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Thursday, 13 August 2026

Newsletter 208

 

AUGUST 2026

In this month’s Enews, we look at:

Government steps up drive to reconnect young people with £1.6 billion in unclaimed savings

The government is stepping up its efforts to reconnect young people with unclaimed savings in Child Trust Funds (CTFs).

Around 6.3 million Child Trust Fund accounts were opened for children born between 1 September 2002 and 2 January 2011

More than 750,000 young adults still have unclaimed matured accounts, holding £2,200 on average and totalling over £1.6 billion.

CTFs were introduced to give every child a financial asset at adulthood. However, accounts can go unclaimed for a number of reasons, including difficulty locating them, people forgetting they have them, or a decision to leave the funds invested for the time being.

The government has set up a Child Trust Fund Taskforce, bringing together CTF providers to drive a coordinated effort to increase reunification of accounts.

Members of the Taskforce will include One Family, Coutts, Nationwide, HSBC UK, Pilling, The Coventry (Co-operative), Sheffield Mutual, Unity Mutual, Forester, Healthy Investments and The Share Foundation.

Rachel Blake, Economic Secretary to the Treasury, said:

‘Too many young people are missing out simply because they are not aware of where their CTF is or how to access it.

‘We are acting to fix that by bringing government and industry together - improving coordination and making it easier for people to find and claim what’s rightfully theirs.’

Internet link: HM Treasury website

Targeted subsidies are needed for firms to tackle Britain’s NEETs crisis

Targeted subsidies, rather than expensive tax breaks, are the most cost-effective way of supporting employers to get young people into work, according to Resolution Foundation analysis.

The think tanks warns that the number of young people not in employment, education or training (NEET) passed one million earlier this year. It says this is a crisis that risks scarring the living standards of a generation.

A range of solutions have been proposed to encourage firms to hire more young people. But a Resolution Foundation report shows that there is a vast gulf in their cost-effectiveness.

The report estimated that the Youth Jobs Grant, which offers firms £3,000 to hire an 18-24-year-old who has been on Universal Credit for six months or more, will create 2,800 additional jobs at a cost of around £36,700 each.

The Jobs Guarantee, which funds six months’ part-time employment for those out of work for at least 18 months, comes in at roughly £38,000 per additional job, making it three-and-a half times cheaper than scrapping employer National Insurance contributions (NICs).

Lindsay Judge, Research Director at the Resolution Foundation, said:

‘One million young people outside of work, education or training is a sobering milestone – the highest figure for 13 years, and a reality that risks lasting damage to the life chances of a generation. But reaching for employer tax cuts to resolve this doesn’t add up.’

Internet link: Resolution Foundation website

HMRC bolsters award schemes for reporting tax fraud

HMRC says it is making it easier for informants to report serious tax fraud and avoidance through the Strengthened Reward Scheme.

Informants may be eligible for a financial reward if the information they provide leads to HMRC recovering at least £1.5 million in unpaid tax.

The strengthened scheme encourages reporting of high-value tax fraud and avoidance and specifically targets serious non-compliance involving large companies, wealthy individuals, offshore structures and avoidance schemes. It is a significant expansion of the existing scheme for lower value reporting, which remains in place.

The tax authority has recorded a webinar and created a short explainer video to provide practical guidance on how to report tax wrongdoing and what information HMRC needs.

Subject to meeting eligibility criteria, informants could receive between 15% and 30% of the value of any additional tax collected by HMRC because of the information provided. These are awarded at HMRC's discretion and are not guaranteed. They will be paid once the tax has been collected and the matter resolved.

Andy Leggett, HMRC’s Director of Risk and Intelligence Services, said:

‘Tax fraud is a crime that cheats honest taxpayers and diverts money from vital public services. This scheme is designed to incentivise people to do the right thing, whether they are members of the public or industry professionals such as accountants and lawyers.

‘Your report could make a meaningful difference.’

Internet link: HMRC press release

Government unlocks major finance package for small businesses

Significant reforms to small business finance have been announced by the government.

The centrepiece of the plans is an expansion of the British Business Bank’s (BBB) Growth Guarantee Scheme (GGS) which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million.

The scheme will scale up to facilitate an additional £2 billion of SME lending per year by 2028/29. This will bring the total SME lending supported through the scheme to £3.35 billion per year, more than double the current £1.35 billion.

The maximum term length of a loan is also increasing from six to ten years for loans of up to £1.1 million.

In addition, the maximum size of businesses that are eligible for a loan under the scheme is rising from £45 million in annual turnover to £54 million.

The BBB estimates these changes will support an additional 12,000 businesses per year by 2028/29, a 150% increase on the 8,000 currently being supported, bringing the total to 20,000.

Louise Hellem, Chief Economist at the Confederation of British Industry, said:

‘The government deserves credit for listening to business and putting forward a package that recognises the practical finance challenges firms face. The priority now is delivery and making sure the support is simple to access, well understood by businesses and effective in crowding in private capital.

‘If implemented well, these reforms can help more SMEs scale, export and adopt new technologies here in the UK – supporting productivity, stronger local economies and long-term growth.’

Internet link: HM Treasury website CBI website

FCA sets landmark crypto rules

Firms supporting people to buy, trade and hold crypto will need to meet new standards under landmark rules set out by the Financial Conduct Authority (FCA).

All firms must meet financial resilience requirements including capital and stress testing. The FCA is also introducing new market integrity rules. These cover areas such as insider trading and market manipulation.

The new framework also sets out specific rules for stablecoins, a type of cryptoasset designed to maintain a stable value, typically by being linked to a currency such as the pound. The regulator says stablecoins will be subject to clear, strong and transparent standards, helping to build trust in how they are used over time.

The FCA says it drew upon international best practice, applying established financial services standards where risks are comparable, including the Consumer Duty.

David Geale, Executive Director of Payments and Digital Finance at the FCA, said:

'This is a significant moment for crypto regulation in the UK. We’ve created a framework that doesn’t force firms to choose between regulatory certainty and room to innovate – this regime means they can have both in a stable, competitive home to build and grow. For consumers, it means firms will be held to similar standards to other financial providers, though we can’t regulate away risk.'

Internet link: FCA website

HMRC reminds people with side hustles to register for self assessment

HMRC is reminding people with side hustles that they will need to tell it if they earn more than £1,000.

The Help for Hustles campaign aims to assist individuals with side hustles to ‘get their tax right, quickly and easily’.

New entrants to self assessment should register for the 2025/26 tax year by 5 October 2026.They must file their online tax return and pay any tax due by 31 January 2027. HMRC has an online tool to help people with side hustles to check if and when they need to report their additional income.

Kevin Hubbard, Director of Small Business and Individuals at HMRC, said: ‘For many people, a side hustle is a valuable source of extra income. If you’re earning more than £1,000 a year from your side hustle it’s important to understand your tax responsibilities, and HMRC wants to make that as straightforward as possible.

‘You can check if you need to do a Self Assessment tax return by using the tool on GOV.UK.’

Internet link: HMRC press release

Government announces VAT will be cut from household electricity bills

The government recently announced that VAT will be cut from household electricity bills from 1 October in time to impact the next Ofgem price cap.

The move is part of new Prime Minister Andy Burnham’s commitment to help ease the cost of living.

The cost of this immediate action for this financial year is being funded from the cancellation of the £1.8 billion Digital ID programme.

Any further action on energy bills will be taken at the Budget, alongside the publication of a forecast from the Office for Budget Responsibility (OBR). All decisions at that point will continue to be funded and also consistent with the government’s fiscal rules.

The Prime Minister said: ‘Westminster has not been working for people for too long, with families struggling with the cost of living.

‘We’re taking immediate action to cut taxes on energy bills, put more money in people’s pockets and bring back hope.’

Internet link: Government website

HMRC still has a long way to go on customer service, says CIOT

HMRC's performance data for 2025/26 shows it has made progress on customer service but still has a way to go, according to the Chartered Institute of Taxation (CIOT).

The data shows a mixed picture with progress on compliance activity, digital adoption and HMRC's telephone service.

However, challenges remain around debt levels, correspondence handling and customer satisfaction.

The CIOT welcomed the news that HMRC has met their target of 85% of attempts to get through to an HMRC helpline adviser succeeding. This is the first time it has met their target in this area.

The CIOT also noted that HMRC has missed its other four customer experience targets.

Charlotte Barbour, Chair of the CIOT's Technical Policy and Oversight Committee, said: 'HMRC has some notable achievements in 2025/26 including record compliance yield, improved telephone performance and increased usage of digital channels. However, service levels are still below where they should be, customer satisfaction remains below target and HMRC continue to struggle with a persistently high level of tax debt.

'Use of HMRC's digital channels continues to tick up but it will need an acceleration if HMRC are to hit their target of 90% of customer interactions online by 2030. It's good news that HMRC are answering their phone lines more quickly than a year ago, but it is still taking twice as long as it did in the 2010s.'

Internet link: CIOT website

Prime Minister cuts business rates for pubs, clubs and music venues

Prime Minister Andy Burnham has slashed business rates for pubs, clubs and live music venues in England by 20%.

The reduction will take effect from April 2027 and will save the typical pub an estimated £1,100 next year, according to the government.

Designed to cut costs for working people and communities, the move will benefit nearly 32,000 pubs, clubs and live music venues, the government said.

The changes will be fully funded, including through reviewing reliefs for businesses that do not make a positive contribution to local communities, such as vape shops.

Mr Burnham said: ‘For too long, governments have stood by while cherished venues have disappeared from our local high streets.

‘This government will back the businesses that people want to see in their communities. I said I would protect pubs and local high streets – the beating heart of our communities – and that’s what we will do. What we’re announcing . . . is just the start as we work to bring back hope across the country.’

Responding to the announcement, the Federation of Small Businesses (FSB) said: ‘We are encouraged at the signal from the Prime Minister . . . , instructing his government to plan for a significant increase in Small Business Rate Relief at the heart of the next Budget.’

Internet link: HMRC press release FSB press release

UK pension providers establish new scale-up fund

UK pension providers have joined forces to establish a new UK scale-up fund of more than £1 billion to back the next generation of high-growth science and technology companies.

The new fund aims to increase UK growth capital and give pension savers greater access to returns from successful UK companies.

It would seek to deliver strong long-term returns for pension providers and their members by investing in successful UK companies.

According to the government, the fund will support economic growth and help pension savers benefit from larger retirement pots.

Commenting on the fund, Prime Minister Andy Burnham said: ‘This new fund would help unlock good growth in every postcode, connecting pension investment with the entrepreneurs and technologies that will reindustrialise Britain and create the jobs of the future.

‘That means more opportunities for working people, stronger returns for savers, and more businesses choosing to start, grow and stay in Britain.’

Internet link: Government website

Don’t ignore Simple Assessment letters, says HMRC

HMRC has urged customers not to ignore Simple Assessment letters for the 2025/26 tax year.

HMRC issues around 1.8 million Simple Assessment letters and stated that people should check the figures in their letter against their own records.

The letters will be sent to those who have tax to pay on income that has not been taxed through Pay As You Earn (PAYE) or Self Assessment.

Individuals may receive a Simple Assessment letter if they owe tax that cannot be collected automatically by HMRC, for example, if:

  • there is tax to pay on interest on savings or dividends
  • a second income has not been taxed
  • tax is due on pension income
  • they received more tax-free allowance than they were entitled to
  • the tax cannot be collected through a tax code (for example, larger amounts owed, typically £3,000 or more).

Any tax owed should be paid by 31 January 2027, unless a different date is shown.

Myrtle Lloyd, Chief Customer Officer at HMRC, said: ‘If you receive a Simple Assessment letter and have tax to pay, please don’t ignore it. It is quick and easy to pay any tax owed via the HMRC app.

‘If you need extra support or want to find out more, search ‘Simple Assessment’ on GOV.UK.’

Internet link: HMRC press release

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Newsletter 207

 

MAY 2026

In this month’s Enews, we look at the government’s crackdown on late payments to small businesses, and the changes to taxing benefits-in-kind through the payroll. There is also a plea on skills planning for Gen Z, and we look at government efforts to reunite young people with their Child Trust Funds. There are also warnings for the government on the negative impact of business rates, information on the UK’s economic security to update you on, and more.

 

Government unveils crackdown on late payments

Small businesses to be backed by new, stronger measures to tackle late payments, the government has announced.

The Small Business Commissioner will be given sweeping new powers to investigate poor payment practices, adjudicate payment disputes, and fine the worst offenders – with fines worth tens of millions for firms that persistently pay late or fail to comply with the new laws.

The government says the measures will tackle a problem costing the UK economy £11 billion every year.

The changes will include a new 60-day cap on payment terms on all large firms when paying smaller suppliers. New mandatory interest on late payments will also be introduced, with a requirement for all commercial contracts to include statutory interest set at 8% above the Bank of England base rate.

Business Secretary Peter Kyle said:

‘Far too many businesses are forced to shut down because they have not been paid – that is simply unacceptable.

‘We are unveiling the strongest, most robust changes to payment laws in over a generation – laws that will transform the fortunes of small businesses for years to come and make their day to day lives much easier.’

Internet link: GOV.UK

New procurement rules offer SMEs hope

The government’s new procurement rules that target opportunities for smaller businesses offer hope to SMEs, according to the British Chambers of Commerce (BCC).

Government departments have, for the first time, set individual spending targets for SMEs to deliver over £7.4 billion a year to small businesses by 2028.

Departments have for the first time, individually set direct SME spending targets and will publish yearly progress updates ensuring they are held to account, those who fall behind will need to set out robust actions on how they will improve.

In 2024, the BCC and Tussell’s SME Procurement Tracker found only 20% of direct procurement spend from the wider public sector, including central government, went to SMEs.

Jonny Haseldine, Head of Business Environment policy at the BCC, said:

‘This shake up is long overdue as public procurement spend with SMEs has been stuck in a rut. Although the value of contracts with SMEs has continued to rise their slice of the pie is still far too small. For too many businesses, government contracts remain out of reach.  

‘This new scheme has the potential to be a game changer, giving smaller firms across the UK greater access to procurement opportunities and supply chains. 

‘As has been demonstrated by Chamber-led supply chains at major infrastructure projects such as Sizewell C and Hinkley Point, SMEs are a vital part of the ecosystem. They provide local skills and knowledge to projects as well as significantly boosting regional economic growth.’

Internet link: BCC website GOV.UK

Tourist tax would hit consumers with £1.6 billion tax rise

The government’s proposed tourist tax would constitute a £1.6 billion tax increase for holidaymakers, according to analysis by Oxford Economics.

The modelling, which was commissioned by UKHospitality, assumed a 5% levy is fully realised by 2030.

It showed a £2.2 billion reduction in GDP, £1.6 billion tax bill for UK holidaymakers, £688 million in reduced tax receipts for the Treasury and a loss of £101m in direct investment from hospitality and tourism businesses.

The modelling by Oxford Economics also considered a £2 levy per person per night and a £2 levy per room per night. All scenarios resulted in a reduction in GDP, tourism spending, nights spent in accommodation and total jobs.

Allen Simpson, Chief Executive of UKHospitality, said:

‘The numbers are clear. A holiday tax would hike costs for Brits, make staycations more expensive and decimate tourism.

‘There are no winners from a holiday tax. From coastal communities and city centres to local guesthouses, pubs and taxi firms, the impacts are stark and indiscriminate.

‘Taxes up, jobs lost and our high streets hit once again. Holidays are for relaxing, not taxing. The government should keep it that way and stop the holiday tax.’

Internet link: UKHospitality website

Countdown to taxation of benefits-in-kind via the payroll underway

There is now less than a year to go before all employers must tax benefits-in-kind via the payroll, the Chartered Institute of Taxation has warned.

Benefits-in-kind are non-cash benefits provided by employers to employees or directors. Common benefits include company cars, private medical insurance and gym membership.

While the benefit is paid for by the employer the recipient is required to pay Income Tax and potentially National Insurance contributions (NICs) on the value of the benefit, as if this value had been added to their salary.

Additionally, the employer must pay employer NICs on the value of the benefit. According to HMRC more than 3.5 million employees receive a taxable benefit-in-kind.

Currently, most employers compute the value of a taxable benefit after the end of the tax year and report it on a P11D form to HMRC and the employee. This means the employer potentially has up to 15 months to calculate, verify and report the value of a benefit.

From 6 April 2027 it will be a legal requirement to report and pay Income Tax and NICs on most benefits-in-kind and taxable expenses payments via payroll rather than waiting until the end of the tax year.

Sarah Hewson, Vice-Chair of the CIOT’s Employment Taxes Committee, said:

‘Mandatory payrolling of benefits will have a big impact on employers, employees and software providers. Don’t leave it too late to get ready for this change.’

Internet link: CIOT website

UK businesses should apply now for Vaping Products Duty

Vaping-related businesses and supply chains need to register now for Vaping Products Duty (VPD) and the Vaping Duty Stamps (VDS) Scheme, says HMRC.

Businesses need to provide the required information now to register for HMRC approval and begin the process of applying for duty stamps.

From 1 October 2026, this information will be used to determine when duty becomes payable, making registering now an essential step in early preparation.

Businesses can visit GOV.UK and search for ‘vaping duty’ to access guidance. It explains which vaping products are liable to the new excise duty, the key dates and milestones ahead, and the roles and responsibilities of manufacturers, importers, warehousekeepers and other businesses across the supply chain.

It also sets out how and when businesses need to register and apply for the relevant approvals, which will take at least 45 working days if further information is needed.

Rachel Nixon, HMRC’s Director of Indirect Tax, said:

‘From 1 April 2026, UK vape manufacturers, importers and warehousekeepers can apply to HMRC for VPD and VDS Scheme approval, which is essential for these businesses to continue trading legally from 1 October.

‘Our guidance brings all the key information together, and using it now will help firms prepare properly, avoid errors and ensure they can continue trading when the new requirements apply from October.’

Internet link: HMRC press release

Higher energy prices could leave typical British households £480 worse off this year

Higher energy prices due to the conflict in the Middle East are set to make the median working-age British household £480 worse off this year, according to the Resolution Foundation.

The think tank based its estimates on market-forecasts for the rise in energy prices consistent with market pricing after the announcement of a ceasefire.

For families with above average income, rising energy prices will likely tip living standards growth into negative territory, says the Foundation.

The typical household, previously on track for 0.9% growth, is now set to see its income fall by 0.6% – a difference of £480 – over the course of the current financial year.

It says that average income growth for the poorest fifth this year is now set to be just 1.2%, down from 2.8% before the conflict.

James Smith, Chief Economist at the Resolution Foundation, said:

‘Despite hopes for a sustained peace, the path of this conflict remains uncertain and energy prices remain well above pre-war levels, meaning many households face a decline in their purchasing power this year.

‘This squeeze will run right through the income distribution. Lower-income households will still see some income growth thanks to a long-awaited rise in real benefit levels, but inflation will likely knock more than a percentage point off what they stood to gain.

‘For those in the middle and towards the top of the income distribution, even the thin growth they had been expecting has tipped into negative territory.’

Internet link: Resolution Foundation website

Pensioners urged to be alert to Winter Fuel Payment scams

HMRC is warning pensioners to be on high alert for scams as the recovery of Winter Fuel Payments begins this month.

Almost two million people are expected to repay their winter 2025 payment due to their annual income being more than £35,000.

HMRC saw more than 25,000 Winter Fuel Payment scam referrals over the last 12 months. It is warning that scammers may now use the recovery process to target this group.

For most, the payment will be recovered through a change to their PAYE tax code from April 2026 with no need to contact HMRC.

For those in self assessment who file online, the payment should be pre-populated in their 2025/26 tax return. Customers should check and add it manually if it is not shown. Paper filers will need to add it on their tax return.

This applies across the UK – including in Scotland, where the payment is known as the Pension Age Winter Heating Payment and in Northern Ireland, where payments were made by the Department for Work and Pensions on behalf of the Northern Ireland Executive. In all cases, recovery is handled by HMRC.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said:

‘Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money.

‘I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us.’

Internet link: HMRC press release

Skills planning ‘vital’ to better engage Gen Z in workplace

Skills planning is ‘vital’ to better engaging Generation Z with the workplace, says the British Chambers of Commerce (BCC).

The report analysed Local Skills Improvement Plans (LSIPs) and found that they have engaged thousands of people and employers in the training and education that firms require.

However, the business group also found that the ‘fragmented’ nature of funding and a limited scope to target young people has led to a range of opportunities being missed.

A number of prospects have been identified to unlock potential, the BCC said.

These include a lack of influence in education for under-16s, opportunities to replicate the system for business support and more effective engagement with young people.

Kate Shoesmith, Director of Policy at the BCC, said:

‘LSIPs have been really successful – involving thousands of businesses, training providers and learners over the past four years, to deliver great employment outcomes.

‘But with almost one million Gen Zs not in employment, education or training, earlier intervention is essential to connect young people to the world of work.

‘The longer they are allowed to drift away from employment the harder it becomes. By linking the government’s Youth Guarantee scheme to ERBs who have strategic oversight of their local economies, a pathway into work can be created.

‘The tools required to do this already exist through LSIPs. It is just a matter of giving them the long-term funding and authority to make it happen.’

Internet link: BCC website

Latest guidance for employers

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

  • Reminder of key dates and processes for reporting benefits in kind (BiKs).
  • Real Time Information submission problems — Incorrect handling of Payroll ID.
  • Removal of the tax relief for non-reimbursed homeworking expenses.
  • The official rate of interest from 6 April 2026.
  • The ‘Tell ABAB’ survey 2026.
  • Statutory Sick Pay changes — what employers need to know.

Internet link: GOV.UK

Government boosts efforts to help young people find their Child Trust Funds

The government will contact thousands of young people about forgotten Child Trust Funds (CTFs) in a bid to reunite account holders with their accounts that are now worth £2,200 on average.

CTFs were introduced by the government in 2005 and applied to children born between 1 September 2002 and 2 January 2011.

The government is now undertaking an extensive awareness campaign urging young people to locate their CTFs through the free ‘Find My Child Trust Fund’ service on GOV.UK.

Many young people are unaware they have a CTF and over 750,000 accounts are unclaimed. The government says it is determined to act so every young person that has a CTF is aware of how to access it.

In order to build on existing efforts, HMRC will be writing to all 21-year-olds whose accounts remain unclaimed to make them aware they have a CTF.

Economic Secretary to the Treasury, Lucy Rigby, said:

‘Hundreds of thousands of young people in this country don’t know they have a CTF, let alone how to access it. Some will have a couple of thousand pounds sat there that would really help them as they begin adult life.

‘I’m determined that those who have CTFs are made aware they have this money.

‘Together, we will ensure funds from these Child Trust Funds can be accessed by young people to help give them the best start to adult life.’

Internet link: HM Treasury website

Business rates system a major brake on UK investment and competitiveness

The UK’s business rates system is acting as a major brake on investment, productivity and economic growth, warns the Confederation of British Industry (CBI).

Almost a third of the 700 firms surveyed said that the system has played a significant role in cancelling, reducing or delaying planned investment in their property.

The CBI says that for the second consecutive year, the UK has the highest property tax levels in the OECD, with property tax as a share of GDP four times higher than Germany.

Businesses say that the level of their business rates bills and the system’s unpredictability, complexity and ‘cliff edges’ are undermining confidence and deterring investment, it adds.

The CBI is urging governments at a national and devolved level to deliver fundamental reform to boost competitiveness and support long-term investment across the UK.

Louise Hellem, Chief Economist at the CBI, said:

‘Business rates are no longer just a cost of doing business – they’re a major tax on ambition and one that effectively penalises investment.

When a single refurbishment can trigger a 40% increase in rateable value, or a £1 change can move a firm from one band to another and add £39,000 to their bill, the system is clearly not fit for purpose in a competitive, modern economy. Reform of the business rates system is no longer a ‘nice to do’, it’s an economic necessity.’

Internet link: CBI website

UK’s economic security at risk

The government must prioritise the UK’s economic security, after 10 years of geopolitical shocks have repeatedly damaged growth, says the British Chambers of Commerce.

