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Tuesday, 8 July 2025

Newsletter 200

July 2025

In this month’s Enews, we look at the CIOT’s call for the government to take a strategic approach to tax policy and the government’s Industrial Strategy. We also look at a warning to taxpayers with online HMRC accounts and the gap between the tax haul expected and that actually collected. There is also news on the Pension Schemes Bill and more.

Government should take more strategic approach to tax policy, says CIOT

The government should take a more strategic approach to tax policy, consulting earlier and giving greater thought to the design of the tax system, says Nichola Ross Martin, President of the Chartered Institute of Taxation (CIOT).

In her inaugural speech as CIOT President, Ross Martin said that making a success of MTD will need HMRC and tax professionals to continue to work closely together.

She also promised to continue to press for improvements to HMRC service levels over the year ahead.

The CIOT President also encouraged the government to consider introducing a statutory employment test

In addition, she urged Institute members and employers to feed into a review of the Chartered Tax Adviser (CTA) qualification.

Ms Ross Martin said:

‘While there is plenty of argument about rates and burdens in parliament, there is very little about reform and design.

‘Take employment taxes. The PAYE system is the government’s main breadwinner. Successive governments have tweaked the rates and thresholds for national insurance but paid rather less attention to the fundamental issues as to how tax policy might adapt to cope with the changing world of work.

To pose these questions is not to argue for an ‘everything everywhere all at once’ approach to tax. But it is to point out that there is more to tax policy than rates and thresholds. Strategy is crucial.’

Internet link: CIOT website

Government introduces Pension Schemes Bill

The government has introduced the Pension Schemes Bill, which it says will make pensions easier to understand and manage as well as drive better value over the long term.

The bill will work to ensure savers get good returns and drive economic investment by requiring defined contribution (DC) schemes to prove they are value for money to avoid underperforming schemes.

It also aims to simplify retirement choices by all pension schemes offering default routes to a retirement income and consolidate and professionalise the Local Government Pension Scheme (LGPS).

In addition, it will bring together small pension pots worth £1,000 or less into one scheme certified as delivering good value and create new rules for multi-employer DC scheme ‘megafunds’ of at least £25 billion.

This is so that bigger pension schemes can drive down costs and invest in a wider range of assets and increase flexibility for defined benefit (DB) pension schemes to safely release surplus worth £160 billion, the government said.

Liz Kendall, Work and Pensions Secretary, said:

‘Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners.

‘The bill is about securing better value for savers’ pensions and driving long-term investment in British businesses to boost economic growth in our country.’

Internet link: GOV.UK

HMRC system attack is a timely reminder to keep personal data safe

Taxpayers are being urged to check their online HMRC account after scammers attempted to defraud the tax authority using individuals’ data and login details.

The Low Incomes Tax Reform Group (LITRG) is also reminding people of the importance of being vigilant and taking care of personal data.

HMRC recently announced that criminals had targeted the online tax accounts of nearly 100,000 taxpayers to try to make false tax refund claims.

In some cases, HMRC have said that criminals gained people’s login credentials and made use of existing online tax accounts. But, in others, they gained personal data that enabled them to set up new online tax accounts via the Government Gateway.

HMRC have locked down the compromised accounts as a precaution. They are writing to those affected with details on how they can regain access to their accounts.

Joanne Walker, Technical Officer at LITRG, said:

‘HMRC have confirmed that they were the victim of online scammers who tried to defraud them of money using the details of individual taxpayers.

‘While HMRC say this attack has not resulted in any tax-related financial loss for individual taxpayers, it is a timely reminder that fraud is an ongoing threat.’

Internet link: LITRG website

FCA in international crackdown on unlawful finfluencers

The Financial Conduct Authority (FCA) joined forces with eight international regulators for a week of action to combat the risks of finfluencers on social media.

Finfluencers are widespread throughout social media platforms. They promote themselves as successful entrepreneurs in luxurious destinations to lure people into paying for their services such as masterclasses to get rich quick and following their investment strategies.

Regulators from the UK, Australia, Canada, Hong Kong, Italy and the United Arab Emirates (UAE) took part in a ‘global week of action against unlawful finfluencers’ from 2 June.

In the UK, the FCA:

  • made three arrests with the support of the City of London Police
  • authorised criminal proceedings against three individuals
  • invited four finfluencers for interview
  • sent seven cease and desist letters
  • issued 50 warning alerts.

The FCA says the warning alerts will result in over 650 take down requests on social media platforms and more than 50 websites operated by unauthorised finfluencers.

Steve Smart, Joint Executive Director of Enforcement and Market Oversight at the FCA, said:

'Our message to finfluencers is loud and clear. They must act responsibly and only promote financial products where they are authorised to do so – or face the consequences.'

Internet link: FCA website

Global economy set for weakest run since 2008, warns World Bank

Heightened trade tensions and policy uncertainty are expected to drive global growth down to its slowest pace since 2008, according to the World Bank’s latest Global Economic Prospects report.

Recent turmoil has resulted in growth forecasts being cut in nearly 70% of all economies - across all regions and income groups, says the Bank.

Global growth is projected to slow to 2.3% in 2025, nearly half a percentage point lower than the rate that had been expected at the start of the year, the Bank adds.

The bank says a global recession is not expected. Nevertheless, if forecasts for the next two years materialise, average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s.

  1. Ayhan Kose, Chief Economist and Director of the Prospects Group at the World Bank, said:

‘Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict.

‘The smartest way to respond is to redouble efforts on integration with new partners, advance pro-growth reforms, and shore up fiscal resilience to weather the storm. With trade barriers rising and uncertainty mounting, renewed global dialogue and cooperation can chart a more stable and prosperous path forward.’

Internet link: World Bank website

Tax gap estimated at 5.3%

The tax gap estimate was 5.3% for the 2023/24 tax year, according to the latest data from HMRC.

The tax gap is the difference between what tax is expected to be paid and actually paid.

HMRC collected £829.2 billion in the 2023/24 tax year representing 94.7% of all tax due, leaving £46.8 billion unpaid.

However, HMRC revised the figures upwards for 2022/23, from 4.8% (£39.8 billion) to 5.6% (£46.4 billion). It also warned that the latest figures may be revised as more data becomes available.

