Tax debt continues to rise amid fears about HMRC powers

Overdue tax owed to HMRC had reached £44.7bn at the end of March, according to the latest official figures released in July, up from £44bn at the same time last year. This included new debt of £103,592m for the full year to the end of March, which is up on the £96,944m for last year’s figures at the same point.

Resolved debt meanwhile has risen to £101,851m for the end of March this year, up from £96,738m cleared during the equivalent period for the previous year. In total, 884,319 customers were in Time to Pay arrangements at the end of March this year, down from 913,209 in the previous year, according to analysis of the figures by BDO. For 2024 to 2025, HMRC said its tax gap – the amount of money that should be paid to HMRC in tax and the amount that is actually paid – was at 6.4%.

So, it is little surprise that HMRC is consulting on changing the rules about when tax is paid, and on whether it should have new powers to take money directly from a taxpayer’s bank account to pay their tax debt back.

Is this likely to happen?

HMRC is consulting on getting these new powers, so it could happen. But whether it happens is another story. One of the most vocal opponents to this extension of HMRC’s powers is the Low Incomes Tax Reform Group (LITRG).

It’s concerned that allowing HMRC to recover lower-value debts directly from taxpayers’ bank accounts could lead to taking money in error and creating hardship as a result, if the safeguards aren’t sufficiently tight to eliminate such mistakes.

These lower-value debts could be collected in greater volumes, and while the LITRG says it recognises “the importance of collecting tax that’s due”, it’s concerned that “some vulnerable taxpayers could be adversely affected if adequate protections are not built into the new process”, said Victoria Todd, Head of LITRG.

She added: “We understand why HMRC is looking for more effective ways to collect tax debts. However, the proposals raise some important questions about how taxpayers will be protected.

“It is important that, before any action is taken to recover a debt directly, HMRC are satisfied that the debt has been correctly identified and is genuinely due.”

What safeguards are in place to prevent financial hardship?

This would be an extension of the existing Direct Recovery of Debts powers, which are currently used only where debts exceed £1,000 and even then, only in certain circumstances. These current powers have caveats which mean HMRC must leave at least £5,000 across the taxpayers’ accounts once any money has been taken.

Under the proposed extension of these powers, the smaller tax debts of up to £5,000 for individuals or £10,000 for companies could be taken directly from their bank accounts on a monthly basis rather than as a single lump sum, and there is currently no specified minimum that must be left in the taxpayers’ accounts listed in the consultation. So, anyone already living on a tight budget could be left in real hardship and struggling to meet their essential living costs such as rent and food.

Ms Todd said: “One of the key questions is how HMRC will assess what is affordable where a taxpayer has not engaged, or cannot engage with them. Without up-to-date information about an individual’s circumstances, there is a risk that deductions could be set at an unaffordable level.

“HMRC will need to be confident that they can correctly identify potentially vulnerable taxpayers and distinguish them from those who are simply choosing not to engage.

“We welcome HMRC’s recognition that strong safeguards and clear routes for taxpayers to challenge decisions will be essential.”

We can help you

If you think you may be affected by the proposed changes, or have any other concerns about your tax position and the current tax regime, then please contact us and we will do everything we can to assist you.

Deadline nearing for those claiming roll-over relief in 2022/23

Business owners who need to claim roll-over relief for the 2022/23 tax year are being reminded by HMRC that if they made a provisional claim for business asset roll-over relief in their self-assessment for that year and haven’t yet replaced it with a final claim, they need to do so.

Roll-over relief can be claimed by a taxpayer who is trading and where a qualifying asset is sold and a new qualifying asset is acquired within a set period. If a valid claim is made, then the payment of Capital Gains Tax (CGT) on the sale of the original asset can be deferred.

A provisional claim would be made if the taxpayer intended to buy the replacement asset, but has not yet done so by the time they need to claim roll-over relief, says the ICAEW. But once the asset is acquired, they need to replace the provisional claim with the final valid claim.

When is the deadline for claims?

The final deadline for these claims is January 31, 2027, and if the final valid claim isn’t made by this time, then HMRC will withdraw any provisional claim, which would mean CGT would need to be paid.

The letter being sent out to taxpayers now by HMRC shows how to make a valid final claim, including what information needs to be provided for the claim to be accepted by HMRC. You can use form HS290 to make the claim, and anyone who doesn’t intend to buy a qualifying asset before the January 31, 2027, deadline should contact HMRC now.

This will start the process of HMRC withdrawing the provisional claim early, reducing the amount of interest you may owe on any tax due. If you are intending to buy the asset either shortly before or soon after the January 31, 2027, deadline, then HMRC will consider “reasonable time” to make the final claim, according to the ICAEW.

Let us help you

If you need help with roll-over relief, then please get in touch with us and we will do what we can to help you.

Long-awaited pension dashboard expected next year

Pension dashboards, which are designed to make it easier for people to decide where their pension is best placed, are expected to be released next year along with league tables for pensions. The aim is to allow pension savers to see how their workplace pension schemes compare to other pension providers in the marketplace.

The pension dashboard has been discussed for years, by everyone from the government to scheme providers and financial advisers. But the FCA and the TPR are consulting on a new ‘Value for Money’ framework for workplace pensions, and assessments are due to be published from 2028.

Savers will be able to compare providers, including workplace pensions, based on charges, returns, and quality of service once the dashboards are fully set up. It will help people to get the best value for money for their pension contributions by checking their provider against the league table.

What benefits will people see?

The aim of the pension dashboard has always been to create an easier way of comparing pension providers for the general public. Pensions at their simplest are tax-efficient savings vehicles – you put in £80 as a basic rate taxpayer and the government gives you tax relief of £20 to make your contribution up to £100. Higher rate and additional rate taxpayers would pay £60 and £55 respectively, and get £40 and £45 respectively in tax relief to make up a £100 contribution.

Rachel Vahey, head of public policy at AJ Bell, said: “The Government has set out an ambitious programme of reforms that has the potential to transform workplace pensions, making it easier for people to compare pensions and switch to get a better deal.

“Pension savers deserve to know how well their pension scheme is performing. ‘Traffic lights’ league tables must be easy to understand and help people make more informed decisions about their retirement savings, rather than burying them in technical language or complex metrics.”

What will I be able to see through the pension dashboard?

You will be able to see all the details of all your pension plans in one place once the dashboard is launched. This will include both state and private pensions, and which pension scheme provider your pension is with. You will see contact details, and the current value of the pension, along with a prediction of what it could generate for you in income once you reach retirement age, according to AJ Bell.

The first incarnation of the dashboard will be accessed through MoneyHelper, which is run by the Money and Pensions Service (MaPS). But it’s expected that other companies, such as pension providers, banks or your employer, will all offer a pension dashboard eventually. The MaPS dashboard is expected to be available to the public in financial year 2027/28.

Ms Vahey said: “Greater transparency should empower people to take control of their retirement planning. Whether that means increasing contributions, reviewing their investment strategy or consolidating pension pots with a provider that better meets their needs for better information, service, price, or wider investment choice, giving them more opportunity to improve their long-term retirement outcomes.”

What else can we expect?

Aside from the impending launch of the pension dashboard, and the league table of pension funds, the Government has also set out a ‘roadmap’ timetable for workplace pensions reform. This includes aiming to create 20 defined contribution ‘megafunds’. A defined contribution pension is a pension where what you eventually receive depends on what you put in and how that money has grown over time.

It has also suggested other reforms, such as the consolidation of dormant small pension pots, and introducing a series of default retirement options for workers saving into their workplace pension. These so-called ‘guided retirement’ options, which are due to start from 2029, could include pension income solutions such as a combination of annuity and drawdown, or a collective solution, designed by pension trustees and providers. You wouldn’t have to accept these options, you could be offered other solutions, or even transfer your pension elsewhere if you prefer.

Larger workplace pension schemes will have to publish Value for Money assessments from 2028, leaving them competing to show how well their scheme is performing. This is based on cost, investment returns, and how good the scheme’s administrative support is. They will be scored from red to green in a traffic light system, which goes from poor value, to outperforming on value. The worst performers will be expected to improve, or close.

Other changes to workplace pensions include the scale provisions, which require “all defined contribution multi-employer schemes which are used for automatic enrolment to have assets of at least £25 billion in a single main default arrangement”, said Ms Vahey.

She added: “This will mean that some pension savers are moved to different pension schemes, as their workplace pensions go through a transitional period.

“Combined with pensions dashboards, these reforms have the potential to create a new generation of more engaged savers. For the first time, people will be able to see what pension savings they have built up across different providers, alongside clearer information about how well those pensions are delivering for them.”

Contact us

If you would like to find out more about how the pension dashboard and other changes will affect you or your business, then please get in touch with us and we will explain what you need to know.

The Uncertain Tax Treatment regime could be expanded

Fears are growing that HMRC’s proposed extension of the Uncertain Tax Treatment (UTT) regime could mire individual taxpayers and trusts in more complexity in an increasingly demanding tax system.

The UTT regime was introduced in 2022 and is designed to get very large companies and partnerships to flag when they have taken a tax position that could be legally contentious. To be included in the legislation, an entity would currently need an annual turnover of £200m or more, or a UK balance sheet of £2 billion or more. Businesses must tell HMRC when they’ve taken a tax position in a return that might be open to challenge, where the tax advantage is £5m or more.

The consultation, which has now closed and HMRC is considering responses, proposed bringing individual taxpayers and trusts into the regime, and adding additional taxes, such as Stamp Duty Land Tax, Capital Gains Tax, National Insurance Contributions and Inheritance Tax.

Could individuals and trusts be brought within the regime?

The proposals in the consultation suggest this is the direction HMRC is looking to travel. The current regime covers Corporation Tax, VAT and Income Tax, including PAYE. But the hope is that the £5m reporting requirement will remain in place, so any expansion would only affect the very wealthiest people in the UK.

The proposed changes are designed to reduce the ‘tax gap’ between what is being paid and what HMRC estimates should be paid. For 2023/24, the tax gap was estimated to be £46.8bn, with the ‘legal interpretation’ portion of the tax gap estimated at £5.4bn, according to HMRC figures.

HMRC argues that if it is notified early about potentially contentious tax positions, it can solve disputes sooner, rather than having to discover them through an inquiry or litigation. But expanding the scope would create greater complexity for individuals and trusts.

Tax is often uncertain because legislation is complex and guidance can be difficult to get right as a result. The addition of a reporting ‘trigger’, where HMRC’s view on an aspect of tax isn’t known, could be difficult to apply in practice, and may mean taxpayers who are unsure whether they should notify or not, deciding to report anyway to avoid the risk of penalties.

Is this HMRC overreach?

Some professional bodies have raised concerns about including individuals and trusts in their responses to the consultation. For example, the Association of Taxation Technicians (ATT) has warned that the £5m threshold must be retained to avoid a disproportionate impact on individuals and trusts.

It also stated: “We also recommend leaving Inheritance Tax (IHT) out of any expansion of the taxes covered by UTT. IHT can involve long periods of time between tax planning taking place and the tax event (often death) occurring, IHT reporting duties on death often fall on people who were not involved in the planning, and because reporting may be unnecessary in the case of some IHT events (e.g. ‘successful’ Potentially Exempt Transfers) where there is no tax charge.”

The ATT is also concerned about the practical implementation of the new reporting ‘trigger’. The consultation response added: “As proposed, this addition risks creating an impractical burden on taxpayers. Instead, we recommend relying on the existing triggers at least until an extended UTT regime has had time to become established, and its effectiveness and impact on trusts and individuals can be properly assessed.

“Finally, the ATT reminds HMRC of its responsibilities in areas of uncertainty and potentially different legal interpretation – UTT should not become a means for HMRC to excuse itself from proactively identifying such areas and clarifying them in either legislation or guidance.”

Any changes have not yet been finalised, so we will have to wait and see what happens to the UTT regime. HMRC’s response to the consultation is expected this summer.

We can help you

If you think you may be affected by the proposed changes, or have any other concerns about your tax position and the current tax regime, then please contact us and we will do everything we can to assist you.

Many businesses use AI, but are they using it well?

AI is helping to save businesses hours each week, but the question now is not whether they should use it, but whether they are using it safely and ethically?

AI can be a genuinely useful tool for small businesses especially helping to draft first versions of emails, policies, proposals, social media, meeting notes, and so on. It can also turn a long, complex document into a plain English summary, suggest ways to improve a sales message, or help prepare for a difficult client conversation.

However, AI should be considered more of an assistant than a replacement for the work done by staff or a business owner. Everything your AI model – ChatGPT, Claude, Copilot, etc. – churns out can sound completely convincing. But it can make mistakes, including using outdated information to give you an incorrect answer. So, you must review any content you ask AI to create, or any analysis it does for you, carefully, especially if what you’re asking for help with is vital to your business or relates to legal or financial decisions.

What you should and shouldn’t do with AI

It might be tempting to ask AI to analyse patterns in information, such as employment records. But it is very unwise to add sensitive data to public AI platforms. Businesses also need to consider data protection rules if personal data is being processed.

If you are using an AI system that you know is secure, then it would still be sensible to be cautious. Even in this position, it would still be prudent not to add any very sensitive information to be analysed. But anyone in your IT department, or a company you use for IT support if you have a smaller business, may be able to give you guidance on this.

Remember too, no matter what you ask AI to help you create, you are still legally responsible for what you publish or send out, even if you got AI to help you write it. This is another reason why it’s vital to review everything that is produced.

How can you use AI ethically?

Using AI ethically should be mostly common sense, alongside learned good practice. For example, no-one should ever use AI to mislead customers, create fake testimonials, or impersonate people. It is also impersonal to recruit with AI, so consider the impression you’re giving your potential staff if you filter possible new recruits this way.