Businesses in the UK have been left permanently bruised by the Pandemic, Brexit, wars in Ukraine and the Middle East, supply chain chaos and US tariffs.

The business group sets out urgent steps needed to secure vital manufacturing inputs and stop British competitiveness declining in an increasingly unstable world.

It says the Prime Minister must take cross-government responsibility for protecting the UK economy from external crises after years of neglect by successive governments.

The BCC argues that keeping the UK’s position as a major trading nation depends on secure access to key inputs such as energy, steel, semiconductors and growth minerals. Demand for some materials is set to rise massively over the next decade, and domestic production cannot meet future needs.

Shevaun Haviland, Director General of the BCC, said:

‘Over the past decade, British businesses have weathered some of the toughest economic shocks we’ve faced in the past 100 years. Through sheer resilience and ingenuity, they have kept trading in an increasingly unpredictable global environment.

‘But it’s clear that this is not enough. The UK’s inadequate economic security has become a drag on growth, competitiveness and national strength; yet it is still not given the focus and urgency it demands.

‘The message from business is clear: delay is a luxury the UK can’t afford. The Prime Minister must act now, match the pace of our competitors, and put economic security at the heart of our national growth strategy.’

Internet link: BCC website

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Friday, 6 March 2026

Newsletter 206

 

March 2026

In this month’s Enews, there is a warning for sole traders and landlords who will be affected by the next stage of Making Tax Digital. We also look at calls to reform the apprenticeship system and to scrap the planned Visitor Levy from the hospitality industry. We also look at the impact of the Employment Rights Act, the latest advisory fuel rates and more.

One million miss self assessment deadline

An estimated one million taxpayers missed the self assessment deadline for the 2024/25 tax year, according to HMRC.

Over 11.48 million taxpayers filed their self assessment tax returns before midnight on 31 January.

However, more than 12 million self assessment taxpayers were expected to file a tax return and pay any tax owed by the deadline.

HMRC says that anyone who needs to file a return and missed the deadline should meet their tax obligations as soon as possible, as late filing and late payment penalties are charged.

The tax authority said that 97.25% of tax returns were filed online with 475,722 taxpayers waiting until the final day to file their return.

On 31 January, 27,456 people submitted their returns in the final hour while the busiest hour for submitting a return was 17:00 to 17:59, when 32,982 people filed.

HMRC advisers handled 5,409 webchats and 10,483 calls to the helplines which, unusually, were opened on a Saturday to provide extra support to taxpayers on deadline day.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said:

‘Thank you to the millions of people and agents who filed their self assessment tax return and paid any tax owed by 31 January.

‘HMRC digital channels are always the quickest and easiest way for people to sort their tax affairs.’

Internet link: HMRC press release

Making Tax Digital for Income Tax biggest tax change since self assessment

The introduction of Making Tax Digital (MTD) for Income Tax this April will be the biggest change to the UK’s tax system since self assessment, says the Low Incomes Tax Reform Group (LITRG).

From 6th April 2026, taxpayers with more than £50,000 of gross income from self-employment and/or rental income in the 2024/25 tax year will need to comply with the new rules from that date.

Unless they are exempt, taxpayers who meet the income threshold will be required to follow these new rules, which will include keeping digital records, submitting quarterly updates of their income and expenses, and filing an annual tax return using commercial software.

According to HMRC’s data, more than 200,000 unrepresented taxpayers will be required to follow the new rules.

The LITRG has published new guidance to help taxpayers navigate the change.

Victoria Todd, Head of LITRG, said:

‘MTD is the biggest tax change since self assessment and with just over two months to go, time is running out to get ready.

‘Many taxpayers will have the support of a tax adviser or accountant to guide them through the process. But for those who can’t afford professional tax advice, the new rules may seem confusing and the requirements daunting.

‘We want to make it as easy as possible for taxpayers to understand whether the rules apply to them and what they need to do if that is the case.’

Internet link: LITRG website

Business confidence jumps in January

The confidence of business leaders in both their own organisations and the wider UK economy rose markedly in January, according to data from the Institute of Directors (IoD).

The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, jumped to -48 in January 2026, from -66 in December 2025.

Business leader confidence in their own organisations also jumped, to +14 in January from -4 in December.

Anna Leach, Chief Economist at the IoD, said:

‘After record weakness last year, January saw a welcome – and fairly chunky – rise in the confidence of business leaders. There’s been an improvement across-the-board in the economic measures too, with the strongest improvements in revenue expectations and investment plans.

‘The year has begun with a high level of policy activity, including a number of packages designed to support businesses – from backing scale-ups and funding for export growth, to business rates relief for pubs and live music venues.

‘But these welcome moves continue to clash with very significant rises in the cost of doing business in the UK. There remains a need to ensure that the full weight of government policy is focused on driving up growth. In particular, we look for further progress in designing-out the risks to employment from the Employment Rights Act, alongside faster action to remove regulatory blockers to growth.’

Internet link: IoD website

Sole traders and landlords given MTD warning

Sole traders and landlords have been warned they need to act now to be ready for Making Tax Digital (MTD) for Income Tax.

HMRC is reminding those earning more than £50,000 from self-employment and property of major changes from 6 April 2026. They will need to use recognised software to keep digital records and send light-touch quarterly updates of their income and expenses.

The tax authority says these are not extra tax returns.

Free software options are available and once income and expenses are recorded, the software generates a simple summary to send to HMRC.

HMRC says that at the end of a tax year, those within MTD for Income Tax will still need to file a tax return by the following 31 January. However, the software will already hold the information from the quarterly updates, meaning no last-minute hunt for records or receipts.

Craig Ogilvie, HMRC's Director of Making Tax Digital, said:

‘With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.

‘This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.

‘Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.’

Internet link: HMRC press release

Apprenticeship system reform must go further

The government must reform the apprenticeship system to make it fit for the 21st Century, according to a new report published by the British Chambers of Commerce (BCC).

The report says that the current framework is too rigid, lacks clarity, neglects higher-level skills and is failing to meet the needs of business.

The report found that while 67% of firms were facing skills shortages, more than half of them do not feel that current training options are plugging this gap.

It also identifies that over a third of businesses say lowering the threshold for the National Living Wage from 21 to 18 will make them less likely to recruit younger people.

Kate Shoesmith, Director of Policy and Insights at the BCC, said:

‘There can be no doubt how truly transformational this training system is. Becoming an apprentice provides a direct route for young people into work, to earn and learn, while setting out a clear pathway for their future development.

‘For established employees they offer the opportunity to upskill, while remaining productive in their current role, a key reason that they remain attractive to employers.

‘But it has been clear for a while that the system has many flaws. Take up and completion rates have been falling, and some businesses have turned their backs on it.

‘The government has recognised it needs to stop this rot and shake things up. But its proposed reforms do not go far enough and lack clarity.’

Internet link: BCC website

HMRC urges young people to claim Child Trust Funds

HMRC is urging young people who have yet to claim their Child Trust Fund (CTF) to do so during National Apprenticeship Week.

HMRC’s figures show 758,000 young people could be missing out on cash as they have yet to claim the savings in their CTF account.

CTF are long term, tax-free savings accounts which were set up for children born between 1 September 2002 and 2 January 2011 with an initial government deposit of at least £250.

Young people can take control of their account at 16, but once they turn 18 years old the account matures and they can decide whether they want to withdraw the money or re-invest it.

With hundreds of thousands of apprentices under the age of 24 across the UK a CTF worth on average £2,242 each, will give them a financial head start.

Myrtle Lloyd, HMRC’s Chief Customer Officer said:

‘Whether young people are on an apprenticeship, starting their first job, or making plans to go to university, a CTF can make all the difference. Find yours today by searching 'find my Child Trust Fund' on GOV.UK.’

Internet link: HMRC press release

Vaping businesses urged to prepare for Vaping Products Duty registration

HMRC is urging manufacturers, importers, and warehousekeepers involved with vaping products to prepare for new duties.

Businesses involved in vaping products can register for Vaping Products Duty (VPD) and the Vaping Duty Stamps (VDS) Scheme from 1 April 2026.

From 1 October 2026, VPD will apply to all vaping liquids sold or supplied in the UK at a flat rate of £2.20 per 10ml, regardless of nicotine content.

