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
• UK Treasury to regulate cryptocurrency under new legislation
• Latest guidance for employers
• Inheritance Tax reliefs threshold to rise to £2.5 million for farmers and businesses
• Spring Statement set for 3 March 2026
• Over 4,800 self assessment scams reported
• HMRC app usage surged in 2025
• Over 4,700 file festive self assessment returns on Christmas Day
• Tax timebomb poses existential threat to high streets, government warned
• Government must ramp up its growth strategy, says think tank
• Self assessment payments via the HMRC app up 65%

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

 

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 inflation rate falls for first time since March
• Chancellor raises £26 billion in Autumn Budget
• AI tools giving risky consumer advice, warns Which?
• Advisory fuel rates for company cars
• MTD penalties waived for first year of Income Tax
• E-invoicing will be fundamental change for VAT-registered businesses
• Sensible solution on unfair dismissal will deliver faster improvements
• Most sole traders are not ready MTD changes
• Covid fraud cost UK taxpayer £10.9 billion
• Salary sacrifice changes will impact over three million employees
• £725 million UK apprenticeship overhaul targets youth unemployment
• Budget unlikely to be growth game changer

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

Advisory Electricity Rate
Home Charger	7p
Public Charger	14p

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

Newsletter 203

 

November 2025

In this month’s Enews, there is news on what people want to see from the Autumn Budget. There is a warning to the government over tax avoidance laws and on enforcement action on employers that fail to comply with the minimum wage. There is also the introduction of Vaping Products Duty next year, a reminder to young people to claim their tax-free savings and some staff news to update you on and more.

• Budget must give UK business a competitive edge
• Countdown to Vaping Products Duty begins
• Over 750,000 young people yet to claim savings
• Chancellor should use budget to reform tax system, IFS says
• New tax avoidance law risks missing target, warns CIOT
• HMRC brings in extra £4.6 billion using ‘big data’ system
• Expert Advisory Panel to provide industry insight on R&D tax relief
• Employers named and shamed for minimum wage breaches
• Latest guidance for employers
• Give State Pension its own PAYE scheme, says LITRG
• Chancellor announces 'blitz on business bureaucracy'
• Budget should tackle hiring issues, says BCC
• Welcome to the team
• Chloe braves the big chop for Myton Hospice

Budget must give UK business a competitive edge

The Autumn Budget must sharpen the UK’s competitive edge to stay ahead of the pack in an increasingly dog eat dog world, says the British Chambers of Commerce (BCC).

The BCC is calling for immediate action to cut the costs deterring investment, simplify regulations to unleash business and update its strategic offer.

The business group makes over 40 recommendations in a new report.

These include committing to no further increase in taxes that add to labour costs.

It also wants to see the axing of the windfall tax on oil and gas to address energy costs for business and the government providing a clear strategy for the North Sea’s transition to a renewable future.

In addition the BCC says the Budget should put rocket boosters under our economic diplomacy to unlock the full potential of ‘Brand Britain’.

Shevaun Haviland, Director General of the BCC, said:

‘There is also growing speculation about what’s coming in the Autumn Budget, which is still weeks away. This is eroding business confidence further as the government’s messaging of ‘tough choices’ adds to the fear.

‘But the Budget can be the decisive moment we need to back British business and put the economy on the front foot.

‘The UK is bursting at the seams with innovative ‘can-do’ businesses that are eager to grow and make the most of the UK’s extraordinary talent, creativity and technical expertise.’

Internet link: BCC website

Countdown to Vaping Products Duty begins

There is now less than a year until the UK Government introduces Vaping Products Duty (VPD) and vaping duty stamps (VDS) on 1 October 2026.

VPD, a new excise duty, will apply to all vaping liquids (or e-liquids) sold or supplied in the UK, at a flat rate of £2.20 per 10ml and VDS must be attached to individual vaping products.

From 1 April 2026, any business involved in the manufacture or importation of vaping products, or storage of duty-suspended vaping products, must apply for approval from HMRC. This will enable them to continue operating lawfully in the UK once VPD and the VDS Scheme come into effect.

With just six months until approval registration opens, HMRC is urging all affected businesses to prepare now to avoid disruption as approval may take up to 45 working days.

What this means for businesses:

• UK manufacturers of vaping products must apply for approval for both VPD and the VDS Scheme.
• Warehouse keepers will be able to apply for VDS Scheme approval directly.
• Overseas manufacturers must appoint a UK representative to apply for the VDS Scheme on their behalf.
• Importers will be required to pay the new duty. They must also register for VPD and the VDS Scheme if they are acting as a UK representative for an overseas manufacturer.

