Newsletter 196

 

March 2025

In this month’s Enews, we look at the government’s decision to scrap powers for HMRC to collect data on the hours employees work, warnings from businesses over the impact of April’s employers’ National Insurance contributions (NICs) increase, at a government consultation on mandatory electronic invoicing for businesses and more.

• Proposed HMRC powers to collect data on hours worked scrapped
• 5 million file self assessment by 31 January deadline
• £35 million added to State Pension pots
• Government consults on mandatory e-invoicing
• Businesses warn of National Insurance ‘powder keg’
• Advisory fuel rates for company cars

Proposed HMRC powers to collect data on hours worked scrapped

The government has stopped controversial plans to collect information about the exact hours worked by every employee in PAYE returns.

The data collection on employee hours was meant to start from April 2026, but the plan has been scrapped as part of the government’s attempts to reduce red tape and regulatory burden for business.

The (Draft) The Income Tax (Pay As You Earn) (Amendment) Regulations 2024 will not be progressed further after the results of a consultation were published.

HMRC said:

‘The government has listened to businesses and acted on their feedback about the administrative burden the requirements in these regulations would bring.’

The Chartered Institute of Taxation (CIOT) warned last May that the estimated one-off cost to businesses of £58 million and ongoing costs of £10 million - an average per business of £29 and £5 respectively- were “significantly underestimated” and that gathering additional data to provide to HMRC would lead to extra work for many employers.

The CIOT added it was unclear why HMRC wanted to collect this information and what they were going to use it for.

Internet link: GOV.UK CIOT website

11.5 million file self assessment by 31 January deadline

More than 11.5 million taxpayers beat the self assessment deadline to file their tax return for the 2023/24 tax year by 31 January and avoid a £100 late filing penalty, according to HMRC’s data.

Almost three quarters of a million taxpayers left it to the last minute to file with 732,498 submitting returns on deadline day.

The most common time to file on 31 January was 16:00 to 16:59 when 58,517 people submitted returns. And 31,442 taxpayers cut it as close as possible by filing between 23:00 and 23:59.

Late filing and late payment penalties are charged for failure to meet the deadline. HMRC is urging anyone who has missed the deadline to file their tax return now and pay any tax owed.

The tax authority says one of the quickest ways to pay is via the free and secure HMRC app. Time to Pay arrangements are available for those who cannot pay their tax bill in full, it adds.

Internet link: HMRC press release

£35 million added to State Pension pots

People plugging gaps in their National Insurance contributions (NICs) have added £35 million to their State Pensions since last April, according to figures from HMRC.

More than 37,000 online payments have been made through the online service, equating to 68,673 years of contributions.

The average online top-up payment is £1,835 and the largest weekly State Pension increase is £113.76. HMRC says that 65% of the years topped up by customers are from 2017 onwards.

HMRC and Department for Work and Pensions (DWP) are reminding customers they only have until 5 April to check their NICs record and fill any gaps from 6 April 2006 onwards.

From 6 April 2025, people will only be able to make voluntary National Insurance contributions for the previous six tax years, in line with normal time limits.

The Check your State Pension forecast service on GOV.UK is the quickest and easiest way to check if action is required, says HMRC. The HMRC app can also be used.

Internet link: HMRC press release

Government consults on mandatory e-invoicing

The government has launched a consultation on plans for the rollout of electronic invoicing (e-invoicing) in the UK.

The 12-week consultation is being jointly conducted by HMRC and the Department of Business and Trade (DBT) and will consider whether to make e-invoicing mandatory for businesses in the UK.

E-invoicing is the digital exchange of invoice information directly between buyers and suppliers.

The government says this could help businesses get their tax right first time, reduce invoicing and data errors, improve the accuracy of VAT returns, help close the tax gap and save time and money.

It usually results in faster business to business payments, leading to improved cash flow and less paperwork, the government adds.

The 34-question consultation can be completed online and once the 12-week feedback session closes.

Internet link: HMRC press release

Businesses warn of National Insurance ‘powder keg’

The overwhelming majority of businesses say the rise in employers’ NICs will force them to change their plans, according to research by the British Chambers of Commerce (BCC).

With under six weeks until the NICs rise comes in, 82% of firms say the tax hike will cause them to rethink. In addition, 58% of surveyed businesses say it will impact recruitment plans, and 54% that it will affect their prices.

Meanwhile, more than a third of firms suggest investment and day-to-day operations will be impacted.

Internet link: BCC website

Advisory fuel rates for company cars

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

Engine size	Petrol
1400cc or less	12p
1401cc - 2000cc	15p
Over 2000cc	23p
Engine size	Diesel
1600cc or less	12p
1601cc - 2000cc	13p
Over 2000cc	17p
Engine size	LPG
1400cc or less	11p
1401cc - 2000cc	13p
Over 2000cc	21p

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

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

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR