HMRC is writing to individuals it believes may have failed to declare consultancy income from private healthcare providers on their self-assessment tax returns. The letters follow information received from private healthcare providers and form part of an HMRC campaign specifically targeting the medical sector. 

The letter asks recipients to check their tax returns and make sure all consultancy income has been included. HMRC stresses that the letter is not a compliance check at this stage but warns that failing to take action could lead to a compliance check and potentially higher penalties if errors are subsequently found.

Recipients are given 30 days from the date of the letter to respond. If a tax return is incorrect and is still within the normal amendment period, it can be amended. Where the deadline for amending the return has passed, the individual can make a voluntary disclosure to HMRC instead.

Anyone who believes they have no consultancy income to disclose is also asked to contact HMRC within the 30-day period. If the recipient does not respond, HMRC says it will continue to monitor the individual’s records and may make a decision based on the information it holds.

The letter also highlights the potential impact on penalties. If HMRC subsequently finds an error, a disclosure made after the letter has been received will generally be treated as ‘prompted’. This can affect the penalty reduction available. However, HMRC says penalties can be reduced where individuals provide full details of mistakes, disclose them promptly and take steps to put matters right.

If you think you may be affected by this campaign, we can help you review your tax returns, identify any undeclared consultancy income and deal with HMRC where necessary. Please contact us if you would like advice on what to do next.

Some taxpayers have already started to receive Simple Assessment letters from HMRC for the 2025-26 tax year, with a further tranche due to be sent between October and December 2026.

Simple Assessment is used where HMRC cannot collect income tax through PAYE or self-assessment. The PA302 letter sets out HMRC’s calculation of the tax due, based on information it holds. Common examples include tax due on pension income, savings interest, dividends or if the taxpayer has a second source of income that has not been taxed. It can also apply where someone has received more tax-free allowance than they were entitled to, or where the amount owed cannot be collected through a tax code, typically £3,000 or more.

HMRC began sending letters to working-age taxpayers from 30 June 2026, followed by letters to pensioners from 12 August. A second tranche, relating to bank and building society interest (BBSI) data, is expected to be issued between October and December 2026. In some limited cases, taxpayers may receive more than one letter for 2025-26.

Tax can be paid in full or by instalments, with the deadline depending on when the Simple Assessment letter is received. For the 2025-26 tax year, letters received before 31 October 2026 require payment by 31 January 2027. Letters received on or after 31 October 2026 require payment within three months of the date of the letter. 

HMRC expects to issue around 1.8 million Simple Assessment letters for the year. Taxpayers receiving a letter should check the calculation carefully against their own records and contact HMRC if they believe any information is incorrect or the assessment should be withdrawn. 

If you receive a Simple Assessment letter and are unsure whether the calculation is correct, what you need to pay or what action you should take, please contact us. We can review the assessment and help you understand what it means and how to deal with it.

HMRC has launched an improved online service to make it easier for individuals to register for self-assessment. Anyone who needs to submit a tax return for the first time for the 2025–26 tax year should notify HMRC by 5 October 2026 to avoid a potential penalty.

The new service is available through a Personal Tax Account and includes pre-populated information, online support during registration and the ability to save and return without losing information. Taxpayers will also receive confirmation by email or text when their registration is complete.

Once registered, taxpayers receive a Unique Taxpayer Reference (UTR), which is needed to complete their tax return. Under the new service, the UTR should appear in the taxpayer's online account within 72 hours, instead of taking up to 15 days to arrive by post.

Taxpayers who are unsure whether they need to submit a tax return can use HMRC's online checking tool. Those who need to register may include newly self-employed individuals with gross trading income above £1,000, a new partner in a business partnership and taxpayers with more than £2,500 of untaxed income.

The deadline for submitting the 2025–26 self-assessment tax return and paying any tax due is 31 January 2027.

Anyone who no longer needs to complete a tax return should tell HMRC as soon as possible. Until HMRC confirms that a self-assessment return is no longer required, taxpayers should continue to meet their self-assessment filing obligations.

The new registration service is currently available to individual taxpayers with a Personal Tax Account. Agents must continue to use the existing registration processes, including using forms CWF1 or an SA1, to register.

Self-employed people can choose to use simplified expenses to calculate certain business costs using flat rates rather than working out their actual expenses.

The system can save time and make record keeping easier, but it will not necessarily produce the best tax position. It is therefore worth comparing the flat rates with the actual costs before deciding whether it suits your business.

Simplified expenses are available to sole traders and partnerships that have no companies as partners. They cannot be used by limited companies or partnerships involving a limited company.

Flat rates can be used for certain vehicle costs, working from home and living at business premises. Other expenses must generally be calculated using the actual costs.

For vehicles, the 2026–27 rate for cars and goods vehicles is 55p per business mile for the first 10,000 miles, falling to 25p per mile thereafter. Motorcycles qualify for 24p per mile.

For working from home, the monthly flat rate is £10 for 25 to 50 hours, £18 for 51 to 100 hours and £26 for 101 hours or more.

Businesses operating from premises that are also the owner's home can also use flat rates to account for private use, depending on the number of people living there.

Records of business mileage, home-working hours and people living at business premises should still be kept. Using HMRC's simplified expenses checker can also help compare the flat-rate method with claiming actual costs before making a decision.

Self-employed people can deduct allowable business expenses when calculating their taxable profits. However, where a cost has both a business and private element, only the business proportion can normally be claimed.

For example, if a mobile phone bill is £200 for the year, with £70 relating to business calls and £130 to personal use, only the £70 business cost can be claimed.

The same principle can apply to costs such as travel, telephone and internet bills, and other items used for both business and private purposes. Keeping appropriate records can help demonstrate how the business proportion has been calculated.

