The Autumn Budget & what this means for SMEs?

Making Tax Digital, what does that mean?

This is a new process the government has introduced for sole traders and landlords to report their income and expenses to HMRC. This is, arguably, the biggest change for tax processing for businesses in decade and it will mean changes for SMEs.

From April 2026, sole traders and landlords must use a new digital software to track their annual income from self-employment and property if your income is over £50,000. You will need to use a software that works with Making Tax Digital to:  

• Create and store digital records of your self-employment, property income and expenses. 
• Send quarterly updates to HMRC.
• Submit your tax return and pay tax due by 31 January 2027.  

There are lots of different software platforms out there which might work for your business. The software you choose will need to be able to: 

• • Support all your income sources covered by Making Tax Digital for income tax.
  • Let you make your submissions to HMRC.
  • Allow you to report all your other income sources to complete your tax return.
  • Work with your account period.  

If you need any more advice, please reach out to your financial advisors or use the government websites.

Enterprise management incentive eligibility be improved to allow scaling and start-ups.

There has been a lot of noise in the SME market for more support from governments to help individuals scale their businesses. To answer these concerns the government announced significant improvements to the Enterprise Management Incentive (EMI). The main updates are:  

• • • Increased employee limit: The maximum number of full-time employees a company can have will now be 500.
    • Higher gross assets threshold: the companies’ gross assets limit will rise to £120 million which will allow more established scaling companies to qualify.
    • Doubled option pool: the total value of shares that can be subject to unexercised EMI options will now be £6 million.
    • Administrative simplification: the requirement to notify HMRC of an EMI option grant within 92 days will be removed which means reducing the risk of losing tax advantages due to administrative errors.

This will ensure that companies can use the tax-efficient EMI scheme to ensure they grow, rather than being forced to switch to less advantageous plans too early. 
Find out more.

E-Invoicing

E-Invoicing is a big change which will affect SMEs this year. E-invoicing can be described as the exchange of invoice documents between a supplier and buyer in a structured digital format. Unlike PDFs or paper invoices, these e-invoices are transferred directly between financial systems to reduce manual errors and improve security.

Although, this change might take some time to get used to and will need to be on a proper financial system, there are actually quite a few benefits for SMEs by automating this process it is said to reduce invoice processing costs by 60-80% and speeds up payments by 5-7 days which enhances cash flow, reduces manual error which  could mean saving considerable time and money.  
Overall, although there might be teething problems, this new process should improve SMEs efficiency, financial stability and potentially improve their position in digital supply chains.

Director loans are under scrutiny…

Antony Batty & Company Ltd spoke about how overdrawn Directors’ Loan Accounts are getting more attention because corporate insolvencies remain high and regulators are closely examining financial behaviour and COVID support schemes.

The key take away from this article is overdrawn directors’ loan accounts are now a major focus in insolvency cases, not a minor issue. Directors should look to stop informal drawings, ensure loans and dividends are properly authorised and documented, review their directors’ loan accounts position early and seek advice from their Accountants or an insolvency practitioner  should financial trouble arise. Early advice can often limit any personal consequences.

Although these changes might seem daunting for SMEs, most are designed to support SMEs and the country’s planned economic growth. It is also about improving digitally and keeping up with technology by introducing processes which help businesses run more efficiently to potentially get paid sooner to aid cashflow.  
Read the full article here.

If you want to maximise your cash flow, why not get in touch with one of our team, today, to discuss how we might help.