Tax E-News – April 2025

Welcome to the April 2025 edition of Tax E-News. We hope that you find this informative. Please contact us if you wish to discuss any matters in more detail.

April 2025

SPRING STATEMENT 2025

On 26 March 2025, Chancellor Rachel Reeves presented her Spring Statement to parliament. Despite a backdrop of low economic growth and increasing government borrowing costs, the Chancellor remains committed to her ‘non-negotiable’ fiscal rules that aim to bring stability to the economy and security for working people. With further borrowing ruled out and a determination not to announce further tax changes, her focus has been on government spending, a review of which will be announced on 11 June 2025. This will allocate government spending for the three years from 2026/27 to 2028/29. […]

SELF-ASSESSMENT

The High-Income Child Benefit Charge (HICBC)

You may have to pay the HICBC if your income exceeds £60,000 and child benefit is being paid in relation to a child that lives with you, regardless of whether you are a parent of that child. If you are living with another person in a marriage, civil partnership or long-term relationship, you will only be liable to the HICBC if you are the higher earner of the two of you. […]

Taxable income and self-assessment tax returns
You might also want to consider increasing your pension savings before 5 April 2025.
Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension, the government tops this up to £5,000. If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000 […]

Digital record keeping and quarterly reporting requirements for traders and landlords
(“MTD”)
Updates are continuing to come through on HMRC’s ‘Making Tax Digital for Income Tax’ (‘MTD for IT’) initiative. It will initially apply from 6 April 2026 for sole traders and property landlords who generated gross trade and rental income (‘qualifying income’) of more than £50,000 in the 2024/25 tax year. […]

EMPLOYMENT TAXES

Employer National Insurance Contributions (NICs)

Please remember that the significant changes to the NICs paid by employers will start to apply from 6 April 2025. An increase in the rate of employers’ NICs from 13.8% to 15% is combined with: […]

TAXES ON CAPITAL ASSETS

Capital Gains Tax (CGT)

As we head into 2025/26, it should be remembered that, for most sales of capital assets, CGT will apply at 18% for basic rate taxpayers and 24% otherwise. The Business Asset Disposal Relief (BADR) rate of CGT for eligible business disposals will increase from 10% to 14%, with a further uplift to 18% planned for 6 April 2026. […]

IHT reliefs for business owners and farmers

The government is continuing with its plans to reform IHT agricultural property relief (APR) and business property relief (BPR) from 6 April 2026, with a consultation process underway on the particular impact when using trusts. […]

BUSINESS TAX MATTERS

Electronic invoicing
The government has recently launched a consultation on the possible advantages of e-invoicing, which include productivity enhancements, cashflow acceleration and error reductions. It also considers how HMRC can support investment and encourage uptake within the business community.

Trading with the USA and other international partners
While uncertainties around global trade and tariffs continue, the government is expressing ambitions to support digitalised trade and supply chains, bringing cross-border trade into the 21st century.
In particular, a new digital pilot with the USA to test ways to speed up trade processes for USA and UK businesses will soon commence.

CORPORATE TAXES

Research and Development (R&D) tax reliefs
With ongoing focus on the availability of R&D tax reliefs and companies’ eligibility to claim them, the government is now consulting on widening the use of ‘advance clearances’ from HMRC. This initiative intends to give companies greater certainty when planning R&D investment, while also improving the taxpayer experience and reducing error and fraud. […]

Tackling ‘phoenixism’
HMRC is expanding its efforts to tackle ‘phoenixism’ (or tax-driven business cessations followed by business start-ups), whereby company directors go insolvent to evade tax and write off debts owed to others. […]

STAMP DUTY LAND TAX (SDLT)

England and Northern Ireland
If you are planning to purchase residential property, remember that the SDLT thresholds will change from 1 April 2025. In particular, a 0% rate currently applies to the first £250,000 of the purchase price. It will only apply to the first £125,000 of the purchase price from 1 April 2025. The new threshold created between
£125,001 and £250,000 will be subject to a rate of 2%. […]

Scotland and Wales
Property purchasers in Scotland and Wales do not pay SDLT. Rather, if you buy a property in Scotland, you pay Land and Buildings Transaction Tax, and in Wales, you pay Land Transaction Tax. Both regimes have recently applied increases to the rates applicable on the purchase of ‘additional dwellings’.

DEALING WITH HMRC

Modernising HMRC
As part of the government’s ‘Plan For Change’, steps are being taken towards modernising HMRC, to improve value for money, enhance efficiencies and support economic growth. Greater innovation, including grasping technological opportunities, is at the heart of this, transforming HMRC into a ‘digital-first’ organisation. A ‘HMRC transformation roadmap’ will be published in the summer.

Improving customer service – including with AI
HMRC officials have been undertaking work to learn best practices in customer service from various successful UK brands. This includes trialling the use of generative artificial intelligence (AI) to point taxpayers to the advice they need on GOV.UK. […]

New PAYE portal
In April 2025, HMRC will launch a new PAYE portal. This is intended to be a new, simple way for 34 million employees and pensioners to check the data that HMRC holds on their employment and pensions, to notify HMRC of any changes, and to find simple explanations to understand the impact of changes on their tax codes.

Tax avoidance and non-compliance
As part of a wider initiative to close the ‘tax gap’, new legislation will be introduced to further tackle tax avoidance and prevent non-compliance.
Particular focus will be applied to offshore tax non-compliance by the wealthy. HMRC are recruiting experts in private sector wealth management and deploying AI and advanced analytics to help identify hidden funds. […]

Tax fraud – new reporting reward scheme
A new reward scheme is being developed to encourage informants to come forward to HMRC about tax fraud. This will launch later this year and target serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes.

HMRC compliance activity
In addition to HMRC receiving a budget to recruit and fund new compliance caseworkers and debt collection officers, we are told that the department is also investing in AI to improve the targeting of compliance work and make HMRC more productive.

Collecting taxpayer data from financial institutions
HMRC will continue working with financial institutions to improve the quality of data that it receives about individual taxpayer transactions, for example, bank interest. Improved data will enable HMRC to modernise its services to taxpayers. […]

Penalties
Returning to the topic of MTD, the government is increasing the late payment penalties for taxpayers within the MTD regime, whether for VAT and/or income tax. Increased rates will apply from April 2025 or when the individual or business joins the MTD regime in question, if later. […]

Interest on unpaid tax liabilities
From 6 April 2025, the late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5 percentage points. For most taxes, this will set late payment interest at the Bank of England base rate plus 4%. […]

IN CONCLUSION

The Spring Statement was an economic update given in challenging circumstances, in what was regularly referred to as a ‘changing world’.
Remember, we are here to work alongside you to ensure your business and personal success. Please do get in touch if there is anything that you would like to discuss.

DIARY OF MAIN TAX EVENTS

APRIL  / MAY 2025