At the same time, duty stamps must be affixed to the retail packaging of individual vaping products for the UK market.

A six‑month grace period will apply for older stock already in retail channels; from 1 April 2027 all UK vaping products outside duty suspension must carry a duty stamp.

Non‑compliance may result in civil or criminal sanctions.

Rachel Nixon, HMRC’s Director of Indirect Tax, said:

‘We are working closely with the vaping sector on this new excise duty ahead of its introduction.

‘From 1 April this year, manufacturers, importers and warehousekeepers must apply to HMRC for approval to continue supplying vaping products in the UK. This gives them six months to obtain our approval before the new duty and duty stamps go live.

‘GOV.UK guidance sets out everything businesses need to know. Searching ‘vaping duty’ is the best place to start. Early preparation is essential to ensure a smooth transition and to avoid disruption to operations.’

Internet link: HMRC press release

Get tax affairs back on track if self assessment deadline was missed

The Low Incomes Tax Reform Group (LITRG) is urging the estimated one million taxpayers who failed to file their tax return on time to get their tax affairs back on track.

HMRC says that around one million customers missed the cut-off date.

Failing to meet the self assessment deadline carries an automatic £100 late filing penalty, with further penalties at stake the longer the return remains outstanding.

The LITRG recommends four steps to get tax affairs back on track:

  1. Checking whether a return is even needed.
  2. Filing outstanding returns as soon as possible.
  3. Paying tax as soon as possible will prevent additional penalties for late payment.
  4. If taxpayers have a reasonable excuse for not meeting the deadline, they usually have 30 days to appeal any penalties charged.

Antonia Stokes, LITRG Senior Manager, said:

‘Missing the self assessment deadline can feel daunting or worrying, and some people might be unsure how to put things right.

‘But there are some practical steps people can take. This includes working out whether a return was even needed in the first place. If it was, then it is better to act now by filing the return and paying the tax, penalties and interest charges that are due. Payment plans are available to help people who might not be able to settle their tax bill in full.

‘If they have what is called a reasonable excuse, it might even be possible to appeal the penalty, but they will still need to file their tax return as soon as possible.’

Internet link: Chartered Institute of Taxation website

Latest guidance for employers

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

  • Reporting expenses and benefits for the tax year ending 5 April 2026.
  • End of year reporting.
  • Upcoming State Pension age changes — impact on payroll operation.
  • Implementation of the Employment Rights Act 2025.
  • Statutory Sick Pay changes — what employers need to know.
  • Tax code changes for winter payment recovery.

Internet link: GOV.UK

 

Government urged to scrap ‘unfair holiday tax’

Over 200 hospitality and leisure CEOs have urged the government to scrap plans for a Visitor Levy in England.

In a letter to the Chancellor, they warn that the proposed holiday tax will ‘hit families hardest, put jobs at risk and drain money from local businesses and communities’.

Signatories to the letter warn that ‘holidays are for relaxing, not taxing’, with the proposed tax meaning tourists would face an extra £100 or more for a two-week holiday in the UK.

The letter says this could force families to shorten trips, skip travel altogether or head overseas, spending their money elsewhere.

The letter also says there will be significant damage to local communities across England that rely on tourism for survival, as fewer visitors mean fewer local jobs and lower spending at local businesses.

Allen Simpson, Chief Executive of UKHospitality, said:

‘Holidays are for relaxing – not taxing.

‘Whether you enjoy a city break, a rural retreat or building sandcastles on your beach holiday, you’re already paying your fair share of tax.

‘In fact, it’s one of the highest tax rates for visitors in Europe and the holiday tax will only increase that further.

‘We are so lucky to enjoy these wonderful islands and we should be encouraging people to visit every part of our country – not taxing them for doing so.

‘The government needs to scrap the holiday tax.’

Internet link: UKHospitality website

Employment Rights Act risks being a handbrake on hiring

More than a third of UK employers plan to reduce the recruitment of permanent staff due to the Employment Rights Act’s (ERA) reforms, says the Chartered Institute of Personnel and Development (CIPD).

A survey published by the CIPD showed that nearly three quarters of employers believe their employment costs will increase because of measures introduced under the ERA.

In addition, more than half of employers expect workplace conflict to increase because of at least one of the changes being introduced.

The survey showed that overall hiring intentions remain at their lowest level on record outside the first year of the pandemic.

Ben Willmott, Head of Public Policy at the CIPD, said:

‘Against a backdrop of low business confidence and already weak hiring intentions, our research suggests there is a real risk that the ERA measures will act as a further handbrake on job creation and recruitment.

‘In response, it’s important that government acts to try and mitigate these potential negative consequences, including through meaningful consultation and where necessary compromise on key measures still to be decided in secondary legislation.

‘We need to see a major communication campaign from government to ensure smaller businesses in particular are aware of, understand and can prepare for the new legal obligations and know when they come in to affect.’

Internet link: CIPD website

Advisory fuel rates for company cars

New company car advisory fuel rates have been published and took effect from 1 March 2026.

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 March 2026 are:

Engine size

Petrol

1400cc or less

12p

1401cc - 2000cc

14p

Over 2000cc

22p

Engine size

Diesel

1600cc or less

12p

1601cc - 2000cc

13p

Over 2000cc

18p

Engine size

LPG

1400cc or less

10p

1401cc - 2000cc

12p

Over 2000cc

19p

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 below. Electricity is not a fuel for car fuel benefit purposes.

Advisory Electricity Rate

 

Home Charger

7p

Public Charger

15p

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

Internet link: GOV.UK AFR

 

 

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Thursday, 12 February 2026

Newsletter 205

 

30 January 2026

In this month’s Enews, we look at the government’s plans to regulate cryptocurrency, the news on the Inheritance Tax relief for farmers and businesses. We also report a big rise in use of the HMRC app, a warning on the impact that business rates increases will have on high street businesses and more

HMRC offers time to help pay self assessment tax bills

HMRC is sending self assessment taxpayers a reminder that help is available to manage their tax bill.

The deadline to file and pay any tax owed is 31 January 2026, but people who are unable to pay in full by then may be able to set up a Time to Pay arrangement online and spread the cost over monthly instalments.

For those with bills of up to £30,000, such an arrangement can be set up without even needing to contact HMRC directly.

According to HMRC, since 6 April 2025 nearly 18,000 payment plans have been set up using the service, helping customers avoid late payment penalties by arranging regular payments that suit their own circumstances.

A Time to Pay arrangements cannot be set up until a self assessment return has been filed. If the tax owed is more than £30,000, or a longer repayment period is needed, people can still apply but will need to contact HMRC directly.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said:

‘We’re here to help customers get their tax right. If you are worried about paying your self assessment bill, assistance is available. Our online payment plans offer financial flexibility and can be tailored to individual circumstances. We want to support all our customers in meeting their tax obligations with confidence.’

Internet link: HMRC press release

UK Treasury to regulate cryptocurrency under new legislation

The UK will bring cryptocurrencies, including Bitcoin, into a regulatory framework with legislation due by 2027.

The government says that firm and proportionate rules will give legal clarity over the sector’s regulatory position.

It says they will also boost consumer confidence by ensuring consumers are robustly protected.

The changes mean that firms will need to be regulated by the Financial Conduct Authority in the same way as other providers of financial products – including being subject to established transparency standards.

Through this new regime the UK is helping to shape global standards for cryptoassets regulation.

The regime is designed to support responsible innovation, ensure open and competitive markets, and promote the UK as a destination of choice for digital asset businesses.

Chancellor of the Exchequer, Rachel Reeves MP, said:

‘Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world leading financial centre in the digital age.

‘By giving firms clear rules of the road, we are providing the certainty they need to invest, innovate and create high skilled jobs here in the UK, while giving millions strong consumer protections, and locking dodgy actors out of the UK market.’

Internet link: HM Treasury website

Latest guidance for employers

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

  • Changes take effect 6 April 2026 — prepare for new PAYE responsibilities in labour supply chains.
  • Clarifying the Optional Remuneration Arrangement rules at section 228A ITEPA.
  • Important update regarding tax refunds.
  • Payrolling of benefits in kind.
  • Employment Rights Bill autumn consultations.
  • Tell ABAB survey report — now live.

