The Fair Work Agency begins operating

The Fair Work Agency (FWA), which was created under the Employment Rights Act 2025, is a government body which aims to both strengthen and simplify the way workers’ rights are enforced across the UK.

The FWA brings together various enforcement functions that used to sit under several separate bodies before it began its work on April 7, 2026. Its remit covers the enforcement of employment agency standards, pay-related rights including national minimum wage and national living wage. It also enforces requirements for a gangmaster’s licence and conditions for licences, and protections against serious labour exploitation, according to Gov.uk.

FWA’s enforcement authority extends across several key pieces of legislation:

• The Employment Agencies Act 1973
• Employment Tribunals Act 1996
• National Minimum Wage Act 1998
• Gangmasters (Licensing) Act 2004
• Fraud Act 2006
• Modern Slavery Act 2015
• Employment Rights Act 2025

Source: Gov.uk

What does this mean for employees?

Employees should find it easier to understand and enforce their workplace rights. Prior to the FWA, responsibility for the different aspects of employment law was spread across multiple bodies, including HMRC for National Minimum Wage enforcement, and the Gangmasters and Labour Abuse Authority for labour exploitation issues.

Over time, the expectation is that the FWA will expand its remit into areas such as holiday pay and Statutory Sick Pay enforcement. But even now, workers can have greater confidence that complaints about employment law breaches will actually be investigated.

The FWA also has powers to inspect businesses, investigate breaches, pursue employers who fail to comply fully with employment law, and to issue civil penalties. For employees who feel unable to take legal action against their employer themselves, the FWA may even support tribunal claims.

What does this mean for employers?

Employers who are already doing everything they should to protect their employees and work within the law have little to worry about. But any employer that isn’t doing everything right, or is perhaps cutting corners when it comes to employment law, needs to change their approach.

Businesses may face more inspections, be expected to keep better and more detailed records, and face larger penalties for breaches. The change will bring in more active enforcement, moving away from what has been a largely complaint-led system in the past.

The Gov.uk site states: “Where non-compliance is identified, FWA may take a range of enforcement actions depending on the nature and seriousness of the breach. It will also determine the most effective enforcement tools to address and prevent offending behaviour, ensuring that responses are proportionate and likely to prevent recurrence. These may include:

• Advice and guidance to secure compliance.
• Warning letters.
• Notices of underpayment and civil penalties.
• Naming employers for underpaying the minimum wage.
• Labour market enforcement undertakings or orders.
• Licensing action, including refusal, modification, suspension or revocation.
• Prohibition notice orders.
• Civil proceedings.
• Criminal investigation and prosecutions, where appropriate.”

Source: Gov.uk

We can help you meet your obligations

If you would like to know if your business is complying with employment law, or you simply need information on how the FWA might change what you need to do, then please get in touch and we would be happy to give you the guidance you need.

Developing tax software with AI? New guidelines are here

HMRC has set out its expectations for how software developers should use AI in tax software products, as it wants to encourage its innovative use to help build products, while protecting users from any potential problems.

AI could be used to develop products to help people submit their tax returns or other information to HMRC, or to help customers with their taxes in another way. But HMRC has released guidance on what they would expect these developers to do if they are using AI to create these kinds of tools.

For example, HMRC expects developers to be transparent about whether their products use generative AI, that they only use reliable source data, which is in line with relevant legislation, and that any products are designed with human oversight and control.

What about security?

Strong security is non-negotiable when it comes to any software that is used to help taxpayers with their submissions, or any other aspect of their tax affairs. HMRC insists that any software generated with or without AI is developed with ethical data security and privacy measures. This includes complying with UK General Data Protection Rules (UK GDPR).

Also, the software should clearly flag to the user if it “identifies areas involving nuanced tax rules, complex scenarios or specific guidance”, says HMRC. It should also identify if there is a need to investigate further or recommend the need to seek guidance from a qualified tax adviser.

In addition to all these requirements, developers should also highlight that it’s the taxpayer’s responsibility to make sure their tax returns are correct.

Let us help you

If you are using software developed using generative AI, or you are interested in designing something to help people with their tax affairs, then please get in touch with us and we will do what we can to help you.

Got an HMRC nudge letter? Here’s why

HMRC has been sending out what are known as ‘nudge’ letters and follow-up texts to taxpayers who may have needed to estimate some of their calculations for the 2024/25 tax return. It has identified taxpayers that it believes have included ‘round sum’ estimates in their self-assessment return for 2024/25, and is reminding them they need to refile the correct return if they haven’t already done so.

This can happen if you don’t have all the exact information to fill in your tax return, and you need to estimate an amount so you can submit it on time. Failing to do this would lead to a late filing penalty if you filed after January 31, so it can make sense to submit what you think is correct, and then make any amendments later.

But those people who haven’t refiled their correct return yet, are being reminded that they need to by HMRC.

