT on your Airbnb income at the standard rate of 20%.

By using your property to derive income there can be other issues that need to be considered:

Council tax vs business rates: if you let a property on a commercial basis for short periods, it may be subject to business rates instead of council tax. To qualify for business rates, a property must be available for commercial letting for at least 140 days a year and actually let for at least 70 days.

Insurance: standard home and contents insurance may not cover short-term rentals. You may need to get specialist cover.

Buying and selling property: the way you use a property for short-term rentals can affect taxes like Stamp Duty and Capital Gains when you buy or sell.

Tax rules for short-term rentals can be complex and depend on your individual circumstances. Our advice, as always, is to speak to your accountant or tax advisor and get some direct information that is pertinent to your situation before listing your property for short-stay rental on Airbnb (or any other platform).

We’re an online accounting firm that believes in delivering big firm expertise without the big cost. Our team work from across the UK to help business owners with everything accounting, including annual accounts, bookkeeping, payroll, forecasts, financial reporting and more. If you're looking for an accountant for your business, get in touch or book a call with our team for a free consultation.

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UK tax guide for short-term rentals like Airbnb

Making Tax Digital by HMRC is a government initiative aimed at making it easier for individuals and businesses to get their tax right and keep on top of their business affairs.

TAX  •  29 SEPTEMBER 2025  •  5 MIN READ

Making Tax Digital is a government initiative aimed at making it easier for individuals and businesses to get their tax right and keep on top of their business affairs.

Understanding Making Tax Digital

Making Tax Digital (MTD) is a government initiative aimed at making it easier for individuals and businesses to get their tax right and keep on top of their business affairs.

MTD involves more frequent information sharing with HMRC throughout the year, rather than a single tax return at the end of the year. 

MTD is already compulsory for businesses above the VAT registration threshold (£90,000). MTD for Income Tax will now be introduced in a phased approach starting from 6 April 2026, while a major policy reversal has seen MTD for Corporation Tax cancelled entirely.

HMRC’s rules for Making Tax Digital for VAT

How an accountant can help with Making Tax Digital 

Making Tax Digital for VAT is the most established part of the program, having been live since its initial introduction in 2019. It is now compulsory for all VAT-registered businesses, regardless of their taxable turnover, as of April 2022. This includes businesses that are voluntarily registered below the VAT threshold. As of 1 April 2024, the VAT registration threshold has also been updated, increasing from £85,000 to £90,000.

All VAT-registered businesses must now use HMRC-approved, MTD-compatible software to keep VAT records and file VAT returns. HMRC now automatically signs up new VAT-registered businesses for MTD for VAT, removing the need for a separate sign-up process.

MTD for VAT requires you to keep records digitally, including:

Invoices, recording the time and date of supply, the net value (excluding any VAT) and the VAT rate used.

The original plan to mandate MTD for Income Tax Self Assessment (ITSA) from 6 April 2024 was abandoned. Instead, HMRC has adopted a phased, tiered approach based on income levels.

From 6 April 2026: MTD for ITSA will become mandatory for self-employed individuals and landlords with an annual qualifying gross income exceeding £50,000. This threshold is determined by your gross income for the 2024/25 tax year.

From 6 April 2027: The rules will extend to those with an annual qualifying gross income of more than £30,000.

From April 2028: The government has set out plans to introduce legislation to extend the rules to those with a qualifying gross income above £20,000.

For MTD for income tax, taxpayers will need to:

Maintain digital records (business and/or property records)

Submit quarterly updates of your business's income and expenses to HMRC using MTD-compatible software.

Finalise your end-of-year tax position: This new system culminates in a two-step year-end process. The first step involves the submission of a Business Source Adjustable Summary (BSAS), where necessary tax and accounting adjustments are made. The second step is the Final Declaration, which brings together all income sources to finalise your tax position for the year.

A new points-based penalty system for late submissions will also go live with MTD for ITSA in April 2026. Each late quarterly submission will incur one penalty point, with a £200 fine being triggered after four points are accumulated. The payment deadlines for income tax remain the same as under the current Self Assessment system, due on 31 January and 31 July each year.

A major and unexpected development is the cancellation of MTD for Corporation Tax. While it was initially slated to be mandated from 2026, HMRC has now announced that it will no longer proceed with a compulsory digital reporting regime for corporations.

HMRC stated the decision was made due to the “diverse needs of the corporation tax population”. This signals a recognition of the complexities of the tax and suggests that future modernisation efforts for corporation tax will likely focus on a more tailored approach, rather than a “one-size-fits-all” digital strategy.

Making Tax Digital is an ever-evolving initiative, and it's your responsibility to ensure that you are ready for MTD and are compliant when it comes along. 

If you engage an accountant, such as Beany, they can take away this burden. It’s their job to keep on top of the MTD updates and requirements, and know what’s required and when. 

