| Date | What’s Due |
| 1 May | Corporation Tax for year to 31/07/2024, unless quarterly instalments apply. |
| 19 May | PAYE & NIC deductions, and CIS return and tax, for month to 05/05/2025 (due 22/05 if you pay electronically). |
| 31 May | Give each employee a P60 for 2024/25. |
| 1 June | Corporation Tax for year to 31/08/2024, unless quarterly instalments apply. |
| 19 June | PAYE & NIC deductions, and CIS return and tax, for month to 05/06/2025 (due 22/06 if you pay electronically). |
Group 1 of Schedule 8 VAT Act 1994 specifically makes ‘food’ zero-rated, although there is a long list of ‘excepted items’ which do not qualify for the zero-rating and are therefore standard-rated. Excepted item No. 2 is “Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance”.
Note 5 expands on the meaning of ‘confectionery’, saying that it “includes chocolates, sweets and biscuits; drained, glace or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers”.
Over the years, there have been numerous court and tribunal cases that have considered whether or not a food item meets the definition of ‘confectionery’. The most recent case has concerned ‘Mega Marshmallows’; the kind usually toasted on a skewer over outdoor fires and barbecues.
In HMRC v Innovative Bites Ltd ([2025] EWCA Civ 293), the Court of Appeal (CoA) has allowed HMRC’s appeal and has remitted the case to the First Tier Tribunal (FTT) to consider whether mega marshmallows are a “sweetened prepared food which is normally eaten with the fingers”. The CoA found that both the First-Tier and Upper Tribunals had not put sufficient emphasis on the manner in which Mega Marshmallows are ‘normally eaten’.
It will be interesting to read the First-Tier Tribunal’s ruling, as toasted marshmallows are normally eaten from a skewer, albeit one that is held with fingers!
The Furnished Holiday Lettings (FHLs) regime was abolished on 6 April 2025. What does the abolition mean for your holiday letting property?
The property will become part of either your main UK or overseas property business. This means that some of the beneficial tax rules that previously applied will no longer apply, such as:
However, all is not lost! There are some transitional measures that you may benefit from:
If your property previously qualified as an FHL and you have questions about the new tax treatment, please get in touch with us!
From 6 April 2025, a new regime for the taxation of UK resident non-domiciled individuals came into effect. HMRC have published a brand-new manual on the regime which can be viewed here.
Until 5 April 2025, special tax rules applied to individuals who were resident in the UK but whose domicile (i.e. their permanent home, usually determined by their father’s permanent home at the time the individual was born) was outside the UK. Such individuals could choose to either pay UK tax on their foreign income and gains as they arose or, alternatively, they could claim the remittance basis, which meant only foreign income and gains remitted to the UK were taxed.
From 6 April 2025, all UK residents will be taxed on the arising basis of assessment. The remittance basis will no longer be an option. A new regime for Foreign Income & Gains (FIG) will be available to individuals for their first four years of UK tax residence after a period of 10 years non-residence. Individuals who make a claim to use the new 4-year FIG regime will not pay tax on FIG arising in those four years. Former remittance basis users will continue to pay tax on FIG that arose before 6 April 2025 that they remit to the UK.
New rules also apply for Inheritance Tax (IHT) purposes. The new test for whether non-UK assets are in scope for IHT is whether an individual has been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises. This is known as being a ‘long-term UK resident’. Where an individual is a long-term UK resident and becomes non-UK resident, they will remain in scope for IHT for a minimum of 3 years and a maximum of 10 years depending on the amount of time they resided in the UK.
Making Tax Digital for Income Tax (MTD for IT) will be introduced from 6 April 2026. Below are some frequently asked questions and answers.
Who will be affected by MTD for IT, and when?
Individuals with self employment and/or income from property will need to comply with MTD for IT once they are mandated. The commencement date for MTD for IT is 6 April 2026, but a phasing-in program will mean that some individuals are not immediately within the regime. MTD for IT applies from:
If an individual’s qualifying income exceeds the threshold in a tax year, HMRC will notify them that they are mandated to comply with the MTD for IT rules.
What is ‘qualifying income’?
Qualifying income is a person’s gross income (turnover), before expenses are deducted, from self-employment and property combined.
Does qualifying income include VAT?
