7th March 2025 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Spring Statement news: Public spending cuts likely
News reported last week said that the Chancellor has put together draft plans for spending cuts to welfare and other government departments.
At the time of the 2024 Autumn Budget, the Office for Budget Responsibility (OBR) said that there was a £9.9 billion buffer available against the Chancellor’s own self-imposed borrowing rules.

However, the OBR’s spring forecast seems likely to show that this buffer has disappeared due to the events of the last few months, including trade tariffs, the war in Ukraine and higher inflation and borrowing costs.

It could be argued that an alternative strategy would be for the Chancellor to amend her borrowing rules. However, to do so would risk losing credibility with the financial markets and the Chancellor has described her rules as “non-negotiable.” So, it seems that spending cuts are now likely, mainly to welfare payments.

How could welfare cuts affect my business?
Such cuts are likely to have ripple effects on small businesses, impacting both their customers and employees. Here are some key ways that these cuts could affect your business:

1. Reduced consumer spending: If welfare payments are reduced, lower-income households will have less disposable income, leading to decreased sales for businesses that depend on everyday spending, such as shops, cafes, and tradespeople. It can also lead to less demand for non-essential goods and services, such as entertainment, beauty treatments, and leisure activities. 
2. Workforce challenges: Employees who may also rely on welfare support, such as Universal Credit top-ups or childcare subsidies, could be affected by cuts. This could lead to increased financial strain for them that leads to reduced productivity, higher stress levels, and even absenteeism. It may also mean difficulties in retaining staff if they seek higher wages elsewhere or struggle to afford travel and childcare costs. 
3. Higher pressure on business owners: Less support may be available for self-employed individuals who rely on welfare payments during periods of fluctuating income. There may also be increased pressure to raise wages for affected employees, potentially squeezing already tight margins.ocal economy knock-ons: Local economies shrink when people have less money to spend. For businesses that rely on strong community support, particularly in areas with high welfare dependency, this can present challenges.
5. Impact on Business-to-Business (B2B) services: If welfare cuts lead to a slowdown in consumer spending, other small businesses that provide services to local companies (such as marketing, IT, and consulting) could also suffer as their clients tighten budgets.

 
What can you do?
Some basic steps you could consider include:

• Diversifying your customer base to reduce reliance on low-income consumers.
• Explore alternative revenue streams, such as online sales or subscriptions.
• Support employees through flexible working arrangements or other benefits to help offset financial strain.

While government decisions on welfare are often made with national budgets in mind, businesses are often on the front line of these changes. While this can create uncertainty, with the right planning and business strategy, you can take proactive steps to protect and even strengthen your business during challenging times.

Staying ahead of economic shifts is key to long-term success. If you’d like expert guidance on how to navigate the impact of welfare spending cuts on your business, get in touch with us today. We’d be happy to help you!

See: https://www.bbc.co.uk/news/articles/c1lpjqg2mp5o
 
Plug-in van grant extended for another year
The Future of Roads Minister, Lillian Greenwood, has confirmed that the plug-in van grant will be extended for another year.

The plug-in grant means that businesses can obtain grants of up to £2,500 when buying an eligible small van up to 2.5 tonnes and up to £5,000 for an eligible larger van up to 4.25 tonnes.

The grant is made available through the dealer or manufacturer as a discount on the purchase price when the van is purchased. So, there is no need for each purchaser having to go through a grant application themselves.

The government is also removing the requirement for additional training that is currently required for zero emission vans but not petrol or diesel ones.
Zero emission vehicles also carry some attractive tax advantages. If you are looking at replacing vehicles and would like help to know what the end costs are for you, please get in touch. We would be happy to help you!

See: https://www.gov.uk/government/news/120-million-to-roll-out-more-electric-vans-taxis-and-motorbikes
 
Public Procurement Act to give more opportunities to small businesses
The Public Procurement Act 2023, originally set for implementation on 28 October 2024, has now officially come into force. This legislation introduces new rules designed to make it easier for smaller businesses to compete for and win public sector contracts.

Key changes under the Act
The Act establishes clear rules that all public bodies must follow when buying goods and services. One of the most significant updates is the introduction of a Central Digital Platform. This is now available and allows businesses to register their details and access all potential bidding opportunities in one place.

An end to late payments
A particularly welcome change is the introduction of a mandate of 30-day terms for all public sector contracts. This measure is expected to improve cash flow for smaller businesses, which often struggle with delayed payments.

Cabinet Office Minister Georgia Gould highlighted the benefits of the new legislation, stating that the new Procurement Act will “tear down barriers that stop small businesses from winning government work, giving them greater opportunity to access the £400 billion spent on public procurement every year.”

New powers to deal with poor suppliers
The Act also introduces new powers to investigate and take action against poorly performing suppliers or those that pose security risks to supply chains. The Procurement Review Unit (PRU) and National Security Unit for Procurement (NSUP) will oversee these investigations. Underperforming suppliers could face exclusion from future contracts or even debarment.
A boost for small businesses
Public sector spending is significant, and this legislation marks a significant step towards creating more opportunities for smaller businesses. By reducing bureaucratic hurdles, ensuring fairer payment terms, and increasing transparency, the Act provides SMEs with a greater chance to secure valuable government contracts.

For small business owners, now is the time to explore these new opportunities and take advantage of the changes aimed at levelling the playing field in public procurement.

See: https://www.gov.uk/government/news/new-public-procurement-rules-to-drive-growth-opportunities-for-small-businesses-and-exclude-suppliers-that-fail-to-deliver 
 
Boost for rural businesses: Government announces £38 million investment
The UK government has announced a major funding boost for rural areas, with up to £38 million allocated to support infrastructure, essential services, and business growth in the countryside. The aim is that the funding will help to create jobs and drive economic growth while improving quality of life for rural communities.

Rural England Prosperity Fund given £33 million
A significant portion of this investment, up to £33 million, will be directed to the Rural England Prosperity Fund (REPF). The fund’s goal is to strengthen the rural economy and is designed to improve local infrastructure and essential services while supporting rural businesses to expand and diversify.

What kind of projects will be funded?
Businesses and community organisations in rural areas will be able to apply for funding for projects that help stimulate economic growth and enhance local facilities. Some of the key initiatives that will be eligible for REPF funding include:

• Rural business hubs: Development of shared workspaces and networking spaces to support rural entrepreneurs and small businesses.
• Business diversification: Funding to help rural businesses create new products, facilities, or convert building to expand beyond traditional agriculture.
• Community greenspaces: Creation of community gardens and green spaces to improve wellbeing and local biodiversity.
• Visitor trails and footpaths: Investment in new footpaths and local trails to boost tourism and accessibility.
• Community hub improvements: Funding to upgrade kitchens in community spaces and enhance facilities used by volunteer organisations such as youth charities and carers’ groups.

Additional £5 million to support rural services
In addition to the REPF, a further £5 million has been allocated to support essential services. The key areas of investment this fund will make include:

• Rural community assets fund: Providing capital for the refurbishment and development of community-owned assets such as village halls and community centres.
• Affordable rural housing: Supporting Rural Housing Enablers to identify and bring forward sites for affordable housing.

What happens next?
Funding allocations for local authorities will be published soon. If you’re a business owner or community leader in a rural area, keep an eye on local authority announcements to see how you can benefit from this funding.

Need advice on how this might impact your business? Get in touch, and we’ll help you navigate the opportunities ahead!

See: https://www.gov.uk/government/news/government-funding-for-rural-communities-set-out
 
Farming reforms to boost profitability
The government has announced its plans for new policies that it expects will make farming more profitable.

The new policies include:

• Seasonal Worker visa route to be extended for another 5 years.
• New requirements for government catering contracts that aim for at least 50% of food supplied coming from British producers or those certified to higher environmental standards.
• Funding for technology investment.
• Protecting farmers in future trade deals.
• Setting up a new National Biosecurity Centre that will upgrade the Animal and Plant Health Agency animal health facility at Weybridge and help to improve resilience against animal disease.

