As we close out 2025, several developments are worth business owners’ attention. From HMRC activity on directors’ loans to economic forecasts and concerns around Making Tax Digital, this month’s updates highlight areas where preparation and early action matter.

Here’s a clear summary of what’s happening and why it’s relevant.

HMRC Reviews Directors’ Loan Account Tax Relief

HMRC has begun contacting tax agents to review claims for relief linked to directors’ loan accounts.

The focus is on company tax returns where relief was claimed on the assumption that loans to directors or other participators would be repaid within the permitted timeframe. Where repayments did not take place as expected, HMRC is asking for returns to be corrected and any resulting tax settled.

This follows earlier compliance activity in this area and signals continued scrutiny. Companies should:

• Confirm whether repayments were actually made

• Check dates against the statutory window

• Ensure disclosures reflect what ultimately happened

• Keep clear records for repayments, write-offs, or novations

Where errors are identified, voluntary amendments can help limit interest and penalties. If you have outstanding directors’ loan balances or historic claims based on expected repayments, it’s sensible to review these sooner rather than later.

Fixing Britain’s Work and Health Gap

A government-commissioned review has highlighted the growing impact of poor health on workforce participation, with employers being asked to play a bigger role in addressing the issue.

The review estimates that around one in five working-age adults are now economically inactive, with long-term sickness cited as the main reason for nearly three million people. The overall cost to the economy is estimated at up to £85bn a year.

The focus of the recommendations is prevention and retention. Keeping people in work through better workplace health support is seen as key, and a three-year programme involving major employers is set to test and scale new approaches.

For businesses, this points to a growing expectation around employee wellbeing, retention strategies, and workplace support, particularly as labour markets remain tight in some sectors.

Most Businesses See No Immediate Gains From MTD for Income Tax

A new survey suggests that while awareness of Making Tax Digital for Income Tax is increasing, most businesses and agents still expect higher costs and additional time pressures rather than clear benefits.

The Administrative Burdens Advisory Board’s 2025 report found awareness rose to 46.4%, but a majority of respondents anticipate little or no net gain. This comes ahead of mandation from April 2026 for sole traders and landlords with combined self-employed and property income over £50,000.

HMRC has already started writing to affected taxpayers, with further letters expected early in 2026. Businesses likely to be within scope should:

• Confirm eligibility

• Review record-keeping methods

• Consider software options well in advance

• Allow time to adjust processes before the start date

Preparation remains the best way to reduce friction when MTD becomes mandatory.

UK Growth Set to Stall Again in 2026

Economic forecasts suggest another subdued year ahead, with UK growth expected to fall below 1% in 2026.

While 2025 growth was boosted by a rebound in business investment, that momentum is not expected to continue. Investment growth is forecast to slow sharply, and the labour market is cooling, with unemployment predicted to peak around 5% next summer.

Business confidence remains weak, with many firms reporting that costs have risen faster than revenues. Although some pressures are easing, conditions are expected to remain challenging.

For business owners, this reinforces the importance of cautious forecasting, cost control, and resilience planning going into 2026.

Final Thought

December’s updates point to a common theme: increased scrutiny, tighter economic conditions, and growing compliance expectations.

Whether it’s reviewing directors’ loan positions, preparing for MTD, or planning for slower growth, early action gives you more control and more options. If any of these areas affect your business and you’d like to talk them through, support is available.