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.

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• One million miss self assessment deadline
• Making Tax Digital for Income Tax biggest tax change since self assessment
• Business confidence jumps in January
• Sole traders and landlords given MTD warning
• Apprenticeship system reform must go further
• HMRC urges young people to claim Child Trust Funds
• Vaping businesses urged to prepare for Vaping Products Duty registration
• Get tax affairs back on track if self assessment deadline was missed
• Latest guidance for employers
• Government urged to scrap ‘unfair holiday tax’
• Employment Rights Act risks being a handbrake on hiring
• Advisory fuel rates for company cars

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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

 

 

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