Steve Reed, the Secretary of State for Environment, Food and Rural Affairs, said: “The underlying problem is that farmers do not make enough money for the hard work and commitment they put in.” He went on to say that his focus “is on ensuring farming becomes more profitable.”

The announcement is positive news for farmers, and we look forward to seeing whether this translates to an uplift in profitability for our farmers!

See: https://www.gov.uk/government/news/government-announces-raft-of-new-policies-and-major-investment-to-boost-profits-for-farmers
 
Health and Safety: Lessons from Tamworth Snowdome
A tragic incident at the Tamworth Snowdome has highlighted the critical need for businesses to properly assess and manage health and safety risks.

The incident
Twelve-year-old Louis Watkiss tragically lost his life during a tobogganing birthday party at the indoor skiing venue on 24 September 2021. While descending the main ski slope, his toboggan collided with a staff member conducting a slope walk. The impact caused the staff member to fall backward onto Louis, resulting in fatal head injuries.

Following an investigation by the Health and Safety Executive (HSE), Snowdome Limited was found to have failed in its duty to ensure customer safety and was fined £100,000 for breaching health and safety laws.

What went wrong?
The HSE investigation revealed significant failings in Snowdome Limited’s risk assessment procedures. Specifically, the company:

• Did not conduct a suitable and sufficient risk assessment for tobogganing activities. 
• Failed to consider all individuals present on the slope, including staff and customers. 
• Lacked a safe system of work to manage collision risks between toboggans and pedestrians. 
• Did not provide adequate information, instruction, training, or supervision to ensure safe operations.

These shortcomings meant that crucial safety measures were not in place, leading to a preventable tragedy.

Legal and regulatory responsibilities
Under Section 3(1) of the Health and Safety at Work etc. Act 1974, employers must take reasonable steps to protect not only their employees but also other individuals who may be affected by their operations. This applies across all industries, from construction sites to entertainment venues like indoor ski slopes.

Nathan Cook, Senior Enforcement Lawyer for HSE, emphasised: “Louis went to a friend’s birthday party at the Snowdome and should have returned home safely to his family after an enjoyable occasion. Tragically, due to the failings of Snowdome Limited, this did not happen.”

He added that the tragedy could have been avoided if the company had implemented adequate risk assessments and safety controls.

What businesses can learn
It is difficult to imagine what Louis’ family have gone through since the tragedy. No business would want to be in the position of Tamworth Snowdome and this case serves as a stark reminder that all businesses—regardless of industry—must take health and safety seriously.

To prevent similar incidents, businesses should:

1. Conduct comprehensive risk assessments: Identify hazards and implement measures to mitigate them. 
2. Establish clear safety procedures: Ensure employees and customers are aware of potential risks and how to avoid them. 
3. Provide adequate training and supervision: Employees should receive ongoing training to recognise and manage risks effectively. 
4. Regularly review safety policies: Work environments and operations change over time, making it essential to keep safety policies updated.

Final thoughts
The £100,000 fine imposed on Snowdome Limited serves as a reminder that failure to uphold safety standards can have devastating consequences. Beyond financial penalties, businesses risk irreparable harm to their reputation and, more importantly, endangering lives.

Businesses should take proactive steps to assess risks, implement safeguards, and foster a culture of safety in the workplace. Health and safety should never be an afterthought: it is a fundamental responsibility that protects lives.

See: https://press.hse.gov.uk/2025/02/26/skiing-company-fined-after-boy-was-killed-at-friends-birthday-party/
 
Guidance on maintaining secure networks
The National Cyber Security Centre have published new guidance for organisations on network security fundamentals. Using networks has become fundamental to many businesses, ensuring they continue to operate and stay secure.

The guidance splits into the following 8 sections:

1. Identifying your assets
2. Understanding the threat
3. Restricting access
4. Designing network architecture
5. Protecting data in transit
6. Securing network perimeters
7. Updating systems
8. Monitoring networks

The guidance provides an overview in each area as well as further reading that can help you ensure that your network is as secure as possible.
See: https://www.ncsc.gov.uk/guidance/network-security-fundamentals

28th February 2025 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

MAKING TAX DIGITAL FOR INCOME TAX
With just over a year to go before Making Tax Digital for Income Tax (MTD for IT) is mandated, now is the time to consider whether your business will be required to comply with the new requirements from 6 April 2026.

If you are a sole trader or run an unincorporated property business, and your ‘qualifying income’ (generally turnover from a sole trade or property business) is £50,000 or more in the 2024/25 tax year, you will be mandated into MTD for IT from 6 April 2026. It’s too early to know your 2024/25 income until your accounts or tax return have been prepared for the tax year, but your 2023/24 self assessment tax return should give you an indication as to whether or not you’ll be mandated. If your qualifying income in 2023/24 was above or nearing £50,000, and you expect it to stay at around that level or increase for 2024/25, then there’s a good chance that you’ll be mandated.

HMRC are taking this approach. They have said that they’ll use 2023/24 returns (the deadline for which was 31 January 2025) to identify which taxpayers are likely to be mandated from 6 April 2026. They’ll be sending those taxpayers a letter in the coming months, advising them that they’re likely to be mandated and explaining why.

If you receive such a letter, or if you’d like to know more about preparing for MTD for IT, please let us know. MTD for IT will involve keeping your detailed accounting records in compatible software and sending quarterly digital reports to HMRC. This might be a big change for some, but it could actually benefit you. We can help you choose the most suitable software and implement the required processes in a way that adds value to your business.

TIMING OF DISPOSALS AND ELECTIONS FOR CAPITAL GAINS TAX
2024 saw an increase in the main rates of Capital Gains Tax (CGT) for disposals taking place on or after 30 October 2024 (now 18% and 24%). It was also announced that the rate of CGT on Business Asset Disposal Relief (BADR) gains would increase from 10% to 14% from 6 April 2025, with a further increase to 18% planned from 6 April 2026. The upcoming change means that getting the timing of BADR-qualifying disposals wrong could mean you paying more CGT.

As a general rule, the disposal date for CGT purposes, for unconditional contracts, is when the contract is entered into, rather than the time that it is completed. New rules prevent using unconditional contracts to secure the lower rates of CGT. There are also new rules that prevent using elections to lock in the lower rate of CGT when share exchanges or reorganisations take place. If you are planning to make a BADR-qualifying disposal, please speak to us so that we can help you avoid any pitfalls!

LOAN CHARGE REVIEW – HAVE YOUR SAY!
The loan charge was brought in to curtail the use of specific tax avoidance schemes that sought to avoid Income Tax and National Insurance by disguising remuneration as loans. There are complex and long-standing problems with HMRC’s policy and settlement concerning loan charge liabilities, with a considerable number of taxpayers experiencing undue hardship.
 
An independent review of the loan charge is taking place, which will focus on cases where tax liabilities have not been resolved. If you were affected and would like to submit evidence, please speak to us.

ARE YOU TRADING?
2024 was the first year for which digital platforms such as Amazon and eBay were required to send information about vendors to HMRC. The reporting requirements apply unless the vendor made fewer than 30 sales in a year and received less than €2,000 (approximately £1,700) for those sales.

The new rules merely strengthen HMRC’s data collection powers and do not create any new tax obligations for individuals. It does however mean that if an online trader has not been declaring their income, HMRC are more likely to find out about it!

There has been a lot of misinformation online and on social media surrounding the new rules, leading people to believe that they’ll have to pay tax on their sales from having a clear-out and selling their unwanted possessions! This isn’t necessarily the case. In a recent educational campaign, HMRC set out the circumstances in which tax would be due. They say, “Selling stuff for some extra money might just feel like a fun hobby you do on the side, but it could also count as something HMRC calls ‘trading’”. The definition of trading is complex, but generally it means that the activity is pursued with a view to making a profit. HMRC go on to say. “Just casually selling some unwanted personal belongings from time to time? It’s unlikely you’ll need to pay any tax on this.”

