Revenue

Revenue increased by 26% to £8,728,000 (2024: £6,922,000) building on growth of 31% reported in the previous year.

Claritas now has eight offices – Birmingham, Bristol, Glasgow, Leeds, London, Manchester, Nottingham and Sheffield with Leeds and Sheffield added in the year.

Core service lines continue to be:

Mergers and Acquisitions (“M&A”)

Corporate

Incentives and Reliefs                 

Private Client

Employment Taxes

Indirect

Valuations

On 6 May 2025, Claritas acquired the Incentives and Reliefs business and assets of Markel Consultancy Services Limited effective 31 May 2025 and merged its own Innovations service line within this operation. Through this acquisition, Claritas welcomed 21 employees and a well established office in Sheffield for initial consideration of £640,000.

Deferred consideration, based on future revenues, of at least £200,000 is payable in two tranches in June 2026 and June 2027 and is provided as part of goodwill. FY25 revenues reflect three months from the acquired Incentives and Reliefs business, contributing £878,000 of the £1,806,000 year on year revenue growth.

The business has seen strong organic strong growth in all service lines apart from M&A which has impacted by reduced M&A activity in the UK market.

The core M&A and Corporate service lines - which provides support for transactions and ongoing corporate services - grew year on year revenues by £365,000 and contributed 47% of total revenues, down from 54% in FY24, partly diluted by the Incentives and Reliefs acquisition .

Gross Profit

Gross margin fell from 46% to 43% reflecting continuing investment in new office start ups and recruitment of fee earning staff across all service lines. Average employee numbers grew from 53 in FY24 to 74 in FY25 and currently stands at 99 people.

EBITDA

Management regard key indicators of performance as revenue growth and EBITDA before recruitment costs. Adjusted EBITDA trend is summarised in the table below:

Significant investment in fee earning, business development and support staff, new offices and technology has reduced the EBITDA margin.

Administrative costs reflect the full year cost for new offices opened in Bristol and Glasgow during FY24 and the costs of an expanded London office team, the newly opened Leeds office and the overheads of the newly acquired Sheffield office for the final three months.

People

Since shortly after being formed in 2012, the firm has consistently recruited graduate trainees and provided them with exceptional training in a supportive and nurturing environment. Four graduates were recruited during the year, with a further three being recruited immediately after the year end. The firm will recruit a further four graduates in FY27.

The firm remains committed to helping all of its staff develop professionally and achieve their personal objectives and to be properly rewarded financially. A significant number of people were promoted during the year and a dividend was paid after the year end to all staff who were members of the staff equity scheme based on the results for the year. This dividend will be recorded in the FY26 accounts.

Net assets

Net assets improved to £918,000 reflecting retained profits including the retained profits of the 51% subsidiary, Claritas Employment Tax Limited.

The principal component of working capital is trade debtors which rose by 49% to £2,278,000. In anticipation of future revenue growth and working capital funding requirements, the company has recently increased its invoice discounting facility and has significant headroom to fund future growth.

Outlook

The Business has continued to grow strongly to date in FY26 with billings to April 2026 66% ahead of the same period in FY25.

The Business now employs 99 staff and several senior new recruits are in progress.

The Directors therefore expect the current year to again be one of very significant revenue growth and investment in people, offices and technology infrastructure that will lay the foundations for long term earnings and margin growth.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 August 2025.

Ordinary dividends were paid amounting to £464,224 of which £392,000 related to equity voting shares and £72,224 related to non-voting employee shares The directors do not recommend payment of a further dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

This report has been prepared in accordance with the provisions applicable to groups and companies entitled to the exemptions of the small companies regime.

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of Claritas Tax Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 August 2025 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity and the related notes from the accounting records and from information and explanations you have given us.

As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at https://www.icaew.com/regulation.

This report is made solely to the board of directors of Claritas Tax Limited, as a body, in accordance with the terms of our engagement letter dated 7 May 2025. Our work has been undertaken solely to prepare for your approval the financial statements of Claritas Tax Limited and state those matters that we have agreed to state to the board of directors of Claritas Tax Limited, as a body, in this report in accordance with ICAEW Technical Release 07/16 AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Claritas Tax Limited and its board of directors as a body, for our work or for this report.

It is your duty to ensure that Claritas Tax Limited has kept adequate accounting records and to prepare statutory financial statements that give a true and fair view of the assets, liabilities, financial position and profit of Claritas Tax Limited. You consider that Claritas Tax Limited is exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the financial statements of Claritas Tax Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory financial statements.

For the financial year ended 31 August 2025 the group was entitled to exemption from audit under section 477 of the Companies Act 2006.

Directors' responsibilities under the Companies Act 2006:

• The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476;

• The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of financial statements.

These financial statements have been prepared in accordance with the provisions applicable to groups and companies subject to the small companies regime.

As permitted by section 408 of the Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £496,891 (2024 - £537,610 profit).

For the financial year ended 31 August 2025 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

Claritas Tax Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 3rd Floor Enterprise House, 115 Edmund Street, Birmingham, B3 2HJ.

The group consists of Claritas Tax Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Claritas Tax Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 August 2025. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

At the time of approving the financial statements, the directors have a reasonable expectation that the group and parent company have adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Details of the company's subsidiaries at 31 August 2025 are as follows:

Secured creditors for the Group and Company amounted to £438,011 (2024: £126,263). These are secured by way of a fixed and floating charge over all assets.

Secured creditors for the Group and Company amounted to nil (2024: £63,656). These are secured by way of a charge over specific assets.

The invoice financing commitment is secured by fixed charges over trade debtors.

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The following are the major deferred tax liabilities and assets recognised by the group and company:

The company issued 6,600 £0.01 J shares to staff at a price of £0.19 each. Shares are issued to all employees, apart from those who join as graduate trainees, within 12 months of joining the Company. Graduate trainees who qualify as Chartered Accountants subscribe for their shares within 12 months of qualifying. Further shares are issued to employees who are promoted.

1,000 £0.01 E shares and 200 £0.01 G shares were converted to deferred shares when employees holding those shares ceased to be employees.

The E, G and J Ordinary Shares have no voting rights but are entitled to receive a dividend to the extent that profits before tax exceed an agreed threshold. In aggregate, they are also entitled to 30% of the proceeds of a sale or liquidation of the Company to the extent that such proceeds exceed £3 million. The hurdle over which each share class benefits on a liquidation or sale differs according to the market value of the Company and shares at the date of issue. A further class of K Ordinary Shares will be issued during the financial year ending 31 August 2026.

The company issued 6,600 £0.01 J shares to staff at a price of £0.19 each. Shares are issued to all employees, apart from those who join as graduate trainees, within 12 months of joining the Company. Graduate trainees who qualify as Chartered Accountants subscribe for their shares within 12 months of qualifying. Further shares are issued to employees who are promoted.

1,000 £0.01 E shares and 200 £0.01 G shares were converted to deferred shares when employees holding those shares ceased to be employees.

The E, G and J Ordinary Shares have no voting rights but are entitled to receive a dividend to the extent that profits before tax exceed an agreed threshold. In aggregate, they are also entitled to 30% of the proceeds of a sale or liquidation of the Company to the extent that such proceeds exceed £3 million. The hurdle over which each share class benefits on a liquidation or sale differs according to the market value of the Company and shares at the date of issue. A further class of K Ordinary Shares will be issued during the financial year ending 31 August 2026.