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%
- Record numbers file assessment in first week of new tax year
- One in four employers plan to make redundancies in next quarter
- Tax and accounting bodies back e-invoicing adoption
- Almost half of sole traders unprepared for MTD changes
- Parents of teens reminded to extend Child Benefit claim online
- Chancellor confirms ISA allowance won't be cut
- Higher borrowing figures 'increase prospect of tax rises'
- HMRC names and shames over 500 employers for failing to pay NLW
- HMRC Small firms held back from energy efficiency by upfront costs
- Advisory fuel rates for company cars
- Team Update
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.