The campaign also addresses the £1,000 trading allowance.  If a person’s sales income from trading is £1,000 or less in a tax year, that trading income does not need to be declared; if sales from trading exceed £1,000, then that trade needs to be declared on a self assessment tax return.

ATED
Annual Tax on Enveloped Dwellings (ATED) is payable by ‘non-natural persons’, such as companies, that hold an interest in UK residential property valued at over £500,000. The ATED charge is based on the value of the property and applies unless an available relief is claimed.

One such available relief is for dwellings that are let to a third party on a commercial basis and are not, at any time, occupied, or available for occupation, by anyone connected with the owner. If this relief applies, it should be claimed in an ATED return.

ATED is payable for a chargeable period ending on 31 March each year. Returns must be filed within 30 days of the period commencing, so returns for the period 1 April 2025 to 31 March 2026 must be filed on or after 1 April 2025, and no later than 30 April 2025.

Over the coming months, HMRC will be sending ‘One-to-Many’ letters to companies that own one or more dwellings valued at over £500,000, declared no profits in their Corporation Tax returns between 2017 and 2020 and either filed no ATED returns or claimed the relief outlined above. The letter explains that as the company’s tax returns show that it did not make a taxable profit, it may not have been run on a commercial basis, with a view to a profit. In such cases, the ATED relief will not apply.

The letter asks companies to review their ATED position and respond within 40 days, either providing further information, making a disclosure or filing any outstanding returns. If HMRC do not receive a response within the set time, they may raise a discovery assessment and penalties may apply.

21st February 2025 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Should you be paying tax on your side hustle?
Conventional approaches to work and earning an income are changing and with the cost of living ever rising, many now use various ways to make some extra cash outside of their main job. If that’s true of you then you may wonder whether you need to pay tax on those earnings.

HM Revenue & Customs (HMRC) have launched a new campaign aimed at demystifying whether you need to tell them about your side hustle earnings so you can avoid any nasty surprises.

The guidance looks at five different types of hustle. Here we briefly review them and what you need to know.

1. I’m buying or making things to sell
If you sell things you make (including digital creative products), upcycle furniture to sell, or buy items to resell at a higher price, then HMRC would consider you to be trading.

2. I’ve got a side gig
Side gigs vary but might include providing car repairs, making deliveries, dog walking, gardening or tutoring.
Although this work may be done in your spare time, if it’s regular and carries on for a few months, HMRC would consider it to be trading.

3. I work for myself doing multiple jobs
If you’re earning a living from doing several different jobs then you could be trading and need to register as a sole trader.

4. I’m a content creator or influencer
What may have started as a hobby could have become an earner for you. For instance, if you get paid to do sponsored social posts for a brand, or you get ad income from your online videos or blog, then HMRC will consider you to be trading.

How much can you earn from trading before you need to tell HMRC?
If you earn £1,000 or less in a tax year then you won’t pay any tax on it. However, if you earn more than £1,000 you need to tell HMRC and may need to pay tax.

Note that this £1,000 limit is a single allowance that applies to your combined trading income. You don’t unfortunately get an allowance for each type of income.

Some may suggest that if you sell less than 30 items a year you do not need to pay tax, however this is incorrect. Online platforms have to share some information with HMRC if you sell more than 30 items in a year, but that doesn’t mean you necessarily need to pay tax. You may also be due to pay tax if you sell less than 30 items. The key question is whether you have earned more than £1,000.

However, if you casually sell some unwanted belongings from time to time, then it’s unlikely you will need to pay any tax on this.

There is one other type of side hustle income that you might need to tell HMRC about, but this has some different rules to consider.

5. I rent out my property
It could be that you run a holiday let, rent a spare room, or rent out a property through an app.

For renting out spare rooms, then that may be covered by the £7,500 rent a room scheme allowance.

If it’s a property that you don’t live in that you rent out, then you also have a property allowance of £1,000. If the income you receive is more than that then you may need to pay tax on it.

It’s worth noting that you can use the £1,000 trading allowance as well as the rent a room scheme and property allowance.

If you need help working out whether you need to pay tax on your side hustle, please give us a call. We would be happy to help you!

For more information on HMRC’s tax help for hustles, see: https://taxhelpforhustles.campaign.gov.uk
 
Extra flexibility for apprenticeships
The Department for Education have released details of additional flexibility coming to apprenticeships.

When adult learners over the age of 19 start their apprenticeship course, businesses will now be able to decide whether they need to complete a level 2 English and Maths qualification (equivalent to a GCSE) in order to pass the course.

The Department for Education stressed that apprentices will still be assessed on the core English and Maths skills that are relevant to the work they do.
However, they will be able to focus more on their paid work.

The minimum duration of an apprenticeship is also being reduced from the current 12 month minimum to 8 months. This change will come into effect from August 2025. However, the changes to English and Maths requirements have taken immediate effect.

It is estimated that these changes could lead to up to 10,000 more apprentices a year being able to complete their apprenticeship, as well as helping learners qualify more quickly in high-demand sectors such as healthcare, social care and construction.

See: https://www.gov.uk/government/news/10000-more-apprentices-as-government-slashes-red-tape-to-boost-growth
 
Reforms to homebuying coming
The government announced major plans last week to modernise the house buying and selling process. The reforms centre on digitalising and making property and identity data available electronically. This will allow mortgage companies and surveyors to have information within easy reach.

It is thought that these changes will help to avoid surprises being encountered late in the process, with the waste of time and money that goes with that.
In Norway, property transactions complete in around one month and the reforms take account of learning about how this has been achieved.

HM Land Registry (HMLR) is involved in the changes and the next step is a 12-week project to identify the design and implementation of agreed rules so that the data can be easily shared. HMLR will also be working with councils over coming months on how to open up more of their data and make it digital.

For estate agents and surveyors these reforms could make a big difference to the amount of time and money lost in sales falling through.

See: https://www.gov.uk/government/news/home-buying-and-selling-to-become-quicker-and-cheaper
 
AI: The good and the bad
Artificial intelligence (AI) continues to make headlines as businesses work out how to make effective use of it.

The government is continuing to push for growth in the AI industry. Last week, it opened bidding so that local authorities can submit proposals to become the next AI Growth Zone. It expects thousands of jobs to be created as a result and that it could rejuvenate local communities in various parts of the UK.

Last week saw the Artificial Intelligence Action Summit take place in Paris. Representatives from 80 countries that include world leaders, tech bosses and academics discussed the current progress of AI and future goals.

The emergence of DeepSeek, the Chinese AI service, has caused a lot of discussion in the AI world. Partly due to fears over security concern – Australia has banned it on government devices as a result. And partly because it appears to be have been developed on a much lower budget than has been the case with other AI services.

On the other hand, the BBC published a report on their own research saying that AI chatbots are unable to accurately summarise news. In their study of ChatGPT, Copilot, Gemini and Perplexity, they found that 51% of all AI answers to their questions about the news were deemed to have significant issues of some sort. 19% of AI answers that cited BBC content contained factual errors such as incorrect statements, numbers and dates.

The BBC also found that the chatbots “struggled to differentiate between opinion and fact, editorialised, and often failed to include essential context.” Their report raises concerns about whether an AI generated headline or news summary might lead to harm.

The international law firm, Hill Dickinson, has decided to reign in the use of AI by its staff and has blocked general access. It found that there has been a significant increase in AI usage by its staff and that much of the usage was not in line with its AI policy. Access is now dealt with under a request process.

Commenting on this, the Information Commissioner’s Office felt that there is a danger in firms outlawing the use of AI but staff continuing to use it under the radar.

As the use of AI continues, it seems likely that we will continue to see a mixture of stories as businesses across the world work out how to safely and effectively use AI.

In the meantime, it seems clear that AI tools should not be used on a ‘set and forget’ basis. Use of AI and the reasons for it given by staff need to be understood. And the output of AI needs to be challenged, such as by being carefully reviewed by someone who understands the subject under review.
 