Some of the key findings from this year’s calculations show:

  • Small businesses represent the largest proportion of the tax gap (60%).
  • Corporation Tax accounts for 40% of the total tax gap.
  • Failure to take reasonable care (31%), error (15%) and evasion (14%) are among the main behavioural reasons for the overall tax gap.

Ellen Milner, Director of Public Policy, said:

‘These figures show the stubbornness of the tax gap and how optimistic the government’s target of a £7.5 billion reduction by 2029/30 is.

‘While large businesses and wealthy individuals are often accused of not paying enough tax these figures suggest that their total share of the tax gap is not much more than a quarter of that of small businesses.

‘The small business figures reflect big upward revisions from HMRC a year ago as a result of a random enquiry programme carried out in 2020/21, which identified greater inaccuracy and non-compliance than previously forecast.’

Internet link: HMRC press release CIOT website

UK government launches Industrial Strategy

The UK government is aiming to slash energy prices, unlock investment and upskill the workforce in its Industrial Strategy.

The government says the Industrial Strategy was developed in partnership with business and includes targeted support for the areas of the country and economy that have the greatest potential to grow.

It says it will slash electricity costs by up to 25% from 2027 for electricity-intensive manufacturers in growth sectors and foundational industries in their supply chain.

The government says it will unlock billions in finance for innovative business, especially for SMEs by increasing British Business Bank financial capacity to £25.6 billion.

Finally, it has pledged to upskill the nation with an extra £1.2 billion each year for skills by 2028/29.

Alex Veitch, Director of Policy at the British Chambers of Commerce (BCC), said:

‘Attracting and retaining people with the right skills is crucial for business, and a fundamental part of driving economic growth.

‘We are pleased the government has listened to our calls and put skills at the heart of the Industrial Strategy. The extra cash investment for training in key sectors, such as defence and engineering, has the potential to be a real springboard for growth.

‘Further action is needed on skills, including more flexibility in the Growth and Skills Levy and a commitment to Local Skills Improvement Plans across England, many of which are successfully led by Chambers.

‘This week’s Industrial Strategy must provide an ambitious long-term plan to drive forward investment and growth through businesses across the UK.’

Internet link: GOV.UK  BCC website

Latest guidance for employers

HMRC has published the latest issue of the Employer Bulletin. The June issue has information on various topics, including:

  • PAYE Settlement Agreement calculations 2024 to 2025
  • organised labour fraud — the supply of labour through Employment Intermediaries
  • mandating the reporting of Benefits in Kind and expenses through payroll software
  • Spotlight 68 — using prepaid debit cards for profit extraction to reduce profits and disguise income
  • future changes to Statutory Sick Pay
  • parents of teens reminded to go online to extend their Child Benefit claim.

Internet link: GOV.UK

HMRC sends side hustle warning

HMRC is warning those earning extra income through a side hustle to check if they need to register for self assessment and file a tax return.

Side hustles can be any additional income stream, from online selling to content creation, from dog walking to property rental. It also includes gains or income received from cryptoassets.

Anyone who earns over the £1,000 threshold may need to register for self assessment and complete a tax return.

There is a checker tool on GOV.UK for those who aren’t sure if they meet the criteria. If they do and are new to self assessment they will need to register to receive their Unique Taxpayer Reference.

Guides for side hustlers can also be found at taxhelpforhustles.campaign.gov.uk.

Myrtle Lloyd, HMRC's Director General for Customer Services, said:

‘Whether you are selling handmade crafts online, creating digital content, or renting out property, understanding your tax obligations is essential. If you earn more than £1,000 from these activities, you may need to complete a self assessment tax return.

‘Filing early puts you in control – you will know exactly what you owe, can plan your payments, and avoid the stress of the January rush. You don't need to pay immediately when you file – you have until 31 January to settle your tax bill.’

Internet link: HMRC press release

More than 25% of UK businesses hit by cyber-attack in past year

More than one in four UK businesses have been the victim of a cyber-attack in the last year with many risking ‘sleepwalking’ into disruption, according to a new report.

The survey conducted by the Royal Institution of Chartered Surveyors (RICS) found that 27% of companies said their building had suffered a cyber-attack in the last 12 months, up from 16% a year ago.

Almost three-quarters of business leaders believe that a cybersecurity incident will disrupt their business in the next 12 to 24 months, the survey found.

The paper identifies operational technology such as building management systems, CCTV networks, Internet of Things (IoT) devices and access control systems as risk areas.

It also notes concerns that some buildings use outdated operating systems (OS). A building opened as recently as 2013 could conceivably use Windows 7; an OS that hasn’t received security updates from Microsoft in over five years.

Paul Bagust, Head of Property Practice at the RICS, said:

‘Buildings are no longer just bricks and mortar, they have evolved into smart, interconnected digital environments embracing increasingly sophisticated and ever-evolving technologies to enhance occupier experience.

‘It is inconceivable to imagine a world where technology will not continue to pose a growing risk to a building’s operation, and it is equally impossible to consider that the management of digital risks will not be needed as an imperative measure to safeguard the future of a building and prevent systems from being compromised.  

‘Failure to identify these growing digital challenges and incorporate security countermeasures risks businesses sleepwalking into cyberattacks.’

Internet link: RICS website 

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Tuesday, 10 June 2025

Newletter 199

 

June 2025

In this month’s Enews, we look at HMRC’s changes to late and penalty interest rates and the record numbers filing self assessment in the first week of the new tax year. There is news on the unpreparedness of sole traders for MTD and HMRC’s child benefit reminder to parents of older teens to update you on.  We also look at action taken against employers who fail to comply with the National Living Wage (NLW) and more.

HMRC cuts late payment interest rate to 8.25%

HMRC have reduced late payment and repayment interest rates from 28 May following the 0.25% cut in the base rate last month.

The Bank of England cut the base rate to 4.25% on 8 May, triggering a 0.25% cut in HMRC interest rates which are pegged to the base rate.

From 28 May, the late payment interest rate is cut to 8.25% from 8.5%, which was the highest rate charged since February 2000.

The repayment interest rate is cut to 3.25% from 3.5% from 28 May.

HMRC late payment interest is set at base rate plus 4%. Repayment interest is set at base rate minus 1%, with a lower limit - or ‘minimum floor’ - of 0.5%.