In short, Making Tax Digital (MTD) is a government initiative aimed at helping individuals and businesses get their tax right. HMRC estimates that billions of pounds are lost every year as a result of individuals and businesses not paying the right amount of tax and MTD is an initiative to address this.  

Will MTD mean lots of extra reporting to HMRC?

The frequency of reporting to HMRC will increase under MTD, however this is not necessarily a bad thing. More frequent reporting means that there is a need to keep more on top of your finances throughout the year, rather than leave it all to the last minute.

MTD is a great opportunity to get on top of your day to day bookkeeping, or engage an accountant to do this for you. This means that when it comes to reporting to HMRC you will already be most of the way there. 

A key benefit of MTD to you as an individual and business owner is that you will know throughout the year an estimate of your tax liability, which will be calculated based on the information you submit to HMRC. This will help you budget and save for your tax bill and will avoid any surprises come the end of the year. 

As mentioned above, MTD also means there will be less stress at year-end as you frantically try to collate all the information needed to submit your tax return, as you will have already reported this to HMRC and will have all the information stored in your MTD-compatible bookkeeping software. 

Do I need special software to be compliant with MTD?

Yes. MTD requires submission of information via MTD-compatible software. Xero is an example of bookkeeping software that is compatible for MTD for VAT and income tax. 

Here is a list of all software that is compatible with MTD for VAT.

Here is a list of al software that is compatible for MTD for income tax. 

HMRC do not provide free MTD software. If you’re unsure about what software to get then speak to your accountant or bookkeeper. 

MTD is compulsory for all VAT-registered businesses, regardless of their turnover. MTD for income tax will become compulsory from April 2026 for sole traders and landlords who meet the relevant income thresholds.

HMRC grants exemption from MTD if it’s not practical for you to use software to maintain digital records and submit data to HMRC. 

It may not be practical due to your age, disability, location, religion or another justifiable reason. 

You will need to explain your reason to HMRC and if an exemption is granted an alternative solution will be found. 

The best way to prepare is to begin using MTD-compatible software to keep digital reocrds of your business's finances.

Understanding Making Tax Digital (2025 update)

Go beyond annual accounts. Use management reports to track performance and make smarter decisions.

FINANCIAL LITERACY  •  14 AUGUST 2025  •  5 MIN READ

Go beyond annual accounts. Discover how regular management reports can help you track performance, improve cash flow, and make confident, data-driven decisions.

What are Management Accounts? Turn Your Data into Business Decisions

Many businesses only look at their financial position once a year, when the annual accounts are finalised. The problem? By then, the data is historical. Relying on this alone is like only getting a health check-up from your doctor once a year and receiving the results months later. The information is valuable, but not timely. A lot can change in a year and you can’t make choices based on old news.

Monthly or quarterly management accounts bridge the gap, giving you timely insights into performance so you can make decisions before opportunities pass or problems escalate. Think of them as your business’s regular health check-up that reviews the vital signs.

Management accounts bring together key financial data into a concise, decision-making tool. While every business’s management accounts will look slightly different depending on industry and goals, they often cover:

Profit and Loss statement - revenue, expenses and profitability

Balance sheet - assets, liabilities and equity snapshot

Cash flow statement - movement of cash in and out of the business, ensuring you have the funds to operate smoothly

Key Performance Indicators (KPIs) - metrics aligned to your goals, such as gross profit margin, customer acquisition cost, or revenue per employee

Variance analysis - where the magic happens, comparing actuals against budget or prior periods to answer the critical question ”are we on track?”

Understanding the key difference in how year-end and management accounts are used is a crucial part of running a business.

Annual accounts are essential for meeting tax obligations and local regulatory requirements but they are primarily historical records.

Management accounts focus on recent performance. They help you see trends, understand the drivers behind your numbers, and make adjustments while there’s time to influence outcomes.

Management accounts aren’t just about reporting numbers, they’re a strategic tool.

Informed decision-making - insights to guide growth, investments and costs

Improve cash flow management - anticipate shortages or surpluses before they impact operations

Spotting trends or problems early - identify rising costs, falling margins or seasonal changes and take corrective action

Stakeholder confidence - provides up-to-date information for investors, lenders, and partners

Tax planning - stay on top of obligations and optimise your tax position before year-end

Performance tracking - compare actual results against budgets or forecasts

The true value of management reports is in interpreting them. Clear analysis, relevant commentary and actionable recommendations are what turn the data into a useful roadmap.

At Beany, our accountants help you understand the story behind your numbers. We turn your financial data into a practical conversation, giving you confidence and clarity to make better decisions for your business.

If you’re already a client, get in touch with your accountant for further information on cost, reporting frequency and what metrics will be the best fit for your business and goals.