HMRC will look at the tax return ‘income’ boxes to calculate qualifying income. For those using the Cash Basis, it is possible to include VAT in the tax return figures for income and expenses. If VAT is included, HMRC will include it in the individual’s qualifying income, therefore it’s best not to use VAT-inclusive figures in the tax return.
Are there any exemptions for those with a low volume of transactions?
No. If qualifying income is over the thresholds outlined above, an individual will be mandated regardless of the volume of transactions.
What do I need to do if I am mandated?
You will keep digital records in MTD-compatible software and send a quarterly update summary of your business income and expenses to HMRC. This means that each quarter, you will need to enter details of each item of income and expenditure into your software.
In addition to the quarterly record-keeping and reporting requirements, you will still need to submit an end-of-year tax return, where you enter any other sources of income (such as employment, savings or dividends) and finalise your tax position. The end-of-year return also needs to be submitted using MTD-compatible software.
Will I need to make quarterly payments to HMRC?
At this point, there are no plans to mandate quarterly payments. The due date for payment will remain 31 January following the end of a tax year, with payments on account due on 31 January and 31 July.
I’ve heard that there’s an easement for those with turnover below £90,000. What does this involve?
There is an easement, but it’s not as generous as we would like! The easement allows businesses with turnover below the VAT threshold to send totals for ’income’ and ‘expenditure’ to HMRC each quarter, instead of totals for a longer and more detailed list of income and expense categories. Each individual item of income and expenditure will still need to be entered into the MTD-compatible software, although each item can be simply categorised as either ‘income’ or ‘expenditure’.
Apparently there’s an easement for recording income from jointly held property. What does this mean?
There is a separate easement for recording and reporting jointly held property income, that can be used in conjunction with the easement for those with turnover below £90,000 (provided income for the property business is below the threshold). If both easements are used, for jointly held property, the individual can enter a single income figure into the MTD-compatible software each quarter and a single, annual total expenses figure in quarter 4.
Where an individual receives property income and incurs residential property finance costs (such as mortgage interest), they must create a separate digital record for these costs and send them separately from other expenses, even if taking advantage of this easement.
I already submit quarterly VAT returns. How will this work alongside MTD for IT quarterly updates?
MTD for IT quarterly updates are for set periods. The quarters end on 5th July, 5th October, 5th January and 5th April, although it is possible to elect to use ‘calendar quarters’ ending on 30th June, 30th September, 31st December and 31st March.
VAT quarters can end on the last day of any month, depending on your ‘VAT stagger’. If your VAT quarters do not align with the calendar quarters for MTD for IT, it may be worth considering changing your VAT stagger, so that your VAT returns are aligned with your MTD for IT quarterly updates.
What will happen if I don’t comply with the new rules?
Once you are mandated to comply with MTD for IT, a range of penalties will apply to both the quarterly updates and the end-of-year returns. A new penalty regime for late filing and late payment will apply to those who are mandated. Penalties for errors will apply to the end-of-year tax return, but not the quarterly updates. This does not mean that erroneous ‘nil’ returns can be submitted for the quarterly updates, however. HMRC will have powers to issue penalties of up to £3,000 per quarter if you do not keep digital records. At this time, it is unclear how HMRC will use these powers because guidance has not yet been issued.
| Date | What’s Due |
| 1 April | Corporation Tax for year to 30/06/2024, unless quarterly instalments apply. |
| 5 April | End of the 2024/25 tax year – many tax planning actions need to have been taken by this date. |
| 6 April | Start of the 2025/26 tax year. |
| 19 April | PAYE & NIC deductions, and CIS return and tax, for month to 05/04/2025 (due 22/04 if you pay electronically). |
| 30 April | Annual Tax on Enveloped Dwellings (ATED) returns and payment for the chargeable period starting on 1 April 2025. |
| 1 May | Corporation Tax for year to 31/07/2024, unless quarterly instalments apply. |
| 19 May | PAYE & NIC deductions, and CIS return and tax, for month to 05/05/2025 (due 22/05 if you pay electronically). |
| 31 May | Give each employee a P60 for 2024/25. |
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.
A number of the news articles below were announced on 26 March, as part of the Chancellor’s update.
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.
For 2025/26, the HICBC is calculated at 1% of the child benefit received for every £200 of income above £60,000. This means that child benefit is fully clawed back where income exceeds £80,000.
From summer 2025, if you are an employee who is liable to pay the HICBC, you will be able to use a new digital service to declare the charge and opt to pay it directly through PAYE, without the need to register for self-assessment.