Following the cut to the base rate David Bharier, Head of Research at the British Chambers of Commerce said:

‘Many firms, desperate for financial respite, will be keen to see further rate cuts in the months ahead.

‘National insurance hikes, alongside other cost pressures, are already having an impact, including increased prices, hiring freezes, and reduced investment.

‘The next few months are likely to remain volatile and the full impacts of a global trade war are still uncertain. Businesses will be looking to government to provide stability and avoid any further pain.’

Internet link: GOV.UK BCC website

Record numbers file assessment in first week of new tax year

Almost 300,000 people filed their tax return in the first week of the new tax year, setting a new record, HMRC has revealed.

Self assessment taxpayers can submit their tax return for the 2024/25 tax year between 6 April 2025, the first day of the new tax year and the deadline on 31 January 2026.

This year 299,419 filed in the first week, up 28,503 compared to the 270,916 people who did so in 2020.

There were 57,815 early filers on 6 April, which was lower than the 67,870 people who did so in 2024.

HMRC is encouraging people to file early so they know what tax they owe sooner, plan for any payments in advance, make repayment claims and avoid the stress of leaving it until January.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

‘Filing your self assessment early means you can spend more time growing your business and doing the things you love, rather than worrying about your tax return.

‘You too can join the thousands of customers who have already done their tax return for the 2024/25 tax year by searching ‘self assessment’ on GOV.UK and get started today.’

Internet link: HMRC press release

One in four employers plan to make redundancies in next quarter

The number of employers expecting to increase staff numbers in the next three months has fallen to a record low outside of the pandemic, according to research from the Chartered Institute of Personnel and Development (CIPD).

One in four employers plan to make redundancies in the next three months, the report added.

A survey of 2,000 businesses found issues such as rising employment costs and growing global uncertainties.

The CIPD said the rate of employers expecting to increase headcount has fallen sharply among large private sector employers and in retail in particular.

James Cockett, Senior Labour Market Economist at the CIPD, said:

‘From April, employers across the UK have begun to feel the full effect of increases to National Insurance Contributions and the National Living Wage outlined in last year’s budget.

‘They’re also looking at the potential impact of the Employment Rights Bill on employment costs and plans, and this comes at a time of global uncertainty. Employer confidence is low, which is being reflected in their hiring plans.

‘The Employment Rights Bill is landing in a fundamentally different landscape to the one expected when it formed part of the Labour manifesto in summer of last year.

‘It was always going to be a huge change for employers but they’re operating in an even more complex world now. It’s vital the government works closely with employers to balance the very real risk of reductions in investment in people, training and technology with their desire to reduce poor employment practice.’

Internet link: CIPD website

 

Tax and accounting bodies back e-invoicing adoption

The UK’s professional tax and accounting bodies have backed the adoption of e-invoicing in their responses to a government consultation.

The Chartered Institute of Taxation (CIOT) says that HMRC will need to prioritise the effective implementation of e-invoicing if it is to drive its adoption among UK businesses.

The CIOT has recommended that any e-invoicing software should be built to flexible, agreed minimum standards that accommodate variations in invoicing requirements in tax legislation, while ensuring clear expectations around operability, security, and data accessibility for taxpayers.

Ellen Milner, CIOT Director of Public Policy, said:

‘If the UK government desires greater adoption of e-invoicing without mandating its use, HMRC will need to consider a package of options to encourage voluntary adoption.

‘This may include an educational and training campaign, financial incentives, providing a better business experience, effective implementation and systems that instil confidence to move along the digital journey.’

ICAEW’s Tax Faculty also responded to the consultation on increasing the adoption of e-invoicing by UK businesses and the public sector.

It said:

‘Many countries, including EU member states, have already introduced e-invoicing mandates or national frameworks. ICAEW believes that the UK’s current lack of a co-ordinated e-invoicing policy places its businesses at a growing disadvantage and could deter capital investment. The government’s consultation is a timely opportunity to close the gap and lay the foundations for future digital transformation.

‘However, successful implementation of e-invoicing will require careful planning, targeted support and alignment with existing international standards.’

Internet link: CIOT website ICAEW website

Almost half of sole traders unprepared for MTD changes

Almost half of UK sole traders feel unprepared for upcoming Making Tax Digital (MTD) for Income Tax changes, according to research conducted by IRIS Software.

The new MTD rules mandate digital record-keeping and quarterly Income Tax updates starting April 2026 and non-compliance can lead to significant penalties.

The study found that almost one in three sole traders have never heard of MTD,

MTD for Income Tax will require self-employed individuals, landlords and small businesses with sales or rents, before expenses,         over £50,000 to keep digital financial records and submit quarterly updates using compatible software from April 2026. The threshold drops to £30,000 in 2027 and to £20,000 in 2028.

The changes could place a significant burden on business owners, who will be required to submit at least five updates to HMRC each year.

Mark Chambers, Managing Director at IRIS Accountancy, said:

‘These findings highlight an important moment of opportunity for the UK’s sole traders. With MTD just around the corner, there’s a real chance for businesses to modernise their financial processes, unlock efficiencies, and gain better visibility of their income and expenses.

‘It’s encouraging to see that nearly a quarter feel ready to meet the requirements, but that leaves a significant portion not experiencing the benefits of digitalised tax reporting that compliance will bring.’

Internet link: IRIS Software website

Parents of teens reminded to extend Child Benefit claim online

Parents of 16 to 19-year-olds will receive reminders from HMRC to extend their Child Benefit claim by 31 August if their child is staying in education or training or payments will automatically stop.

Child Benefit will automatically stop on 31 August on or after a child’s 16th birthday if it’s not extended.

Between May and July, letters will be sent to parents reminding them to go online to confirm if their teenager is staying in full time education or approved training after they finish their GCSEs to continue receiving their Child Benefit.

Parents can extend their claim via the HMRC app or online on GOV.UK. The letters also contain a QR code which takes parents straight to the digital service on GOV.UK.

Child Benefit is currently worth £26.05 per week - or £1,354.60 a year - for the eldest or only child and £17.25 per week - or £897 a year - for each additional child.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said:

‘Child Benefit is an important boost to families. As soon as you know what your teenager is planning to do, extend your claim in minutes to guarantee your payments continue in September. Simply go to GOV.UK or the HMRC app to confirm today.’