Internet link: GOV.UK

Inheritance Tax reliefs threshold to rise to £2.5 million for farmers and businesses

The level of the Agricultural Property Relief (APR) and Business Property Relief (BPR) thresholds will be increased from £1 million to £2.5 million, the government has announced.

The change will allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them before paying Inheritance Tax (IHT), on top of existing allowances.

The government says the changes come after it listened to concerns of the farming community and businesses about the reforms.

It says it will protect more farms and businesses, while maintaining the core principle that the most valuable agricultural and business assets should not receive unlimited relief.

The change will be introduced to the Finance Bill in January and will apply from 6 April.

Environment Secretary Emma Reynolds said:

‘Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming.

‘We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms. We are increasing the individual threshold from £1m to £2.5 million which means couples with estates of up to £5 million will now pay no inheritance tax on their estates.

‘It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.’

Internet link: GOV.UK

Spring Statement set for 3 March 2026

The Spring Statement has been scheduled for 3 March 2026 by the Chancellor of the Exchequer Rachel Reeves.

Ms Reeves has asked the Office for Budget Responsibility to prepare an economic and fiscal forecast for publication on that date.

The government said:

‘As set out at the Budget, the Spring forecast will not make an assessment of the government’s performance against the fiscal mandate and will instead provide an interim update on the economy and public finances.

‘The government will respond to the March forecast through a statement to Parliament, in line with the government’s commitment to deliver one major fiscal event a year at the Budget.

‘This approach gives families and businesses the stability and certainty they need and supports the government’s growth mission.’

Internet link: GOV.UK

Over 4,800 self assessment scams reported

More than 4,800 self assessment scams have been reported since February 2025, according to data released by HMRC.

The tax authority says scammers are using persuasive and threatening tactics to target people when they are more likely to receive correspondence from HMRC. The scammers send fake tax demands or attempt to pressurise people to hand over personal information.

In the last 10 months, taxpayers have reported more than 135,500 HMRC-related scams, including 29,000 scams referring to fake tax refund claims.

HMRC is reminding customers to be vigilant as the self assessment deadline nears and check whether the email, SMS message or phone call claiming to be from HMRC is genuine on GOV.UK.

The self assessment deadline to file returns and pay any tax owed for the 2024/25 tax year is 31 January 2026.

Lucy Pike, HMRC’s Chief Security Officer, said:

‘Millions of people file a tax return each year and scammers mimic HMRC to try and catch unsuspecting victims out.

‘I’m urging people to stay vigilant and if any emails, text messages or phone calls appear suspicious – don’t be lured into clicking on links or sharing your personal information – report it directly to HMRC. Just search ‘report an HMRC scam’ on GOV.UK to find out more.’

Internet link: HMRC press release

HMRC app usage surged in 2025

Use of the HMRC app surged last year as millions of users downloaded it for the first time, according to the tax authority’s figures.

HMRC says the app was downloaded 4.2 million last year and people logged in to the app 136 million times, a 20% increase on 2024, reflecting growing confidence in managing tax digitally.

Total annual app users have now surpassed 7.18 million, up from 5.09 million the previous calendar year.

There has also been significant growth from older and retired users, especially checking State Pension forecasts.

Other areas that saw growth were Child Benefit and National Insurance (NI).

Almost 960,000 people used the Child Benefit area of the app in 2025 - 160,000 more than in 2024.

In addition, 383,000 people stored their NI number on the app during 2025, 70,000 more than the previous year.

HMRC says the rise in app use this year reflects its ambition to make it easier for customers to self‑serve on straightforward tasks.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said:

‘The HMRC app has become one of the quickest and easiest ways to check your tax affairs and we’ve seen even more customers embrace it this year. If you choose to use the app you can access the information you need straight through your phone.’

Internet link: HMRC press release

Over 4,700 file festive self assessment returns on Christmas Day

More than 4,600 self assessment taxpayers filed their tax return on Christmas Day, according to data from HMRC.

In total, 37,435 customers filed between 24 and 26 December. Christmas Eve was the most popular day with 22,350 tax returns filed while Boxing Day saw 10,479 tax returns filed.

The most popular times to file were between 11am and midday on Christmas Eve, between 1pm and 2pm on Christmas Day and between 3pm and 4pm on Boxing Day.

The self assessment deadline is 31 January and HMRC is encouraging taxpayers, who have not yet filed their tax return, to visit GOV.UK to start theirs.

Myrtle Lloyd, HMRC's Chief Customer Officer, said:

‘Millions of customers have already completed their tax returns and can start 2026 with one less thing to worry about.

‘For anyone yet to file, don't leave it until the last minute. Filing now means you know exactly what you owe and have time to arrange payment. Search 'self assessment' on GOV.UK to get started.’

Internet link: HMRC press release

Tax timebomb poses existential threat to high streets, government warned

Small businesses such as cafes, shops and hairdressers are facing three years of business rates misery with an average 52% hike in bills, analysis from the Federation of Small Businesses (FSB) has revealed.

This is due to the removal of business rates relief for 230,000 small firms across the retail, hospitality and leisure (RHL) sectors in England.

The removal of the relief combined with other business rates changes being introduced by the government from this April, leaves many having to pay thousands of pounds extra, says the FSB.

In a letter to the Government, FSB has urged ministers to deploy the full relief available to them for small firms in RHL. Currently, only a quarter of the potential relief included in the government’s own formula is being used.

FSB Policy Chair Tina McKenzie said:

‘Striving small businesses in retail, hospitality and leisure – from bakeries and coffee shops to garden centres, gyms and dry cleaners - are on the brink unless Chancellor makes a decisive intervention now.

‘The tax timebomb that’s currently ticking will see three years of soaring bills, threatening our high streets and the jobs and services they provide.

‘Combined with other cost pressures going up in April as well, the Chancellor has to be realistic that without action on business rates relief, the burden will become too much to bear for some, who will either shrink or close down altogether.’

Internet link: FSB website

Government must ramp up its growth strategy, says think tank

Despite falling behind its peers the UK economy could be on the brink of a turnaround so the government must up rather than run-down its growth strategy, says the Resolution Foundation.

A report by the think tank warns that the UK’s poor post-financial crisis economic performance has continued well into the 2020s. Its GDP per head is now languishing 15% behind its former peers, including France, Germany and Canada.

There are signs that the UK economy may be turning a corner however, with productivity growing by 3.4% over the past 18 months.

The report says the government’s three-pronged strategy of restoring stability, increasing investment and reforming the economy is the right one for the challenges Britain faces.

Greg Thwaites, Research Director at the Resolution Foundation, said:

‘There’s lots to welcome in the government’s economic growth strategy. But it has spent much of the past 18 months undermining that strategy with policy U-turns, kite-flying tax ideas and timidity in areas like trade where it needs to be bold.

‘With signs that productivity may be turning a corner, the government must capitalise by ramping up its plans. It should redouble efforts to unblock housebuilding in major cities, focus job support for young and older workers, and decide whether to bite the bullet and reverse some of the damage from Brexit.’

Internet link: Resolution Foundation website

Self assessment payments via the HMRC app up 65%

The number of people using the HMRC app to pay their self assessment tax bill has increased by 65% this tax year, according to the tax authority.

Almost 340,000 people have used the HMRC app to pay their self assessment tax since 6 April 2025, an increase of 132,788 people compared to the same period last year, says HMRC.

Self assessment taxpayers need to file their tax return online for the 2024/25 tax year and pay any tax owed by 31 January 2026. HMRC is encouraging those yet to start theirs, to go to GOV.UK and do it now. Anyone who misses the deadline could be subject to an automatic £100 penalty.

HMRC says that filing tax returns ahead of the deadline means knowing how much tax to pay sooner.

The tax authority says it is quick and easy to pay via the HMRC app and set up payment reminders to make sure the deadline is not missed.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said:

‘The self assessment deadline is less than one month away, and thousands of people have already paid their tax bill via the HMRC app. It is quick and easy to do, and you can also see your payment history. Search ‘download the HMRC app’ on GOV.UK to access the app and make your self assessment payment.’

Internet link: HMRC press release

 

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Friday, 9 January 2026

Newsletter 204

 

January 2026

In this month’s Enews, there is news on protection for bank deposits, the latest news on UK inflation and a warning on the risks of relying on advice from AI tools.