Taxable income and self-assessment tax returns
If you are undertaking a commercial venture with a plan to make profits (e.g. buying stock to resell), tax may be due on the profits made. However, if your commercial venture is generating trading or property rental income of less than £1,000 a year, this is disregarded for tax purposes. This often covers small income-generating activities such as dog walking or creating content online.
Once the £1,000 limit has been exceeded, it is necessary to report your ‘taxable activity’ to HMRC.
At present, if you have trading income over £1,000, you are required to submit a self-assessment tax return every tax year. This applies even if your affairs are otherwise quite simple. The Chancellor has announced that a new simple online service will be developed in future to allow those with trading income between £1,000 and £3,000 to report their trading income and pay any tax they owe, without necessarily requiring a full self-assessment tax return. For those without tax to pay, they will not need to report their trading income at all.
If your trading income exceeds £3,000 you will remain in the self-assessment tax system.
If your trading and property rental income exceeds £50,000, make sure you read the next section, as a fundamental change to income tax reporting is coming in from April 2026!
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.
This will be followed by those with qualifying income of more than £30,000 in the 2025/26 tax year being mandated to comply from 6 April 2027.
It has now been announced that those with qualifying income over £20,000 in 2026/27 will be mandated to comply from 6 April 2028.
The MTD for IT rules are mandatory and, if affected, you will be required to use ‘MTD-compatible software’ to maintain digital records and send a quarterly summary of your business and/or property income and expenses to HMRC. This will be in addition to an end-of-year tax return. It has now been confirmed that, for those mandated into MTD for IT, the end-of-year tax return must also be submitted using MTD-compatible software. It will not be possible to use a free HMRC online service.
Other MTD for IT changes announced at the Spring Statement were:
There are various ways to remain compliant under the new rules, and options exist to ‘trial’ the new MTD system voluntarily before the 6 April 2026 start date. Please talk to us if you would like to know more.
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:
* A higher threshold of £50,270 applies for employees who are under 21 and apprentices under 25. Other variations can also apply.
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.
Particularly in relation to business disposals, timing is important, so please do talk to us about optimising your tax position prior to any capital disposal.
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.
Relief of up to 100% of asset value is currently available on qualifying business and agricultural assets. From 6 April 2026, it is proposed that the 100% relief will apply on up to £1 million of combined agricultural and business property, with the relief reducing to 50% on the value that exceeds £1 million.
Another April 2026 change will reduce the BPR available on AIM shares and similar from 100% to 50%.
Care is needed when planning for these changes, as the rules are not yet certain and even gifting before 6 April 2026 will not necessarily achieve the desired effect. Please do talk to us about how best to organise your estate with business or agricultural assets.
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.
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.
Voluntary advance assurances are already part of the R&D tax relief regime, but they are not commonly utilised. The consultation considers a framework where future assurances become mandatory in certain areas, namely those where HMRC are concerned about the risk of incorrect claims.
The consultation also considers whether, in future, a minimum expenditure threshold should apply to R&D reliefs, noting that a threshold of £25,000 used to apply in the past.
What is clear is that expert tax support continues to be required for all R&D activity. If this is something that you or your company are undertaking now or considering for the future, please do get in touch.
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.
HMRC, Companies House and the Insolvency Service will deliver a joint plan to tackle rogue directors who abuse the insolvency regime. The plan includes an increase in the use of securities, where HMRC asks for an upfront payment of tax from new companies. More directors will be made personally liable for the taxes of their company and there will be an increase in the number of enforcement sanctions.
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%.
For first-time buyers, the 0% rate currently applies to the first £425,000 (of properties costing up to £625,000), and this will drop to £300,000 on 1 April 2025 (for properties costing up to £500,000).
Tiered SDLT rates apply above the 0% bands, starting with the new 2% rate mentioned.
SDLT surcharges apply to purchasers of ‘additional dwellings’ (i.e. when they already own one dwelling), and to companies.
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’.
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.
HMRC is also expected to roll out more widely a system where taxpayers can use their voice as their password to pass security checks faster and more securely.
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.
A consultation has also been launched on further tackling those who promote or market tax avoidance or contrived schemes. The proposals give HMRC additional powers and stronger sanctions, enabling them to disrupt the business model that promoters rely on.
Another new consultation considers whether HMRC’s powers are effective in dealing with non-compliance that is facilitated by unscrupulous tax advisers.