Internet link: HMRC press release

Chancellor confirms ISA allowance won't be cut

Chancellor Rachel Reeves has confirmed that the annual tax-free ISA allowance won’t be reduced from £20,000.

Ms Reeves stated that she ‘absolutely wants to preserve’ the £20,000 tax-free investment people can make every year.

The Chancellor is set to launch a consultation into how the UK ISA market could be overhauled, and did not rule out changes to cash ISAs.

The overall annual savings limit remains at £20,000 for 2024/25 and 2025/26. Investors are allowed to invest in a cash ISA, an investment ISA, an Innovative Finance ISA or a combination of the three, subject to not exceeding the overall annual investment limit.

Investors are able to transfer their investments from a stocks and shares ISA to a cash ISA (or vice versa).

The Chancellor said:

‘I do want people to get better returns on their savings whether that is a pension or their everyday savings. At the moment a lot of money is put into cash or bonds when it could be invested in equities or stock markets and earn a better return from it.'

Internet link: CityAM article

Higher borrowing figures 'increase prospect of tax rises'

Experts have warned that recent higher than anticipated government borrowing figures have increased the prospect of Chancellor Rachel Reeves raising taxes at the next Budget.

Official data showed that government borrowing was £20.2 billion in April, which was an increase of £1 billion from the same month in 2024.

Experts have warned that weaker economic growth anticipated over the coming months could affect tax receipts, which would pile pressure on government finances.

The Chancellor aims to bring stability to the UK economy by paying for day-to-day government costs through tax income rather than borrowing and getting debt falling as a share of national income by the end of the current parliament.

Ruth Gregory, Deputy Chief Economist at Capital Economics, said:

‘With the Prime Minister announcing a partial U-turn on the cut to winter fuel payments, the dilemma faced by the Chancellor over how to deal with increased spending pressures in environment of low economic growth and high interest rates hasn't gone away.’

Internet link: BBC article 

 

HMRC names and shames over 500 employers for failing to pay NLW

HMRC has named and shamed over 500 UK employers for failing to pay the National Living Wage (NLW) or the National Minimum Wage (NMW).

The employers will now be forced to repay over £7.4 million to nearly 60,000 workers who had been left out of pocket.

Employers who left nearly 60,000 workers over £7.4 million out of pocket must now repay their employees.

The rates for NLW increased to £12.21 an hour on 1 April and the government says this put £1,400 into the pockets of full-time workers on NLW.

Justin Madders, Minister for Employment Rights, said:

‘There is no excuse for employers to undercut their workers, and we will continue to name companies who break the law and don’t pay their employees what they are owed.

‘Ensuring workers have the support they need and making sure they receive a fair day’s pay for a fair day’s work is a key commitment in our Plan for Change. This will put more money in working people’s pockets, helping to boost productivity and ending low pay.’

Internet link: GOV.UK

HMRC Small firms held back from energy efficiency by upfront costs

Small firms are keen to become more energy efficient, but they are being held back by the high upfront cost of green investment, according to the Federation of Small Businesses (FSB).

The FSB has outlined a path to help cut carbon emissions and costs for small firms in a report.

The FSB’s report found that small businesses are keen to make investments in sustainability and to become more energy efficient through reducing their carbon footprints.

The business group says small firms across the country should be given access to the Business Energy Advice Service, which offers tailored support including free energy assessments and match-funded grants for improvements.

It also says that future solar panel grant support offered by the government should be available to commercial properties as well as domestic properties.

The current VAT zero rate for installing energy-saving materials should include commercial premises, the FSB adds.

Tina McKenzie, Policy Chair at the FSB, said:

‘The incredible inventiveness and entrepreneurialism among the small business community will be a powerful tool when it comes to cutting carbon, growing the green economy, and hitting the country’s net zero targets – if small businesses are given the tools and support they need to thrive.

‘The sustainable economy has absolutely enormous potential for growth in coming years. This is growth that we as a country need, and small firms must be given the chance to benefit from the opportunities on offer.’

Internet link: FSB website

Advisory fuel rates for company cars

New company car advisory fuel rates have been published and took effect from 1 June 2025.

The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2025 are:

Engine size

Petrol

1400cc or less

12p

1401cc - 2000cc

14p

Over 2000cc

22p

Engine size

Diesel

1600cc or less

11p

1601cc - 2000cc

13p

Over 2000cc

17p

Engine size

LPG

1400cc or less

11p

1401cc - 2000cc

13p

Over 2000cc

21p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 7p per mile.

If you would like to discuss your company car policy, please contact us.

Internet link: GOV.UK AFR

Team Update

This month we are pleased to welcome the addition of a new member of our team.

Kerry Brookes has joined Walker Thompson in our Payroll and Bookkeeping Services section, and she will hopefully soon become a familiar name and face to clients. Her experience of various accounting software packages will be a great addition to our existing business.

Outside of work Kerry enjoys trips away in her VW Campervan.

 

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Tuesday, 13 May 2025

Newsletter 198

May 2025

In this month’s Enews, we look at the new service launched by Companies House that allows individuals to verify their identity through GOV.UK and at the cost of tax red tape on small businesses. We also look at HMRC’s warning for those sole traders and landlords who will soon be required to use Making Tax Digital and the Chancellor’s plan to level the playing field for UK businesses. We have news on pensions reforms to update you on and more.

Government calls time on red tape for pubs, clubs, and restaurants

Pubs, clubs and restaurants will benefit from a reduction in the red tape that has stifled hospitality business, the government said.

Action includes moves to improve the application of licensing laws and strengthening businesses’ competitiveness. This will give diners, pub and partygoers more time and more choice to enjoy what the UK hospitality has to offer, the government says.

The changes include a landmark pilot that could see more alfresco dining and later opening hours in London, as the Mayor of London is granted new ‘call in’ powers to review blocked licensing applications in nightlife hotspots.

The government says that if successful, this approach could be rolled out to other mayors to work with their own local police forces across England.

Businesses have long indicated that the current licensing system lacks proportionality, consistency, and transparency - creating barriers to growth and investment for business.

Chancellor of the Exchequer, Rachel Reeves, said:

‘British businesses are the lifeblood of our communities. Our Plan for Change will make sure they have the conditions to grow – not be tied down by unnecessarily burdensome red tape.