Don’t ignore the letter

If you have received one of these letters from HMRC, please don’t ignore it. You usually have 12 months from January 31 to refile the return with correct information. This would mean you should have until January 31, 2027, to amend the 2024/25 tax return. But HMRC is encouraging people to make their amendments sooner, and the letters may have a different deadline, said the Low Incomes Tax Reform Group (LITRG).

Similar messages will be going out to all taxpayers in an equivalent position, and are designed to encourage you to check your returns in case they need refiling. If you haven’t got a letter but know that you need to refile your return with the correct information, then now would be a good time to adjust it.

Even if the amended figures are the same as the ones you submitted originally, you should still refile the return, said the LITRG. This is because you may have ticked a box on the original return saying it contained provisional figures. If that is the case, you need to refile and remember to untick that box before you resubmit your return.

What if I think my return is correct?

If you receive one of these letters but you believe everything in your tax return is correct, then you should contact HMRC’s Self-Assessment Helpline, said the LITRG, and they should be able to give you the right guidance.

You can also speak to your accountant to make sure you’re not mistaken and do have amendments to make to your tax return. Either way, checking now will be far better than realising a mistake has been made later.

If you choose to ignore the letter, or fail to contact HMRC by the date specified in the letter, you may find HMRC opens an enquiry into your self-assessment return for 2024/25, said the LITRG. If they then find your return does contain inaccuracies, you could face a penalty, and you may have to pay late payment interest if you haven’t paid enough tax.

We can help you

If you think you may need to refile your 2024/25 self-assessment tax return because you needed to update the figures, or because you believe you have made a different mistake, then please contact us and we will do everything we can to assist you.

Making Tax Digital has arrived – here’s what you need to do

Making Tax Digital (MTD) has finally arrived, having gone live on April 6, 2026, and it is going to change the way those affected need to file their returns to HMRC.

If you are self-employed, receive property income, or both, and have total qualifying income from self-employment and property above £50,000 – remember this isn’t profit, it is income – then you are likely to be an MTD taxpayer. Your total income will include payments from multiple sources, which is especially relevant if you are a landlord with more than one property.

If you’re not sure whether you qualify for MTD, then you can always ask your accountant. In fact, even if you know you qualify, it would be best to speak to your accountant to make sure you comply with all the different changes that MTD brings. Many people think it is just a change in the way you need to file your tax returns. But there is more to it.

Choose your software

Quarterly updates are the big change for people affected by MTD, and this is facilitated by accounting software that allows you to send your quarterly updates directly to HMRC from your system. If you don’t already use accounting software that allows you to send updates directly to HMRC, then you will need to choose it quickly to make sure you don’t miss the first deadline. This will be August 7, 2026, which covers the period from April 6, 2026, to July 5, 2026, if you use standard update periods.

Once you have chosen your software, which could be FreeAgent, QuickBooks or Xero among others, then you also need to link your bank accounts to it, so your transactions are brought into your accounting software and you can reconcile all transactions in one place.

If you haven’t done any of this yet, or you’re still using spreadsheets to do your accounts, then you need to act fast. Making these changes sooner rather than later will give you the information you need, where you need it, when the time to file comes. And planning ahead is much better than trying to make these changes in a panic. Remember, you need to link all your business accounts, if you have more than one.

Why is this so important now?

If you haven’t done any of this before you need to send your first quarterly update, then you will be playing catch-up – and that can become uncomfortable. You need to make sure all the data is flowing as it should be, rather than trying to reconstruct it later.

For the same reason, you should check the data you have already included in your accounting software for your year end. You should check all your expenses are coded correctly, and that all your eligible income is included in the right place.

If you have any personal spending that has gone through the business, you will need to identify this correctly so it isn’t included within your business accounts. You should also make sure there are no duplicated transactions in the accounts, as that can give you errors that might be difficult to unpick later. The closer you can get it to being exactly right before you start your quarterly updates, the better.

Review your accounts each month

If you want to really keep on top of things and ensure you’re doing everything right, then reviewing your accounts each month is a good idea going forwards. Take a day each month where you know you have less work to do, and use it as an admin day where you review your monthly transactions and make sure they are correctly categorised.

The latest accounting software can help you keep on top of your expenses more easily, as you can upload images of your receipts in real time. Taking a snapshot with your phone camera and uploading this will mean you don’t have to go through shoeboxes full of receipts when you get to the end of the quarter. As they can be categorised as you go, you will save yourself a lot of time when you need to send your update to HMRC.

The other important thing to do is decide what your accountant will do, and what you will do when it comes to MTD. It might be that you want to do the monthly bookkeeping, but you ask your accountant to check it for you. Or you may want your accountant to do the monthly bookkeeping, but this is likely to increase your costs. So, have a discussion now before you need to send your first quarterly update, to make sure you know who is doing what. It can save confusion later.

You can find out more about MTD on Gov.uk.

Contact us

If you would like to find out more about MTD and whether you are affected, then please get in touch with us and we will explain what you need to know.