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. This includes reducing the admin time needed in preparing a self-assessment tax return, by HMRC automatically pre-populating return areas with information they already hold. Accurate PAYE coding adjustments would be another benefit.
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.
The new rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more.
HMRC is also reviewing the penalty framework that applies across the board when a taxpayer either:
It is expected that any new regime will continue to distinguish between genuine mistakes (where often a penalty is not charged at all) and conscious attempts to cheat the tax system. Overall, the emphasis is on simplifying and strengthening the penalty system.
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%.
The above developments reinforce the importance of keeping your tax affairs up-to-date and adequately budgeting for future tax liabilities. Flexible ‘time to pay’ arrangements can sometimes be agreed with HMRC. We can support you with any of this.
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.
| Date | What’s Due |
| 1 March | Corporation Tax for year to 30/05/2024, unless quarterly instalments apply. |
| 19 March | PAYE & NIC deductions, and CIS return and tax, for month to 05/03/2025 (due 22/03 if you pay electronically). |
| 26 March | Spring Forecast: the Chancellor of the Exchequer, Rachel Reeves, will present her Spring forecast. |
| 1 April | Corporation Tax for year to 30/06/2024, unless quarterly instalments apply. |
| 5 April | End of the 2024/25 tax year – many tax planning actions need to have been taken by this date. |
| 6 April | Start of the 2025/26 tax year. |
| 19 April | PAYE & NIC deductions, and CIS return and tax, for month to 05/04/2025 (due 22/04 if you pay electronically). |
| 30 April | Annual Tax on Enveloped Dwellings (ATED) returns and payment for the chargeable period starting on 1 April 2025. |
The table below sets out the HMRC advisory fuel rates from 1 March 2025. These are the suggested reimbursement rates for employees’ private mileage using their company car.
Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.
| Engine Size | Petrol | Diesel | LPG |
| 1400cc or less | 12p
(12p) |
11p
(11p) |
|
| 1600cc or less | 12p
(11p) |
||
| 1401cc to 2000cc | 15p
(14p) |
13p
(13p) |
|
| 1601 to 2000cc | 13p
(13p) |
||
| Over 2000cc | 23p
(23p) |
17p
(17p) |
21p
(21p) |
Previous rates are shown in brackets.
You can also continue to use the previous rates for up to 1 month from the date the new rates apply.
Note that for hybrid cars, you must use the petrol or diesel rate.
For fully electric vehicles the rate is 7p (7p) per mile.
Employees using their own cars
For employees using their own cars for business purposes, the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate continues to be 45 pence per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25 pence a mile thereafter. Note that for National Insurance contribution purposes the employer can continue to reimburse at the 45p rate as the 10,000 mile threshold does not apply.
Input VAT
Within the 45p/25p AMAP payments, the amounts in the above table represent the fuel element. The employer is able to reclaim 20/120 of the fuel amount as input VAT provided the claim is supported by a VAT invoice from the filling station. For a 2500cc petrol-engine car, 4 pence per mile can be reclaimed as input VAT (23p x 1/6).
Annual Tax on Enveloped Dwellings (ATED) is payable by ‘non-natural persons’, such as companies, that hold an interest in UK residential property valued at over £500,000. The ATED charge is based on the value of the property and applies unless an available relief is claimed.
One such available relief is for dwellings that are let to a third party on a commercial basis and are not, at any time, occupied, or available for occupation, by anyone connected with the owner. If this relief applies, it should be claimed in an ATED return.
ATED is payable for a chargeable period ending on 31 March each year. Returns must be filed within 30 days of the period commencing, so returns for the period 1 April 2025 to 31 March 2026 must be filed on or after 1 April 2025, and no later than 30 April 2025.
Over the coming months, HMRC will be sending ‘One-to-Many’ letters to companies that own one or more dwellings valued at over £500,000, declared no profits in their Corporation Tax returns between 2017 and 2020 and either filed no ATED returns or claimed the relief outlined above. The letter explains that as the company’s tax returns show that it did not make a taxable profit, it may not have been run on a commercial basis, with a view to a profit. In such cases, the ATED relief will not apply.
The letter asks companies to review their ATED position and respond within 40 days, either providing further information, making a disclosure or filing any outstanding returns. If HMRC do not receive a response within the set time, they may raise a discovery assessment and penalties may apply.