‘We’ve heard industry concerns and we’re partnering with businesses to understand what changes need to be made, because a thriving night time economy is good for local economies, good for growth, and good for getting more money in people’s pockets.’

Internet link: GOV.UK

Pension reforms needed to help individuals through their retirements

Reforms are needed to make the pension system easier to navigate successfully in order to help reduce the risk of a shortfall in retirement, according to the Institute for Fiscal Studies (IFS).

The think tank says that private sector employees are increasingly accumulating retirement savings in ‘defined contribution’ (DC) pensions (pension pots that do not guarantee a regular income through retirement).

Since 2015, people over 55 have been able to withdraw money from DC pensions in any way they choose.

According to the IFS, as this form of wealth becomes more important, people face too many complex and risky decisions through retirement.

This increases the risk that many exhaust their private resources and fall back purely on state pensions and benefits, especially later in retirement, the think tank added.

Bee Boileau, Research Economist at IFS, said:

‘The forthcoming Pension Schemes Bill is expected to introduce default retirement income solutions. Done well, these should improve outcomes for many, given the risks many face when drawing down pension savings through retirement at present.

‘But key questions remain – in particular, there will be some for whom a retirement income default will not be right. The government and pension providers must ensure that it is straightforward to opt out of whatever new defaults are introduced, and that as far as possible those making these decisions are sufficiently informed and helped.’

Internet link: IFS website

Companies House begins to verify identities

A new service has been launched that allows individuals to verify their identity directly with Companies House through GOV.UK.

The introduction of identity verification is one of the key changes to company law as part of the Economic Crime and Corporate Transparency Act 2023. Companies House has landmark new and enhanced powers to combat economic crime and boost economic growth.

More than six million people will be required to comply in the 12 months after identity verification becomes a legal requirement later this year. According to Companies House, identity verification will provide more assurance about who is setting up, running, owning and controlling companies in the UK.

Louise Smyth, CEO of Companies House, said: ‘Identity verification will play a key role in improving the quality and reliability of our data and tackling misuse of the companies register.

‘To save time later, we encourage directors, people with significant control of companies (PSCs) and those filing information with Companies House to verify their identity during the voluntary window.

‘We expect identity verification to become mandatory from Autumn 2025.’

Internet link: GOV.UK

Business group welcomes launch of Code of Practice

The Institute of Directors (IoD) has welcomed the launch of the government's new Cyber Governance package, which is underpinned by the Cyber Governance Code of Practice.

The Code of Practice shows boards and directors how to manage digital risks and protect their business from cyber-attacks.

It outlines how directors can build resilience to a wide range of cyber risks across their organisation.

The Code, which has been co-designed with technical experts from the National Cyber Security Centre (NCSC) and a range of governance experts across industry, focuses on the actions senior leaders should take to govern cyber risks effectively within their organisation.

Erin Young, Head of Innovation and Technology Policy at the IoD, commented: 'With cyber-attacks becoming more frequent, harmful and costly, cyber resilience is now a crucial boardroom responsibility. The new Cyber Governance Code of Practice provides practical guidance for boards and directors to effectively govern cyber risk and safeguard future growth.'

Internet link: IoD website

Spending Review 'could brighten living standards outlook'

Think tank the Resolution Foundation has suggested that the government's upcoming Spending Review could help to brighten the 'bleak living standards outlook' for low-to-middle income families.

The Foundation stated that the Review should prioritise spending on services they use the most, and that public services are crucial for quality of life. It said that household disposable income is expected to fall from 2025/26 but public service spending is rising by £18 billion a year in 2028/29 in real terms.

Public services are not, however, used equally across all households, the Resolution Foundation added. The allocation of extra funding between departments at the June Spending Review will determine which families benefit.

Emily Fry, Senior Economist at the Resolution Foundation, said: 'Britain's outlook for real disposable incomes is bleak, especially for poorer households after the benefit cuts announced at the Spring Statement. But the wider picture is more positive when the £18 billion boost to public services is included, as this will provide vital 'in-kind' benefits, particularly for poorer households.

'A focus on improving families' experience of a range of downtrodden services in the Spending Review could help boost quality of life for lower income families in a challenging living standards environment.'

Internet link: Resolution Foundation website

Tax red tape costs small businesses nearly £25 billion a year

Tax compliance costs the UK’s small businesses nearly £25 billion a year, according to recent research conducted by the Federation of Small Businesses (FSB).

The average small firm spends £4,500 and 44 hours a year on tax compliance, according to the research.

These annual totals could include time spent trying to contact HMRC, the cost of staff time used to manage compliance, and the price of software subscriptions and/or an external accountant, among other outlays.

Poor levels of customer service from HMRC are a recurring theme within the report, making tax compliance even more difficult and stressful for small businesses.

Tina McKenzie, FSB’s Policy Chair, said:

‘Tax compliance is far from a niche issue – it affects all five and a half million small businesses in the UK, costing them £4,500 and 44 hours a year each on average.

‘Collectively, that adds up to an annual total cost to the small business community of nearly £25 billion and over 240 million hours.

‘This is money and time that could be far, far better spent on building up their business, and the overall cost to the economy in terms of lost growth and wasted productivity is enormous.

‘Given the challenges facing the economy, and the need for growth, reducing the burden placed on small firms by tax compliance must be a priority – something the government has recognised as a priority for other regulators. HMRC should be included in the government’s drive to make regulation better support growth.’

Internet link: FSB website

Latest guidance for employers

HMRC has published the latest issue of the Employer Bulletin. The April issue has information on various topics, including:

  • the new rates of the National Minimum Wage
  • reporting expenses and benefits for the tax year ending 5 April 2025
  • changes to notifications by employers to operate PAYE on a proportion of a globally mobile employee’s income and changes to Overseas Workday Relief.
  • the tax treatment of double cab pickups.
  • Capital Gains Tax — working out your adjustment for the 2024 to 2025 tax year.

Internet link: GOV.UK

Sole traders and landlords get Making Tax Digital warning

Sole traders and landlords with an income over £50,000 have been warned that there is less than a year before they will be required to use Making Tax Digital for Income Tax (MTD for IT).

HMRC says the launch of MTD for IT on 6 April 2026 will mark a significant and time-saving change in how these individuals will need to keep digital records and report their income to the tax authority.