New to Beany? Book a free consultation to discuss your compliance accounting requirements and explore valuable add-on services like management reports.

Financial literacy

Compliance or strategy? Understand the difference between financial and management reports.

One report is for tax authorities, the other is for you. We break down the key differences between financial statements and management reports for UK business owners.

Management Accounts vs Financial Statements: Key Differences & Benefits

Financial reports are a fundamental part of running a business. However, not all reports are created equal. The key to decision-making is understanding the difference between the official financial statements prepared after year-end and the timely management reports needed to steer your business on a day-to-day basis.

Understanding both is essential. Financial statements are like a car’s MOT certificate, proving it’s compliant and roadworthy. Management reports are like your car’s dashboard (speedometer and fuel gauge) that help you on your journey. One ensures compliance and reflects where you’ve been, the other provides the insight you need to decide where you’re going.

In this article, we highlight the key features of each.

Financial statements are the official, formal record of your company’s financial performance and position for a particular financial year.  

Provide a high-level, trustworthy overview for external groups like HMRC, banks and investors

Are strictly governed by Financial Reporting Standards and Company Law

Present a historical view, showing a clear account of what has already happened

Are prepared annually primarily for compliance with tax and legal requirements

Year-end financial statements include the Profit and Loss, Balance Sheet and Cash Flow Statement, and are fundamental to your business’s official reporting.

Management reports are internal, customised reports created specifically to help business owners and their team run the business more effectively.

Provide a customisable and tailored view of your business, often including operational data

Unlike official statements, they are flexible and not regulated so can be adapted to focus on the information you need most

Are prepared monthly or quarterly, giving you an up-to-date view of recent performance

Management reports often include Profit and Loss, Balance Sheet, and Cash Flow Statements on a smaller scale, but also operational metrics and variance analysis.

Think of it this way, the financial statements are the birds-eye view of your business, while the management reports are the zoomed-in street view.

These two types of reports are not mutually exclusive. You can use your official financial statements to set high-level goals, then use your management reports to track the monthly/quarterly progress and daily actions needed to achieve that goal.

Top tip: don’t just wait for your annual financial statements, but use regular management reports to keep your finger on the pulse of your business’s financials and the metrics that matter most.

Is your reporting giving you the full picture?

If you’re already a client, get in touch with your accountant to discuss your reporting strategy and how our management reports service can help keep track of your key metrics and goals.

New to Beany? Book a free consultation to discuss your compliance accounting requirements, and explore valuable add-on services like management reports.

Financial statements vs management reports

Learn how depreciation works, what assets can be depreciated, and how it affects your tax position.

FINANCIAL LITERACY  •  7 JULY 2025  •  6 MIN READ

Learn how depreciation works, what assets can be depreciated, and how it affects your tax position. Clear advice for business owners in the UK.

What is Depreciation? A Guide for UK Businesses

As a UK business owner you’ll often buy assets to help run your business, for example, a laptop, car, office furniture, and machinery. These items are often used in the business over a number of years, but they don’t hold their value forever. Over time, these assets lose value through wear and tear, obsolescence, or simply because they’re no longer fit for purpose. This reduction in value is known as depreciation, and understanding how it works is important when it comes to managing your finances and filing your accounts.

In simple terms, depreciation is an accounting method that allows businesses to spread the cost of an asset over a period of time (also known as ‘its useful life’).

Instead of reflecting the full cost of the asset as an expense in the year it was purchased, you spread the cost over its estimated lifespan.

For example, if you bought a piece of machinery for £50,000 and it’s expected to last 10 years, you would reflect £5,000 of costs each year for 10 years, rather than reflecting the full $50,000 in 1 year.

Depreciation helps acknowledge that your assets contribute to your business’s income over its entire lifespan rather than only in the year it was purchased.

Depreciation might sound like an accounting technicality, but it plays an important role in the financial management of a company.

In the UK, businesses use depreciation to reflect the reduction in value of their assets over time. This isn't just for internal tracking; it's also a requirement under UK accounting standards to show depreciation in company accounts. This ensures the financial statements give a true and fair view of the business's financial position.

Here are a few key reasons why depreciation matters.

Depreciation spreads the cost of an asset over its useful life, rather than recording it all as an expense in the year of purchase. This gives a clearer picture of profitability, ensuring your profit and loss account shows a more realistic cost of using the asset each year.

It also helps with consistency in reporting, which is important when comparing financial performance across different periods, especially useful for management decisions, investor confidence, or when applying for finance.

Over time, assets lose value. Depreciation helps track this by showing the current book value of each asset i.e. the original cost less accumulated depreciation.

Accumulated depreciation over a few years: £15,000

This is particularly useful for internal planning, asset management, and in some cases insurance valuations.

While depreciation appears in your company accounts, it's not a tax-deductible expense for UK corporation tax purposes. Instead, HMRC uses a separate system called capital allowances.