Creating an AI policy for the business to follow is the best way to keep your team working in the right way, as then everyone knows what is allowed, what is expected, and what tools can be used. You should include what information must never be added to an AI platform, and when the use of AI should be disclosed.

Using AI the right way can be a real benefit to your business, and keeping on the right side of ethical use will help prevent any problems further down the line.

We can help you meet your obligations

If you would like to know more about business ethics and how to keep your business moving forwards in the right way, then please get in touch and we would be happy to give you the guidance you need.

Do a mid-year business review to see if you’re on track

Most businesses will have goals that they want to hit by the year end, which is a good idea. If you know your destination, it’s easier to find the road to get there. But by doing a mid-year review, you can take a business snapshot to see if you are likely to meet those goals.

Most of us now use accounting software to deal with the Making Tax Digital regime, and this has another major benefit. Most of these systems will offer you options to check on various business reports throughout the year. So, you can see where your business is performing better or worse, and fix it.

QuickBooks, Xero, FreeAgent, or any other similar accounting system, will allow you to compare your income, costs and profits with the same period last year and see how healthy your business is. Things to consider are whether you’re selling more or less than last year, whether your costs are higher, and where your best profit margins are on different products.

You should also assess your cashflow, as that is the lifeblood of any business. See who owes you money, how quickly invoices are paid, whether you have sufficient cash to cover tax, wages, supplier payments, and upcoming bills. A business may look good on paper, but without cashflow, it can all fall apart very quickly.

Is there enough time to make changes?

If you do a mid-year business review, and you see things that could be done better, then you have time to make the necessary changes.

For example, you can also see anywhere you spend a lot of time without getting much return. This level of analysis will really help move your business to the next level. You can also check where you might be able to cut costs – lose unused subscriptions, review your prices to see if your margins are high enough, and chase any invoices that are overdue.

Setting monthly targets will also help you see on a more micro level whether your business is heading in the direction you want it to.

Let us help you

If you want some help with analysing your business at the half-year point, then please get in touch with us and we will do what we can to help you.

Late payments to small businesses face biggest crackdown in 25 years

Large companies who persistently pay small suppliers late, or have unreasonably long payment terms, are facing the toughest UK crackdown in more than 25 years, as the Government aims to tackle one of the biggest cashflow problems affecting small businesses.

The Commercial Payments Bill, also named publicly as the Small Business Protections Bill by the Government, was introduced to Parliament in May 2026 and aims to rebalance the power dynamic between large firms and smaller businesses that work with them. This includes sole traders and freelancers.

Late payments can lead to serious cashflow issues for small businesses, resulting in staff being paid late, or not at all, forcing small business owners to rely on credit, and especially spending hours chasing money which should have already been paid. Those hours mount up and could be used to move the business forwards. Government research has found staff at small businesses across the UK can spend up to 133m hours collectively chasing payments across the economy each year.

Late payments are estimated to cost the UK economy around £11 billion a year, according to Government figures, and they contribute to 38 businesses closing every day. Businesses are estimated to be typically owed £26 billion in late payments at any time, with firms affected owed an average of £17,000.

What proposals are in the Bill?

The new Bill aims to make late payments a thing of the past, as it will cost large companies more and be harder to justify. A key proposal is for a 60-day cap on payment terms for large companies paying smaller suppliers.

Long contractual payment terms, where the payment is technically made ‘on time’ but may be, say, 65 days or more after the work was completed, can create similar cashflow issues. To combat these practices, the Government is proposing reforms allowing smaller businesses to charge mandatory interest on late payments at 8% above the Bank of England base rate. This would give a current rate of 11.75%, as the Bank of England base rate was 3.75% at the time of writing.

You can already claim statutory interest and debt recovery costs if another business pays late, but the new rules would enshrine the right in legislation, making it harder for larger companies to work around it with contract terms.

Are there teeth behind the proposed legislation?

The Small Business Commissioner is expected to receive stronger powers to help deal with late payments in the UK. These include the power to investigate poor payment practices, adjudicate disputes and fine persistent late payers. Potential penalties could run into millions for large companies who are the worst offenders, as it could equate to a percentage of their overall turnover.

Emma Jones, Small Business Commissioner, said: “I am on a mission to make life easier for small firms by getting money moving faster through the economy by tackling late payments. The measures the Government has announced will strengthen the role of my office in taking on the worst payers alongside ensuring small businesses have a stronger voice on payment terms and late payment interest.

“I work with many firms, including those on the Fair Payment Code, who see the value of prompt payment to their business, but for too many late payments and long payment times persist with little accountability.

“These reforms will reduce the hours spent chasing debt, allowing small businesses to focus on more productive and enjoyable growth.”

Will it really make a difference?

Time will tell whether the rules change the behaviour of late-paying larger companies, but it is clear that late payment is no longer being treated as ‘just a normal part of business’. It ultimately has an impact on the wider economy.

Large companies who don’t pay smaller suppliers fairly, and on time, would face legal repercussions if the Bill becomes law in its current form. Prime Minister Keir Starmer said: “Small businesses are the backbone of our economy – run by people who take risks, create jobs and keep communities going. This Government is firmly on their side.

“Too many small business owners are spending hours chasing money they are owed and when payments don’t come through, the cost is personal. It’s about whether you can pay your staff, keep the lights on, or invest in your future.

“We’re changing that with the toughest action on late payments in a generation, so small businesses get paid on time and get the backing they need to grow, create jobs and serve their communities.”

Contact us

If you would like to find out how to deal with late payments and what options you have when it comes to cashflow, then please get in touch with us and we will explain what you need to know.

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.

Savers could face an unexpected tax bill

Savers making the most of the rise in interest rates could get an unexpected tax bill if they breach the Personal Savings Allowance (PSA).

The PSA was introduced in April 2016, and it allows basic rate taxpayers to earn up to £1,000 in interest on their savings per year without paying tax on it. But the allowance hasn’t changed in value since it was launched, and as interest rates have increased in recent years, there is a greater chance of savers breaching this limit.

The PSA is separate to the Individual Savings Account (ISA) limit, and there is an argument that people might be better off using an ISA so they can have more of their interest growing tax free, as there is no income tax to pay on interest through an ISA, no matter how much they receive.

How the PSA works

As already mentioned, basic rate taxpayers can earn up to £1,000 in interest on their savings each year, without having to pay any income tax. Higher-rate taxpayers can only earn up to £500 in interest before they start paying income tax on their savings interest. Additional rate taxpayers don’t have any PSA, so would pay tax on all interest paid outside an ISA.

Since the PSA was introduced 10 years ago, basic-rate taxpayers will have paid around £4.7 billion in tax on their savings interest, according to analysis of HMRC’s data by Yorkshire Building Society. But it needs updating, according to Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

She added: “While [the PSA] protected savings interest from tax when it was launched for many, it’s outdated and needs to change. The fact that millions of ordinary people risk paying a tax bill on their savings shows how the PSA has not moved along with the times.”

Why are more people being taxed?

More people are being pushed into higher income tax bands as wages have increased, but income tax thresholds have been frozen. As people move into higher income tax bands, their PSA allowance is cut.

In fact, the number of higher-rate taxpayers increased from around 4.4m in 2016, to 7m in 2025/26. The number of additional rate taxpayers has risen from 0.4m to 1.23m over the same period. Plus, higher interest rates now compared to 2016 mean that for the same amount sitting in the account, there is a higher chance of the PSA being breached.

For example, a higher-rate taxpayer in 2016 could have saved up £50,000 in a one-year fixed account paying a typical rate of 1% before breaching their PSA. But if they deposited just £12,000 into a one-year bond now, paying 4.50% AER, they would earn £540 in interest and be liable to pay tax, according to figures from Moneyfactscompare.co.uk.

Many people would be better off using a cash ISA to protect their savings interest from income tax. You can currently deposit up to £20,000 in a cash ISA each tax year, and any interest earned is completely exempt from income tax.

Cash ISAs will often pay rates similar to non-ISA accounts, especially towards the end of the tax year when companies are trying to encourage people to use up their ISA allowance, said Ms Springall.

Even if you’re not at imminent risk of paying income tax on your savings income, it is worth acting now to protect your money from any potential liabilities you might face in future. For example, from the 2027/28 tax year, anyone aged under 65 will only be able to deposit £12,000 into cash ISAs each year. The allowance will remain at £20,000 for those over 65.

We can help you

If you would like to find out how you can make the most of your savings, keeping more of your interest in your pocket without breaking any rules, then please contact us and we will do everything we can to assist you.

Start of the new tax year – now’s the time to use allowances

Many of us love to work to a deadline, but when it comes to maximising your tax allowances each tax year, it isn’t a great strategy to leave it until the last minute to mop them up. If you want to maximise allowances, you have up to 12 months to do so by starting as soon as you can, and this can also make it possible for those with less disposable income to see greater benefits.

As the income tax thresholds have been frozen for another year, you need to make the most of the tax allowances you do have, especially as many of them are set to reduce in coming tax years.

Rachael Griffin, tax and financial planning expert at Quilter, said: “This is a year to use the allowances you can, but the bigger task is getting ready for the major structural shifts arriving in 2027. Cash ISA limits will be cut for under‑65s and savings income will be taxed more heavily, while unused pensions will fall within inheritance tax (IHT), so households need to… prepare for a very different tax landscape.”

For example, if you start your saving into your Individual Savings Account (ISA) as soon as you can, you have more time to use the full £20,000 allowance. You could put up to £1,666 per month into an ISA to build up to the full £20,000 over 12 months. This might be easier for some people than finding the full £20,000 in one go and can also boost your savings over time.

The two extremes of ISA investing were evident at one of the world’s largest investment management firms on April 5 and then April 6 this year. The final investor of the 2025/26 tax year invested via the Fidelity International platform with just 20 minutes to go at 23:40 of April 5. While the first investor of this tax year put money into their ISA within the first hour of April 6.

Fidelity has also calculated that by using your ISA allowance early, you benefit more, as you can see from the table below. Early Shirley, who has invested the full allowance for the last 10 years as soon as possible, has the largest pot at £321,570. Monthly Monty, who puts in the full amount allowed each month, has £303,625 – ahead of Last-Minute Lara who invests at the end of the tax year, and has £299,385. The difference between Early Shirley and Last-Minute Lara is a whopping £22,185 over 10 years.

Returns generated after 10 years of investing the maximum ISA allowance

Source: Datastream, Fidelity International, 05/04/2016-06/04/2026. Total return in GBP of FTSE All Share

What else should be considered now?

Topping up your pension is one thing you should try to do early in the new tax year. You can put up to £60,000 a year, or 100% of your earnings, whichever is lower, into your pension each year and receive tax relief.

If you haven’t used up your full allowance for previous years, you can add more into your pension pot by using what are known as “carry forward” rules. This has an additional benefit of reducing your tax bill, while boosting your long-term retirement plans, but you should speak to your accountant before actioning this.

You can also gift up to £3,000 a year free of IHT, said Ms Griffin, or £6,000 jointly for a married couple or civil partners. If you didn’t use the allowance for the last tax year, then you can gift as much as £12,000 as a couple in this tax year.

One major change to be aware of this tax year is the requirement for some taxpayers to do ‘digital reporting’ to HMRC. From April 6, you are required to submit quarterly updates under new reporting rules if you are self-employed or a landlord earning over £50,000. Even though there are no penalties for missing a filing this year, it is sensible to get used to how the system works to make sure you don’t get caught out later by errors, or penalties, which will apply from January 31, 2027, if the last return of the year is late.

Let us help you

If you are interested in seeing how you can use your tax allowances earlier in the tax year, or need more information about digital reporting, then please get in touch with us and we will do what we can to help you.

Renters’ Rights Act comes into force from May 1

New obligations for landlords and new rights for tenants are coming into force from May 1 as the Renters’ Rights Act is implemented. The changes are designed to give tenants more rights than they have previously enjoyed, and to ensure landlords are not operating in ways that disadvantage their tenants. But these rules create the biggest shake up of the sector, and there is a lot for both sides to absorb to make sure they don’t fall foul of the new rules.

One of the main changes is that there is no longer a traditional fixed-term tenancy. Typically, tenants were offered a tenancy for maybe six or 12 months by the landlord or the agent operating on the landlord’s behalf. But from May 1, shorthold tenancies of this type, and all new tenancies, will be rolling, without a fixed end date.

This means that to end a tenancy, either the tenant or the landlord must give notice, which creates a more formal process, and makes it much harder for informal tenancies to exist.

What rules have changed?

A Section 21 eviction – known as a ‘no fault’ eviction, was the main way that landlords would evict tenants, as they didn’t need a specific reason to issue one. Now that this has been removed, if a landlord wants to evict a tenant, the eviction must be justified under Section 8.

You might action a Section 8 eviction if there are rent arrears, antisocial behaviour, because the landlord wants to sell the property, or because the landlord wants to move into the property. These changes create a legal process that must be carefully navigated.

There are also changes to how and when rent can be increased. From May 1, you are limited to just one rent increase per year, and tenants must be given at least two months’ notice of any increase.

Landlords also can’t ask for large rental payments upfront under the new rules, with advance rent effectively capped at one month in most cases. Rental bidding wars are also banned, so landlords or agents won’t be able to encourage offers above the advertised rent to secure a property. Tenants also have stronger rights to challenge rent increases they consider excessive, so they don’t have to just accept what the landlord is proposing in terms of a rent increase without having a say.

What else has changed?