HMRC says that by keeping digital records throughout the year, sole traders and landlords can save hours previously spent gathering information at tax return time – allowing them to spend more time focusing on their business activities.

Quarterly updates will spread the workload more evenly throughout the year, bring the tax system closer to real-time reporting and help businesses stay on top of their finances and avoid the last-minute rush.

HMRC is urging eligible customers to sign up to a testing programme on GOV.UK and start preparing now.

Craig Ogilvie, HMRC’s Director of MTD, said:

‘MTD for IT is the most significant change to the self assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax.

‘By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year.’

Internet link: HMRC press release

Chancellor unveils plans to maintain level playing field for British business

Chancellor Rachel Reeves has said British businesses will be supported to trade freely as she takes action on practices that undercut fair trade, such as the dumping of cheap goods into the UK.

The government announced immediate action by the Trade Remedies Authority (TRA), the body responsible for defending the UK against certain unfair international trade practices.

The Chancellor also announced her intention to review the customs treatment of Low Value Imports, which allows goods valued at £135 or less to be imported without paying customs duty.

Major UK retailers have called on the government to amend the customs treatment, arguing that it disadvantages them by allowing international companies to undercut them.

William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), said:

‘There are still many twists and turns to go in the trade war between the US and China. It remains to be seen whether cheap Chinese goods will flood the UK as a result.

‘But the risk is present. It is sensible for the TRA to have all the necessary tools and resources to take action to prevent the UK being swamped with unfairly cheap products.

‘If domestic production suffers from a surge in imports or dumping of goods it is right that business has clearer access to make their case to the TRA. It must have the resources it needs to enforce a level playing field.’

Internet link: GOV.UK BCC website

Lack of trust and board expertise putting brakes on AI adoption

A lack of trust and a shortage of expertise at board level are limiting the adoption of AI in UK businesses, according to research from the Institute of Directors (IoD).

Just over half of survey respondents said limited expertise or understanding of models and tools at management and board level was restricting adoption of AI. In addition, 50% said that lack of trust in AI outcomes was their biggest concern.

Security risks, such as cyber, data protection and privacy, as well as employee skills gaps and ethical risks, are also significant barriers for business leaders.

Of the half of UK business leaders whose organisations use AI, 78% cite increased productivity and operational and administrative efficiencies as the most significant benefits.

Dr Erin Young, Head of Innovation and Technology Policy at the IoD, said:

‘While UK business leaders in early AI adoption are enthusiastic about greater productivity and efficiencies, they face a complex set of barriers to top-down implementation and governance – from skills and expertise gaps at board level, to a lack of trust and fundamental concerns about reliability, security and business value across AI capabilities, tools and applications.

‘Given a focus on addressing private sector user-adoption barriers in the UK government’s AI Opportunities Action Plan, it is important that these concerns are addressed strategically for businesses of all sizes across sectors in the Industrial Strategy.’

Internet link: IoD website

HMRC launches new online help for compliance checks

HMRC has launched a new online interactive tool to help guide both businesses and individuals through tax compliance checks.

The Interactive Compliance Guidance tool available on GOV.UK provides information to help customers understand:

  •         HMRC compliance checks.
  •         Why HMRC has requested specific information or documents.
  •         How to request extra support due to health or personal circumstances.
  •         How to appoint someone to act on your behalf.
  •         What to do if you disagree with a decision made by HMRC.
  •         How to pay a tax assessment or penalty.

The new tool brings together existing compliance guidance and videos in one place, making it easier to find and navigate the appropriate information, HMRC says.

Joanne Walker, Low Incomes Tax Reform Group (LITRG) Technical Officer and Customer Experience Advisory Group (CEAG) member, said:

‘When unrepresented customers have a tax compliance problem, it can be difficult for them to find the help they need.

‘This new interactive tool from HMRC makes compliance guidance readily accessible in one place, and easier for people to find the information that is relevant to them. The links to the extra support available will be especially valuable for the most vulnerable customers.’

Internet link: HMRC press release

New cryptoasset rules aim to protect consumers

The government is introducing legislation to regulate cryptoassets and improve consumer protection for the asset class.

The new rules will apply to firms offering services for cryptoassets like Bitcoin and Ethereum.

The government says that around 12% of UK adults now own or have owned crypto, up from just 4% in 2021. But it says owners have too often been left exposed to risky firms and scams.

Under the new rules, crypto exchanges, dealers and agents will be brought into the regulatory perimeter. Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection and operational resilience, like their counterparts in traditional finance.

Chancellor of the Exchequer, Rachel Reeves said that the UK and US will use the upcoming UK – US Financial Regulatory Working Group to continue engagement to support the use and responsible growth of digital assets.

Ms Reeves said:

‘Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.’

Internet link: GOV.UK

  

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Tuesday, 15 April 2025

Newsletter 197

 

APRIL 2025

In this month’s Enews, we look at HMRC’s research into the economic benefits of Making Tax Digital (MTD), a change in the threshold for reporting trading income on side hustles and at the Chancellor of Exchequer’s first Spring Statement. There is news on the Employment Rights Bill, an update on the Loan Charge Review and news on UK exports to update you on. We also take a look at April’s increase in minimum wage rates and more.

Financial benefit of MTD could be as high as £915 million

The financial benefits of MTD for VAT could be as high as £915 million, according to analysis carried out by HMRC.

Since April 2022 all VAT-registered businesses should be using MTD compatible software to keep digital records and submit returns.

HMRC used responses from a survey with businesses in MTD for VAT using fully functional software to estimate the average time savings businesses have made.

The results showed that, on average, businesses have saved time on their ‘business’ finances and record keeping’ compared to time spent before MTD. Across all VAT businesses using fully compatible software, the time saved is estimated to be between 26 hours and 40 hours per business per year.

HMRC said that if this was extrapolated to the population, it estimated a time saving of between 32 million hours and 49 million hours in the 2022/23 tax year across all businesses in MTD for VAT.

The financial value of this time is estimated to be between £603 million and £915 million.

HMRC said:

‘The results of our analysis provide strong evidence that Making Tax Digital is having a positive impact for businesses. The findings complement other published estimates of the administrative burden of Making Tax Digital and demonstrate a wider economic benefit, beyond any requirement to meet tax obligations.’

