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Welcome to the L M Warner Services blog, your go-to source for the latest updates in accounting, payroll, and financial management. We share expert tips, business insights, and crucial information on HMRC changes and taxation updates to help you navigate the financial landscape with confidence. Check back weekly for new articles!

New rules for letting property from May 2026

1st May 2026

From 1 May 2026, the Renters’ Rights Act introduces the most significant changes to private renting in England for many years. The reforms affect how landlords let property, manage tenants and bring tenancies to an end.

For landlords and property investors, understanding these changes is essential to remain compliant and avoid penalties.

Fixed term tenancies replaced by rolling agreements

One of the biggest changes is the move away from fixed term tenancies. Most existing and new tenancies will become assured periodic tenancies, meaning they run on a rolling basis with no fixed end date.

This removes the certainty of a defined term and means landlords must plan for greater flexibility in occupancy.

End of no fault evictions

The Act abolishes Section 21 evictions. Landlords can no longer ask tenants to leave without giving a valid legal reason.

Instead, possession will only be possible using specific grounds, such as:

  • rent arrears
  • selling the property
  • moving into the property

This represents a major shift in the balance of rights towards tenants.

New rules on rent increases

Rent increases will be limited and standardised. In most cases, landlords will only be able to increase rent periodically, typically once per year, and tenants may challenge increases they believe are excessive.

This means pricing strategy will need to be more carefully managed.

Greater tenant protections

The new rules introduce stronger protections for tenants, including:

  • a ban on rental bidding wars
  • restrictions on discrimination, for example against tenants with children or those receiving benefits
  • limits on advance rent payments, generally capped at one month

These changes are designed to make access to rental housing fairer and more transparent.

New compliance requirements for landlords

Landlords must also meet new administrative obligations. For example, tenants must receive a government information sheet explaining the changes by 31 May 2026, or landlords may face fines.

Further measures, including a landlord database and ombudsman scheme, are expected to increase oversight of the sector.

What landlords should do now

With these changes now in force, landlords should:

  • review tenancy agreements and processes
  • ensure compliance with new eviction rules
  • update rent review strategies
  • check communication procedures with tenants
  • consider the long term viability of their property portfolio

A more regulated environment

The overall direction of travel is clear. The private rented sector is becoming more regulated, with greater emphasis on tenant rights and transparency.

For landlords, the focus now shifts from flexibility to compliance and long term planning. Taking early advice and reviewing procedures now will help ensure that property businesses remain both compliant and commercially viable under the new rules.

Collecting slow paying debts

1st May 2026

Late payment remains one of the most common causes of cash flow pressure for small businesses. Even profitable businesses can struggle if invoices are not paid on time. The good news is that there are several practical options available to improve collections, ranging from simple internal processes to more formal recovery action.

Start with clear credit control procedures

The first step is to ensure that your processes are working properly. Invoices should be issued promptly and include clear payment terms, due dates and bank details. A structured follow up system is essential. This might include reminder emails shortly before the due date, followed by regular and consistent contact once payment becomes overdue.

Communicate early and professionally

Many late payments are not the result of dispute, but simply poor organisation on the part of the customer. A polite but firm phone call can often resolve the issue quickly. It is helpful to confirm that the invoice has been received, that there are no queries, and that payment has been scheduled.

Review credit terms and customer risk

If a customer regularly pays late, it may be necessary to review the terms offered. Options include shorter payment periods, reduced credit limits, or requiring payment in advance. For new customers, consider carrying out basic credit checks before extending credit.

Consider incentives and penalties

Offering small discounts for early payment can encourage faster settlement, particularly for larger invoices. At the other end of the scale, businesses can charge statutory interest and compensation on late payments under the Late Payment of Commercial Debts (Interest) Act 1998. While not always enforced, the existence of these charges can strengthen your position.

Use formal recovery options where necessary

If informal methods fail, more formal action may be required. This could include:

� instructing a debt collection agency

� issuing a formal letter before action

� commencing legal proceedings through the courts

For undisputed debts, a statutory demand may also be appropriate, particularly where the amount involved is significant.

Explore invoice finance and factoring

Where late payment is a persistent issue, businesses may consider invoice finance. This allows you to receive a large proportion of the invoice value upfront, improving cash flow while the finance provider collects the debt.

Take a proactive approach

The key to effective debt collection is consistency. Businesses that actively manage their debtor list tend to experience fewer problems than those that only react once cash flow becomes tight.

If you would like help reviewing your credit control procedures or improving cash flow, please get in touch.

 

The marginal tax trap in 2026-27

1st May 2026

For the 2026-27 tax year, individuals with income between £100,000 and £125,140 face an effective marginal income tax rate of 60%. This unusually high rate is not a separate tax band but arises because the personal allowance is gradually withdrawn once income exceeds £100,000.

The personal allowance remains £12,570 for 2026-27 and continues to be withdrawn at the rate of £1 for every £2 of adjusted net income above £100,000. Once income reaches £125,140, the personal allowance is completely lost.

This tapering creates an effective marginal tax rate of 60% on income within this band. Normally, income in the higher rate band is taxed at 40%. However, when the personal allowance is reduced, part of the income that would otherwise have been tax free becomes taxable. In practical terms, every additional £1 of income above £100,000 results in 40% higher rate tax plus a further 20% effective charge caused by the loss of personal allowance.

