Close companies face additional reporting requirements

Further administrative changes are on the cards for close companies, as the Government seeks to gain a better understanding of previously difficult-to-distinguish transactions.


Close companies – those companies controlled by five or fewer participators or by their directors if those directors are participators – may soon need to disclose details of transactions with participators in order to stay compliant.


A full definition of who qualifies as a participator can be found in CTM60107, but they will generally be shareholders or directors.


A business is controlled by a participator when the participator has voting power, share capital of the company and rights to capital on winding up.


It is worth understanding which transactions may be impacted and how this could change reporting requirements.


Which reporting requirements might change?


The proposed changes will cover a range of transactions, including:

  • Cash withdrawals
  • Loans
  • Debts
  • Dividends
  • Other distributions and transfers of assets to and from the company


It will exclude items that are already reported to HMRC, meaning that the changes will not result in a doubling up of administrative tasks.


To comply with the changes, close companies must provide details concerning the amount transacted, the date and the details of the recipient, including their name, address and national insurance number.


Why are these changes being introduced?


There is no guarantee that these changes will be introduced, as they are currently under public consultation.


However, there is a belief that transactions between close companies and their participators may be an area that is vulnerable to tax loss due to high levels of error and fraud.


Small businesses are seen as being particularly vulnerable to the tax gap, i.e. the difference between the amount of tax owed and the amount collected. They continue to be the focus of scrutiny and tax reform.


As these proposals are still under consultation, there is no clear indication of how and when the reports will need to be made.


The anticipated implementation will see the establishment of an annual reporting cycle that will be tied to the existing company tax return.


This should mean that the obligations will be easier to track, as they will not be an additional requirement.


Our team can help you understand your obligations and keep you updated on the outcome of the consultation.


Speak to our team to take the stress out of company tax compliance. 

Mixed picture for UK mergers and acquisitions– Where do the opportunities lie?

By Charlie Flockhart • July 21, 2026
Mergers and Acquisitions (M&A) are a core part of business growth and resilience. Done well, the acquiring business benefits from a new market and the other company gets access to additional resources and support. Government data has shown changes in the value of UK M&As, so it is necessary to understand how opportunities may manifest in the future. How are mergers and acquisitions changing in the UK? The Office for National Statistics (ONS) recently published data concerning M&As and the picture is mixed. Compared to the previous quarter, the first quarter of 2026 saw a notable fall in the number of M&As, dropping from 495 to 352. Inward M&As, those deals wherein foreign businesses acquired UK businesses, saw an £18.8 billion reduction in value, as it was only £14.2 billion compared to the previous quarter’s £33 billion. Domestic M&As, those conducted between UK businesses, took a slightly smaller hit of £0.4 billion, resulting in a value of only £1.5 billion compared to the previous £1.9 billion. Outward M&As bucked the trend as UK businesses acquiring overseas companies saw a £1.7 billion increase in value, taking the £3 billion generated in the last quarter to £4.7 billion. What opportunities are there for mergers and acquisitions in the UK? For UK businesses unsure about expanding overseas, the data might make the case that it is a worthwhile endeavour. Using M&As to expand internationally gives UK businesses access to people who understand the market, language and culture needed to succeed in a new territory. This will involve engaging with the existing team and learning from their lived experiences. For businesses focused only on UK growth, M&As remain a viable expansion strategy even as value fluctuates. It is worth remembering that the value of a business at the point where an M&A completes is not necessarily indicative of its long-term value, as your efforts could be the key to greater future growth once you have a place in that market. Looking to expand your business? Our team can help you understand all aspects of an M&A to ensure you are best positioned to find sustainable growth for your business and then support you through the process. If you want to make the most of the opportunities mergers and acquisitions present, get in touch with our team .

Should I gift a lump sum from my pension to family? Understanding the Inheritance Tax implications

By Charlie Flockhart • July 20, 2026
You are likely aware of the upcoming inclusion of unspent pension pots for Inheritance Tax (IHT) calculations from 6 April 2027. This has sparked a wave of interest in finding alternative ways to save for the future. While it might seem necessary to reduce the amount contained in your pension pot, there are tax implications that must be considered. Is it a good idea to gift a lump sum from my pension? Accessing a lump sum of your pension can be useful for a range of reasons, as you or your loved ones could benefit from the money you have saved over years of work. However, IHT is not the only tax implication of accessing pension lump sums, as these can be subject to Income Tax. You can access up to 25 per cent of your pension tax-free and the most you can take across all pensions tax-free is £268,275 – a figure that only concerns those with pensions worth more than £1,073,100. If you are under 75 and expected to live less than a year because of serious illness, you may take all of the money from your pension in a lump sum without paying tax, provided it is below the lump sum and death benefit allowance. Knowing what is possible to withdraw then allows you to determine whether gifting is a viable strategy. What are the tax implications of gifting a lump sum from my pension? Gifting can reduce IHT exposure, even to nil, but the rate of tax exemption is determined by when the gift was given in relation to when you die. The rates are as follows: 

Employee Ownership Trusts – What business owners need to know

By Charlie Flockhart • July 20, 2026
With more than 2,400 businesses now operating through an Employee Ownership Trust (EOT) structure, this has become a mainstream option for business owners thinking about succession and exit. The tax benefits that helped drive that growth have recently changed, but EOTs remain a competitive succession route. For many owners, the financial case was never the only consideration. What is an Employee Ownership Trust?  An EOT is a structure through which a company becomes majority-owned by a trust on behalf of its employees. The existing shareholders sell a controlling stake to the trust, which holds those shares for the collective benefit of the workforce. Employees do not buy shares directly. Instead, they benefit through profit-sharing arrangements and a genuine stake in the long-term success of the business. For the selling owner, it is a way to exit on their own terms while keeping the company’s culture and identity intact. Capital Gains Tax (CGT) relief changes to EOTs Until November 2025, qualifying owners could sell to an EOT and pay no Capital Gains Tax (CGT) on the gain, but that has now changed. For disposals completing on or after 26 November 2025, 50 per cent of the gain is exempt from CGT, with the remaining 50 per cent taxed at the individual’s prevailing rate. Business Asset Disposal Relief (BADR) and Investors’ Relief cannot be used alongside EOT relief to reduce the chargeable portion further. For higher-rate taxpayers, the effective CGT rate on an EOT sale is around 12 per cent. This is still well below the 24 per cent that applies to most other business disposals. The 2025 Budget also introduced a requirement for trustees to take all reasonable steps to ensure the price paid does not exceed market value, making a robust and defensible valuation more important than ever. Why use an EOT as part of your exit strategy? Tax efficiency is one factor, but it is rarely the only one. Many owners are drawn to EOTs because there is no external buyer imposing a new direction, no protracted trade sale negotiations and a genuine sense that the business and its people will be looked after. Profit-sharing arrangements also tend to improve engagement, retention and productivity, which support the business through the transition and beyond. Is an EOT right for your business? EOTs tend to work best where there is a strong management team capable of running the business after the transition and a workforce with genuine engagement. They suit owners whose priorities go beyond maximising the headline sale price. The process involves obtaining an HMRC-compliant valuation, preparing financial forecasts to show the business can meet deferred consideration over time and working with specialist advisers to structure the transaction correctly. If you are exploring your exit options and want to understand whether an EOT could be the right fit, please get in touch with our team .