We take a look at the readiness of sole traders for the next stage of Making tax Digital and the penalty regime. There is also news on mandatory e-invoicing for VAT-registered businesses.

There is also news on the government’s apprenticeship initiative, the economic forecasts following the Budget to update you on and lots more.

Bank deposit protection limit to be increased to £120,000

UK bank customers will benefit from an increase to the maximum amount they would be reimbursed for if their bank were to fail from 1 December, the Prudential Regulation Authority (PRA) has confirmed.

From December, the deposit protection limit, which applies to the Financial Services Compensation Scheme, will protect up to £120,000 of a depositor’s money should their bank, building society or credit union fail.

This increases the limit from the current £85,000 which was set in 2017. It is also more than the previous PRA proposal of £110,000, which the regulator has changed due to consultation feedback and the latest inflation data.

This increase in the deposit protection limit is the latest in a series of regulatory thresholds to be updated by the PRA.

Sam Woods, Deputy Governor for Prudential Regulation at the Bank of England and CEO of the PRA said:

‘This change will help maintain the public’s confidence in the safety of their money. It means that depositors will be protected up to £120,000 should their bank, building society or credit union fail. Public confidence supports the strength of our financial system.’

Internet link: Bank of England website

 

UK inflation rate falls for first time since March 

The UK inflation rate fell to 3.6% in the year to October, according to the latest data from the Office for National Statistics (ONS).

October’s decline was led by a smaller rise in gas and electricity prices compared with a year ago as well as a drop in hotel prices, the ONS said.

Core inflation, which excludes energy and food, was 3.4% in October, down from 3.5% in September. However, food and drink inflation rose to 4.9% in October, up from 4.5% in September.

This is the first time the rate has fallen since March and the lowest the rate has been since the year to June. But it remains above the Bank of England's 2% target.

Ben Jones, Lead Economist at the Confederation of British Industry, said:

‘Inflation eased in October, broadly in line with the Bank of England’s expectations.

‘With Q3 GDP figures confirming a weak growth backdrop, and the labour market continuing to soften, today’s figures add to the evidence that price pressures are gradually subsiding.

‘Combined with the likelihood of further fiscal consolidation measures at the Budget, the data should give the Bank’s Monetary Policy Committee confidence that inflation risks are diminishing.

‘If this trend continues, the case for an interest rate cut in December looks increasingly compelling.’

Internet link: ONS website CBI website

Chancellor raises £26 billion in Autumn Budget

Chancellor of the Exchequer Rachel Reeves set out tax-raising measures worth up to £26 billion in the Autumn Budget.

The increases will be achieved through a range of measures, including extending the freeze on Income Tax thresholds for a further three years.

Ms Reeves also announced extra spending increasing to £11.3 billion in 2029/30, including an extra £9 billion on welfare.

Despite the uplift in spending the Chancellor has more than doubled her fiscal headroom from around £10around to around £22 billion, according to the Office for Budget Responsibility (OBR).

The OBR overshadowed the Chancellor’s speech with the accidental publication of its main measures prior to the Budget being announced in Parliament.

On Income Tax the personal allowance, the higher rate threshold and additional rate threshold are frozen at £12,570, £50,270 and £125,140, respectively, until 2030/31.

Taxes on property, dividend and saving income – which currently face no equivalent of National Insurance contributions (NICs) – will be increased by up to 2%.

From April 2029, the government will charge employee and employer NICs on any pension contributions made via salary sacrifice above £2,000 a year

The Budget also halves Capital Gains Tax relief for company owners selling their businesses to Employee Ownership Trusts from 100% to 50%.

In addition, the Budget introduced a High Value Council Tax Surcharge on homes worth more than £2 million, while protecting those on low incomes.

Individual Savings Accounts (ISAs) will be reformed from April 2027 when the annual cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.

The Chancellor also took action to cut £150 off energy bills, freeze rail fares and end the two-child benefit cap.

The government is extending the 5p fuel duty cut until the end of August 2026 with rates then gradually returning to March 2022 levels by March 2027.

Ms Reeves said:

‘I can tell you today that, for every family we are keeping our promise to get energy bills down and cut the cost of living with £150 taken off the average household energy bill from April.

‘Money off bills, and in the pockets of working people. That is my choice.’

Internet link: GOV.UK

AI tools giving risky consumer advice, warns Which?

AI tools including Chat GPT, Gemini and Meta AI are giving inaccurate, unclear and risky advice which could prove costly if followed, warns consumer champion Which?.

Research showed that around half of UK adults are now using AI tools to research topics including personal finance, the law and health.

Which? tested six AI tools - ChatGPT, Google Gemini, Gemini AI Overview (AIO), Microsoft’s Copilot, Meta AI and Perplexity - to establish how well they could answer common consumer questions.

Meta AI received the worst score in Which?’s tests, achieving just 55% overall.

ChatGPT, which is the most used tool according to Which?’s survey, came second to bottom with an overall score of 64%,

Perplexity topped the table with 71%. It received the highest scores for accuracy, relevance, clarity and usefulness of any of the tools on test.

Andrew Laughlin, Which? Tech Expert, said:

‘Everyday use of AI is soaring, but we’ve found that when it comes to getting the answers you need, the devil is in the details. Our research uncovered far too many inaccuracies and misleading statements for comfort, especially when leaning on AI for important issues like financial or legal queries.

‘When using AI, always make sure to define your question clearly, and check the sources the AI is drawing answers from. For particularly complex issues, always seek professional advice - particularly for medical queries, before making major financial decisions or embarking on legal action.’

Internet link: Which? website

Advisory fuel rates for company cars

New company car advisory fuel rates have been published and took effect from 1 December 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 December 2025 are:

Engine sizePetrol
1400cc or less12p
1401cc - 2000cc14p
Over 2000cc22p
Engine sizeDiesel
1600cc or less12p
1601cc - 2000cc13p
Over 2000cc18p
Engine sizeLPG
1400cc or less11p
1401cc - 2000cc13p
Over 2000cc21p

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 below. Electricity is not a fuel for car fuel benefit purposes.

Advisory Electricity Rate 
Home Charger7p
Public Charger14p

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

Internet link: GOV.UK AFR

MTD penalties waived for first year of Income Tax

Self assessment taxpayers due to join Making Tax Digital (MTD) for Income Tax next April will not face penalties if late filing quarterly updates.

In the Autumn Budget 2025 documents, the government said it will not charge penalty points if those joining MTD submit any of their compulsory quarterly updates of income and expenses late during 2026/27.

This means that the first group of taxpayers earning non-PAYE income over £50,000 will not be liable for the new penalty regime under MTD until April 2027.

HMRC will apply the new penalty regime for late submission and late payment to all income tax taxpayers from 6 April 2027.

The new system is based on a points-based sanctions regime and will penalise those who persistently do not comply by missing filing and payment deadlines.

Under the new regime, when a taxpayer misses an annual submission deadline, they will incur a penalty point. A taxpayer becomes liable to a fixed financial penalty of £200 only after they have reached the points threshold of two for late submission of their final declaration.

Sharron West, Technical officer at LITRG, said:

‘We’re pleased to see the government defer penalties for the first year of Making Tax Digital.

‘Making Tax Digital is the biggest change to the tax system since self assessment and because of that, we expect that there will be some teething problems when it goes live in April.

‘This period of grace is especially good news for those who will be getting used to the new system without the help of a tax adviser.’

Internet link: CIOT website

E-invoicing will be fundamental change for VAT-registered businesses

The mandatory introduction of e-invoicing for all VAT-registered businesses selling to UK business customers from April 2029 will be a fundamental change, says the Chartered Institute of Taxation (CIOT).

The government announced the requirement in the Autumn Budget 2025 policy documents.

It said: ‘Continued collaboration between the government and the private sector is essential for driving innovation. To drive productivity further, the government will require the use of electronic invoicing for all VAT invoices for business-to-business and business-to-government transactions from 2029, with a roadmap to be published at Budget 2026.’

The CIOT is cautioning the government against rushing into mandatory e-invoicing, calling for the use of thresholds and staged implementation to try to mitigate the impact of such significant digital change.