For example, an additional £1,000 of income above £100,000 may lead to £400 higher rate tax plus tax on £500 of lost personal allowance, creating a further £200 tax liability. The combined effect produces an effective marginal rate of 60% within this band.

The issue has become more significant because income tax thresholds are currently frozen until at least April 2031, meaning more individuals are gradually being drawn into this band as earnings increase.

The High Income Child Benefit Charge should also be considered when reviewing income levels. For 2026-27, the charge applies where adjusted net income exceeds £60,000, and Child Benefit is fully withdrawn once income reaches £80,000. This change increased the upper limit from the previous £60,000 cap, reducing the marginal impact on families compared with earlier years. (GOV.UK)

Planning ideas to consider

There are several legitimate planning steps that may help individuals reduce adjusted net income below £100,000 or limit the impact of the personal allowance taper.

Pension contributions are often the most effective strategy. Personal pension contributions attract tax relief and reduce adjusted net income for the purposes of calculating the personal allowance. A carefully timed pension contribution may restore some or all of the personal allowance and significantly reduce the effective marginal tax rate.

The 60% marginal band is often described as a hidden tax trap because it does not appear in standard tax tables. Individuals approaching this income level may benefit from reviewing their position before the end of the tax year to ensure that planning opportunities are not overlooked.

New rights to sick pay and parental leave for millions of workers

6th April 2026

The UK government has introduced significant employment law reforms that expand access to Statutory Sick Pay (SSP) and parental leave rights. These measures represent one of the most substantial updates to workplace protections in recent years and are intended to support employees facing illness or family responsibilities, while helping to create a more flexible and resilient workforce.

A key reform is the removal of the traditional three day waiting period for Statutory Sick Pay. Employees are now entitled to SSP from the first day of sickness absence, rather than from the fourth day as previously required. This change is expected to benefit millions of workers, particularly those on lower incomes who may previously have felt pressure to continue working while unwell in order to avoid losing pay. Earlier access to sick pay should help reduce financial stress and allow employees adequate time to recover before returning to work.

The reforms also expand eligibility for SSP by removing the previous earnings threshold, allowing lower paid and part time employees to qualify. Statutory Sick Pay is now calculated as the lower of £123.25 per week or 80 percent of average weekly earnings. These adjustments aim to provide greater financial security during periods of illness and to reduce the risk of employees returning to work too soon, which can prolong illness and affect productivity.

Alongside changes to sick pay, the government has introduced day one rights to Statutory Paternity Leave and unpaid parental leave. Previously, employees normally needed a qualifying period of employment before becoming eligible for these entitlements. The new rules allow eligible parents to take time off from the start of their employment, helping families better balance work and childcare responsibilities. It is estimated that tens of thousands of fathers and partners each year will benefit from immediate access to paternity leave, while many more parents will gain earlier access to unpaid parental leave.

Additional provisions include Bereaved Partner’s Paternity Leave, giving partners the right to take time off following the death of a child’s mother or primary adopter. The reforms form part of a broader programme of employment rights improvements designed to modernise workplace protections and improve enforcement through the creation of a new Fair Work Agency.

From an employer perspective, these changes highlight the importance of reviewing employment contracts, payroll systems and internal policies to ensure compliance with the updated rules. Businesses may need to amend sickness absence procedures, staff handbooks and HR policies to reflect the removal of waiting days and the introduction of new parental rights. Employers should also consider communicating these changes clearly to staff, ensuring that employees understand their rights and responsibilities.

Overall, the reforms are intended to strengthen job security and financial stability for workers, while encouraging a healthier and more supportive workplace culture. For many employers, the changes also provide an opportunity to review broader workforce wellbeing strategies and demonstrate commitment to fair employment practices.

 

HMRC Making Tax Digital (MTD) Requirements and Quarterly Filing Obligations

6th April 2026

What is MTD?

Making Tax Digital is HMRC’s initiative to modernise the UK tax system. It requires taxpayers to keep digital records and submit updates to HMRC using compatible software, rather than filing a single annual Self Assessment tax return.

Who is affected?

From April 2026, MTD for Income Tax will apply to individuals who are:

  • Self-employed, and/or

  • Landlords
    with annual gross income over £50,000 from these sources.

From April 2027, this threshold will reduce to £30,000.

What are the new requirements?

Under MTD, you will need to:

  1. Maintain digital records of your income and expenses

  2. Submit quarterly updates to HMRC

  3. Submit a Final Declaration at the end of the tax year (replacing the current Self Assessment return)

Quarterly filing periods and deadlines

The tax year runs from 6 April to 5 April the following year. Quarterly updates will be required as follows:

Quarter Period             Covered Filing                     Deadline for Filing

Q1                                         6 April – 5 July                    7 August

Q2                                         6 July – 5 October            7 November

Q3                                        6 October – 5 January     7 February

Q4                                        6 January – 5 April             7 May

Each update is a summary of your income and expenses for that period and must be submitted digitally via MTD-compatible software.

Final Declaration

After the end of the tax year, you will need to submit a Final Declaration by 31 January, confirming your total income, making any adjustments, and finalising your tax position.

What you need to do now

Although these changes may seem significant, early preparation will make the transition smoother. I recommend:

  • Ensuring you keep accurate and up-to-date digital records

  • Using HMRC-approved accounting software

  • Reviewing your current bookkeeping processes