Tenants will automatically have the right to ask to have pets in rented accommodation, and the landlord must have a reasonable reason to refuse the request. It isn’t enough for the landlord to say he or she doesn’t want them. Stronger anti-discrimination rules are also being implemented, so landlords can’t refuse tenants because, for example, they have children or receive benefits.

All the changes must be communicated to existing tenants by the end of May this year via a Government leaflet which can be downloaded from Gov.uk. Failing to do this could lead to potential fines.

However, if a landlord has given a tenant notice before May 1, 2026, then these rules may not apply. But if they do apply, then tenants can effectively stay indefinitely, and you need valid legal grounds to remove them.

New rules if you want to sell your property

If you genuinely intend to sell your property, you can serve a Section 8 notice under the updated rules to ask your tenants to leave. But you can’t just use this as a ruse to get tenants out, you must follow through with the sale or face consequences if you don’t.

For example, you would need to instruct an agent, list the property, or show other credible steps towards selling. If you don’t sell, then in most cases you can’t put your property up for rent until 12 months after you served the notice.

You must also give four months’ notice to the tenants if you want to sell, and you can’t give this notice within the first 12 months of the beginning of a contract. So, in effect, if you wanted to sell your property, you would need to wait up to 16 months before you can begin to put it on the market.

One important aspect of the new rules to be aware of is that local councils will be given more powers in relation to rental properties, which includes being able to impose civil penalties of up to £7,000 for a first or minor non-compliance with the rules, and up to £40,000 for serious or repeat non-compliance. Councils will also be able to pursue action through the courts if there is serious or persistent non-compliance, which could lead to an unlimited fine. You can find more information about the new rules at Gov.uk.

Contact us

If you would like to find out how these rules may affect you, whether you’re a tenant or a landlord, and how to deal with them effectively, then please get in touch with us and we will explain what you need to know.

Household bills rise in April – here’s what to expect

Household bills have begun rising in April, with a raft of increases set to make it harder to make ends meet. Everything from council tax to water bills are rising at the start of the new tax year, and it is important to understand what is changing so you can deal with it accordingly.

Council tax is set to rise by around 5%, with seven areas being given permission to impose higher increases, according to information from AJ Bell. Sadly, you can’t do much to change your council tax, apart from move to a smaller property. But you should double check your property is being taxed in the correct band.

Danni Hewson, head of financial analysis at AJ Bell, said: “About as welcome as a pothole at the end of the road or the bin collectors going on strike, the rise means the average Band D bill has increased by more than a quarter in 5 years, up from £1,898 in 2021 to £2,392 a year in 2026.”

How other bills are rising

Water bills are set to rise across England and Wales, with an average increase of 5.4%, but the size of the increase will depend on where you live. Even the average rise could add an extra £33 a year to your water bills.

Broadband is also set to go up by £3 to £4 per month for those who are on contract, depending on which provider you’re with. If you’re just out of a contract, you may find your price increase considerably higher, but by shopping around for the best deal you could save money.

Ms Hewson said: “That’s also the case for mobile phone contracts and quickly texting the word ‘INFO’ to 85075 will helpfully tell you if you are still in contract, when it ends and if there are any exit fees to pay. Again, shopping around can save you pounds especially when it comes to sim only deals.”

Are energy bills rising too?

Unusually, the energy price cap has fallen in April, as the Government’s decision to shift some green levies into general taxation provides some energy bill relief.

This means the average dual fuel household bills should fall by around £117 a year, slightly less than the £150 cut promised, said Ms Hewson. But it is important to enjoy the benefits while they last, as geopolitical tensions are set to make them short-lived.

Ms Hewson added: “The gains will be short lived thanks to the Iran war which has sent energy costs surging again and July’s price cap is expected to rise by at least £300 a year. While long days and summer weather will help take some of the sting out of that increase; the big worry is where the next price cap will be set.

“Households on fixed tariffs will still be cushioned until their current deal comes to an end but finding a new deal may prove difficult with many tariffs having been taken off the market.”

We can help you meet your obligations

If you need to see how you can make your money go further, and to ensure you’re claiming all the allowances you can to help offset these price rises, then please get in touch and we would be happy to give you the guidance you need.

Rewards for anyone reporting tax avoidance or evasion

Whistleblowers reporting on serious tax avoidance or evasion are set to get a significant boost to their rewards from April, thanks to a change in the way HMRC pays for intelligence.

Under the Strengthened Reward Scheme, people reporting on tax evasion or avoidance where HMRC collects more than £1.5m in tax, may get a significant financial reward.

This kind of high-value avoidance or evasion usually involves large companies, wealthy individuals, or offshore or avoidance schemes, and reporting this to HMRC could lead to a big payout.

What can you expect to receive?

If the information you provide to HMRC leads to it recouping at least £1.5m in tax, you could receive between 15% and 30% of the tax collected, not including penalties and interest. However, the rewards are not guaranteed, they are still paid at the discretion of HMRC.

Some people won’t qualify for an award, including if

• You are or were a civil servant (or contracted to work in the government) and got the information while you were employed.
• You are the taxpayer involved in the tax evasion or avoidance, or you planned and started the actions that led to the tax evasion or avoidance.
• The information you provide may already be known to HMRC or could have been identified through routine processes.
• The reward might directly or indirectly lead to funding illegal activity.
• You are required by law to disclose, or not disclose, the information.
• You are acting on behalf of someone else.
• You got the information from someone who would not have been eligible for a reward themselves.
• You are providing the information anonymously (anonymous submissions will be accepted but no payment will be made).

Source: Gov.uk

HMRC is asking anyone who knows about tax avoidance or evasion to send a report, even if they’re not eligible for a reward.

How do you send a report?

You can send a report to HMRC via this link if you think a person or a business is avoiding or evading tax payments. You can make the report anonymously if you wish, but you would not be eligible for a reward. To be eligible, you must provide contact details.

Any information you do provide will be confidential, and you will be asked to include:

• What type of activity you are reporting (1,200 character limit).
• How you know about it.
• What your relationship is to the individual or business.
• How long it has been going on for.
• The total value, or estimation, of the activity.
• A description of any supporting information you have or know of (500 character limit).

Source: Gov.uk

You can’t add attachments to the report, but you can let HMRC know you have additional information if necessary. Once the report is sent, you’ll get confirmation of receipt from HMRC, and you are asked not to send another report on the same activity.

Also, before you send the report, HMRC asks that you don’t try to find out more information yourself, don’t let anyone know you’re making a report, and don’t encourage anyone to commit a crime to find out more information.

If HMRC wants more information or you’re eligible for a reward, it will contact you. Bear in mind it could be years before you receive an award payment, as it can take a very long time to investigate tax evasion or avoidance.

We can help you meet your obligations

If you need information about how this scheme works or have any concerns about this, then please get in touch and we would be happy to give you the guidance you need.

Will it still be sensible to take income in dividends?

Increases in the dividend tax levels from April 6 are set to eat into the income of directors, who will often pay themselves in dividends, but is it still sensible to take payments this way for the coming tax year?

The dividend tax rates are set to rise by 2 percentage points from April 6. This will raise the Basic Rate from 8.75% to 10.75%, and the Higher Rate from 33.75% to 35.75%. But the Additional rate of 39.35% will remain the same.

So, does this rise create a case for paying yourself via a salary rather than dividends going forwards, or are dividends still the best way for directors to pay themselves from their companies?

Dividends still win, but a mix of salary and dividends is best

Even though the increase in dividend tax rates will reduce the benefit of paying yourself in dividends, it still makes more sense financially to take dividends than it would to pay yourself a salary alone in most cases.

By taking a salary, your company would need to pay Employer National Insurance Contributions (NICs) on your salary at 13.8% for any amounts of £9,100 or above. You would also need to pay employee NICs on your salary above £12,570 – which is the level of the personal allowance – at 8% up to £50,270, and at 2% above this level. On top of this, you also pay income tax at 20% as a basic rate taxpayer, 40% as a higher rate taxpayer, or 45% as an additional rate taxpayer.

By taking dividends, assuming your Corporation Tax has already been paid and your profits are high enough for you to do so, you would usually have more in your pocket as they are not subject to NICs like a salary. Your company would pay no NICs, and neither would you, and the dividend tax levels are also below the higher rate and additional rate income tax bands.

If you’re not earning much in dividends, you should check with your accountant whether you’re better off taking your earnings as a salary or in dividends, as there could be a point where the balance tips in favour of salary. But typically, you are still better off taking dividends, even though the benefits are narrowing.

Still, the best way to pay yourself from your company is likely to be via a mix of the two. This would mean taking a small salary, equivalent to the personal allowance of £12,570, and then taking the remainder in dividends. This means you pay some NICs, which will still qualify you for the State pension, but you will pay little or no income tax on the salary, and a salary is also deductible for Corporation Tax.

Let us help you

If you are interested in seeing how you can legitimately reduce your tax burden through dividends, then please get in touch with us and we will do what we can to help you.

Saving for school fees? The sooner you start, the better

There’s no getting away from it, children are expensive, especially if you are planning to send them to private school and/or university. But the sooner you start to put money away to save for these fees, the better, as it means you can put aside a smaller amount of money each month, and still watch it grow over time to meet your goals.

One of the best savings vehicles to help save for your child’s future is a Junior ISA (JISA), as the money inside this product will grow free of income tax and capital gains tax, which helps to maximise not just the money you put in, but any growth you see over the years.

You could also benefit from an increase of around 50% in the overall fund by the time your child reaches 18, providing you start early enough, according to recent research from Fidelity International. But no matter when you start, saving for your child’s future is a wise move.

Why should you use a Junior ISA?

Using a JISA is a sensible way to build a pot of money for your child, which can help to pay for various milestones such as university fees, a wedding, or even as a deposit to help them to buy their first home. Parents, grandparents, plus wider family and friends can all add money to the JISA, and the tax breaks explained above make it an appealing investment vehicle, and it will be in your child’s name.

You can open either a cash JISA or stocks and shares JISA for your child, and you can put up to £9,000 each year into JISAs for each child, as a maximum across both types. The money can be added to year after year, and will become available to your child when they reach 18.

It will be very useful, because even at today’s prices, these milestones cost a lot of money. The table below gives some examples of how much various life events currently cost, and shows how much you would have needed to save over the last 18 years per month to meet these estimated costs. The values assume a 5% growth per year, less a 0.75% annual management charge, but don’t take inflation into account, which over time will erode your spending power as costs rise.

Source: Fidelity International

The importance of planning ahead

Most parents wouldn’t be able to save enough money to cover all their child’s life events, or even some of them, depending on their circumstances. But the figures in the table show how effective it is to start saving as soon as possible.

Jemma Slingo, Pensions and Investment Specialist, Fidelity International said:“For many families, the aim is simply to take some pressure off at key moments – whether that’s helping with first-year university costs, contributing towards a house deposit, or giving their child a financial cushion as they start adult life.

“What matters most is starting early, setting a contribution that feels manageable, and sticking with it.”

We can help you

If you are already saving for your children and want to check things are on track, or you would like to start, then please contact us and we will do everything we can to assist you.

Does your family know where to find your will? Or pension?

Thousands of people die each year without a will, as more than half of us don’t have one. But even for those who have written a will, there is a good chance your loved ones won’t know where to find it when you die.

Nearly half of all couples don’t know where their partner’s will is, according to research by Canada Life, and nearly 60% of us wouldn’t know how to locate our parents’ pension policies when they are gone. These two facts have the potential to leave millions of people at risk, facing unnecessary delays to probate, and even penalties at a time of bereavement. When it comes to siblings, nearly nine in 10 (87%) wouldn’t be able to locate their brother or sister’s will.

Pensions make up the second largest part of a household’s wealth, according to data from the Office for National Statistics, second only to the value of your property. Yet nearly two in five people (37%) in a relationship wouldn’t even know where to find their partner’s pension documents in the event of their death.

Why does this matter?

If these documents can’t be found when someone dies, it means executors or personal representatives face delays in getting the information they need to deal with probate efficiently, slowing everything down at a time when emotions are high.

Pensions will become part of the inheritance tax (IHT) net in 2027, and personal representatives of the deceased will be responsible for tracking down the policies. So, not knowing where to lay hands on these documents also increases the potential risk for penalties from HMRC, if an IHT bill isn’t paid on time.

However, these are just two of the important documents a partner or family member couldn’t find. Four in 10 people couldn’t find a partner’s life insurance policy, and almost half (47%) say they couldn’t find a partner’s debt or loan agreements.

What should people do to prevent these problems?

The easiest way to make sure everyone who needs them can find documents in the event of your death is to create a specific list explaining where everything is, and to tell the relevant people – your children, partner, trusted friend and so on – where to find that list. If you leave instructions about how to deal with all your assets when you die in a will, you will save your loved ones a lot of trouble.

Liz Hardie, Tax, Trusts and Estate Planning Specialist, Canada Life said: “It’s easy to put off conversations about where important documents are kept, but the consequences of not knowing can be serious, particularly as previous Canada Life research has shown that the most common problem encountered by executors of a will is tracking down policy documents.

“Whether it’s delays in accessing funds, missing out on benefits, or facing unexpected liabilities, families could be left in a difficult position simply because they didn’t have the right information at hand.

“Make time for the conversations that matter. Knowing where key documents are kept isn’t just about being prepared for the worst, it’s about making life easier for everyone, whatever the future holds.”

We can help you meet your obligations

If you want some help with making sure your affairs are in order and that your family will be able to find all the information they need when you’re no longer here, then please get in touch and we would be happy to give you the guidance you need.