Data protection fees to increase by 29.8%
Following a consultation in 2024, the fees payable by data controllers to the Information Commissioner’s Office (ICO) will be increased by 29.8%.
The new fees will be as follows: Tier 1 Current Fee £40, New Fee £52. Tier 2 Current Fee £60, New Fee £78. Tier 3 Current Fee £2,900, New Fee £3,763.

There is a £5 discount for direct debit payments and any organisations that are currently exempt from paying the fee will continue to be exempt.

See: https://www.gov.uk/government/consultations/data-protection-fee-regime-proposed-changes/outcome/data-protection-fee-regime-government-response
 
HMRC late payment interest rates to be cut
Following the reduction in the Bank of England base rate, HM Revenue & Customs (HMRC) have confirmed that their interest rates will be reduced accordingly.

Late payment interest will reduce to 7% from 7.25%. Repayment interest – paid on tax repayments – will be reduced to 3.5%.

The change will come into effect from:

• 17 February 2025 for quarterly instalment payments.
• 25 February 2025 for non-quarterly instalments payments.

See: https://www.gov.uk/government/news/hmrc-late-payment-interest-rates-to-be-revised-after-bank-of-england-lowers-base-rate--2
 
Crackdown on illegal working in the UK: Key highlights & takeaways
The UK government has intensified its crackdown on illegal working, with January 2025 seeing record enforcement activity. Home Secretary Yvette Cooper announced these efforts as the Border Security, Asylum, and Immigration Bill returned to Parliament last week.

Key highlights
Here are some key highlights of the recent activity:

• 828 premises were raided in January (+48% on the previous January), which led to a total of 609 arrests (+73%).  
• Visits show that restaurants, nail bars, and car washes are seen as high-risk sectors.  
• Since 5 July 2024, illegal working visits and arrests have increased by 38% compared with the previous year, with 1,090 civil penalty notices being issued by the Home Office in that time.

What are the takeaways for businesses?
Ensuring your employees have the legal right to work is more critical than ever. Employers can use the Home Office’s guidance on checking a job applicant’s right to work. A proactive approach to vetting staff can save significant headaches down the line.

Now is a good time to review your recruitment processes and make sure you are complying with immigration laws. It’s particularly important to be wary of informal hiring or failing to conduct due diligence, since it’s clear that the authorities are ramping up enforcement.

Ethical employment practices are not just a legal necessity but also a business advantage. Businesses that treat their workers fairly and operate within the law enhance their reputation and contribute to a fairer marketplace. In contrast, those who cut corners risk financial penalties and long-term reputational damage.

In view of the increased enforcement activity, being compliant with the immigration laws will help to protect your business and its reputation.

See: https://www.gov.uk/government/news/uk-wide-blitz-on-illegal-working-to-strengthen-border-security
 
Director fined for using unlicensed security operatives
The Security Industry Authority (SIA) has reported that a director for a Manchester-based security company has been fined for failing to comply with an investigation into the use of unlicensed security operatives.

The law requires security operatives working under contract to hold and display a valid SIA licence. Merseyside Police reported to the SIA that unlicensed security operatives had been used at a venue in Liverpool.

The SIA sent two requests for information before inviting the director to attend an interview under caution. The director failed to respond or attend and so the SIA initiated prosecution proceedings.

Manchester Magistrates Court sentenced the director and ordered them to pay a total of £3,540 in fines and costs.

See: https://www.gov.uk/government/news/security-boss-convicted-of-obstructing-regulators-investigation
 
Proposals on new energy saving requirements for landlords
The UK government is consulting on changes that will require private landlords in England and Wales to meet higher energy performance ratings by 2030.

Currently, 48% of all private rented homes have an Energy Performance Certificate (EPC) of C or above. However, under new plans the government is proposing that by 2030 all privately let properties will need to meet a minimum EPC C. Currently the minimum level required is EPC E.

The government estimates the average cost to landlords to comply with the proposals by 2030 would be between £6,100 and £6,800.

The consultation is looking for views from landlords and tenants on the proposals, including:

• Whether landlords should be required to meet a fabric standard through installing measures such as loft insulation, cavity wall insulation or double glazing, before moving onto other options including batteries, solar panels and smart meters.
• A maximum cap of £15,000 per property for landlords, with support schemes such as the Boiler Upgrade Scheme and Warm Homes: Local Grant.
• An affordability exemption that lowers the cost cap to £10,000.
• All landlords being required to meet the new standard by 2030 at the latest.

The consultation closes on 2 May 2025. If you are a landlord and wish to take part, the details can be found here.

In view of the potential costs involved, landlords will be following these proposals with interest.

See: https://www.gov.uk/government/news/warm-homes-and-cheaper-bills-as-government-accelerates-plan-for-change
 
4 new road schemes to be funded
Road schemes affecting Wiltshire, Leeds, Essex and Buckinghamshire were given approval last week following the grant of £90 million of government funding.

The improvement in infrastructure these schemes will bring is expected to help businesses be able to transfer goods more easily and generate growth in the economy.

The 4 schemes involve:

• A350 Chippenham Bypass in Wiltshire.
• A647 Dawsons Corner and Stanningley Bypass in Leeds.
• South East Aylesbury Link Road (SEALR) in Aylesbury, Buckinghamshire.
• A127/A130 Fairglen Interchange in Essex.

See: https://www.gov.uk/government/news/millions-to-see-faster-journeys-as-government-green-lights-90-million-for-4-essential-road-schemes-across-england

14th February 2025 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Are you thinking about starting a new business?
Starting a business in the UK is an exciting venture, but it comes with financial, tax, and accounting responsibilities that you must navigate effectively.

Understanding what you will need to do from the outset will help make sure that you don’t miss anything, avoid unnecessary costs, and position your new business for success.

Here are some key areas to focus on:

1. Choosing the Right Business Structure
One of the first decisions you need to make is selecting which is the right legal structure for your business. The three main options in the UK are:

• Sole Trader – Simple to set up but comes with unlimited personal liability. 
• Limited Company – Offers limited liability protection but involves more administrative work. 
• Partnership – Suitable for businesses with multiple owners but requires a clear agreement on profit sharing and responsibilities.

Each structure has different tax and legal implications, so it pays to take enough time to make sure you make the best choice for you.

2. Registering with HMRC and paying tax
All businesses must register with HM Revenue & Customs (HMRC). Sole traders and partnerships need to register for Self Assessment, while limited companies must be registered with Companies House and will have additional tax obligations, including Corporation Tax.

Considering tax is critical to business planning and no one wants to pay too much! Key taxes include Income tax, Corporation tax, VAT, and PAYE and national insurance.

3. Setting up a business bank account
For limited companies, having a separate business bank account is a legal requirement.

Sole traders are not required to have a separate account, but we strongly advise that you keep your business and personal finances separate as it simplifies your bookkeeping and tax reporting.

4. Bookkeeping and claiming expenses
Keeping accurate financial records will be crucial for you in managing your business and staying compliant with tax rules. This means considering whether you should invest in using accounting software and how you will make sure you keep records of your income, expenses and invoices for the time period that HMRC require.

You will be able to reduce your taxable profits by claiming allowable business expenses. These may include office costs (e.g., rent, utilities, equipment); travel expenses (e.g., fuel, train fares, accommodation); staff wages and subcontractor costs; and marketing and advertising costs.

It’s essential that you keep receipts and documentation to support any claims.

5. Planning for growth
Growing your business will likely take good planning and funding.

Financial forecasting and budgeting can help you keep your finger on the main financial drivers for your business so that you can grow your business effectively and sustainably.

There are many potential funding options that could help you expand your business. Bank loans, grants, and venture capital should all be assessed.

If you would like assistance with your new business venture, why not give us a call and ask us for a copy of our New Business Kit? We can help you make sense of all your financial, tax and accounting needs. We will be happy to help you lay a strong foundation for your business so you can focus on its growth.
 
Base rate cut to 4.5%
The Bank of England reduced their base rate to 4.5% last week, as had been widely expected in the days leading up to the decision.

The decision was made by a 7-2 majority. The minority of two members were looking for the rate to be reduced to 4.25%.