E-invoicing is a digital exchange of invoice information directly between the supplier and customer’s accounting systems; invoices sent electronically by email with a pdf or jpeg format attachment will no longer suffice.

CIOT spokesperson Alison Kerrey said:

‘E-invoicing is a fundamental change for businesses. This goes further than Making Tax Digital, because it is not just digital record keeping, it is communicating digitally with customers and suppliers.

‘We are particularly concerned that those businesses that only issue and receive a handful of invoices per year will face disproportionate costs.

‘The CIOT support moves to increase the adoption of e-invoicing. But if there is to be a mandate, there need to be real benefits to HMRC and UK businesses and sensible, realistic implementation.’

Internet link: CIOT website

Sensible solution on unfair dismissal will deliver faster improvements

Reducing the qualifying period for unfair dismissal protection is a sensible move, says the Resolution Foundation.

The government is amending the Employment Rights Bill to reduce the qualifying period for unfair dismissal protection from two years to six months, rather than scrapping altogether for a ‘day one’ right.

This is a sensible move that will speed up the delivery of improvements to working conditions and reduce the risk of firms being put off hiring, said the think tank.

The UK currently has a two-year qualifying period for unfair dismissal protection – meaning workers can be well established in their job but still lack this protection.

According to the Foundation, other rich countries which have unfair dismissal protection typically have much shorter qualifying periods, reflecting the fact that it does not take employers more than a few months to judge whether a new hire is a good fit.

But getting rid of qualifying periods altogether would have been a step too far in the other direction, risking putting employers off hiring, it adds.

Nye Cominetti, Principal Economist at the Resolution Foundation, said:

‘The UK currently has one of the longest qualifying periods for protection which needs to come down. But scrapping it entirely would have meant lurching from one extreme to the other and putting firms off hiring new workers.

‘This sensible move to a six-month qualifying period will bring the UK into line with other countries, deliver tangible improvements to working conditions, and help the government move forward with other key aspects of the Employment Rights Bill.’

Internet link: Resolution Foundation

Most sole traders are not ready MTD changes

The majority of sole traders do not have a clear understanding of Making Tax Digital (MTD) for Income Tax, according to research from IPSE, the self-employed association.

A survey conducted by IPSE found that 70% either have not heard of the initiative or do not realise it requires digital record-keeping and quarterly submissions through approved software.

MTD for Income Tax will come into force in April 2026.

However, IPSE’s survey found that most sole traders are still managing their finances in ways that will not meet MTD requirements. A third continue to use pen and paper for their books, two-thirds rely on spreadsheets, and more than half track income through bank statements.

The timeline for MTD is:

From April 2026: Sole traders and landlords earning over £50,000 must keep digital records and submit quarterly updates through compatible software.

From April 2027: Sole traders and landlords earning over £30,000.

From April 2028: Sole traders and landlords earning over £20,000.

IPSE said:

‘Given the fact that we’ve already had previous delays and considerable resources and time have been invested, HMRC will not be pausing this rollout anytime soon.

‘However, HMRC has a duty to inform as many sole traders as possible – and right now, that awareness campaign is simply not landing.

‘With less than six months until the first deadline, our findings highlight a serious communication gap. Most respondents reported receiving no direct information from HMRC about MTD, which explains why awareness remains so low.’

Internet link: IPSE website

Covid fraud cost UK taxpayer £10.9 billion

Taxpayers lost £10.9 billion to fraud and error as the UK government’s pandemic response left the front door open to fraud, according to an independent report.

The Covid Counter Fraud Commissioner, Tom Hayhoe’s, final report to Parliament finds many schemes - including Bounce Back Loans and Eat Out to Help Out - were rolled out with huge fraud risks and no early safeguards – costing the taxpayer millions.

Weak accountability, bad quality data and poor contracting were identified as the primary causes of the £10.9 billion pound losses.

The report highlights that counter fraud controls were ‘inadequate’ and only improved later in the pandemic.

It makes further recommendations to ensure the country is prepared for further crises that need an economic response from government - emphasising that future preparation and robust controls will provide the best value for money for taxpayers.

Chancellor, Rachel Reeves said:

‘Leaving the front door wide open to fraud has cost the British taxpayer £10.9 billion — money that should have been funding our public services, supporting families, and strengthening our economy.

‘We have started returning this money to the British people and we will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.’

Internet link: HM Treasury website

Salary sacrifice changes will impact over three million employees

The removal of full tax-free salary sacrifice on pensions with a new £2,000 limit will hit over three million employees at 290,000 companies, according to government figures.

The change to pension salary sacrifice is due to come into effect from 6 April 2029 and will see a new £2,000 limit on the amount of contributions employees can make into a salary sacrifice scheme free of tax and national insurance contributions (NICs), hitting schemes run by UK employers.

Almost eight million employees currently use salary sacrifice to make pension contributions. Of these, over three million sacrifice more than £2,000 of salary or bonuses.

However, just over half of employees will fall below the threshold based on current HMRC estimates, meaning over four million pension savers will not be affected.

The government said:

‘The government supports and incentivises pension saving and has retained Income Tax and NICs reliefs on pensions contributions that are worth over £70 billion per year.

‘Most other salary sacrifice opportunities were closed in 2017. Salary sacrifice for pensions contributions remains, and its cost as a relief has increased markedly from £2.8 billion in forgone NICs in tax year 2016 to 2017, rising to £5.8 billion in tax year 2023 to 2024. Were no changes made, it is expected that this would nearly triple to £8 billion by tax year 2030 to 2031.’

Internet link: GOV.UK

£725 million UK apprenticeship overhaul targets youth unemployment

A £725 million package of skills reforms to the apprenticeship system with the aim of helping to tackle youth unemployment and drive economic growth, has been announced by the UK government.

The government says the reforms will create 50,000 additional apprenticeships and foundation apprenticeships over the next three years.

As part of the package, the government will also cover the full cost of apprenticeships for eligible young people under 25 at small and medium-sized businesses.

The announcement also emphasised that removing the 5% co-investment rate for SMEs means that the training costs for all eligible under 25 apprentices are fully funded, opening up thousands of opportunities for young people.

Lizzie Crowley, Skills Adviser for the Chartered Institute of Personnel and Development (CIPD), said:

‘Apprenticeship starts have been falling for years, limiting opportunities for young people and preventing organisations - especially smaller firms - from building the skills they need to boost performance.

‘Creating 50,000 apprenticeships and giving mayors a stronger role in connecting young people with employers is a positive step. And in a year of rising employment costs, fully funding apprenticeship starts for under-25s in smaller businesses will be welcome.

‘However, removing the 5% employer contribution alone won’t drive take-up. Cost is rarely the main barrier for smaller employers; the greater challenge is releasing staff for off-the-job training and having the management capacity to support apprentices effectively day to day. Without tackling those practical constraints, take-up is likely to remain limited.’

Internet link: GOV.UK CIPD website

Budget unlikely to be growth game changer

The Autumn Budget is unlikely to kickstart the UK economy with the nation’s growth outlook remaining subdued, according to research from the British Chambers of Commerce (BCC).

The UK economy is expected to grow by 1.4% in 2025, revised slightly up from the previous forecast of 1.3%, driven by strong public spending, according to the BCC.

However, GDP is expected to slow to 1.2% in 2026, before rising to 1.5% in 2027, because of productivity challenges and cautious fiscal tightening, the business group added.

The BCC says that business investment is forecast to suffer significantly next year – falling from expected growth of 3% in 2025, to just 0.9% in 2026. It is then expected to rise again to 1.5% in 2027.

The projected weak levels of business investment are due to ongoing cost pressures on firms and the lack of direct growth measures in the Budget.

David Bharier, Head of Research at the British Chambers of Commerce said:

‘Our forecast suggests the Autumn Budget is unlikely to be a growth game changer for the UK economy.

‘Taken together the forecast paints a picture of an economy remaining stuck in low gear. Businesses are showing remarkable resilience and innovation, but many are weighed down by political uncertainty and the cumulative cost pressures.

‘Delivery on growth is now key – the government has published industrial, trade, and infrastructure strategies, and these must translate into action.’

Internet link: BCC website

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