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

‘We are working closely with the vaping sector ahead of these changes. Businesses are encouraged to visit GOV.UK and search ‘prepare for vaping duty’ to access guidance and updates. Early preparation is essential to ensure a smooth transition and to avoid disruption to operations.’

Internet link: HMRC press release

Over 750,000 young people yet to claim savings

Over 750,000 18-to-23-year-olds have yet to claim their matured Child Trust Funds, according to HMRC.

The tax authority says that the accounts are worth £2,242 each on average.

Child Trust Funds 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 the account holder turns 18 it matures, and they can decide whether they want to withdraw the money or re-invest it.

Young people can use the GOV.UK locator tool to find their Child Trust Fund quickly and for free. It requires the young person’s National Insurance number and date of birth.

More than 563,000 young people went online to find their Child Trust Fund in the 12 months to the end of August 2025, says HMRC.

It takes about five minutes to submit a request to find a Child Trust Fund using the online tool and, for most, less than three weeks to hear back.

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:

‘If you’re between 18 and 23, you could be sat on a savings payout and not even realise it. Just search 'find my Child Trust Fund' on GOV.UK to find your savings account today.’

Internet link: HMRC press release

Chancellor should use budget to reform tax system, IFS says

Chancellor Rachel Reeves should use the Autumn Budget to reform the UK’s tax system, says the Institute for Fiscal Studies (IFS).

The think tank says this would help Ms Reeves to raise more revenue while limiting the hit to the economy.

The IFS warns the Chancellor against raising the levels of existing taxes to bring in the estimated £30 billion she requires to stay on course for her targets to repair the public finances.

Changes to wealth-related taxes, including Capital Gains Tax, would be more effective than the introduction of an annual wealth tax, the think tank added.

Isaac Delestre, a Senior Research Economist at IFS, said:

‘Revenue-raising seems likely to be a major goal of the coming Budget. But if Rachel Reeves limits her ambition to collecting more revenue, she will have fallen short.

‘Almost any package of tax rises is likely to weigh on growth, but by tackling some of the inefficiency and unfairness in our existing tax system, the Chancellor could limit the economic damage.

‘The last thing we need in November is directionless tinkering and half-baked fixes. There is an opportunity here. The Chancellor should use this Budget to take real steps down the road towards a more rational tax system that is better geared to promoting the prosperity and well-being of taxpayers.’

Internet link: IFS website

New tax avoidance law risks missing target, warns CIOT

New legislation aimed at tackling rogue tax agents and those pushing tax avoidance schemes won’t catch all of those it is aimed at, warns the Chartered Institute of Taxation (CIOT).

Instead the measures could make it harder for some taxpayers to get the advice they need to comply with tax laws, the Institute added.

The CIOT argues that the current proposals are not well targeted, imposing potentially unworkable conditions on tax agents. Meanwhile, many of the ‘bad actors’ who are the real target of these measures will be out of scope and able to continue their abuse of the system, it adds.

The Institute says it is concerned that, without changes, the proposals will lead many reputable advisers to withdraw from giving advice where the meaning of complex tax legislation is unclear, or where the potential tax liability is high.

Ellen Milner, CIOT Director of Public Policy, said:

‘The government are right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

‘However, the current proposals are set to miss their target. According to HMRC, the market for tax avoidance schemes is now dominated by about 20 operators. These people are not mainstream tax and accountancy professionals and are largely based overseas. The legislation as drafted will struggle to capture these people.’

Internet link: CIOT website

HMRC brings in extra £4.6 billion using ‘big data’ system

HMRC brought in an extra £4.6 billion in tax revenue last year by using its ‘big data’ system.

The tax authority’s Connect system uses data from a wide range of financial sources to analyse tax returns and detect potential evasion.

In a response to a freedom of information request from law firm Pinsent Masons, HMRC said it generated on average £3.4 billion in additional annual yield from Connect cases.

However, this rose by over a third in the 2024/25 tax year when Connect generated approximately £4.6 billion.

Connect, which was introduced in 2010, has grown in scale over the last 15 years to become one of the largest datasets held by the UK government.

It has now become a key part of tax investigations, with around 4,300 HMRC staff now using it.

The increasing scale of the Connect system allowed HMRC to conduct more than half a million cases in the last year alone.

Ian Robotham, a tax expert at Pinsent Masons, said:

‘HMRC has spent time building up the amount of data sources that it can access and analyse.

‘The algorithms that it uses allows HMRC to spot anomalies that would otherwise go unnoticed by the human eye.

‘With thousands of HMRC staff now using Connect, taxpayers are facing a level of oversight that would have been unthinkable just a few years ago.’

Internet link: Pinsent Masons website

Expert Advisory Panel to provide industry insight on R&D tax relief

HMRC has appointed six independent industry specialists to a new Research and Development (R&D) Expert Advisory Panel.