In announcing their decision, the Monetary Policy Committee (MPC) outlined their thoughts on the economy. Here are some highlights.

Inflation forecasts
The Consumer Price Index (CPI) was 2.5% for the last quarter of 2024. The Bank expects CPI inflation to increase to 3.7% by autumn 2025 due to higher global energy costs and regulated price changes.

However, the MPC also feel that pressures on inflation at a domestic level are moderating and will wane further as 2025 progresses. So, they expect CPI inflation to fall back to 2% from the end of 2025.

Growth forecasts
The Bank expects GDP growth to pick up from the middle of this year. They believe that the economy’s ability to produce goods and services has grown more slowly than previously estimated. So, while they’ve noted a slowdown in demand, they judge that only a small amount of unused capacity has been created in the economy.

These and other factors led the MPC to reduce the rate to 4.5%.

Will there be future rate cuts?
Looking forward to future potential rate cuts, the MPC has said “a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate.” They stressed that there are ongoing uncertainties around demand and supply in the economy.

The MPC also highlighted the global economic uncertainty and a pickup in financial market volatility due to the recent announcements in the US on trade tariffs and subsequent retaliatory measures. This is something they continue to monitor.

To review the Monetary Policy Summary in full, see: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/february-2025
 
Would you benefit from a top up contribution to your State Pension?
HM Revenue and Customs (HMRC) have revealed that 37,000 people have plugged gaps in their National Insurance (NI) record since last April, boosting the amount of State Pension they will receive when they reach retirement age.

The amount of State Pension you will receive is based on how many completed years you have in your NI record. Currently it is possible to review your record going back to 2006, and where there is a gap, you can contribute to plug the gap and ensure that you maximise the amount of State Pension that will be available to you.

There is limited time to be able to do this though. From 6 April 2025, you will only be able to make voluntary NI contributions for the previous 6 tax years. This means there is now less than two months left to be able to plug any gaps that go back to 2006.

HMRC have an online service that allows you to check and view any gaps in your NI record, calculate the difference any payment will make to your State Pension and then make a payment for the years you would like to top up.

If you would like any help in finding out whether you have any missing years and how much benefit you could get from a top up, please contact us and we would be happy to help you!

See: https://www.gov.uk/government/news/35-million-added-to-state-pension-pots
 
How do you make sure data cannot be recovered from storage media?
When it comes to disposing of computer equipment, how do you make sure that any storage media – hard drives, SSDs, flash drives and so forth – can’t be read by unauthorised users or have the data recovered?

These days practically every electronic item contains some form of electronic storage media. The National Cyber Security Centre (NCSC) reports that there have even been examples where several gigabytes of sensitive documents were retrieved from decommissioned photocopiers and printers.

The NCSC has reviewed and republished guidance on sanitising and disposing of storage media. Here’s a brief review of some of the key points.

Sanitising storage media
The NCSC recommends that any media that has stored data that’s sensitive to your business should be sanitised before it is disposed of. Just pressing ‘delete’ on your computer is not enough.

If the storage media isn’t sanitised there are risks that any sensitive data on it could be recovered by competitors or used for criminal activities.

Selling or disposing of the equipment would be situations you might automatically think of. NCSC advises that sanitising storage media is also needed when reallocating equipment to a different user or being returned to a supplier for repair.

Before sanitising
NCSC advise that it is best to understand your data and know which items of equipment contain what data. This will help you identify any potentially more sensitive items of equipment.

Having a re-use and disposals policy in place is important and NCSC provides a sample policy that you can use. It is useful to understand what the eventual sanitisation requirements will be as part of your decision-making process for buying equipment.

Is the data encrypted?
Where the device has an encryption option, that has been activated, this can make life simpler. For example, Bitlocker is available on Windows and FileVault on macOS. These usually have a ‘factory reset’ option that deletes the encryption keys and makes the data unreadable. Once this has been done, NCSC says there is then minimal risk to sensitive data.

This does not mean that the reset procedure can guarantee that all user data has been rendered unreadable. However, NCSC advises that a ‘factory reset’ on an encrypted device will provide a satisfactory level of assurance.

If the data is not encrypted, then there is a need to overwrite and verify the overwrite. There are commercial tools available that can do this.

Where it cannot be assured that storage media has been wiped, or there is a residual risk that a skilled, well-funded laboratory could recover data, then it may
be necessary to physically destroy the media. NCSC advises destroying the media to particles of 6mm or less.

For further information, please see the guidance.
 
Charity Commission warns charities about fraud prevention
The Charity Commission has issued a warning reminder to large, incorporated charities about changes to the law on preventing fraud. A new failure to prevent fraud offence will come into force on 1 September 2025 for all large organisations, including charities.

Who does this apply to?
This new offence is introduced by the Economic Crime and Corporate Transparency Act 2023 and will affect large, incorporated charities that meet two of the following three criteria:

• More than 250 employees.
• More than £36m of income.
• More than £18m in total assets.

What is the change?
Where an employee, agent, subsidiary, or other “associated person”, commits fraud that intends to benefit the organisation (or its clients) and the organisation did not have reasonable fraud measures in place, the organisation may be criminally liable under the new law.

Guidance has been published on the new offence, which can be read here. This guidance has been published by the Home Office after consulting with the Scottish Government and Department of Justice in Northern Ireland.

If you would like any help with reviewing your approach to fraud prevention, please get in touch. We would be happy to help you!

See: https://www.gov.uk/government/news/failure-to-prevent-fraud-offence-regulatory-alert
 
Boost in funding for flood defences
Following the recent run of storms and wet weather, the government has announced that £2.65 billion will be spent over the next two years to build, maintain and repair flood defences.

Extreme weather events are increasing in frequency, so flood defences are becoming increasingly important in protecting both homes and businesses. The funding will also help protect farmland, which has also suffered in the recent storms.

Environment Agency Chair Alan Lovell said: “The impact of flooding on our communities will only become greater as climate change brings more extreme weather, like Storms Bert, Conall and Eowyn.” He also expressed his commitment to delivering on the vital projects that are needed across the country.

According to the press release, up to 1,000 projects are set to receive a share of the funding. These include flood defence projects at Bridgwater in Somerset and Derby. Projects in the West Midlands, Dorset, Leicestershire and Nottinghamshire will also receive support. In addition, essential maintenance will be carried out at the Stallingborough Sea Defences along the Humber estuary and to improve protection in Pevensey Bay.

See: https://www.gov.uk/government/news/record-investment-to-protect-thousands-of-uk-homes-and-businesses
 
Rises to national minimum wage confirmed
Legislation was laid before Parliament last week confirming that the new National Living Wage and new Minimum Wage rates will take effect from 1 April 2025.

While many businesses are feeling and have expressed concern about the increases, the sight of the legislation suggests that no reprieve is in sight.
As a reminder, the National Living Wage will increase to £12.21 from 1 April. This is a 6.7% increase and will be worth £1,400 a year to an eligible full-time worker.

The National Minimum Wage for 18-20 year olds will increase to £10.00 an hour. For an eligible full-time worker, this will work out to an extra £2,500 a year.

An impact assessment published on the same day the legislation was laid indicates that these increases will put around £1.8 billion into the pockets of workers over the next six years.

While these measures will benefit many workers, you may be concerned about the anticipated cost of this increase causing problems for your business.

If you need help costing out what the increases will cost you and advice on the potential strategies you have to manage these costs, please get in touch and we would be happy to help you!

See: https://www.gov.uk/government/news/april-pay-rise-set-to-boost-pockets-of-over-3-million-workers
 
Duty changes for the alcohol industry
February saw changes for the alcohol industry come into force that particularly affected winemakers.

A temporary easement has been in place for wine that has treated wines with an alcohol by volume (abv) between 11.5% and 14.5% as if their abv was 12.5%. It was announced in the 2024 Autumn Budget that the easement would end on 1 February 2025.

There have been calls to make the easement permanent, however the government has confirmed that the easement would end as planned.