Maximise your tax allowances before April

There’s just over a month until the end of the tax year on April 5, and if you have any available tax allowances that you haven’t used up completely, now is the time to start working out how to use as much of them as you can this tax year.

Various tax rules are set to change from April 6, so it is important to use up what is available this tax year to maximise the current rules.

There are many ways to reduce your tax liability each year through proper and full use of the allowances, but it is always best to work with your accountant to do everything the right way, so you don’t create a problem for yourself further down the line.

Check that your State Pension NICs record is complete

One important thing to check is that your National Insurance contributions (NICs) record for your State Pension is complete. You need to have 35 years of qualifying NICs payments to receive the new full State Pension, and at least 10 years to receive any State Pension at retirement age.

Missing years can occur if, for example, you’ve had any time off to look after children, or missed work years for any other reason, such as being ill or taking time off to travel. Even if you haven’t taken time off, you need to check your record is correct, because mistakes happen.

People who have stayed at home to look after their family should have received their NICs contribution years for this period under the Home Responsibilities Protection scheme, or by the National Insurance Credits for Parents and Carers in 2010, which replaced it. Both schemes would give you qualifying credits for the State Pension while you weren’t working. But the system hasn’t been perfect, so there is currently a government initiative to correct missing HRP records between 1978 and 2010. If you think you or someone you know may have been affected during this time, it is even more important to check your record.

If you have any gaps that aren’t mistakes, it is possible to pay voluntary contributions for up to the past six years to fill those gaps in your National Insurance record and boost your qualifying years. These payments must be made before April 5 each year.

You can get a State Pension forecast at Gov.uk which will tell you if you have any years where your contributions weren’t complete. This is an important step, because not checking could result in paying contributions that aren’t necessary to make.

Make the most of your pensions contributions

You can put as much as you like into a personal pension scheme, but there are limits on how much of your contributions will benefit from tax relief. For example, if you’re not earning at all, you can add a maximum of £3,600 including tax relief into a pension. If you are earning, you can put up to 100% of your relevant UK earnings into a pension to get tax relief, up to a maximum of £60,000. So, even if you earn enough to get more tax relief than this, you won’t receive it on contributions above this figure.

You also cannot reclaim more tax relief in a year than you were due to pay in tax, so you need to ensure your pension planning takes this into account. But you can do something called Carry Forward, which enables you to use any unused annual allowance from the previous three years, to maximise the benefits of any unused amounts from these years.

If you earn more than £200,000 a year, your annual allowance for pension contributions could reduce from £60,000 to as low as £10,000, so you must take this into account when making decisions about optimising your tax allowances towards the end of the tax year.

One important thing to remember is that if you are a 40% or 45% taxpayer, you may need to reclaim your additional pension contribution tax relief – anything above the basic rate of tax relief of 20% – through your tax return directly from HMRC. So, if this hasn’t been done, even in previous years, you should speak to your accountant for advice.

Company owners should pay themselves in dividends

Company directors can often take money out of their business more tax efficiently through dividends than as a salary, but you can only distribute dividends if you have enough ‘distributable reserves’. Bear in mind though that from April 6, 2026, the basic and higher dividend tax rates will rise by 2 percentage points, to 10.75% and 35.75% respectively, which reduces the benefit to some degree.

Also, it is typically more tax efficient if the company pays your pension contributions for you, so if there is enough money in the business to do this, then speak to your accountant about how to action this properly.

If you’re an experienced business owner, you may also want to consider investing in a Seed Enterprise Investment Scheme (SEIS), which is designed for fledgling companies looking for investment, or Venture Capital Trusts (VCTs). These both offer tax benefits that help reduce your liabilities.

Qualifying Enterprise Investment Schemes (EISs) – which would include some AIM-listed companies – offer tax relief at 30% on investments up to £1m, or £2m if the company you’re investing in qualifies under the ‘Knowledge Intensive Companies’ rules, which typically refer to companies heavily involved in research in areas such as technology or biotechnology.

The VCT tax relief is currently available on qualifying investments up to £200,000 at 30%, but this reduces to 20% from April 6, 2026.

Contact us

If you are keen to optimise the tax relief available before the end of the tax year, then please get in touch with us and we will explain what you need to know.

More than 640,000 people can reclaim over £150m on Student Loans

Hundreds of thousands of people are entitled to refunds on their Student Loan repayments made in the 2024/25 financial year, and many of those with money owing are yet to make their claim.

The Student Loans Company (SLC) released stats showing more than 640,000 people are due refunds, with four scenarios that would result in a graduate being eligible for a Student Loan refund:

• Making a repayment, but eventually earning less than the annual repayment threshold.
• Being placed on the wrong Student Loan repayment plan.
• Making a repayment before the repayment period begins.
• Continuing to repay after their balance has been cleared.

Source: SLC

If a graduate didn’t make the repayment voluntarily, then they would be able to claim a refund in each of these cases.

What is the typical reason for a refund?

The most common reason for a Student Loan refund is because a graduate made a repayment on their Student Loan, without having met the annual earnings threshold for when it needs to begin being repaid.

A total of 643,824 people with what is known as a ‘Plan 2’ loan – which relates to loans that are “Post-academic year 2012/13 loans (pre-Plan 4 and 5) England and Wales only”, according to Gov.uk, were due to receive a total of £85,964,932 in refunds. That works out as £133.52 on average.

The figures also showed that 28,834 people made payments on their Plan 2 loans, before the repayment term should have started. A further 15,941 graduates with a Plan 2 loan made a repayment on the wrong plan, and a further 57,764 graduates had payments taken after their loan had been repaid in full.

Usually, if the threshold for repayment is met, then payments begin in the April following a student’s graduation. The above numbers are likely to include students with more than one type of Student Loan, across multiple plan types.

Aren’t these incorrect payments being refunded automatically?

The graduates who have already repaid their Student Loans in full, and have had an additional payment taken in error, should automatically get a refund. But if you think you might be in this position and haven’t yet heard from the SLC, you should still double check you haven’t made any payments after your Student Loan balance is repaid in full.

If someone is owed an amount that was paid before they reached the threshold for starting to repay their Student Loans, they also should be contacted by SLC the next financial year, to invite them to request a refund on their account.

Remember, you don’t have to have been contacted by SLC to request a refund. If you think you are due a refund and haven’t heard from SLC, then you can make the request yourself directly to SLC, and if you are eligible for a refund, it should be paid directly to your bank account.

You need the money back in your pocket

Given the problems many people currently have dealing with the cost of living, it is very important to make sure you are reclaiming any money you shouldn’t have paid to the SLC for your Student Loans. You can find more information on how to do this, and also the full stats for 2025, in the SLC’s guide to Student Loan refunds.

Tom Allingham, Save the Student’s student money expert, said: “By far the most common reason that a graduate might be eligible for a Student Loan refund is if they made a repayment despite eventually earning less than the annual threshold. This has most often affected those with a Plan 2 loan – English graduates who started uni between 2012–2023, and Welsh graduates who started any time since 2012.

“In 2024/25, the repayment threshold on this plan was £27,295. However, Student Loan repayments are taken when you’re paid – so depending on how often this is, your repayments are calculated against a weekly, fortnightly or monthly equivalent of the threshold instead.”

This threshold could be reached if extra shifts were worked in a week, or they received a bonus, or even changed job part way through the year, said Mr Allingham. But if the total earnings at the end of the year were less than £27,295, they would be eligible for a refund.

Mr Allingham added: “As for whether it’s worth actually claiming the money, the main thing to remember is that Student Loans aren’t like other types of debt. Many graduates with a Plan 2 loan will never clear the balance in full before it’s eventually cancelled, and monthly repayments are only affected by your earnings, not your outstanding debt. In other words, making voluntary repayments could just be throwing money away.

“And even if you have another type of Student Loan, or think you’ll repay in full, it might still be worth claiming a refund. An extra few hundred pounds could be a much-needed boost right now, even if it means taking a couple of extra months to repay the loan. But everyone will have their own priorities, and it may be that you’d rather overpay now and clear your balance earlier.”

Contact us

If you or your children have Student Loans and think you or they may have paid too much and are due a refund, then please get in touch with us and we will explain what you need to know.

Holders of cryptocurrency in HMRC’s sights from January 1

UK residents who hold cryptocurrency are facing more scrutiny from HMRC from New Year’s Day, as cryptocurrency service providers will begin passing details of UK holders to the taxman from that date.

HMRC will begin implementing the Cryptoasset Reporting Framework (CARF) from January 1, 2026, which enables cross-border information exchange between tax authorities in relation to transactions involving crypto assets.

CARF rules have been developed by the Organisation for Economic Co-operation and Development (OECD) and incorporated into UK law, because of the rapidly expanding interest and investment in cryptocurrency.

How many people invest in crypto assets?

One in four people in the UK invest in crypto assets, according to a recent survey by Gemini, with the majority of UK residents saying they intend to invest in crypto in the coming year. In fact, 88% of them expect to invest at least 5% of their portfolio in crypto.

These people will have their information sent to HMRC by the reporting crypto asset service providers (RCASPs) as tax authorities request comprehensive information on crypto holdings, and will require UK RCASPs to undertake due diligence in relation to their users.

This means that from January 1, 2026, HMRC “will have CARF data on all UK taxpayers using a UK based RCASP together with information concerning UK taxpayers from overseas RCASPs through the exchange of information”.

Does this only apply if you are using a RCASP based in the UK?

The way this measure is being implemented, and the nature of sharing CARF data across borders, means HMRC will have CARF data on those using UK-based and non-UK based RCASPs. The various jurisdictions participating in this initiative are doing so to increase data transparency and support international tax compliance.

The move is designed to tackle both tax evasion and avoidance, and “to help UK taxpayers meet their tax obligations”. If you extrapolate the Gemini research data of one in four UK residents holding crypto assets, with around 69.3m people living in the UK according to data from the Office for National Statistics, that means as many as 16.63m people could expect to find their data being passed to HMRC in relation to crypto assets.

Most of these (76%) are aged 16 to 44, and men are more likely to invest in crypto assets than women, with 69% of holders being male, according to figures from HMRC. Those from an Asian or Asian British ethnic background make up 11% of holders. The information required is expected to be collected through tax returns and compliance teams, with the accuracy of tax returns kept under review.

We can help you

If you are one of the millions of people who invest in crypto assets either through a UK provider or one overseas, and you want to know what these changes will mean for you, then please contact us and we will do everything we can to assist you.

VCT and EIS changes – good for companies, not investors

Investors who use Venture Capital Trusts (VCTs) or Enterprise Investment Schemes (EISs) to invest in start-ups and benefit from tax relief as a result, will face new rules from April 6, 2026, thanks to changes made in the Autumn Budget.

These investment vehicles are great ways for companies to raise early investment from investors at what can be the riskiest time to invest in a business. The reward for those prepared to take the risk on investing in a start-up through VCTs or EISs are the tax breaks that are available. But investors are facing a reduction in these tax benefits from April, thanks to changes to the current rules.

The changes are different for both VCTs and EISs, and how much a company can raise with each vehicle under the new rules will depend on what type of business it is.

What are the new investment limits?

Eligible companies will be able to have a maximum of £30m in ‘gross assets’ immediately before the share issue through EISs from April 6, 2026, and £35m immediately afterwards. This is an increase of £15m and £19m respectively, compared to the amounts currently allowed.

Through both EISs and VCTs, the annual combined amount it is possible to raise will double to £10m, and as much as £20m for knowledge-intensive companies (KICs). In a lifetime, a company will be able to raise £24m through these vehicles, again doubled from the current £12m, and up to £40m for KICs.

However, investors may find these vehicles less appealing, as they will see a reduction in their upfront income tax relief on VCT investments from April 6, 2026, when it will fall from 30% to 20%, while tax relief on EISs will remain at 30%. But the way EIS and SEIS shares are treated for inheritance tax (IHT) will change, and from April 6, 2026, 50% of any value over £1m will become subject to IHT at an effective rate of 20%.

Why will these changes be made?

The changes are designed to extend the EIS and VCT limits to support both new companies, and those that are scaling up, while also equalising the tax treatment of VCTs and EISs, as EISs don’t offer dividend relief, said HMRC.

Qualifying companies are those that “are not registered in Northern Ireland trading in goods or the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity. These companies will remain eligible for the current scheme limits,” according to Gov.uk.

Businesses that qualify will be able to access more investment through these schemes, and there isn’t expected to be a significant change in the amount of administration required. For the several hundred businesses that are near to the current limits, this change will offer a considerable boost.

What is the impact on the people who invest via these vehicles?

Around 24,000 people invest in these vehicles, and those using VCTs will see less upfront income tax relief on their investments. But there should be no change in the way they deal with HMRC.

HMRC said this measure “does not change or introduce any tax obligations or processes”.

The largest gender investing in VCTs is men, amounting to an estimated 76% of all investors, even though men make up around 50% of the overall population. Most people (57%) investing in VCTs are aged between 45 and 64, even though this age group makes up just 31% of the overall population.

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Cash ISA allowance reduced to £12,000 for under 65s

The Chancellor took aim at cash ISAs in her Budget, and is reducing the amount that can be put into a cash ISA from £20,000 to £12,000, with the remaining £8,000 being eligible for investment ISAs.

These changes, which will apply from April 6, 2027, will not affect those over age 65, who will still be able to put the full £20,000 into a cash ISA each year if they prefer. The move is designed to encourage people who have typically chosen the cash ISA in preference to investment ISAs to broaden their portfolio into investment products, which traditionally have delivered better returns over the long term.

Michael Summersgill, CEO of AJ Bell CEO, said: “The Chancellor clearly recognises the huge benefit of long-term investing and the boost it can provide to people’s finances, but today’s announcement is a missed opportunity to reshape ISAs with the consumer in mind.”