The introduction of the panel is one of a number of practical enhancements that the tax authority says will make it easier for UK firms to understand R&D tax relief.

R&D tax reliefs are valuable incentives designed to encourage businesses to invest in innovative science and technology projects, driving economic growth across the UK.

These improvements include an expanded reporting channel for agents; and a user-friendly free online tool to help businesses check their eligibility before submitting a R&D claim.

HMRC says that together, these enhancements are designed to support business innovation, improve claim accuracy, and strive to make the system work for everyone.

The new panel brings together experts with real world experience, offering deep sectoral knowledge across manufacturing, technological development, life sciences and AI, says HMRC.

Jonathan Athow, HMRC’s Director General, Customer Strategy and Tax Design, said:

‘HMRC welcomes the advisory panel and their sectoral insight and expertise. Along with the new guidance tool, we are delivering on feedback from agents and businesses, making it easier for genuine innovators to access the support they deserve, while protecting the system from abuse.’

Internet link: HMRC press release

Employers named and shamed for minimum wage breaches

The government has named and shamed nearly 500 employers who failed to pay the National Minimum Wage (NMW).

The employers have been fined over £10 million for failing to comply with NMW laws.

In addition, £6 million has been repaid to 42,000 workers by employers who have been underpaying their staff.

The government says that enforcement of workers’ rights is set to be beefed up through the new Fair Work Agency which will shield workers from employers who flout the law.

It says that this strong enforcement does not just protect workers; it protects those businesses who do right by their staff from being undercut.

By taking swift action against these employers, the government is sending a clear message that it will not tolerate those who short-change their workers, regardless of their size or sector, it adds.

Business Secretary Peter Kyle said:

‘Every worker deserves a fair day’s pay for a fair day’s work, and this government will not tolerate rogue employers who short-change their staff.

‘I know that no employer wants to end up on one of these lists. But our Plan to Make Work Pay cracks down on those not playing by the rules.

‘This ensures a level playing field where all businesses pay what they owe whilst workers receive the boost to their living standards they deserve.’

Internet link: GOV.UK

Latest guidance for employers

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

• Making your PAYE Settlement Agreement payment.
• Guidance for labour supply chains featuring umbrella companies.
• New Advisory Electric Rate for fully electric company cars.
• Spotlight 71 — Warning for agency workers and contractors who are moved between umbrella companies.
• ‘Tax Help for Hustles’ campaign — new resources for employees.
• Update on Winter Fuel Payments recovery through the tax system.

Internet link: GOV.UK

Give State Pension its own PAYE scheme, says LITRG

The Treasury should make it easier for state pensioners to pay any tax they owe with a Pay as You Earn (PAYE) scheme, says the Low Incomes Tax Reform Group (LITRG).

The LITRG told the Treasury that there is a 'pressing need' to change the way the payments are taxed to make the process easier to understand and manage.

This is due to the increasing number of pensioners finding out that they owe income tax on their state pension for the first time. The LITRG has recommended that the State Pension be given its own PAYE scheme, so that any tax is collected at source by the DWP before State Pension payments are made.

Currently, any tax due on a person's State Pension is collected by adjustments to tax codes, self assessment or simple assessment.

Sarah Weston, Technical Officer at the LITRG, said: 'The continued freezing of the tax-free personal allowance and triple-lock pension increases mean growing numbers of people are facing a tax bill on their State Pension for the first time.

'Some people are unaware of this and can end up with a nasty shock if they receive an unexpected tax bill from HMRC after the end of the tax year. For those who are affected, it can be unclear and confusing.

'We think that bringing the State Pension into its own separate scheme of PAYE would be a simplification that will make it easier for HMRC to collect the tax it is owed.'

Internet link: LITRG website

 

Chancellor announces 'blitz on business bureaucracy'

Chancellor Rachel Reeves recently announced a 'blitz on business bureaucracy', with cuts to red tape that the government says will save firms £6 billion.

Ms Reeves says the government will be 'scrapping pointless paperwork' and speeding up planning to deliver on the Prime Minister's 25% admin reduction target - a central commitment in the Modern Industrial Strategy.

The government says the crackdown on 'needless form-filling will see over 100,000 firms qualify for simpler corporate reporting rules', removing the need for small business owners like family-run cafes to submit lengthy Director reports to Companies House.

Businesses will also save time and money when building, with the Chancellor setting out plans for digital planning checks that could see developers sending photo evidence to authorities online which are then approved using trained AI models.

John Foster, Chief Policy and Campaigns Officer at the Confederation of British Industry (CBI), said: 'There is a fierce urgency in the need to get the UK economy growing at a sustainable rate so it can make a meaningful difference to our nation's prosperity. For businesses to fully contribute to this mission they need room to invest, not be constantly battling costly regulation that adds little or no value.