This means that the wine duty for all wine will now be based on its alcoholic strength. The duty rate changes at each 0.5% abv, meaning that there are now 30 different payable amounts replacing the single rate under the easement. Wines with an abv below 11.5% and above 14.5% were already being taxed by strength and this will continue.

In addition to this change, duty rates on all non-draught alcohol products rose in line with the Retail Price Index (RPI) from February 2025.

Small producers of non-draught products have seen an increase in their cash discount to bring them in line with the relief for draught products.

There has also been a 1p duty cut for draught pints.

These changes mean that there could be benefits for businesses in the hospitality trade from using small producers. Higher strength wines will become more expensive and so businesses will need to be alert to ensure that costs are passed on appropriately.

See: https://www.gov.uk/government/publications/changes-to-the-rates-of-alcohol-duty
 
Company fined over health and safety negligence
Pemberton Timber Frame Ltd from Kent has been fined and ordered to pay costs following an avoidable injury to one of its workers.

The company manufactures timber frame structures for the construction industry. One of its workers was operating a panel saw and was asked to perform a rip cut on a length of timber, i.e. cut down its thickness. This meant he tried to pass the timber through the panel saw multiple times because the timber was thicker than the blade could cut in one pass.

He successfully managed the first cut, but on the second attempt his right hand made contact with the blade and unfortunately had three fingers instantly amputated.

The Health and Safety Executive (HSE) found that the employee had been asked to complete a task that wasn’t suitable for the machine he was using and that he had not received sufficient training or instruction on how to use the panel saw safely.

Even worse, the HSE discovered that the company did have appropriate machines that would have allowed the task to be carried out safely, but the employee didn’t know this because of his lack of training.

HSE provides clear guidance on the safe use of panel saws to carry out rip cuts. A panel saw with a circular blade must not be used unless the saw blade, at all times, projects through the upper surface of the material being cut.

Ross Carter, the principal inspector for HSE, said: “Those in control of work have a responsibility to devise safe methods of working and to provide the necessary information, instruction and training to their workers.”

The case serves as a reminder of the need to make sure safe systems of work are in place for all work tasks.

See: https://press.hse.gov.uk/2025/01/15/fine-for-kent-timber-firm-after-worker-loses-three-fingers

7th February 2025 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

HMRC SCAM ALERT - STAY VIGILANT! 

We want to alert you to a scam currently targeting businesses by impersonating HM Revenue and Customs (HMRC). Fraudsters are sending convincing emails and letters that claim to conduct compliance checks or verify financial information. These communications often request sensitive documents such as bank statements, VAT returns, and identification copies, using official-looking HMRC branding and fake email addresses like companies-review@hmrc-taxchecks.org to appear legitimate.

Key Indicators of the Scam:

• Unfamiliar Email Addresses: Legitimate HMRC emails will always end with @hmrc.gov.uk. Be cautious of any communication from addresses that deviate from this standard.

• Requests for Sensitive Information: HMRC will never ask for personal or financial information via email or text. They typically communicate through official letters or their secure online portal.

• Unexpected Correspondence: If you receive unsolicited communications claiming to be from HMRC, especially those requesting sensitive information, treat them with suspicion.

Recommended Actions:

• Do Not Respond: Avoid engaging with or providing any information to suspicious emails or letters.

• Report Suspicious Communications: Forward any dubious emails to HMRC at phishing@hmrc.gov.uk. Suspicious texts can be sent to 60599. 

• Verify Authenticity: If you’re uncertain about the legitimacy of a communication, contact HMRC directly using official contact details available on the GOV.UK website.

Staying vigilant and following these guidelines can help protect your business from fraudulent activities. If you have any concerns or need further assistance, please don’t hesitate to reach out to us.

THERE’S STILL TIME FOR SOME YEAR END TAX PLANNING!
With the tax/financial year end approaching, now is a good time to check that you’re making the most of the available reliefs and allowances available to you. Please talk to us if you think any of the issues affect you.

Savings
If you have some spare cash, an obvious tax planning point might be to maximise your ISA allowances for the 2024/25 tax year (currently £20,000 per person). If you are 18 or over, but under 40, you can open a Lifetime ISA to save for your first home or retirement. You can put in up to £4,000 each year, until you’re 50, but you must make your first payment into your ISA before you’re 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. The £4,000 Lifetime ISA limit counts towards the £20,000 ISA allowance.

Pension planning
You might also want to consider increasing your pension savings before 5 April 2025.

Under the current rules, the government adds to your pension contributions at the 20% basic rate. For instance, if you save £4,000 in a personal pension, the government tops this up to £5,000. If you are a higher rate taxpayer there is a further £1,000 tax relief when your tax liability is calculated, reducing the net cost to £3,000.

If you have income in excess of £100,000, your £12,570 personal allowance may be tapered. For every £2 of income in excess of £100,000, the personal allowance is reduced by £1, reducing to nil where net income is £125,140 or more. Additional pension contributions can be even more effective if your income is between £100,000 and £125,140; the gross pension contribution reduces net income for the purposes of calculating the reduction in the personal allowance. This is effectively a 60% tax saving.

Capital Allowances
Unless the business year end is 31 March or 5 April, the end of the tax year is not a significant date as far as capital allowances are concerned. In order for new equipment to attract capital allowances, the expenditure must be incurred on or before the end of the accounting period.

Limited companies and unincorporated businesses are entitled to a 100% write-off for the first £1 million spent on new and used equipment in a 12 month period. This “Annual Investment Allowance” (AIA) does not apply to motor cars, but there is a special 100% tax relief if you buy a new zero-emissions motor car.

In addition to the AIA, limited companies buying new (not second hand) equipment are entitled to fully expense the cost of most acquisitions against business profits. There is no financial limit on expenditure qualifying for this “full expensing” relief.

Where equipment is bought under a hire purchase contract, the capital allowances outlined above are available on the full cost of the asset provided it has been brought into use by the end of the accounting period. This is despite the fact that the payments may be spread over a number of months.

Capital Gains Tax (CGT) planning
You might wish to consider bringing forward capital gains to before 6 April 2025 if you haven’t used your £3,000 CGT annual exemption for 2024/25.
 
Paying Voluntary National Insurance Contributions
A retiring person needs to have 35 ‘qualifying years’ in order to claim the full state pension. For those with gaps in their record, usually due to not paying sufficient National Insurance Contributions (NICs), it is possible to ‘plug’ those gaps by paying Class 3 (Voluntary) NICs at £17.45 per week (£17.75 in 2025/26). Usually, it is only possible to pay Class 3 NICs in respect of the past six tax years, but there is currently an easement in place that allows taxpayers to pay Class 3 in respect of tax years going as far back as 2006. This easement expires on 5 April 2025, so it is worth considering making Class 3 payments before the opportunity is lost.

Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) applies to purchases of property in England and Northern Ireland. The following SDLT nil-rate thresholds are set to revert to their previous levels from 1 April 2025, so if possible, accelerating a completion date could be worthwhile in order to make a saving!
 
For first-time buyers of residential property:
Threshold to 31 March 2025: £425,000
Threshold from 1 April 2025: £300,000
 
Single residential property:
Threshold to 31 March 2025: £250,000
Threshold from 1 April 2025: £125,000
 
Furnished Holiday Lettings
As covered in previous editions of this newsletter, Furnished Holiday Letting (FHL) status will be abolished from 6 April 2025. This will mean an end to the beneficial tax treatment that has been enjoyed by FHL owners up to now. If you own an FHL property, it may be worth considering the cessation of your FHL trade prior to 6 April 2025, so that your ability to claim Business Asset Disposal Relief in the normal period of three years post cessation can be preserved.

If you wish to continue operating your property as a holiday let, and are considering making any renovations to the property, it’s worth remembering that you can still claim capital allowances for expenditure on a qualifying FHL prior to 6 April 2025, so you may wish to accelerate such expenditure.

