March 2026
In this month’s Enews, there is a warning for sole traders and landlords who will be affected by the next stage of Making Tax Digital. We also look at calls to reform the apprenticeship system and to scrap the planned Visitor Levy from the hospitality industry. We also look at the impact of the Employment Rights Act, the latest advisory fuel rates and more.
- One million miss self assessment deadline
- 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
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:
- Checking whether a return is even needed.
- Filing outstanding returns as soon as possible.
- Paying tax as soon as possible will prevent additional penalties for late payment.
- 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
Posts
No comments:
Post a Comment