'The government deserves credit for recognising this challenge and taking action to address it. We now need business and government to work together at pace, to deliver a growth-enabling regulatory system that sensibly balances appetite to risk while giving businesses confidence to invest and thrive.'

Internet link: GOV.UK, CBI website

Budget should tackle hiring issues, says BCC

The British Chambers of Commerce (BCC) has called for Chancellor Rachel Reeves to use the Autumn Budget to combat ‘persistent’ hiring problems.

According to the BCC’s latest Quarterly Recruitment Outlook, 54% of businesses have attempted to hire employees in the last three months. However, most firms continue to face recruitment challenges, with 75% of employers stating they have experienced issues.

Just 22% of businesses hired new employees in the third quarter of this year, the BCC found. 25% reported that they intend to increase their workforce in the next three months.

‘Employers are battling against sky-high employment costs and widespread skills shortages,’ said Jane Gratton, Deputy Director of Public Policy at the BCC.

‘With 72% of firms saying costs are putting pressure on them to raise prices, the spectre of higher inflation will continue to hover.

‘The government should use the tax system to help people stay in – or quickly return to – employment when they experience ill health. Tax breaks for health services that businesses provide to their workforce are an obvious solution, to protect people’s livelihoods and keep skills in the workforce.’

Internet link: BCC website 

Welcome to the team!

We are pleased this month to announce a new addition to the Walker Thompson team.
Kiera Gale has joined us directly from Ullathorne School here in Coventry having made the decision to study through a work based apprenticeship scheme.
In her own words Kiera said that she saw this as a route to qualification which allowed her to earn money whilst studying for her AAT examinations rather than running up debt.
We shall be supporting Kiera as far as possible to ensure her success in the coming years.

Chloe braves the big chop for Myton Hospice 

This month we would like to share with you something which one of our staff subjected herself to for the benefit of Myton Hospice and cancer sufferers . Chloe Orman recently lost her grandmother to cancer and had seen how Myton Hospice had provided excellent end of life care. Many cancer sufferers, including children, lose their hair whilst undergoing chemo therapy treatment and Chloe decided to grow her hair with the intention of it being eventually cut and donated to The Princess Trust for the production of wigs .
For Chloe, the pride in facing the loss of her hair was made slightly less painful in that through Just Giving, she raised almost £1500 for Myton, something that we know would make her late grandmother extremely proud.

Internet link: Myton Hospice website

Newsletter 202

 

October 2025

In this month’s Enews, we look at the numbers of taxpayers that will need to report quarterly when Making Tax Digital (MTD) for Income Tax comes into force. There is also a scam warning for self assessment and details of a new fraud law.The Chancellor has announced the date for her Autumn Budget with details of a Budget Board to boost economic growth and the call for the Chancellor to make changes to National Insurance and Income Tax rates in the Autumn Budget. There is also news on HMRC’s ability to recover debts from bank accounts and a warning about the damage long-term sickness is doing to the economy to update you on and more.

• Over 850,000 self employed to be pulled into first phase of Making Tax Digital
• Warning as 170,000 self assessment scams reported to HMRC
• Latest guidance for employers
• Autumn Budget to be delivered on 26 November
• HMRC splits advisory fuel rates for electric cars
• Advisory fuel rates for company cars
• Lowering VAT threshold would be manifesto breach, warns IPSE
• Companies face prosecution risk as new fraud law comes into force
• Economic outlook remains subdued
• Chancellor to explore reforms to business rates on second premises
• Budget Board must focus on easing the cost of doing business, says IoD
• Covid repayment window opens
• Chancellor urged to cut National Insurance but hike Income Tax in Autumn Budget
• AI to boost trade by nearly 40% by 2040 if gaps are bridged, says WTO
• Failed housing transactions cost £1.5 billion a year
• Digitally excluded can apply for MTD for Income Tax exemption now
• HMRC to resume taking tax owed by debtors directly from their bank accounts
• Long-term sickness blighting UK economy

Over 850,000 self employed to be pulled into first phase of Making Tax Digital

HMRC has confirmed that 864,000 self-employed workers and landlords will be pulled into the quarterly reporting rules for Making Tax Digital (MTD) for Income Tax when it comes into force.

The first phase of MTD for Income Tax will begin next April at the start of the 2026/27 tax year. It will require individuals with a qualifying income over £50,000 to file quarterly returns using software with a final year end round out.

When businesses need to start using MTD for Income Tax depends on their qualifying income within a tax year. If their qualifying income is over:

• £50,000 for the 2024/25 tax year, they will need to use it from 6 April 2026
• £30,000 for the 2025/26 tax year, they will need to use it from 6 April 2027
• £20,000 for the 2026/27 tax year, they will need to use it from 6 April 2028

According to HMRC, around 2.9 million have a qualifying income above £20,000 and will need to join MTD for Income Tax, based on self assessment figures for 2023/24.

HMRC said:

‘MTD for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC. They will need to keep digital records and every quarter, submit simple summaries of their income and expenses to HMRC using compatible software. This is expected to reduce the tax gap by reducing the scope for error and failure to take reasonable care.’

Internet link: GOV.UK

Warning as 170,000 self assessment scams reported to HMRC

HMRC is calling on self assessment taxpayers to remain vigilant to scams that claim to be from the department after receiving 170,000 reports of incidents.

The tax authority says that scammers often impersonate HMRC, offering fake refunds or demanding urgent payments to steal personal and banking information.

More than 170,000 scam incidents were reported to HMRC in the 12 months to 31 July 2025, and 47,000 of these reports involved fake tax refund claims.

HMRC will never:

• leave voicemails threatening legal action or arrest
• ask for personal or financial information via text message or email
• contact customers by email, text, or phone to inform them about a refund or ask them to claim one.

Anyone due a refund can claim it securely via their HMRC online account or via the HMRC app.

HMRC says that filing early can also help, as those who have already submitted their tax return are less likely to be caught off guard by scam attempts closer to the self assessment 31 January 2026 deadline.

Kelly Paterson, HMRC’s Chief Security Officer, said:

‘Scammers target individuals when they know self assessment customers will be preparing to file their tax returns. We’re urging everyone to stay alert to scam emails and texts offering fake tax refunds.

‘Taking a moment to pause and check can make all the difference. Report any suspicious activity to us before the fraudsters do any more harm. Search ‘HMRC scams advice’ and refer to the scams guidance on GOV.UK to stay informed and protect yourself.’

Internet link: HMRC press release

Latest guidance for employers

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

• P11D and P11D(b) for tax year 2024/25
• PAYE Settlement Agreement - calculations and payment
• employers PAYE disputed charges
• Spotlight 69 — liquidation of a Limited Liability Partnership used to avoid Capital Gains Tax
• implementation of the Employment Rights Bill.

Internet link: GOV.UK

Autumn Budget to be delivered on 26 November

The Autumn Budget will be delivered on 26 November by the Chancellor of the Exchequer, HM Treasury has announced.

The Office for Budget Responsibility’s latest outlook for the economy and public finances will be released on the same day.

The Budget outlines the government's plans for raising or lowering taxes and sets out its spending commitments for health, schools, police and other public services.

Chancellor of the Exchequer, Rachel Reeves said: ‘Britain’s economy isn’t broken. But I know it’s not working well enough for working people. Bills are high. Getting ahead feels tougher. You put more in, get less out. That has to change.

‘We’ve got huge potential - world-leading brands, dynamic industries, brilliant universities, and a skilled workforce. We’re a global hub for trade.

‘Fixing the foundations has been my mission this past year … but I’m not satisfied. There’s more to do. Cost of living pressures are still real.

‘And we must bring inflation and borrowing costs down by keeping a tight grip on day-to-day spending through our non-negotiable fiscal rules. It’s only by doing this can we afford to do the things we want to do.

‘If renewal is our mission and growth are our challenge. Investment and reform are our tools. The tools to building an economy that works for you - and rewards you.’

Internet link: GOV.UK

HMRC splits advisory fuel rates for electric cars

HMRC has split fuel advisory rates for electric cars depending on where drivers charge their company cars due to the price discrepancy between home and public chargers.

From 1 September 2025, the single rate for fully electric cars will be abolished and replaced with two different rates reflecting whether a car is charged at home or on a public charger.

The rate will be 8 pence per mile for home charging and 14 pence per mile for public charging. This will replace the current universal rate of 7 pence per mile.

These rates will be reviewed quarterly in line with petrol and diesel advisory fuel rates.

HMRC said:

‘The ‘Domestic electricity cost per kilowatt-hour’ is the Department for Energy Security and Net Zero annually published figure, uprated with the latest estimate of electricity prices from the Office for National Statistics.

‘The ‘slow or fast public charge cost per kilowatt-hour’ is the Zapmap public charging price index monthly published figure for slow or fast chargers (charging speed less than 50 kilowatts), uprated with the latest estimate of electricity prices from the Office for National Statistics.

‘A higher amount than the advisory rates can be used as long as you can show that the fuel cost per mile is higher. Therefore, if the public charger used is higher in cost per mile than the new advisory rate introduced for public charging, a higher rate can be used as long as you can show the cost per mile is higher.’