There are specific rules for people who work from home. A reasonable proportion of costs such as heating, electricity, Council Tax, rent or mortgage interest and internet and telephone use may be allowable.

The calculation should use a reasonable method for dividing the costs between business and private use. This could take account of the number of rooms used for business and the amount of time spent working from home.

Alternatively, eligible self-employed people may be able to use simplified expenses, which provide flat rates for working from home, certain vehicles and living at business premises.

Only the allowable business expenses portion should be included when calculating taxable profits.

HMRC is currently carrying out its annual reconciliation of PAYE for the 2025-26 tax year. Between June and November, HMRC calculates the Income Tax paid by individuals and checks whether the correct amount has been collected. Where HMRC identifies a difference, it may issue a tax calculation letter, known as a P800.

If you receive a P800, do not automatically accept that HMRC’s calculation is correct. You should check the figures against your own records, including your employment and pension income, tax deducted and any other relevant income or tax reliefs. Errors or missing information can affect the calculation and could result in either too much or too little tax being shown as due.

HMRC provides an online service that allows taxpayers to check how much Income Tax they paid for the year ended 5 April 2026. The calculation can also be checked through the HMRC app.

A P800 may show that you have overpaid tax and are due a refund, or that you have underpaid and need to pay additional tax. In some cases, the P800 will allow you to claim a refund or pay the tax owed online.

If you are unsure whether the figures or tax calculation are correct, we can review your P800 and advise whether any action is needed.
 

Self-employed individuals can deduct allowable business expenses from their income when calculating taxable profits. However, businesses must keep accurate records and evidence to support the costs being claimed.

HMRC requires taxpayers to keep proof of business expenses, although evidence does not usually need to be submitted with a self-assessment tax return. Records should be retained and made available if HMRC requests them as part of a compliance check.

Evidence should show the nature of the expense, the amount paid and that the cost relates to the business. This may include receipts, invoices, bank statements, contracts or other supporting documents. Where an expense has both business and private use, records should also demonstrate how the business proportion has been calculated.

Allowable expenses can include costs such as office expenses, travel, insurance, marketing, professional fees, staff costs and business premises costs. However, personal expenses cannot be claimed, and only the business element of mixed-use costs can be deducted.

Businesses should also ensure they use the correct treatment for larger purchases. Under traditional accounting, equipment, machinery and vehicles may need to be claimed through capital allowances rather than as day-to-day expenses. Under the cash basis, most equipment and machinery can be deducted as an expense, although cars are generally dealt with through capital allowances.

Cash basis accounting is a simplified method used by sole traders and other unincorporated businesses to work out income and expenses for self-assessment in a straightforward manner. 

The cash basis is the default method for calculating income and expenses for self-employed individuals and partnerships when completing their Income Tax self-assessment return. Businesses that prefer traditional accruals accounting, or are not eligible for cash basis, must opt out of the cash basis when submitting their return.

One of the main benefits of cash basis is that businesses only record income when payment is received and expenses when they are paid. This means they do not pay Income Tax on money they are still waiting to receive, which can help improve cash flow management.

The scheme can also simplify accounting records. Equipment purchased for business use can usually be claimed as an allowable expense rather than through capital allowances, making the process more straightforward.

Cash basis is available to sole traders and partnerships without corporate partners. However, limited companies, limited liability partnerships and certain other businesses cannot use the scheme. Traditional accounting may also be more suitable for businesses with complex arrangements, significant stock levels or those needing accounts for finance and funding purposes.
 

The £1,000 property allowance is a helpful for individuals with small amounts of property income. The allowance provides a tax exemption of up to £1,000 a year against gross property income, meaning some landlords may not need to report their income to HMRC.

The allowance applies to income from land or property, such as renting out a driveway or other small property-related income. If your total gross property income for the tax year is £1,000 or less, you will not usually need to tell HMRC or include this income on a tax return, provided you are eligible to use the allowance.

If you own property jointly with others, each person can claim their own £1,000 allowance against their share of the gross rental income. Where property income exceeds £1,000, you will normally need to declare the income and can choose whether to deduct the £1,000 allowance or claim actual allowable expenses. However, you cannot deduct more than the amount of your income to create a loss.

The property allowance cannot be claimed in certain circumstances. For example, it cannot be used where the income is from a property business connected to a company or partnership involving you or someone connected to you. It also cannot be used if you claim the tax claim  for residential property finance costs, such as mortgage interest, or if you use the Rent a Room Scheme and deduct actual expenses instead.

If you pay for replacing or repairing small tools you need for your job, you may be able to claim tax relief from HMRC. Eligible tools include items such as scissors, small hand tools and electric drills that are essential for carrying out your work and are not provided by your employer.

You may also be able to claim tax relief for the cost of cleaning, repairing or replacing a uniform or specialist work clothing, such as overalls or safety boots. However, you cannot claim for the initial cost of buying work clothing, everyday clothes worn for work, or the cost of laundering a uniform if your employer provides a free laundry service that you choose not to use.

If your role requires personal protective equipment (PPE), your employer is responsible for providing it free of charge or reimbursing you for the cost. You cannot claim tax relief on PPE yourself.

Claims can be based on the actual amount you have spent, provided you keep receipts or other evidence, or you may be able to claim a fixed flat rate expense if one has been agreed for your occupation. Flat rate claims do not require supporting evidence.

HMRC normally allows claims for the current tax year and up to four previous tax years, provided they are submitted within four years of the end of the tax year in which the expense was incurred.
Most employees can claim online using HMRC’s portal https://www.tax.service.gov.uk/claim-tax-relief-expenses/what-claiming-for. Taxpayers who complete a self-assessment tax return should claim the relief through their tax return.