Does this increase the complexity of ISA investing?

The move increases the complexity of ISA investing, at a time when experts are calling for more simplicity and flexibility for individuals, who already often find it difficult to navigate the investment landscape more widely.

Mr Summersgill said: “Government should be focused squarely on simplifying the market to make it easier for ordinary people to navigate, providing flexibility for consumers, rather than adding friction in the form of new allowances and added complexity.”

He would like to see the Government ask itself “two key questions” before implementing these proposals. The first is whether any serious person would design a system with “umpteen ISA products all with different allowances”. The second is whether there is any evidence at all that this measure will encourage people to invest.

Mr Summersgill added: “The answer to both those questions is no. Government should go back to the drawing board and examine the evidence in earnest before these proposals move forward.”

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Budget 2025: What it means for you

Chancellor Rachel Reeves delivered her second Budget on November 26, and taxpayers face the highest tax burden on record as a result.

Frozen tax thresholds for everything from income tax to inheritance tax, a change in the use of salary sacrifice to make pension contributions, and a host of other measures mean the Chancellor should swell the Treasury’s coffers by as much as £26 billion in 2029/30.

You could be forgiven for thinking that, under a Labour Government, the richest in the UK would be footing most of the bill. But the reality is very different, and even the Chancellor admitted that “ordinary people will have to pay a little bit more”. That little bit more will take the UK’s overall taxation to the highest level since records began, amounting to 38% of GDP in 2030/31.

Which measures are raising the most money?

The freezing of the income tax and National Insurance thresholds is set to raise the most money. These have been frozen since 2022 and were expected to begin rising again in 2028. But Rachel Reeves has extended the freeze from 2028 to 2031, raising an extra £12 billion due to this extension alone, according to the Office for Budget Responsibility (OBR). This is a volte face compared to her previous Budget, where she said any extension of this freeze would hurt working people.

In a never-seen-before event, information contained in the Budget was released early, hours before the Chancellor stood up to deliver her Budget speech in the Commons, thanks to a mistake by the OBR which put the details on its website too soon.

Rachael Griffin, tax and financial planning at Quilter, said: “The multi‑year freeze on income tax thresholds has now been extended, locking households into one of the most powerful stealth tax rises in modern fiscal policy.

“Reeves has had to renege on what was her rabbit out of the hat moment at her maiden Budget. Given in her speech last year, she said that an extended freeze would hurt working people, this must represent breaking the party’s manifesto pledge.”

A surprising amount of money, up to £4.7 billion in 2029/30, is expected to be raised in additional National Insurance Contributions (NICs) because of the change to salary sacrifice, which will limit the amount of National Insurance relief you can receive to £2,000 a year.

Salary sacrifice is the way that many people put additional money into their pension, as taking an amount from your gross salary means your employer and you as the employee, don’t pay National Insurance contributions on the money. There is currently no limit on how much you can add to your pension this way.

Who will be most affected by this change to salary sacrifice?

The people most affected by this change, which will be in place from April 2029, are those in the private sector who use this method to add money to their pension. This is something that isn’t typically done in the public sector, said Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group.

He added: “Salary sacrifice has long been one of the most efficient ways for workers to boost pension contributions, so limiting it will inevitably increase costs and reduce take-home pay for many.

“At a time when simplicity and engagement are critical to improving savings levels, adding complexity and reducing incentives risks undermining confidence in the system. It’s also vital that consideration is given to the timing of this change.

“People will want to make use of [this] arrangement to the full extent they’re able to. Employers will still face a considerable amount of administration to comply and will need to put thought into communication. It’s also still unclear how the mechanics of the new cap will apply when people move between employers – in all likelihood, this will add further complexity. Payroll systems will need to be updated, and employers will have to manage compliance across multiple schemes and employee movements.”

What other measures were announced?

Other measures announced included a new High Value Council Tax Surcharge which affects properties worth more than £2m. There is a scale of charges for properties worth £2m to £5m or more.

The lowest surcharge, which applies to properties worth between £2m and £2.5m, is £2,500. For those valued between £2.5m and £3.5m, the surcharge is £3,500. Properties worth between £3.5m and £5m will face a surcharge of £5,000, and those worth £5m or more, will pay a £7,500 surcharge.

Landlords will also be hit with an additional 2% tax charge on their rental income from April 2027, which will take the income tax rate paid on rental income up to 22% for basic rate taxpayers, 42% for higher rate taxpayers, and 47% for additional rate taxpayers.

Electric vehicles and plugin hybrid vehicles will also face a new tax. Electric vehicle drivers will pay a charge of 3p per mile from 2028, while plugin hybrids will pay 1.5p per mile, making these vehicles considerably more expensive to run. But fuel duty continues to be frozen for now.

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Beware of trading when your company is insolvent

Continuing to trade while your company is technically insolvent could lead to big problems for the directors, as it could lead to limited liability no longer applying, and leave them on the hook personally for outstanding debts.

A company would be considered insolvent if it cannot pay its debts when they fall due, or its liabilities exceed its assets. There are two specific legal tests that can be applied to check if a company is insolvent:

• The Cash Flow Test (Insolvency Act 1986): the company can’t pay its bills, suppliers, HMRC or lenders on time. This would include juggling payments such as VAT or PAYE, or you’re ignoring letters from creditors.
• The Balance Sheet Test (Insolvency Act 1986): The company’s total liabilities, including contingent and future ones, are greater than its total assets.

If either of these tests are met, then the company is likely to be insolvent, even if the company is still able to trade day-to-day.

What happens if you continue to trade and meet these tests?

If you continue to trade while insolvent, it isn’t automatically illegal. But if you take on new debts or contracts while you know you can’t meet existing obligations, it can cross into wrongful trading or fraudulent trading, or both. When this line is crossed, it could carry personal consequences for directors.

For example, the detail related to Wrongful Trading under the Insolvency Act 1986, highlights that directors should have known or ought to have known that the company had no reasonable prospect of avoiding insolvency.

If you continued to trade, then you could be made personally liable for debts as a director of the business from that point onwards, and/or potentially disqualified as a director for up to 15 years. Ignorance isn’t a defence, as directors are expected to keep adequate financial records so they constantly understand their company’s solvency position.

When does it become Fraudulent Trading?

Fraudulent Trading under the same Act is where you continue trading and intentionally defraud creditors, or for any other fraudulent purpose, it then becomes a criminal offence. Under these circumstances, you could be held personally liable for debts and fines, and face up to 10 years in prison.

Under the Company Directors Disqualification Act 1986, the Insolvency Service can disqualify you for between 2 and 15 years if they find you are not considered a “fit and proper” person, which includes trading while insolvent.

Ordinarily, a limited company means the company’s debts are separated from you personally. But under the circumstances mentioned above, you can be held personally responsible for losses to creditors. But if you suspect your company could be close to the line, then there are a few things you should do:

• Stop incurring new debts.
• Record concerns in a board meeting, and call one if there isn’t one planned.
• Seek professional insolvency advice from a licenced insolvency practitioner.
• Maintain accurate records to show you acted prudently, which can provide some protection for you.
• Consider restructuring the company through administration, a Company Voluntary Agreement (CVA), or liquidation if it becomes necessary.
• Monitor cashflow weekly and monthly.
• Take early advice so you prove you have acted responsibly which means you can avoid personal risk and perhaps even rescue the business.

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If you have any concerns about the solvency of your business, then speak to your accountant as soon as possible. So, please get in touch and we would be happy to give you the guidance you need.

HMRC publishes new rates for employees’ electric cars

Employees with electric vehicles as company cars have seen a change in the rates they can claim for mileage allowance since September 1, but HMRC has updated the guidance on October 6 about how these new rates need to be apportioned for each journey.

The previous mileage allowance for business journeys was a flat 7p per mile no matter where the car was charged for each journey, which made calculations much easier. But now, HMRC has made it clear that the new rates of 8p per mile if the car was charged at a residential property or 14p per mile if it was charged publicly must be allocated in proportion to how much of each powered the trip.

This new guidance makes it much more complicated for company car owners with electric vehicles, as they will now need to do much more admin to ensure they don’t overclaim on their mileage allowance from HMRC.

HMRC states: “The ‘slow or fast public charge cost per kilowatt-hour’ is the Zapmap public charging price index monthly published figure for slow or fast chargers (charging speed less than 50 kilowatts), uprated with the latest estimate of electricity prices from the Office for National Statistics.”

What if my car is charged both at my house and publicly?

Whether you need to charge your car at your home or out and about as you’re driving at a public charging point, you will now need to allocate a proportion of charging time to each business journey. So, it is now vital for employers to keep records showing how each business journey was powered, and whether the electricity was bought at home or at a public charging point to offer proof for each claim to HMRC.

This means employees will need to record where the charging of the car took place – at home or at a public network charge point, how many miles each charge covered, and retain evidence of each, such as payment receipts or charging logs and mileage data. In every case, the apportionment to each charge point would need to be fair and reasonable, HMRC said.

If the public charging point costs significantly more than the 14p per mile allowed, then it is possible to claim more than the 14p per mile rate. But proof would also be needed from the public charging point if extra is claimed. These rates only apply to purely electric vehicles. Any hybrid cars would be treated as petrol or diesel for the advisory fuel rates.

The rates below are from September 1, 2025, and you can use the previous rates for up to one month from the date any new rates apply. This would mean claims up to October 1, 2025, could still use the 7p flat rate.

Source: HMRC

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HMRC powers to raid bank accounts for unpaid tax revived

HMRC has once again been given powers to take money owing to it directly from people’s bank accounts when people persistently fail to pay the tax due. Most taxpayers, those who pay on time and in full, will have nothing to worry about.

But the small minority that refuse to pay, even though they have the means to, are facing the long arm of HMRC reaching into their bank or building society accounts to pay their outstanding tax bill. There are safeguards in place that should ensure no-one undeserving of this action is affected, but it is important to understand under what circumstances you might face money being taken from your account directly.

These powers were used just 19 times in the two years before being paused during the Covid-19 pandemic. But during the Spring Statement this year, these powers were flagged as being revived, meaning anyone who persistently refuses to pay the tax they owe, could be affected.

Recovering debt is important and fair

Most taxpayers – around 90% last year amounting to £858.9 billion – pay their tax on time. The rest became a debt, which must be recovered from individuals and businesses because otherwise its “unfair on the honest majority”, said HMRC. The money is also needed to fund public services, and any shortfall could result in a lack of funding for essential support networks.

Most people who miss the first tax deadline pay the full tax owed if they get a reminder. But a minority of individuals and businesses fail to pay even though they can afford to. This is when the Direct Recovery of Debts (DRD), the name of this measure, is used. It has been restarted in what is being called a ‘test and learn’ phase.

The policy allows HMRC to recover money owed directly from a debtor’s account, or from funds held in cash ISAs, where the debt is £1,000 or more. But there are several safeguards in place to prevent HMRC taking money that would put people into a difficult financial position.

What safeguards are in place?

The safeguards that prevent HMRC pushing people into financial hardship are listed below, and there is also protection for people who might be seen as vulnerable customers.

The safeguards include:

• Only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored our attempts to make contact. Anyone who disputes the amount owed has the automatic right to appeal.
• Guaranteeing that every debtor will receive a face-to-face visit from HMRC agents before their debts are considered for recovery through DRD, this meeting will provide a further opportunity for us to:
  • Personally identify the taxpayer and confirm it is their debt.
  • Explain to debtors what they owe, why they are being pursued for payment, and discuss payment of the debt.
  • Discuss options to resolve the debt, including offering a Time to Pay payment plan to the debtor, where appropriate.
  • Identify debtors who are in a vulnerable position and offer them the support from a specialist team to help them settle their debts.
• Only debtors who have received this face-to-face visit, have not been identified as vulnerable, have sufficient money in the bank and have still refused to settle their debts will be considered for debt recovery through DRD.
• Only considering the use of DRD on those with tax and tax credits debts of more than £1,000.
• Always leaving a minimum of £5,000 in the debtor’s accounts, so that we do not put a hold on money needed to pay wages, mortgages or essential business or household expenses.

Source: Gov.uk

Is it possible to appeal if you think HMRC has made a mistake?

If you think that HMRC has made a mistake, there is a specific and clear process you can go through if you object or appeal. There is a 30-day window once the debt recovery has been initiated, for those owing tax to lodge an objection to the actions of HMRC.

Money will be held in the account, but not transferred, and the decision about the objection will be made within thirty days. Debtors can also appeal an HMRC decision to the County Court on specific grounds, such as hardship and third-party rights.

For most people, it can be when a major life event or business issue arises which creates a cashflow problem, and people can face financial difficulty which makes it hard to pay their tax. HMRC said it “routinely takes a sympathetic approach to those who need additional support”. But it is important to get in touch with HMRC in good time, so it knows you need help.

HMRC added: “HMRC is committed to clear governance and transparency. The Commissioners of HMRC will maintain oversight of the use of the power, and statistics will be published on the number of times the power is used, and appeals are raised.”

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Are we seeing the end of the ‘Bank of Mum and Dad’?

Children hoping they will get financial help from their parents as they get older may find they’re disappointed, as more than one in 10 retirees are cutting back on gifting, according to research from wealth manager Quilter.

Rising financial pressures, such as the cost-of-living crisis, are prompting an increasing number of retirees to reduce the support they are prepared to give to younger generations, raising questions about how wealth will be passed down.

The Quilter Retirement Lifestyle Report found 13% of retirees plan to cut back on the amount they are gifting to children. It rises to 16% when you look at younger retirees with above-average incomes, and 15% for those with lower incomes. This research could show a sea-change in the way younger generations will be financially supported by their parents.

What amounts are typically passed on?

The average retiree currently spends more than £2,500 each year supporting younger family members, the survey of 5,001 retirees found. This is made up of £1,323 in gifts and £1,175 paid towards education.

Some retirees, especially those with higher disposable incomes, pay significantly more than this each year, with many exceeding the £3,000 annual gifting allowance. For example, younger retirees with higher incomes, gift an average of £4,836 to relatives, and pay £5,280 towards education each year.

Shaun Moore, tax and financial planning expert at Quilter, said: “Retirees provide a vital avenue of financial support for younger generations, helping with everything from education to deposits for first homes. If the bank of mum and dad, or even the bank of gran and grandad, begins to close its doors, the ripple effects could be felt across the housing market, education system, and the wider economy.”

What happens if you gift more than the annual allowance?

If you breach the gifting annual allowance under the Inheritance Tax (IHT) rules, you won’t immediately trigger a tax charge, but if you die within seven years of the gift, then your estate could face an IHT charge, but this will depend on what your overall estate is worth and whether it will be subject to IHT at all.

Any gift above the annual allowance would then become part of the Potentially Exempt Transfer (PET) rules, where there is an inheritance tax charge that tapers down depending on how many years you survive the gift by. This creates complexity for the people who are left behind as your executors, who then need to determine whether gifts made were survived by more than seven years.

The gifting allowance of £3,000 has stayed the same in more than 40 years. If this figure had kept pace with inflation, it would currently be £12,000. Quilter is calling on the Government to uprate this figure to at least £9,000 to allow families to transfer wealth with greater confidence and flexibility. With the Autumn Budget happening on November 26, it remains to be seen whether any changes to this allowance, or any other aspect of IHT, are made.

Mr Moore said: “The rumour mill is already in overdrive as we near the Chancellor’s upcoming budget and has so far seen a potential lifetime cap on gifting, an extension to the period donors must live after making a gift before it falls outside of their estate for IHT purposes, and the potential for a further freeze on the nil rate band all debated.

“A modernised allowance would support financial planning, reduce reliance on the state and help unlock economic potential. With pensions soon falling within the IHT net, generating a considerable uplift in revenue, this reform would be a modest concession for meaningful economic gain. If the government’s goal is to foster a high-growth, investment-led economy, then reducing friction around intergenerational wealth transfer is not just aligned with that vision, it is essential to it.”

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Proposed contactless changes could help customers

The Financial Conduct Authority (FCA) is consulting on proposals to give card providers the flexibility to decide what contactless limit would be most suitable for their customers, which could bring greater convenience to people making larger purchases.

Many card providers already offer the ability to adjust a personal contactless limit, or to turn off contact functionality for a customer’s card, and the FCA is encouraging more card companies to offer this choice.

David Geale, Executive Director of Payments and Digital Finance at the FCA, said: “We’re seeing smarter payment technology and more well-established fraud controls, so it’s the right time to let firms tailor contactless payments to fit their customers’ needs and drive innovation. While we wouldn’t expect to see immediate changes to limits by firms, they would have the flexibility to make payments more convenient for customers.

“People are still protected; even with contactless, firms will refund your money if your card is used fraudulently.”

Are contactless protections the same as regular card payments?

Contactless payments have the same protections as other card payments, so customers will be reimbursed by banks and payment firms if they are the victim of unauthorised fraud. This would include if someone’s card has been lost or stolen and is used by someone other than the cardholder.

UK Finance’s Annual Fraud Report 2025 estimates that contactless fraud currently runs at around 1.3p per £100 spent via contactless payments, while traditional payments run at 6p per £100 spend for all unauthorised fraud.

The current limit for most contactless payments is £100, and many card providers are expected to keep this limit, even if the consultation response suggests a higher limit could be more appropriate.

When does the consultation end?

Responses to the consultation should be returned to the FCA by October 15, but the FCA has already had nearly 1,300 responses to the contactless payments Engagement Paper.

This is one of around 50 measures outlined in a letter to the Prime Minster in January, which are designed to support economic growth and prioritise digital solutions.

The FCA Quarterly Consultation Paper states: “Currently, the FCA sets regulatory limits on the value and number of contactless payments that can be made before requiring authentication, typically via a personal identification number (PIN) entry. These requirements are set out in an exemption to the Strong Customer Authentication (SCA) requirements in the Payment Services Regulations 2017 (PSRs), within the Strong Customer Authentication Regulatory Technical Standards (SCA-RTS) (see ‘Current regulatory framework’).

“We propose to replace these regulatory limits with a new exemption, which would allow [Payment Services Providers (PSPs)] to process contactless payments without asking the payer to authenticate the payment, where PSPs identify the risk of a transaction to be low. It is important to note that under the proposed approach, and subject to compliance with all requirements under the rule, PSPs will be able to set their own contactless limits, including at current levels. We will continue to monitor and supervise firms to ensure they are achieving good outcomes, such as low levels of fraud, under the new exemption.”

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Three ‘finfluencers’ in court for first appearances

Three financial influencers – known as ‘finfluencers’ – have appeared in court having been charged as part of a global crackdown on illegal promotions led by the Financial Conduct Authority (FCA), one of the UK’s financial regulators.

Charles Hunter from Exeter, Kayan Kalipha from London, and Luke Desmaris from Harlow, appeared before Westminster Magistrates’ Court, each individually charged with an offence relating to their social media posts. They are alleged to have encouraged social media followers to invest in foreign exchange (forex or FX) trading through high-risk products known as contracts for difference, without having the authorisation to promote these investments.

Each defendant has been charged with one count of communicating an invitation to engage in investment activity, contrary to section 21 (1) of the Financial Services and Markets Act 2000. Anyone who contravenes Section 21 (1) of the Financial Services and Markets Act 2000 can be punished on indictment by a fine and/or up to two years’ imprisonment.

All three defendants pleaded not guilty and will next appear at Southwark Crown Court for a hearing on October 8, 2025.

International crackdown on unauthorised promotions

The charges follow the FCA’s announcement in June 2025 about a coordinated global enforcement action targeting illegal financial promotions by finfluencers across multiple jurisdictions. The FCA led a coordinated international enforcement effort involving nine regulators across six countries.

The operation resulted in arrests, interviews, cease and desist letters and over 650 takedown requests across social media platforms and websites. It was as part of that operation, the FCA authorised criminal proceedings against these three individuals.

If you’re unsure if a company is regulated, you can use the FCA’s Firm Checker to find out if a firm is authorised and has permission to promote the service it’s offering. The FCA’ InvestSmart page contains useful information to help people make better investment decisions.

Anyone who believes they have suffered loss in relation to this matter is encouraged to contact the FCA consumer contact centre on 0800 111 6768 (freephone).

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Clock is ticking for parents saving for university fees

The university year has just started for the latest undergraduates, but parents putting money aside for later cohorts have the pressure of time against them as they save to pay for future university fees.

Nearly half (46%) of parents of under 18s are saving for their children’s university fees, according to research by AJ Bell. The largest proportion of parents have saved between £5,000 and £10,000, but this would leave a significant amount still to be covered. The typical university costs can reach £60,000 or more, including tuition fees, living costs and accommodation.

Most parents want to help their children begin working life without being saddled with thousands of pounds in debt from their university years.

Saving little and often

Many parents are saving small amounts of money more often, such as £25, £50, or even £99 per month, said Dan Coatsworth, investment analyst at AJ Bell. He added: “This might involve sacrificing a meal out or a couple of trips to the pub, yet it can make a massive difference to the recipient during and after university.”

For most people, covering the cost of university takes a mix of tuition and maintenance loans to fund a degree. These aren’t repaid until the graduate is earning at least £25,000, and if the payment isn’t completed within 40 years, then the remainder of the loan will be written off, said Mr Coatsworth.

However, many parents are concerned about the impact on their child of having the weight of this debt hanging over their children on the day they leave university. Mr Coatsworth said: “It can have a negative psychological effect on a person, making them feel like they’re fighting a battle with their personal finances from day one of post-university life.”

The student loan payments effectively become a 9% tax on income until they are paid off or wiped at 40 years, which can lead to people becoming more anxious about their finances.

How do you build an investment strategy for university fees?

The important thing for parents to remember is that it isn’t essential for them to cover all university costs from savings. Any amount of contribution they can make is going to reduce the amount of debt their child will leave university with.

The key thing is to start saving and investing for university fees as soon as you can, because there is a longer period to have that money grow, and it means you shouldn’t need to save as much each month as you would if you left it until your child is almost at university age. But how much you can save will depend on what other demands you have on your monthly income.

Mr Coatsworth said: “The sooner you start to save for your child, the better. Admittedly, certain individuals or couples find they are strapped for cash during the early years of childhood, particularly if they pay for a child minder or nursery fees. In this situation, anything you can save is good, even if it is only a small amount. It’s all about getting into the habit.”

What if I haven’t started saving until my child reaches secondary school?

If you don’t start saving to cover university fees until your child goes to secondary school, you will have to play catch-up. But you may find you have more disposable income then and can save more than you might have been able to earlier as your childcare costs are likely to have decreased. So, all is not lost.

Mr Coatsworth said: “For example, Sadie invests £100 a month into a global equity fund once her 11-year-old daughter Chloe starts secondary school. The fund grows by 7% a year after fees and is worth £10,874 by the time Chloe turns 18.”

While this is still a sizeable amount of money, it is less than you might have been able to generate by starting earlier. In the same example, with £100 being saved from Chloe’s fifth birthday and achieved a 7% return, the pot would have been worth £25,175 by her 18^th birthday, said Mr Coatsworth. Depending on the investment product you use, you can also ask friends and wider family to contribute, which would lead to a bigger sum to offset university costs.

You can also continue saving while your child is at university, as the course could be anything from three to five years. But you would want to reduce the amount of risk you are taking with these later investments to ensure you don’t see the funds drop too much if there is a market shock at the worst possible moment.

No matter when you start saving, you should make sure you take professional advice to choose the right product for you and the best strategy.

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If you want to find out how you can make the most of the time you have to save for university fees for your children, then please get in touch with us and we will explain what you need to know.

Children born in Q4 2007 can access their Child Trust Funds from September

Children born on September 1, 2007, will be able to access their Child Trust Funds (CTFs) for the first time in September, when they reach 18 years old.

The first CTFs were opened for children born on or after September 1, 2002, so those reaching 18 this September are the fifth cohort to benefit from the UK Government’s savings scheme, which was designed to provide those on lower incomes with a head start to save money for their child’s future.

The first payments were made with vouchers into the funds from January 1, 2005, when the first CTFs were set up by providers.

What did the Government pay into CTFs?

All children born between September 1, 2002, and January 2, 2011, had a £250 voucher paid into a CTF on their behalf at birth. Those on very low incomes, who were claiming the full entitlement to Child Tax Credits at the time, got an additional £250, meaning £500 was paid in for those children from the lowest-earning families.

Some children also got another top-up voucher at age seven, but there were changes to the CTF scheme over time, and it means not everyone got the same amount of money paid in by the Government. Any child born between September 1, 2002, to July 31, 2010, got both the birth voucher of either £250 or £500, and got the voucher at age seven.

Children born on or after August 1, 2010, didn’t get the age seven payment, and all the voucher payments, including the birth vouchers, stopped completely when the scheme was scrapped on January 1, 2011. Any child born after this date didn’t get any CTF vouchers at all.

Could the CTF be added to?

Yes, it has been – and still is – possible to add to the CTF, up to a total amount of £9,000 a year into the account until the child reaches 18. A year in CTF terms starts on the child’s birthday, and ends the day before the next birthday. But if the £9,000 annual allowance isn’t used up, it cannot be rolled over to another year, it disappears.

The CTF will grow free of tax until the child reaches 18 and at this point, the decision on what to do with the CTF rests with them. They can take control of their fund from age 16 if they want to, but cannot withdraw the funds for another two years. When they can take the money, the CTF can either be cashed in, or it becomes an adult Individual Savings Account (ISA) and will continue to be invested. The CTF itself will close.

What if I can’t remember where the account was opened for my child?

If you know which company was managing the CTF for your child, then you should contact them directly when your child reaches 16 if they want to take over the running of the fund, and 18 when they are allowed to withdraw the money.

If you don’t know which company was running the CTF, then you can use the Gov.uk online search tool to find it. You will need your National Insurance number and the name and birth date of the child who’s name the fund is in. You may also need to provide the child’s National Insurance number, if you have it, to help find the fund. Children who were in care were also eligible for the CTF, so if this was the situation you or a friend were in, then you should check whether your fund is available to you, or tell your friend to check.

The average fund is typically around £2,000 when it is accessed, although those who had people add more each year would have a considerably larger fund. But either way, this money is sitting waiting for all those who reach 18 if they were born within the relevant years.

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If you want to find out more about whether you have a CTF or what to do with it when you access the CTF, then please get in touch with us and we will explain what you need to know.

“Decisive action” needed for a UK pension regime fit for the next generation

Pension reforms proposed by the Institute for Fiscal Studies (IFS) in partnership with the abrdn Financial Fairness Trust aim to help move the UK’s pension system towards one fit for future generations. The proposals have been released ahead of the Government’s own review of retirement inadequacy.

The reforms outlined in the IFS report, The Pensions Review: final recommendations, would provide a secure State Pension, increase the number of workers saving into private pensions, help those hit hardest by the rises in State Pension age, and help people to manage their pension wealth throughout their retirement.

The IFS highlighted serious problems which remain for the next generation of pensioners, despite significant improvements in recent years. These are largely the result of most workers no longer saving into defined benefit pension schemes, which pay a specific amount at retirement based on the wage you were earning when you retired, along with lower levels of home ownership. The review identified several issues that need addressing:

• Pressure on public finances from an ageing population.
• Many workers failing to save enough to have an adequate income through retirement – including most of the self-employed.
• Complex decisions over how to draw on and manage pensions through retirement.
• Increasing numbers of older people living in more expensive, insecure, private rented accommodation.

What are the recommendations?

There are various recommendations to make the necessary changes to the UK’s pension system, and they would work across the entire landscape. One of the key measures is a four-point State Pension guarantee.

The first would be to target a level of the new State Pension “as a fraction of economy-wide average earnings”. For example, the current pension is worth 30% of average full-time earnings. Once the target level is reached by using the existing ‘triple lock’, then the IFS recommends the State Pension should rise in line with average earnings growth.

The second is that the State Pension should always grow as fast as inflation, if earnings growth is below it. The IFS report stated: “This would temporarily cause the state pension to be above target. As is done in Australia, the state pension would then continue to rise in line with inflation until it returns to target.”

The third is that the Government should commit to never means-testing the State Pension, while the fourth is that the State Pension age should only rise as longevity at older ages rises.

What about private pensions?

Private pension savings are currently not sufficient for most people to reach a retirement that they will enjoy comfortably. In fact, 20% of private sector employees and 80% of self-employed workers are not saving into a private pension at all.

Even those who are saving will usually be saving into a defined contribution pension, with around 40% set to miss the standard benchmark for retirement income as the amount they will receive is based entirely on the investment performance of the pension fund. Also, many people are struggling on lower incomes so the IFS recommends avoiding the default automatic enrolment into a pension as it would mean those people have less money to take home.

Instead, it recommends removing the requirement for any employee aged 16-74 having to make contributions to their pension to receive employer contributions. The suggestion is that an employer pays at least 3% of their salary as a pension contribution, regardless of whether the employee also pays into the scheme.

To ensure those on lower earnings don’t lose too much of their monthly income, the IFS also proposes increasing the minimum default total pension contributions under automatic enrolment. It also recommends integrating pension contributions into Self-Assessment tax returns to help boost pension savings by the self-employed.

The report stated: “The proposals boosting pension contributions from employers and employees would generate an additional £11 billion per year of private pension saving (£5 billion from employer contributions and £6 billion from employee contributions). Those on course for low-to-middle retirement incomes would see the biggest boost to their incomes – by an average of 13–14% – from these reforms.”

There are further measures suggested in the report, which can be read in full on the IFS website: The Pensions Review: final recommendations.

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If you are keen to find out more about how you can improve your pension savings or help your employees with theirs, then please contact us and we will do everything we can to assist you.

HMRC aims to help prevent scam emails

HMRC is encouraging people to check that any email purporting to be from the taxman is genuine before you make any effort to respond and potentially fall foul of a phishing or other fraudulent email scam.

It has created a page that allows you to check what emails HMRC is actually sending out, so you can determine whether the one you have received is genuine, and whether you should respond to it.

How do I check?

The website can be found on Gov.uk and lists the emails from A to Z that HMRC is sending out, when it started to send them, and the kind of information you can expect them to be including in the email.

For example, for emails related to Child Benefit claims updates and the Cryptoassets educational email, the site states:

From 8 July 2024, HMRC may contact you by email.

HMRC may contact you by email if you’ve made a claim for Child Benefit, to confirm that your claim has been received and is being progressed. HMRC will use the email address that you have provided. The emails have the title ‘Thank you — we’ve received your Child Benefit claim’.

These emails will never ask you for any personal or financial information. If you’ve already contacted HMRC about Child Benefit you can check the status of your claim.

The Cryptoassets educational email section states:

From 8 July 2025 HMRC may send you an email if you have been trading in cryptoassets.

The email will:

• Explain what you need to do if you receive and dispose of cryptoassets.
• Explain what a disposal is.
• Link to a YouTube video explaining how cryptoasset transactions are taxed for individuals.

The email will also provide links to guidance to:

• Check that you’ve declared cryptoasset activities correctly.
• Report your cryptoasset income and gains.
• Check if you need to pay tax when you sell cryptoassets.

These emails will never ask you for any personal or financial information.

Source: Gov.uk.

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If you want help to make sure you are dealing with a genuine email from HMRC, then please get in touch with us and we will do what we can to help you if you are still unsure even after consulting this HMRC page online.

Parents of teenagers can extend Child Benefit claim online

HMRC is reminding parents of 16 to 19-year-olds to extend their Child Benefit claim by August 31 to ensure their payments continue. Last year, 870,000 parents extended this benefit, with most confirming the extension online.

You can use either the HMRC app if you have it downloaded, or the digital service online at Gov.uk to guarantee that the payments are extended. But whatever method you choose, it needs to be done by August 31 to ensure the payments continue seamlessly.

This is because without confirming an extension, Child Benefit will automatically stop on or after your child’s 16^th birthday.

Is it worth the hassle to extend Child Benefit?

Child Benefit is currently worth £26.05 per week, which adds up to £1,354.60 per year for the eldest or only child. Any additional children you have will qualify for £17.25 per week, or £897 per year, neither or which is a sum to be sniffed at.

You are entitled to extend your Child Benefit if your child is remaining in full-time education after 16, or going into approved training after finishing their GCSEs. Letters will be going out to families to remind them to extend the benefit between May and July if it is relevant for them.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Child Benefit is an important boost to families. As soon as you know what your teenager is planning to do, extend your claim in minutes to guarantee your payments continue in September. Simply go to Gov.uk or the HMRC app to confirm.”

Isn’t there a rule about those earning too much to get Child Benefit?

If the person claiming the Child Benefit or their partner has an individual income of more than £60,000 to £80,000 per year, then you might face the High-Income Child Benefit Charge. This will reduce the amount of Child Benefit you can get.

For the 2024/25 tax year, you will lose 1% of your Child Benefit per £200 you earn above £60,000. This means you will lose all the Child Benefit when you reach £80,000 a year or more.

You can use the Child Benefit tax calculator to see how much you will receive and what the charge might be. If you must pay a charge, then you will have the option to use a digital service this summer onwards to pay the charge through your PAYE, rather than having to file a separate self-assessment tax return. But if you prefer to file a separate return to deal with this, then you still can.

Families who have opted out of Child Benefit payments can restart their payments quickly via the online portal or the HMRC app.

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If you are unsure whether you might need to pay the High-Income Child Benefit Charge, or need any help extending or restarting your Child Benefit claims, then please get in touch and we would be happy to give you the guidance you need.

New Pension Schemes Bill to benefit 20 million workers

The Government’s new Pension Schemes Bill is expected to make it easier for millions of people to manage their pensions, by improving returns, and combining smaller pension pots to create bigger and better pension funds.

The benefits of combining smaller pension pots can’t be underestimated, as typically the costs associated with managing these funds will fall, automatically increasing returns. This is all part of the Government’s Plan for Change, which is designed to put more money in people’s pockets.

Many workers will often create small pension pots with the various employers they work with, as few people will stay with a single employer for most of their working life – a big change from years gone by. Changing the system to enable these smaller pots to be combined into a single, larger pot that can be monitored more easily and with lower overall fees will go a long way to helping people better understand their overall financial position when they are heading towards retirement.

What will this mean for people nearing retirement?

Anyone approaching retirement will also benefit from “clear default options” for turning their pensions into retirement income, including more secure routes to deciding how they use their pension when the time comes.

This is potentially useful as the Pension Freedom rules which came into effect on April 6, 2015, removed the requirement to buy an annuity with your pension, but the extra choice has made it difficult for some people to know what to do for the best.

The suggestion from Chancellor Rachel Reeves is that all pension schemes should offer a default route to creating an income in retirement. While this would simplify things for people, it may result in some not choosing anything other than the default route, which may not be the best option for them. If you aren’t sure that what is the best option for you, either when these planned changes come in or before, then speak to your accountant for advice before you vest your pension.

The Chancellor said: “The Bill is a game changer, delivering bigger pension pots for savers and driving £50 billion of investment directly into the UK economy – putting more money into people’s pockets through the Plan for Change.

“The Bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures…”

These measures include:

• Requiring Defined Contribution (DC) schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes.
• Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement.
• Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding.
• New rules creating multi-employer DC scheme “megafunds” of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets.
• Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local area infrastructure, housing and clean energy.
• Increased flexibility for Defined Benefit (DB) pension schemes to safely release surpluses worth collectively £160 billion, to support employers’ investment plans and to benefit scheme members.

Source: Gov.uk

Pension changes are expected to accelerate

The Government is trying to accelerate change in the pensions marketplace to ensure people have more money in their pension fund at retirement. The changes are described as “urgent” by Minister for Pensions Torsten Bell.

He said: “Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement.

“The Pension Schemes Bill is part of this Government’s significant pension reform agenda. It follows the major consolidation of the UK pension system set out in the Pension Investment Review.”

The need for simplification is real, as experts feel that the way pensions work has become too fragmented and too complex.

Rocio Concha, Director of Policy and Advocacy, Which? said: “It’s good to see the government taking steps to simplify them and ensure schemes provide value for money. Which? has campaigned for years for the consolidation of small pots, so we are delighted that this Bill is seeking to do just that – a move that will provide greater value for savers and support them to keep track of their pensions.

“Which? looks forward to working with the government to ensure the pensions system is fit for the future.”

Both Defined Contribution and Defined Benefit schemes covered

The two main types of pensions – Defined Benefit (DB) and Defined Contribution (DC) will both be in the sights of the Government’s simplification plans. DB pensions are the more traditional schemes, where the amount of pension you receive is based on the amount of salary you were earning when you retired from the company or organisation.

These are much rarer now, and it is much more common for people to be in DC schemes. These are where you pay in a certain amount, which is often matched by your employer, or it may pay in more or less than you do, but the amount you receive at retirement depends on the performance of the underlying pension fund investments over time. The DC pensions are the ones where you have to think about how to take your pension when the time comes, as there are a variety of ways you can currently do this, which is adding to the confusion.

Nausicaa Delfas, Chief Executive, The Pensions Regulator (TPR) said: “The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future.

“We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation.”

The bill will cover a number of other points, and you can find out more about the Government’s Pension Investment Review on Gov.uk.

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MPs call on HMRC to address challenges in tax admin

HMRC’s challenges in administering the tax system as it has become increasingly complex have been revealed in Parliament’s Public Accounts Committee (PAC) report, with trust in the agency falling, and costs rising significantly. The simplification of taxation has been emphasised by PAC as a way of improving trust with taxpayers and learning lessons from the implementation of Making Tax Digital (MTD).

Caroline Miskin, Senior Technical Manager – Digital Taxation, at ICAEW, says: “It is no surprise that the cost of complying with tax obligations is increasing as each year more is asked of HMRC, taxpayers and agents. It has been clear for some time that HMRC has been struggling to meet the additional demands placed on it, contributing to a decline in customer service that appears to be eroding trust in the tax system.

“It is vital that the impacts of administering and complying with changes in tax policy, including changes to HMRC systems, are given serious thought at an early stage in the process. More needs to be done to simplify the tax system, not just tax administration. It is disappointing that the government appears to be only interested in the latter. MTD demonstrates the importance of consulting with and listening to taxpayers and agents. Our members tell us – and we have told HMRC and government – that quarterly reporting will increase costs for little obvious benefit, and the PAC report supports this.”

What are the challenges?

PAC has made several recommendations to help HMRC deal with the challenges it has identified. A primary one is that tax has become more costly to administer. The total cost per year is estimated at more than £20 billion, with much of that cost falling on businesses. This is largely due to the additional policies announced, with 240 tax policy changes announced between 2022 and 2024 alone.

In the 2023/24 tax year, HMRC spent £4.3 billion on administration, up by 15% – equivalent to £563m in real terms – compared to 2019/20. This was the driving force behind the Government introducing a range of simplification measures.

HMRC’s compliance productivity has also fallen, despite hiring more senior staff. In 2023/24, the compliance return for each worker for HMRC was £1.27m. This is down from £1.4m per worker before the pandemic, when inflation is taken into account. PAC has asked HMRC to outline how it will improve these figures to increase productivity again.

Taxpayers have lost trust in HMRC

Perhaps the biggest problem is that large businesses, small businesses, individual taxpayers and their agents have all lost trust in HMRC. Figures show that between 2021 and 2023, trust in HMRC fell from 52% to 47% for individuals, and from 61% to 49% for agents, according to the ICAEW.

PAC is encouraging HMRC to find out why there has been such a fall in trust. But perhaps part of the problem is the difficulties HMRC has faced with its IT systems. Work to replace legacy systems is costing more and taking longer than expected. The legacy systems mean it isn’t possible to use the full benefits of AI, which HMRC has already admitted is making it lag behind other organisations when it comes to communicating with taxpayers and agents digitally. Leveraging AI would help to improve efficiency and boost the customer experience.

The other major challenge is that despite the amount of time and effort that has gone into Making Tax Digital, there is little proof of productivity improvements for VAT traders, as it “is imposing additional administrative costs on taxpayers”, even though it is also generating additional VAT revenue. The estimated cost of implementing MTD back in February 2024 was £500m, with ongoing net costs of £200m a year thanks to the introduction of MTD income tax.

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Changes to umbrella company payments could reduce wages

Umbrella companies are typically used by recruitment agencies to employ workers on temporary contracts, in sectors like IT, healthcare, construction and education. Usually, the contractor or temporary worker will work for a client, the client pays the recruitment agency, and the agency pays you your money through the umbrella company after deducting any fees, tax and National Insurance contributions (NICs).