Internet link: GOV.UK AFR

Advisory fuel rates for company cars

New company car advisory fuel rates have been published and took effect from 1 September 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 September 2025 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	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 below. Electricity is not a fuel for car fuel benefit purposes.

Advisory Electricity Rate
Home Charger	8p
Public Charger	14p

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

Internet link: GOV.UK AFR

Lowering VAT threshold would be manifesto breach, warns IPSE

Lowering the threshold for VAT registration would breach Labour’s manifesto, IPSE, the Self-Employed Association has warned.

IPSE says that the government is in a bind both politically and economically. Having ruled out tax rises on ‘working people’ and hiking employer National Insurance contributions (NICs) the Chancellor’s options are limited.

IPSE asks, in these circumstances will Ms Reeves reform taxes rather than raising them?

Sole traders are required to register for, charge and pay VAT once their annual turnover goes over £90,000.

IPSE says this threshold can put a ceiling on the ambitions of sole traders earning close to that amount; they may be reluctant to artificially increase the price of their services by 20%, giving customers and clients a reason to buy from competitors.

Newspaper reports say that the Treasury is now considering slashing the threshold to as low as £30,000.

Fred Hicks, Senior Policy and Communications Adviser at IPSE, said:

‘This would make registering for VAT unavoidable for anyone whose main source of income is from self-employment, and then some.

‘Cutting the VAT registration threshold is not the same as increasing rates of VAT – even if it ultimately ends up with more people having to charge and pay it. And if this radical reform did go ahead, this may well be how government justifies it.

‘But make no mistake – in IPSE’s eyes, it absolutely would be a breach of their commitment – and a breach of faith – to claim that dragging people into paying a new tax is not the same as putting their taxes up.’

Internet link: IPSE website

Companies face prosecution risk as new fraud law comes into force

Companies could be prosecuted and face unlimited fines if they fail to prevent fraud that their firm profits from under a new corporate offence.

The offence will hold large organisations to account if they profit from fraud. It forms part of wider measures introduced by the government to tackle fraud and protect the UK economy.

These have been introduced as part of the Economic Crime and Corporate Transparency Act (ECCT) 2023 and came into force on 1 September.

Under the new law, which was passed with cross-Parliament support, large organisations can be held criminally liable where an employee, agent, subsidiary, or other ‘associated person’ commits a fraud intending to benefit the organisation.

In the event of prosecution, an organisation will now have to demonstrate to the court that it had reasonable fraud prevention measures in place at the time the fraud was committed.

Lucy Rigby KC MP, the Solicitor General, said:

‘Fraud undermines our British values of fairness and playing by the rules. It hurts individuals and businesses, and harms business confidence.

‘This new legislation sends a clear message that large organisations must take responsibility for preventing fraud, and those that fail to do so will be prosecuted with the full force of the law.

‘This government is committed to protecting our economy and we’re determined that those who don’t play by the rules will be brought to book.’

Internet link: GOV.UK

Economic outlook remains subdued

The overall outlook for the UK economy remains subdued despite an upgrade to its forecast, says the British Chambers of Commerce (BCC).

The UK economy is expected to grow by 1.3% in 2025, revised up from the previous forecast of 1.1%, says the BCC.

This upgrade reflects better-than-expected economic performance in Q1, supported by public spending. However, GDP is expected to slow slightly in 2026 to 1.2%, before rising to 1.5% in 2027 – unchanged from the previous forecast.

Business investment across 2025 is projected to be 1.6% – a significant downgrade from 4.8% in the last forecast, the business group added.

Vicky Pryce, Chair of the BCC Economic Advisory Council, said:

‘While 2025 may be slightly better than forecast, the overall growth landscape for the UK in the next couple of years looks weak. The economy will continue to be buffeted by global headwinds, alongside ongoing worries about high bond yields.  

‘Government expenditure has bolstered the economy this year, but the spending taps are likely to be tightened very soon across Whitehall.  

‘The spectre of inflation is set to loom over the economy for some time to come, with consumers reluctant to spend. That’s likely to slow the path of interest rate cuts.  

‘Government long-term strategies are welcome – but firms can’t only exist on promises of tomorrow. They need help today to grow, recruit and compete.’

Internet link: BCC website

Chancellor to explore reforms to business rates on second premises

Chancellor Rachel Reeves will look at fixing the cliff edges in business rates that can discourage small business investment and growth, according to a report from HM Treasury.

Currently when a business opens a second property, they will lose access to all Small Business Rates Relief (SBRR) unless they meet specific conditions, holding businesses back from expanding.

That means that a local bakery would have to pay thousands of pounds more for opening a small shop in the next village.