This means you "add back" depreciation when calculating your taxable profits, and then claim capital allowances, which offer tax relief on certain qualifyin purchases of equipment, vehicles, and other assets. These don't always match the depreciation rate used in your accounts, but they still offer valuable tax savings over time.

So while you won't get tax relief based on your depreciation figures, you do still benefit from tax deductions on capital expenditure.

Generally, you can depreciate assets that:

You own (or have leased under a finance lease arrangement),

Are expected to decline in value over time, and,

You can’t depreciate things like stock, land, or everyday expenses like internet or electricity. (Land is generally not a depreciating asset as it typically doesn’t decline in value).

There are a few different ways depreciation can be calculated, but you don’t need to do all the maths yourself. That’s what your accountant is for.

Here are two common methods used by UK businesses:

This method lets you claim more depreciation in the early years of owning an asset, and less as it gets older. It’s similar to how a car loses value more quickly in the first few years.

Depreciation is calculated as a percentage of the asset's net book value each year, not the original cost.

You buy a car for £20,000 and apply a 20% depreciation rate on a reducing balance basis.

Year 1: 20% of £20,000 = £4,000. Net book value = £16,000.

Year 2: 20% of £16,000 = £3,200. Net book value = £12,800

Year 3:20% of £12,800 = £2,560. Net book value = £10,240

Each year, the depreciation is based on the remaining value, not the original purcahse price.

This method spreads the depreciation evenly over the asset's useful life. It's a simpler and more predictable approach.

You purchase machinery for £50,000 with a useful life of 10 years. Using this method, you'd depreciate it by £5,000 each year.

You claim the same amount of depreciation each year until the asset's value is fully written off.

Depreciation is more than just an accounting term. It’s a valuable tool that can impact your business's profitability.

Understanding how it works and why it’s important is useful for effectively managing your business assets, operational efficiency, and finances.

For tailored assistance on how depreciation applies to your business assets and to ensure you’re maximising eligible deductions, it's always recommended to consult your accountant.

Beany are an online accounting firm in the UK that delivers big firm expertise without the big cost. We handle everything accounting-related (such as annual compliance, bookkeeping, financial insights and strategy), and help business owners make smarter decisions for their business and lifestyle through our responsive, friendly expertise.

What is depreciation (and why does it matter)?

Learn how HMRC defines the role of company director and what it means for tax and National Insurance.

FINANCIAL LITERACY  •  9 JUNE 2025  •  5 MIN READ

Wondering if you're classed as self‑employed as a company director? Learn how HMRC defines your role and what it means for tax and National Insurance.

Are Company Directors Self-Employed in the UK?

Many company directors, especially of small and owner-managed businesses, often wonder if they are deemed to be self-employed for tax purposes. 

The term ‘self-employed’ is often used loosely in everyday language, but HMRC gives specific guidance around who is deemed to be self-employed. Spoiler, being a company director does not equate to being self-employed. 

Understanding the difference is important as it affects how you pay tax, your responsibilities and your reporting obligations. 

We’re going to clear up the confusion, explain how directors are classified and what that means in practice. 

The short answer is no, being a company director does not mean you are self-employed. 

By HMRC’s definition, a person is self-employed if they run their business for themselves, and take responsibility for its success or failure. This is applicable to sole traders, where the person and business are legally one and the same. 

Company directors run limited companies on behalf of shareholders, and are classed as office holders for tax and National Insurance Contribution purposes. 

Now you might be wondering, what if I’m the sole director and shareholder of my limited company, surely that means I fall under the definition of self-employed? The answer is no, because in the eyes of the law, the limited company is an entirely separate legal entity, distinct from directors and shareholders.

Directors are often employees of the limited company, in addition to being an office holder. You are therefore working for and on behalf of the company and its shareholders, and in exchange you might receive a salary which is taxed through PAYE (pay as you earn). 

When might a company director also be self-employed?

A company director may also be self-employed, but it would be in a separate capacity to their work associated with the limited company.

For example, if they were a director of a tech company but also ran a sole trader business (e.g. freelance wedding photography), the sole trader income would be classed as self-employment as it's entirely separate from their work with the limited company.

If self-employed work is being done for the company, and the director was to invoice for work they carry out as company director (rather than take a director's salary), this would likely be contested by HMRC and disallowed as self-employment income.

A company director usually receives at least some of their income by way of a salary (and perhaps bonuses). These are paid via the company payroll and are subject to PAYE tax and national insurance.

If a director is also a shareholder of the company, they can also get paid via dividends. Often directors will take a small salary and the balance as dividends, as this is often the most tax-efficient.

Directors may also receive benefits in kind, such as a company car or private medical insurance.

Do company directors need to complete a self assessment tax return?

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