However, if you are one of the people working in this way, then the changes to employer NICs from April 6, 2025, mean that you could end up having less money in your pocket thanks to a quirk in the way this can impact individuals, rather than employers.

From April 6, 2025, NICs increased by 1.2% to 15% and the level at which employers begin to pay it fell from £9,100 per year to £5,000 per year. This has already caused problems for many businesses that are facing bills much higher than they had expected. These costs are borne solely by the employer in most cases, and employees should not see any impact on their salary. But with umbrella companies, the position is likely to be different, according to the Low Incomes Tax Reform Group (LITRG).

In this case, it could be the employee being paid by the umbrella company that could face paying this bill, as NICs is often deducted from the worker’s agreed rate.

Why will this affect the worker and not the employer?

Agencies are paid by companies that ask them to find employees for them, and these fees are often paid to an umbrella company that will then pass that money onto the worker for the period of time they are with the company.

Unless the recruitment agency’s client is providing the additional amount of money to cover the rise in NICs, that money is most likely going to come out of the wage that the agency is sending to the worker. This means you will have less money in your pocket, even though this NICs change was not supposed to affect employees.

The difference in the pay could be considerable. For example:

Someone starts a job in March 2025 with an assignment rate of £18 an hour. If they work 37.5 hours a week, this translates into gross pay for them of £519.37. The employment costs are £132.81.

In April 2025, the assignment rate is still £18 an hour. But the employment costs are now £145.32 due to the increased employer NIC rate. This means the person’s gross pay will be £506.77.

Source: LITRG

You may think that if you have a contract with the agency, you have a specific rate of pay. But in many of these contracts your rate of pay can be changed, providing you are being paid the minimum wage.

What can I do about this?

If you’re getting less money because of this increase in NICs, then you could ask your umbrella company to renegotiate the overall rate with your agency and/or end client, so the increase in NICs is paid by the company you work for, not you. You may not be able to do this, but it is worth asking.

If not, then you should look at the guidance created by HMRC with input from the LITRG. This outlines how umbrella companies can positively contribute to the temporary labour market.

These actions are split into two sections – operating reasonably and providing a good service. The headings for these actions include:

• Umbrella companies should be run by fit and proper people.
• Umbrella companies should be financially viable.
• Umbrella companies must follow the statutory requirements that apply to all employers.
• Umbrella companies must accurately operate the payroll for their employees.
• Umbrella companies should compete based on lawful practices.
• Umbrella companies should be clear, open and honest with the information they provide their employees.
• Umbrella companies should provide employee care.
• Umbrella companies should provide recruitment agencies with the information they need to meet their legal obligations.

Source: LITRG

HMRC is expected to begin tightening compliance around how employer NICs is charged in these cases. But if the umbrella company you’re working with isn’t complying with this guidance, then you may want to consider not working with them. You can find out more about the pay you would receive with the Umbrella Company Pay Tool, which is on Gov.uk.

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If you think you might be affected by these changes, then please get in touch and we would be happy to give you the guidance you need.

Tax simplification measures – do they go far enough?

The Government has revealed a package of changes designed to simplify the tax and customs system and to help deliver its ‘Plan for Change’. There are 26 measures included in the changes, plus two administrative measures to strengthen the “integrity of the tax and customs system”.

A further 11 measures are intended to bring changes to the tax system to ensure “it continues to be fit for the modern world”. The expectation is that the measures will reduce bureaucracy and increase efficiency at HMRC, so the state can become more “productive, agile and effective”.

The measures come after commitments in the Autumn Budget 2024 and the Spring Statement 2025 to bring forward these changes in Spring 2025.

What measures have been included?

The measures are relatively wide ranging, with too many to mention in a single article. But the key ones, which have been designed to help simplify the tax and customs system, are outlined below. You can find the full list at Gov.uk.

Employers and small businesses should see their administrative burdens reduced, as HMRC works to modernise its systems to improve the experience for everyone that deals with it, including individuals and sole traders. This push towards simplification should also extend to HMRC guidance and communications.

Capital Goods Scheme Simplification

Legislation will be laid before Parliament to remove computers from assets covered by this scheme, which will reduce administration as they would have previously had to adjust VAT recovery on these assets over a five-year period if the cost of them was more than £50,000 excluding VAT. Removing these from the measure means these calculations would no longer be needed.

The capital value expenditure of land, buildings and civil engineering work will also increase from the current level of £250,000 excluding VAT, to £600,000 excluding VAT. So, only projects above the new threshold would need to adjust VAT over the standard 10-year period, reducing compliance requirements for mid-sized capital projects.

Income Tax Self-Assessment (ITSA) Criteria Review

Previously, anyone with trading income above £1,000 had to file a self-assessment return. But under the new measures, the threshold for reporting trading income will be aligned with new ITSA reporting thresholds for property and ‘other’ taxable income, HMRC said, raising it to £3,000 gross. The Government claims this will remove the requirement for 300,000 taxpayers to file a self-assessment return, making it much easier for those with small incomes from side gigs, such as freelancing or selling online.

However, you may want to file a self-assessment return if you need to reclaim tax for work expenses, so speak to your accountant if you think you would still be better off filing if you’re in this position once the legislation takes effect.

Benefits in Kind must be dealt with through payroll from April 2027

The mandatory reporting of most Benefits in Kind through the payroll system of businesses was due to begin from April 2026. But following consultation with the Administrative Burdens Advisory Board, the Institute of Chartered Accountants of England and Wales and the Employment and Payroll Group, the “introduction of mandatory reporting and paying of Income Tax and Class 1A National Insurance contributions (NICs) on benefits in kind via payroll software” has been delayed by a year.

When the measure takes effect, company cars, private medical insurance, and gym memberships, for example, would need to be reported to HMRC through the payroll. Other benefits, such as employer-provided accommodation or interest-free or low interest loans from employers for things like rail travel season tickets, do not have to be included from this date, but can be included voluntarily if desired.

HMRC plans to further engage with how these rules will be applied so any disruption to employers is kept to a minimum, and the delay will give employers more time to prepare for the changes before they come into force.

These delays add to the announcement on January 28 that the draft Income Tax (Pay As You Earn) (Amendment) Regulations 2025, which were initiated by the previous Conservative government, will be scrapped. This saves employers from needing to add more detailed employee hours information to HMRC, which was due to begin from April 2026.

Getting National Insurance Contribution refunds to be made easier

HMRC is also in the process of reviewing the process for refunding National Insurance Contributions (NICs) under the Annual Maximum rules by streamlining the claims process and accelerating the processing time taken for each claim. This should make it easier and faster for people who are due refunds to access them.

Another NICs-related change is that the Government plans to enhance the Check Your State Pension forecast service, which helps people who need to fill in gaps in their NICs record by paying voluntary NICs. This builds on the Spring Statement 2025 announcement that from this summer, employees who become liable to the High-Income Child benefit charge, will be able to pay this directly through PAYE and will not need to file a separate self-assessment.

These are just a few of the measures that were announced by the Government in relation to increasing the simplicity of tax and NICs, but you can find out more about other measures at Gov.uk or by speaking to your accountant.

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Companies are being warned to comply with new rules

Companies registered at Companies House are being warned to keep on top of their responsibilities, such as filing their confirmation statements on time, otherwise they could face new penalties.

Companies House will still support businesses to help them comply with their legal obligations by sending notifications via email, for example. But if warnings issued by the department are ignored, then a financial penalty could be applied. Any company or director who is found responsible for committing a more serious offence could face civil or even criminal prosecution, and/or be disqualified from being a company director.

There are other agencies that could be brought into a prosecution too if necessary, such as the Insolvency Service, among others. This could result in a sharing of intelligence between the various agencies, with cases being referred between them, which could lead to more holistic enforcement action where that is appropriate.

Any director convicted of an offence could end up with a criminal record. You can find out more about the Companies House approach to enforcement in the Companies House enforcement policy.

What financial penalties could me or my company face?

If you don’t comply with your obligations under the new rules, then you can face a fine, which will increase depending on the severity of the breach, and the number of previous breaches of a similar nature.

Source: Gov.uk

The new rules are part of the ongoing implementation of the Economic Crime and Corporate Transparency Act 2023, and increase the powers of Companies House in relation to tackling economic crime and improve corporate transparency.

Martin Swain, director of Intelligence and Law Enforcement Liaison at Companies House, said: “The introduction of these new penalties marks another significant step forward for Companies House and our transformation.

“Where our guidance and support are not enough to encourage users to comply with the law or discourage misuse of our registers, we won’t hesitate to use these new powers available to us.

“We’ll take a consistent and proportionate approach to these new powers to firmly, but fairly, enforce the law. This will improve the quality of the data on our registers and help us play a greater role in identifying, disrupting and preventing economic crime.”

Can I appeal a penalty?

You can appeal a penalty from Companies House, providing you have permission from the court to do so. This appeal would be made to either the County Court or, in Scotland, the Sheriff Court. But there are very specific grounds that must apply for you to have grounds to appeal:

You may only appeal on the grounds that the decision to issue a financial penalty, the level or type of financial penalty or any condition stated in the penalty notice:

• Is unlawful.
• Is irrational or unreasonable.
• Has been made on the basis of procedural impropriety or otherwise contravenes the rules of natural justice.

Source: Gov.uk

Any application to the court for permission to appeal must be made within 28 days from the day after the penalty notice is given. Any request for permission to appeal after this date would only be accepted if the court accepts there was a good reason for you not filing to seek permission within that period.

If you choose to appeal, you also must serve written notice of the appeal application on the registrar within seven days from the date on which the application for permission to appeal was issued. You also must outline what grounds you are making the appeal on within a statement, which can be emailed to enquiries@companieshouse.gov.uk.

You can also write to the registrar at:

Companies House
Crown Way
Cardiff
CF14 3UZ

The court will consider the appeal, and could dismiss the appeal, vary the penalty amount, change the nature of financial penalty between a daily rate, fixed penalty, or a combination of the two. The court could also quash the penalty completely, or in part.

Jonathan Upton, director of Legal Services at the Insolvency Service, said: “We are committed to working collaboratively with Companies House to help improve the integrity and transparency of the data on its register.

“Where it is appropriate and proportionate to do so, and as part of our overall approach to tackling economic crime and wrongdoing, we will utilise the powers available to us to take enforcement action against misconduct on the register.”

We can help you

If you are concerned that you have not complied with all your obligations for Companies House, then please contact us and we will do everything we can to assist you.

Trump’s tariffs hit the markets – what should you do?

The first 100 days of the Trump administration has certainly created consternation across the world, as Donald Trump’s implementation of tariffs – which have been on again and off again and are currently suspended for most countries at the time of writing – have spooked world markets.

The latest shock to the Dow Jones and the S&P 500 came from Donald Trump’s threat to remove Jerome Powell, head of the Federal Reserve, from his post. But again, at the time of writing, he had walked back from that too. That said, things are changing so quickly at present, there is no telling what may have happened by the time you read this.

So, the only thing you can really do is work on the basis that markets are going to be volatile for the foreseeable future, and even if they have gone up in recent days, all it takes is for another shock from the Trump administration or elsewhere to shake things up once again.

How to deal with market volatility

As markets go up and down at pace, it can be tempting to make knee-jerk decisions, especially if you’re seeing your investment portfolio fall like a stone. But remember, the only time you actually lose money, is when you crystallise a loss.

If you have, say, £150,000 in a portfolio, then seeing this fall by 10% for example to £135,000 could be very concerning. But panic selling is not the answer, as you will then no longer be invested and cannot benefit from any subsequent market rise. If you stay invested, then when the market recovers, you will see the value of your investments rise too.

This could take some time, especially if there is little in the way of good news for a longer period. But as the traders build in some elements of the uncertainty we are currently seeing into their forecasts, hopefully the volatility will decrease. Only time will tell whether this will happen.

Using the volatility to your advantage

One thing to bear in mind is that if you have money available to invest currently, then you are likely to benefit from the volatility we are seeing. In essence, when the markets fall, you are effectively buying your investments at a sale price and will see your money grow more quickly when markets rebound.

For example, let’s say before the market fell, the shares or units you wanted to buy cost £10 each, and you have £100 to invest. So, you would be able to buy 10 shares at this price. But if the market fell by 20%, then the shares would fall in price to £8, and investing the same amount would give you 12 shares instead of 10, with £4 left over.

If the share or unit price returned to its previous level, then in the first example you would have £100 once again. But in the second example, you would have £120 when you had only had to invest £96 at the cheaper price and still managed to get two more shares.

Investing regularly can smooth out the ups and downs

The easiest way to make the most of the volatility is by investing regularly in the markets, as that way you can buy on the ups and the downs. Timing the market is very hard, and anyone who waits until ‘the right moment’ is likely to miss out on the best days to make returns on their investment.

Calculations from Fidelity Investments show that since December 31, 1992, if you missed the 30 best days in the FTSE100, you would have seen your investments grow by just 81% to April 7, 2025. Missing the five best days would have seen returns of 466%. But if you had stayed invested for the whole period from 1992 to April 7, 2025, you would have 763% more than you invested in the first place.

So, if you split your investment over a period of, say, 12 months, and drip-feed it into the markets, then you will be investing at whatever price the market happens to be on the day. Some days you will get more for your money, other days you will get less. But over time, the likelihood is you will gain more, because being in the market consistently has proven historically to be more important than trying to time the market.

Contact us

If you want to find out how to deal with the current volatility, then please get in touch with us and we will do whatever we can to help.