The report confirms that the government will review how SBRR can support business growth, potentially lifting growth and living standards in the future for those who work in these small businesses.

This is one of the options being explored in the Treasury’s business rates interim report.

Chancellor of the Exchequer, Rachel Reeves, said:

‘Our economy isn’t broken, but it does feel stuck. That’s why growth is our number one mission. We want to see thriving high streets and small businesses investing in their future, not held back by outdated rules or strangled by red tape.

‘Tax reforms such as tackling cliff-edges in business rates and making reliefs fairer are vital to driving growth. We want to help small businesses expand to new premises and building an economy that works for, and rewards working people.’

Internet link: HM Treasury website

Budget Board must focus on easing the cost of doing business, says IoD

The government’s Budget Board must focus on easing the cost of doing business, says the Institute of Directors (IoD).

The board has been created to link top ministers and 10 Downing Street officials with the Treasury.

The board will meet weekly and will be chaired by the Prime Minister’s new economic advisor Baroness Minouche Shafik and Treasury Minister Torsten Bell.

Anna Leach, Chief Economist at the IoD, said:

‘We are glad to see the government putting renewed energy into the growth agenda with a particular focus on business.

‘It is positive that the government has announced the creation of this body, bringing together teams across Number 10 and the Treasury, focussed on ensuring that the Autumn Budget delivers vitality to the economy.

‘Business confidence has fallen to historically low levels since last year’s Budget. Our own economic confidence index fell to its lowest ever level in July this year, with taxes and the wider economic climate dominating concerns amongst business leaders.

‘To be successful, this board needs to deliver a Budget that really works for business, with swift action to remove barriers to growth from the regulatory and tax system. We look forward to engaging constructively with the board to ensure the voice of enterprise is at the heart of its work.’

Internet link: IoD website

Covid repayment window opens

The government has launched a voluntary repayment scheme to allow recipients of financial Covid support to repay outstanding money they were not entitled to or did not need with ‘no questions asked’.

The government says that over £10 billion was lost to pandemic fraud, flawed contracts and waste under the previous government’s pandemic era procurement and schemes. £1.54 billion has already been recovered through existing efforts.

It says it will do everything in its power to recoup money lost to Covid fraud.

All Covid schemes, including loans, grants, social security and tax benefits fall under the voluntary repayment scheme.

The government says that individuals who don’t take the chance to come forward and repay outstanding money could face prosecution when it receives additional investigatory powers next year.

Changes to how director disqualification works could also see more people stopped from being involved in businesses or facing compensation orders.

A Covid fraud reporting website is also being launched to allow members of the public to report suspected fraud.

Covid Counter-Fraud Commissioner Tom Hayhoe said:

‘Our message to those who still owe Covid era money is simple – pay now, clear your conscience, or face the consequences.

‘This money belongs in communities, the NHS, police and armed forces. Those who don’t take up this straightforward offer and have knowingly, wrongly claimed tax-payer-funded help could face prosecution, disqualification, or prison.

‘The digital trail is forever, so the time to settle is now - before new investigatory powers and tougher rules come into force.’

Internet link: GOV.UK

Chancellor urged to cut National Insurance but hike Income Tax in Autumn Budget

Chancellor Rachel Reeves has been urged to cut National Insurance contributions (NICs) and increase Income Tax to create a ‘level playing field’ and protect workers' pay.

The Resolution Foundation said the Chancellor should make a 2p cut to NICs as well as a 2p rise in Income Tax in the Autumn Budget.

The think tank said the move would help to address ‘unfairness’ in the tax system.

Adam Corlett, Principal Economist at the Resolution Foundation, said:

‘Significant tax rises will be needed for the Chancellor to send a clear signal that the UK’s public finances are under control.

‘Any tax rises are likely to be painful but given the fallout from the recent employer NICs rise, the Chancellor should do all she can to avoid loading further pain onto workers’ pay packets.

‘She can do this by switching our tax base away from employee NICs and onto Income Tax, which is paid by a far broader group in society. This should form part of wider efforts to level the playing field on tax, such as ensuring that lawyers and landlords face the same tax rates as their clients and tenants.

‘These sensible reforms would raise revenue while doing the least possible harm to workers and the wider economy. And by acting decisively, the Chancellor can turn her full attention back onto securing stronger economic growth.’

Internet link: Resolution Foundation website

AI to boost trade by nearly 40% by 2040 if gaps are bridged, says WTO

Artificial intelligence (AI) could boost the value of cross-border flows of goods and services by nearly 40% by 2040 thanks to productivity gains and lower trade costs, according to a World Trade Organization (WTO) report.

However, the report says that for AI and trade to contribute to inclusive growth policies need to be in place to bridge the digital divide, invest in workforce skills, and maintain an open and predictable trading environment.