Internet link: GOV.UK

Employment Rights amendments do little to address employer concerns

The government’s proposed amendments to the Employment Rights Bill will do little to alleviate employer concerns, warns the Institute of Directors (IoD).

Changes to a number of proposals, including application of zero-hours contracts to agency workers and Statutory Sick Pay, have been announced.

In February, the IoD set out four key changes to the Employment Rights Bill which would significantly soften the negative impact of the reforms on hiring.

This included delaying protection against unfair dismissal so that they only come into effect after six months rather than on day one and increasing the planned reference period for the entitlement to guaranteed hours to 52 weeks.

Alexandra Hall-Chen, Principal Policy Advisor for Employment at the IoD, said:

‘While any steps to mitigate the impact of the government’s employment reforms on businesses are welcome, the changes announced today do not address the key areas of the reforms which are of particular concern to employers.

‘Substantial further amendments to the Bill will be required if it is to avoid undermining the government’s growth mission. Our own data shows that directors’ headcount expectations have dropped to lows last seen in the depths of the Covid-19 pandemic. Urgent and substantive action from government is needed to restore business confidence in hiring.’

Internet link: IoD website GOV.UK

Private sector activity expected to fall

Activity in the private sector is expected to fall for the fourth consecutive quarter, according to a Growth Indicator from the Confederation of British Industry (CBI).

Business volumes in the services sector are expected to decline to -23%, and distribution sales are anticipated to fall significantly in the three months to May.

Private sector activity fell again in the three months to February at a faster pace than the quarter to January.

However, manufacturers expect output to return to growth in the longer term.

Alpesh Paleja, Deputy Chief Economist at the CBI, said:

‘There are some glimmers of hope in our latest surveys. Growth expectations have become marginally less negative, driven by a predicted return to growth in the manufacturing sector. But overall, the data still paints a picture of a tough operating environment for businesses, with consumer-facing sectors faring particularly badly.

‘We do expect some tailwinds to growth over the year ahead. Rising real incomes will hopefully give households more confidence to spend, giving some relief to the sectors suffering the most.’

Internet link: CBI website

Side hustle trading threshold raised to £3,000 per year

The reporting threshold for trading income for self assessment is being lifted from £1,000 to £3,000 gross within this parliament, according to the Treasury. This involves people who already have a main income source.

This includes people trading clothes online eg; vinted,  dog-walking or gardening on the side, driving a taxi, or creating content online.

The Treasury says this will benefit around 300,000 taxpayers who will no longer need to file a self assessment tax return.

An estimated 90,000 of them will have no tax to pay and no reason to report their trading income to HMRC in the future at all. Others will be able to pay any tax they owe through a new simple online service.

The changes are part of the government’s Plan for Change, which it says will drive forward efficiency reform.

James Murray, Exchequer Secretary to the Treasury, said:

‘From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.

‘Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle.

‘We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.’

Internet link: GOV.UK

Chancellor unveils plan to cut red tape

Chancellor Rachel Reeves has unveiled plans to cut red tape as the government aims to kickstart economic growth.

The government says its Action Plan will save businesses across the country billions of pounds by cutting the number of regulators, streamlining their core legal duties and cracking down on complexity in the regulatory system.

It says regulators have signed up to 60 growth boosting measures, including fast-tracking new medicines to market through a new pilot to provide parallel authorisations from key healthcare regulators, so that patients can access the medicine they need quicker

Other measures will aim to boost infrastructure building by simplifying guidance to protect bat habitats and streamlining mortgage lending rules, including making it easier to re-mortgage with a new lender and reduce mortgage terms.

The UK’s business groups welcomed the announcement.

Dr. Roger Barker, Director of Policy at the Institute of Directors (IoD), said:

‘The Government’s Better Regulation Action Plan is a welcome shift to a more growth friendly approach.

‘In addition to the measures announced today, we would also like to see the government apply more rigorous and timely impact assessment procedures when considering new regulation. Non-regulatory solutions should always be considered, and the business case for new regulation should be subject to proper independent scrutiny by the Regulatory Policy Committee. There should also be a commitment to reviewing the ongoing effectiveness of existing regulation at regular intervals.’

Kate Nicholls, Chief Executive of UKHospitality, said:

‘A plan to cut red tape and reduce the burden on businesses is long overdue.

‘In sectors like hospitality, businesses have been struggling with too much cost and too many regulations for decades, and it has held back growth.’

Internet link: GOV.UK IoD website UKHospitality website

No further tax increases in Spring Statement

Chancellor Rachel Reeves announced ‘no further tax increases’ in the 2025 Spring Statement.

The Chancellor’s Autumn Budget contained a record £40 billion in tax increases. However, it did not raise personal taxes including, Income Tax, employee National Insurance contributions or VAT.

Ms Reeves had pledged one fiscal event a year and confirmed that no taxes would be raised at the Spring Statement.

Instead, the Chancellor made a number of announcements on spending and economic forecasts.

The forecast from the Office for Budget Responsibility (OBR) halved the UK’s growth in 2025 from 2% to 1%.

However, Ms Reeves pointed out that the Organisation for Economic Co-operation and Development (OECD) downgraded this year’s growth forecast for every G7 economy.

The OBR forecasts show that inflation will average 3.2% this year before falling ‘rapidly’, meeting the Bank of England’s 2% target from 2027 onwards.

Ms Reeves said that defence spending will increase to 2.5% of GDP, by reducing overseas aid.

This means an extra £2.2 billion for the Ministry of Defence in the next financial year to address ‘increasing global uncertainty’.

The government will spend a minimum of 10% of the MoD’s equipment budget on innovative technology, boosting production in places such as Derby, Glasgow and Newport.

In addition, the Chancellor said that planning reforms will put the government 'within touching distance' of hitting its target of 1.5 million new homes over the course of this Parliament.

Ms Reeves said that this will increase the level of real GDP by 0.2% by 2029/30, adding £6.8 billion to the economy.

The Chancellor said:

‘Our task is to secure Britain’s future in a world that is changing before our eyes. The threat facing our continent was transformed when Putin invaded Ukraine. It has since escalated further and continues to evolve rapidly.

‘At the same time, the global economy has become more uncertain, bringing insecurity at home as trading patterns become more unstable and borrowing costs rise for many major economies.’