AVOID ANY DOUBLE CAB ‘HICCUPS’!
HMRC has published new guidance regarding a change in the interpretation of how Double-Cab Pickup (DCPU) vehicles should be classified for car benefit, capital allowances and some deductions from business profits purposes.  Previously, HMRC accepted that if the payload of a DCPU was 1 tonne or more, it was a goods vehicle, not a car, and therefore qualified for beneficial capital allowances and benefit in kind treatment.

Following the government’s announcement in Autumn Budget 2024, from April 2025 (1^st for companies, 6^th for individuals), HMRC will no longer apply the payload test and instead consider the vehicle’s primary suitability when it was constructed. As DCPUs are ‘dual-purpose’ they are not primarily suited to carrying goods or burden and so will be classed as cars.

Transitional arrangements are in place, so if you are considering purchasing a DCPU, bear in mind that ordering a DCPU prior to 6 April 2025 could ensure that the more attractive benefit in kind tax treatment that applies to goods vehicles is available for a few more years. For capital allowances purposes, entering into a contract to purchase a DCPU prior to 1/6 April 2025 will secure the beneficial capital allowances treatment for goods vehicles, provided the date the obligation to pay for the DCPU is before 1 October 2025.

EMPLOYMENT EXPENSES
It is possible to claim Income Tax relief on eligible employment expenses that have not been reimbursed by your employer. If you file a self assessment tax return, relief must be claimed on the employment pages, but for employees who do not file a self assessment, it is possible to claim tax relief using an online form (P87). This follows a period during which HMRC had temporarily suspended the online form process due to a high number of ineligible claims being made. When making a claim it will be necessary to provide evidence of the expenses incurred.

Expenses on which tax relief can be claimed include:

• Working from home (if your employment contract requires you to do so).
• Repairing or replacing a uniform or small tools.
• Travel for business journeys (not journeys to or from work).
• Professional fees and subscriptions.

VAT ON FOOD AND DRINK
In 2024 we saw a lot of legal cases that examined the VAT rating of food and drink and it appears this trend is continuing into 2025! The VAT rating of food and drink has always been a contentious topic but in the case of Global By Nature Ltd v HMRC (TC09396) we can see the first time that a tribunal or court has examined the VAT law covering ‘sports drinks’.

VAT legislation allows food and drink (other than catering) to be zero-rated but there is quite a long list of foods and drinks that are exceptions to the zero-rating and so are subject to VAT at 20%. One such exception is “Sports drinks that are advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise or build bulk” and this includes powders or syrups that are used to make such drinks.

In the Tribunal, HMRC argued that the above legal wording provides a definition of ‘sports drinks’, in that they are drinks that are “advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise or build bulk”. They said that Global By Nature Ltd’s drink powders were sports drinks, they were marketed as such, and were standard rated.

Global by Nature Ltd (GBN) argued that their powders, whilst intended to be consumed as a drink, were not ‘sports drinks’ and, even if they were, they were not marketed as such.

The Tribunal agreed with GBN in that two tests should be used to determine whether a product met the conditions in the legislation:

• Is the product a sports drink?
• If so, is it advertised or marketed as products designed to enhance physical performance, accelerate recovery after exercise or build bulk?

‘Sports drink’ is not defined anywhere in law, so after examining various dictionary definitions and uses of the phrase, the tribunal decided that GBN’s powders did not contain enough carbohydrate to be considered sports drinks. As they were not sports drinks, how they were advertised or marketed did not need to be considered – they did not fall within the exception and could be zero rated.

31st January 2025 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend.

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Chancellor’s speech: An update on economic growth measures
The Chancellor of the Exchequer, Rachel Reeves, delivered a speech last week that served as an update on the government’s plans for delivering economic growth.

The plan largely focused on developments proposed around Oxford and Cambridge as well as a third runway at Heathrow. Here are some of the highlights from the speech.

Oxford and Cambridge Growth Corridor
The Chancellor highlighted the potential growth available in the area between Oxford and Cambridge and feels this could become Europe’s answer to Silicon Valley. Currently, slow transport links and a lack of affordable housing have been identified as holding this potential back.

Improvements to rail transport links with East-West Rail and making Tempsford a mainline station were announced. There are also plans to upgrade roads between Milton Keynes and Cambridge to improve travel times.

A new Cambridge Cancer Research Hospital is being prioritised, and there are plans for a new Fens Reservoir to serve Cambridge and South East Strategic Reservoir near Oxford.

The Chancellor also announced that the Environment Agency have removed their objections to a new development in Cambridge that will provide 4,500 new homes together with schools and business premises.

A new AI Growth Zone in Culham is intended to speed up planning approvals for rapid build-out of data centres. And Cambridge University are planning a new flagship innovation hub in the centre of Cambridge, partly to attract investment and partly to help with building an innovation-focused community.

Third runway at Heathrow
While a third runway has already been previously approved, plans are stepping up to bring this to reality. The government is inviting proposals to be brought forward by the summer and will then take forward a full assessment through the Airport National Policy Statement.

The Chancellor reported that a third runway could increase GDP by 0.43% and create 100,000 jobs.

Other highlights
The Chancellor mentioned other developments as follows:

• Approach to trade: The government will continue to work on building economic relationships with the United States, the EU, and faster-growing economies around the world – China and India were mentioned. 
• Employment system reforms: The Secretary of State for Work and Pensions will be setting out reforms to the welfare system before the Spring Statement. And an Immigration White Paper will bring forward proposals to bring overall levels of net migration down, while the government also looks at visa routes for very highly skilled people. 
• Pensions system reforms: A final post-consultations report on the creation of larger consolidated funds will be published in the spring. 
• Regulatory system: Following discussions with Heads of the largest regulators, an action plan on how they can be more agile and responsive to businesses will be published in March. 
• Planning reforms: The Planning and Infrastructure Bill, to be introduced this Spring, will reduce environmental requirements placed on developers when they pay into the nature restoration fund. Measures will also make it easier to develop new infrastructure like nuclear power stations, trainlines and windfarms. 
• Investment: Further investments by the National Wealth Fund in Connected Kerb and Cornish Metals were announced. A refreshed Carbon Budget Delivery Plan is planned for publication later this year as Net Zero is seen as an industrial opportunity. 
• Infrastructure: Offshore windfarms in areas like East Anglia and Yorkshire could become a reality, and the government plans to work with the private sector to deliver a Lower Thames Crossing that will improve connectivity. Developments to Old Trafford, South Yorkshire Airport and East Midlands Airport were also discussed. The government is also moving forwards with the Wrexham and Flintshire Investment Zone, and the potential of unlocking land around stations is seen as a good way to improve infrastructure in Manchester and Leeds.

To read the Chancellor’s speech in full, see: https://www.gov.uk/government/speeches/chancellor-vows-to-go-further-and-faster-to-kickstart-economic-growth 
 
Rising above the storms: Finding strength in recovery
Severe weather can be an enormous challenge for businesses, and we have seen plenty of it recently. Power outages, property damage, and forced downtime are not just disruptions—they can feel like setbacks that threaten months or years of hard work. If your business has been affected by recent storms, you are not alone, and it’s important to remember that resilience is built in moments like these. 

While you may already be taking steps to recover and regroup, this article is here to offer encouragement, practical ideas, and a reminder of your strength as you navigate this difficult time. 

1. Acknowledge what you’ve accomplished so far
The immediate aftermath of severe weather is often chaotic, but just reaching this point - whether that means safely evacuating your team, assessing damages, or reopening your doors - deserves recognition. It’s easy to focus on what’s left to do but take a moment to appreciate the progress you’ve already made. 

2. Lean on your community 
This is the time to reach out. Whether it’s fellow business owners in your area, local organisations, or your loyal customers, communities often come together after storms to support one another. 

Consider sharing your story - be it on social media, with local news outlets, or directly with your customers. People value transparency and are often willing to help, whether that’s through donations, purchases, or simply spreading the word about your situation. You might be surprised by the generosity and encouragement you receive when you allow others to step in and help. 

3. Focus on small wins 
When faced with a long recovery process, it can be daunting to think about everything that needs to be done. Instead, break it down into small, manageable steps. 