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

‘This report is a call to action for business and policymakers worldwide to ensure we realise the full benefits of AI in boosting global trade, productivity and skills.

‘It identifies a possible AI premium for global economic growth of 12-13% and goods export growth of up to 37% by 2040. AI can boost exports by reducing red tape, speeding up journey times, and cutting customs delays. AI-services are also highly exportable, and can be a major source of growth, in an area where the UK is already a world leader.

‘But tariff and technical barriers to trade need to be dealt with to allow AI to realise these full gains. We also need to ensure that electronic transmission of services across the world remains tariff-free.’

Internet link: WTO website BCC website

Failed housing transactions cost £1.5 billion a year

Failed housing transactions cost consumers and the economy at least £1.5 billion every year, according to research published by Santander.

The research says that over 530,000 transactions fall through every year due to the UK’s antiquated homebuying process.

The economic analysis shows that the direct cost to consumers of this through expenditure on elements such as mortgage and solicitors’ fees that consumers cannot recoup, is £560 million annually.

However, the impact is not just limited to consumers. The repercussions on the broader economy include the loss of work output due to stress and the time taken to buy a property within work hours, estimated at £380 million per year.

There is also the cost of people’s reduced wellbeing, estimated to be £400 million and wasted leisure time, approximately £170 million.

David Morris, Head of Homes at Santander UK, said:

‘The homebuying journey is still operating in the confines of a framework that was established a century ago. This antiquated system is an increasingly heavy anchor weighing on the economy and fixing it must be key.

‘While the government has put the housing market firmly on its agenda – as this research shows - the scale of the challenge remains largely underappreciated, and that’s why we’re calling for powerful reforms to give buyers and sellers more confidence, ease the financial and emotional strain and create a housing system fit for the needs of today’s consumers and economy.’

Internet link: Santander website

Digitally excluded can apply for MTD for Income Tax exemption now

HMRC has opened up a service for landlords and self-employed to apply for exemption from Making Tax Digital (MTD) for Income Tax phase one.

From next April, people who are self-employed and landlords, and declare more than £50,000 of gross income in their 2024/25 self assessment tax return, will be legally required to follow the new MTD for Income Tax rules from April 2026 onwards.

Anyone who thinks they may be eligible for exemption must phone or write to HMRC. Third parties such as relatives and agents can do this on behalf of taxpayers if they are authorised. It will take up to 28 days for HMRC to respond with a decision.

Sharron West, Technical Officer at the Low Incomes Tax Reform Group (LITRG), said:

‘Because HMRC will deal with applications on a case-by-case basis, we don’t yet know how generous their interpretation of the rules will be, but we know that HMRC are keen to see as many people as possible manage their taxes online.

‘If you are already exempt from MTD for VAT, HMRC say you should contact them when the exemption application process opens so they can check your circumstances and confirm if you’ll also be exempt from MTD for Income Tax.

‘The clock is ticking and it’s time to get ready.’

Internet link: GOV.UK Chartered Institute of Taxation website

HMRC to resume taking tax owed by debtors directly from their bank accounts

HMRC has resumed its programme allowing direct recovery of money from debtors’ bank accounts.

The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a ‘test and learn’ phase’, the tax authority has confirmed.

DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said.

This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor’s account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers.

Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt.

Safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact.

The safeguards also include leaving a minimum of £5,000 in the debtor’s accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses.

HMRC said:

‘The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.’

Internet link: GOV.UK

Long-term sickness blighting UK economy

The UK must tackle its status as the sick man of the G7 if it wants to grow the economy, warns the British Chambers of Commerce (BCC).

Businesses want to see a major shake-up of the UK’s approach to ill-health which is excluding people from work and hobbling the economy, says the BCC.

It says around 7% of the UK workforce, almost 2.8 million people, is currently out of work due to long-term sickness, whereas the equivalent figure in Japan is just 3.5%.

The government’s own calculations put the lost economic output from this inactivity at a minimum of £130 billion, a figure which does not include welfare payments.

The BCC is calling for joint action by government and businesses to halt the rising tide of sickness and help people suffering ill-health to get back into work or stay there.

Shevaun Haviland, Director General of the BCC, said:

‘Sickness absenteeism is a growing concern. The UK has more than nine million people who aren’t working with one third of them suffering from long-term health conditions.  

‘This is a devastating loss of potential – for these individuals, the businesses that need them and our local economies.  

‘If the government is serious about growth, then we must turn the tide on this loss of talent. The evidence is also clear that being in work is good for health.  

‘Employers recognise the problem and want to do more, but the increasing cost and complexity of the landscape means many lack the resources to respond quickly and effectively.’

Internet link: BCC website