Financial planning
Six things care providers should know when contacted by HMRC
With care homes facing mounting financial pressures, Jonathan Cooper, founder and director of The Director’s Helpline and The Director’s Choice, offers some tips on staying on top of your tax obligations
Across the UK, care home owners are facing a perfect storm of rising demand, increasing costs, and shrinking margins. What was once a difficult environment has now become an impossible one, meaning that, for many, the challenge is no longer just about providing good care, but about keeping the doors open. According to the Care Policy and
Evaluation Centre at the London School of Economics, demand for adult social care is set to rise from around 520,000 in 2022 to more than 750,000 by 2042. However, the resources to meet that demand are not keeping pace, leaving homes under significant pressure to deliver quality services with limited support. At the same time, cost pressures are
intensifying. The Nuffield Trust estimates that the changes to employer National
Insurance Contributions (NICs) that were brought in in April 2025 will cost independent sector social care employers an extra £940m in 2025/26. For a people- intensive industry where staffing accounts for most of every pound spent, that is a significant additional weight to carry. Then, add slow local authority payments
and increased agency reliance into the mix, and it is no surprise many homes are struggling with cashflow. For many care home operators, managing payroll, suppliers, and utilities while maintaining high standards of care leaves little room to address tax obligations – so HMRC involvement can feel particularly daunting. But it is worth remembering that many
directors did not start out to run a company, they came to run a business dedicated to care. Financial management is rarely their
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expertise, so feeling overwhelmed is natural, and the pressures can feel deeply personal as they try to balance care provision and financial survival.
The hidden HMRC crisis At The Director’s Helpline, we speak with over 600 company directors every month, and an increasing number are from the care sector. Many of those conversations start the same way, with a care business owner trying to do the right thing while struggling to balance the day-to-day realities of staffing, compliance, and resident care against mounting financial pressures. The truth is that HMRC debt often builds
up not through mismanagement, but timing. Local authorities typically take 45 to 60 days to pay invoices, but payroll still has to go out on time. PAYE and VAT deadlines follow
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