Internet link: GOV.UK

Finance Act 2025 receives Royal Assent

The first Finance Act of the Labour government (which reflects the 2024 Budget) has gained Royal Assent and passed into law.

The Finance Act 2025 makes major changes to the tax rules for non-doms, removes the VAT exemption for private school fees, increases some rates of Capital Gains Tax (CGT) and Stamp Duty Land Tax, and extends the energy profits levy on the oil and gas sector.

The abolition of the remittance basis of taxation for non-UK domiciled individuals sees it replaced with a residence-based regime with effect from 6 April 2025. This means all longer-term UK residents will be taxed by the UK on their worldwide income and gains as they arise.

The Act removes the VAT exemption on the supply of private school fees, vocational training and board and lodgings when supplied by a private school or similar institute.

The Act increases the main rates of CGT from 10% and 20% to 18% and 24% respectively for disposals made on or after 30 October 2024.

John Barnett, Chair of the Technical Policy and Oversight Committee at the Chartered Institute of Taxation (CIOT), said:

‘Moving from domicile to residence as the basis for taxing people who are internationally mobile makes sense.

‘As well as being a major simplification, it is a fairer and more transparent basis for determining UK tax.

‘Residence is determined by criteria far more objective and certain than the subjective concept of domicile. Replacing the outdated remittance basis is also sensible and the Temporary Repatriation Facility offers a helpful transition.’

Internet link: GOV.UK CIOT website

Minimum wage rose on 1 April

Increases to the National Living Wage and National Minimum Wage took effect from 1 April.

From April 2025, the NLW will increase by 6.7% and the NMW by as much as 18% depending on the category of the worker.

The NMW is the minimum amount per hour workers are entitled to be paid by law. Different rates apply depending on the category of the worker.

The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.

 

 NLW18-2016-17Apprentices
From 1 April 2025£12.21£10.00£7.55£7.55

 

Peter Bickley, Technical Manager – Employer Taxes, ICAEW, said:

‘Although the rise in the minimum wage will be welcomed by many workers, it presents a further challenge for employers already facing significant changes from April 2025, not least the increase in the rate of, and secondary threshold for employers’ National Insurance contributions, albeit that the bigger employment allowance should help small employers.

‘Employers must ensure that they continue to comply with the requirements as it is a criminal offence not to pay someone the minimum wage.’

Internet link: GOV.UK ICAEW website

Loan charge review calls for evidence

The independent review into the loan charge has issued a call for evidence with examples of promotional material and marketing leaflets a priority for the review team.

The review was announced by the Treasury in January and is being led by Ray McCann, a former President of the Chartered Institute of Taxation.

It is now asking people affected by loan charge to get in touch with evidence of the schemes they were signed up to by noon on 30 May.

McCann said:

‘What the review needs most is documentary evidence, such as copies of marketing material, letters, emails and so on sent to you by the promoters of these schemes.

‘This will supplement the information the review already holds and add to the great deal of information, albeit mostly anonymous, that is in the public domain.

‘It will greatly help the review team understand why so many have become involved in these schemes, the responsibility the promoters have for bringing misery to so many and the difficulties you have had in bringing your involvement to a close.

‘The review team has suggested several questions in each section, these can be answered as they have been asked, where they are relevant, or used as a guide to the kind of information the review team needs. The review team also plan to speak to some of those involved as part of the review.’

Internet link: GOV.UK

UK firms show ‘resilience’ as exports grow in January

Total UK exports in goods and services rose by 2.8% in January, according to the latest trade data from the Office for National Statistics (ONS).

Goods exports were up by 3.5% on this while services exports up by 2.3% month on month.

Non-EU goods exports had strong growth in January with a rise of 5.7% in volume terms, while EU goods exports rose by 1.3% month on month.

Total import volumes into the UK fell by 0.9% in January, with goods imports down by 1.7% in volume terms, while services imports rose by 0.6% in January.

William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), said:

‘UK companies are showing resilience in a more difficult trading world.

‘With US tariffs now a reality, the prospect of more to follow, and retaliatory tariffs by some of our trading partners, the rest of 2025 could be challenging for UK exporters in particular.

‘That is why the forthcoming Industrial and Trade Strategies need to provide practical measures to help boost export performance in key UK sectors – from professional and business services, and advanced manufacturing, to defence and life sciences.

‘We also need to see the government push for a new settlement with the EU, our biggest trading partner, to help remove barriers for UK businesses and support them to grow and expand.’

Internet link: ONS website BCC website

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Monday, 10 March 2025

Employee Pensions

 

The way that tax relief is given on employee pension payments depends upon what type of scheme it is. 

  • If the scheme is a ‘net pay arrangement’, the total pension contribution is deducted from your pay before tax is calculated, therefore, full tax is given immediately on the full pension payment.

  • If the scheme is a ‘relief at source’ arrangement, the pension contribution is deducted from the gross pay after tax has been calculated. The amount will be net of basic rate tax relief.

 

Further details of the two schemes is given below:

Net Pay Schemes

Net pay arrangements do not require the employee to do anything to get your tax relief. Employee pension contributions are deducted from the gross salary by the employer before income tax is calculated, so tax relief is given on the pension amount immediately at the highest rate of tax.

Relief at Source Schemes

Under relief at source schemes, employees pay pension contributions from their net pay that has already had tax deducted from it. The pension contribution is net of basic 20% tax relief. However, if they are higher rate taxpayers and, assuming they aren’t already completing self-assessment returns or making higher rate pension claims, then they need to make claims with HMRC for the additional 20% relief, giving them the tax relief up to the higher rate.

For example, if an employee is a higher rate taxpayer, and pays a £200 employee pension contribution from their wages under a relief at source scheme, that contribution is actually £250 less £50 tax relief at source (£250 @ 20%). If they are a higher rate taxpayer, they can claim another £50 tax back, to give the full 40% tax relief on £250. When multiplied by several months pay and possibly up to 4 tax years (see below) this could be a substantial additional amount of tax relief / refunds.

If they haven’t done so, employees can claim back 4 years. As we are only 4 weeks from tax year end this is worth considering soon to maximise any possible back claims

 

Here is a link to the HMRC guidance re making claims- 

https://www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments

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