• Got the power back on? Celebrate that!
• Restored internet or phone lines? Another win!
• Completed an insurance claim or arranged for repairs? That’s progress. 

Each small step forward is a reminder that you are moving closer to full recovery. Recognising these wins can help sustain your motivation during challenging times. 

4. Prioritise what matters most 
When everything feels urgent, it’s helpful to pause and prioritise. What will have the most immediate impact on your business and your peace of mind? 

For some, it might mean getting back in touch with clients to reassure them. For others, it could be addressing critical repairs or setting up temporary solutions to resume operations. There’s no “right” way to recover—just the way that makes sense for you, your team, and your customers. 

5. Remember your strength 
Storms test us, but they also reveal our strength and adaptability. Think back to other challenges your business has faced. Each time, you found a way through, and this time will be no different. 

It’s okay to feel frustrated or exhausted, but don’t let those feelings define your story. Every day you continue to take action is a testament to your resilience. 

6. Look ahead with hope 
While the present may feel overwhelming, there is a future beyond this storm. Use this moment to think about how your business can grow even stronger in the years to come. Whether it’s improving emergency preparedness, forging new relationships in your community, or finding innovative ways to adapt, there could well be opportunity in rebuilding. 

A final word of encouragement 
If you’re reading this and feeling overwhelmed, know that it’s okay to take a breath. Getting your business back on track may be more of a marathon than a sprint. However, the work you’re doing now is laying the foundation for better days ahead.

The storm may have disrupted your plans, but it hasn’t changed your ability to move forward. Keep going - you’re doing incredible work, even if it doesn’t always feel that way. Your resilience is inspiring, and your business will weather the storms!
 
Lack of competition in the UK cloud services market
A recent investigation by the Competition and Markets Authority’s (CMA) independent inquiry group has revealed that competition in the UK cloud services market is not functioning as effectively as it could.

Cloud services form the backbone of modern business operations, supporting industries ranging from financial services and retail to digital start-ups and public services. In 2023, UK businesses and organisations spent £9 billion on cloud services, with this figure growing over 30% annually. However, the inquiry group identified several concerns:

• Limited provider options: The market is dominated by two providers: Amazon Web Services (AWS) and Microsoft. These together account for up to 80% of UK cloud spending. Google, which is the third largest provider, has a much smaller share, while other providers struggle to meet the diverse needs of businesses. 
• Barriers to switching providers: There are technical and commercial challenges that make it difficult for businesses to switch cloud providers or to use multiple providers. This often locks businesses into their initial choices, which may not remain suitable as their needs evolve. 
• High barriers to entry: The substantial capital investment required to enter the market restricts competition, making it challenging for new providers to compete or grow. 
• Anti-competitive practices: The inquiry group concluded that Microsoft leverages its dominant position in software to create disadvantages for competitors like AWS and Google. For example, its licensing policies make it harder for businesses using Microsoft software to choose alternative cloud providers.

What is the potential impact on UK businesses?
These findings indicate that limited competition may lead to higher costs, reduced innovation, and lower service quality for businesses. When cloud providers face insufficient pressure from competitors, businesses miss out on better deals and cutting-edge solutions that drive productivity and growth.

Proposed remedies and recommendations
The CMA inquiry group has proposed several measures to address these issues:

• Strategic Market Status (SMS): AWS and Microsoft could be designated with SMS under the Digital Markets, Competition and Consumers Act (DMCCA) 2024. This designation would allow the CMA to impose legally binding requirements to address anti-competitive practices. 
• Potential interventions: Measures could include ensuring fair software licensing, reducing costs for switching or using multiple providers, and encouraging technical standardisation.

What this means for your business
As a business owner, the outcomes of this investigation could help to reduce the costs you pay for cloud services you use, improve the quality and range of cloud services available, and make it easier to change providers when your business needs this.

The CMA will consult on its provisional findings and recommendations, with a final decision expected by the statutory deadline of 4 August 2025.

If you would like to participate in the consultation, or for more details, see the CMA’s cloud services market investigation case page.

See: https://www.gov.uk/government/news/cma-independent-inquiry-group-publishes-provisional-findings-in-cloud-services-market-investigation
 
Is cash still king?
The new economic secretary to the Treasury, Emma Reynolds, has said that there are no plans to regulate businesses, whether big or small, to compel them to accept cash.

Concern has been raised about various shops and service firms not accepting cash and therefore excluding those who rely on cash to pay for things. While some countries appear to be planning to put rules in place that require essential services to accept cash, the UK does not seem as though it will be following suit.

Cards have been used for many years in the UK, with mobile payments by smartphone now becoming increasingly popular. 72% of 16-24 year olds now regularly use mobile payment services. This increase is reflected across all age groups, with 27% of those aged 45-54 now also regularly using this method.

However, cash still remains a popular choice for making payments. Cash was used in a fifth of shop transactions last year. After decades where use of cash has been shrinking, this is the second year in a row where cash use in shops has increased. It seems that many find that using cash helps them to budget better.

Should you accept cash?
The answer to this question really depends on who your customers are. If your customers are largely older or more value conscious, then it seems that these types of customers are more likely to rely on paying with cash. If you don’t accept cash, you may risk losing sales.

On the other hand, if you mainly sell to younger, more digital savvy customers, not accepting cash may have little effect on sales. This may help you save the costs and security issues involved in handling cash.

See:  https://www.bbc.co.uk/news/articles/c20gevkx8gyo
 
Data Protection Day at the ICO: Focus on AI
28 January 2025 was Data Protection Day and the Information Commissioner's Office (ICO) used it to highlight the opportunities and challenges related to AI and data protection.

AI adoption is integral to the government's growth plans, however the ICO are keen to make sure that the opportunities AI brings are taken up in a way that keeps people safe.

The ICO have highlighted some misconceptions about AI, and this contains some good pointers for businesses and organisations considering using AI.

Control over personal data
There is no change to the rights that people have over their personal data. Each person has the right to object to their own personal data being used for AI purposes. The ICO are also stepping in on this issue - as they did recently with LinkedIn and Meta - when they observe incorrect approaches by organisations.

Be transparent
The ICO emphasised that being open and honest with people isn’t optional or an afterthought. Businesses that want to use people’s data to train AI models need to be transparent about what they are doing. The ICO recently consulted on this and found a lack of transparency across the industry, but feel this matter is central to firms building trust in their AI models.

Intention is irrelevant
While an organisation may not mean to process people’s data, intention is irrelevant. It is what happens to the data that matters. This means businesses must be careful about the data they use to train AI models.

AI models have data protection risks
Some have argued that AI models don’t store personal data and so data protection doesn’t apply. However, some AI models can contain the personal data they have been trained on in a form that allows for people to be identified. The ICO have said they are continuing to improve their understanding of this area.

Data protection and AI go hand in hand
Again, some have argued that data protection law should be lighter touch when it comes to developing AI. However, the ICO are clear that businesses must first consider how they will make sure people’s rights and freedoms are protected before using AI in their products and services.

Considering the overall message from the ICO, it seems clear that businesses involved in training AI models or using AI in their products and services need to be careful that they are complying with data protection laws.

See: https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2025/01/debunking-data-protection-myths-about-ai/
 
Global growth team appointed
As part of the government’s efforts to drive economic growth, the Trade Secretary has appointed a new ‘global growth team’ of UK Trade Envoys with the goal of driving UK exports and investment.

32 MPs have been assigned target markets across the globe and have been tasked with identifying trade and investment opportunities for businesses as well as championing the UK as the place to invest for investors in those markets.

The markets chosen are all considered to have significant potential for growing UK trade.

Jonathan Reynolds, the Business and Trade Secretary, said the new Trade Envoys “will use their experience, expertise and knowledge to unlock new markets around the world for British businesses, drumming up investment into the UK and ultimately driving economic growth.”

See: https://www.gov.uk/government/news/new-global-growth-team-appointed-by-trade-secretary
 
Reforms to pensions proposed in order to drive growth
The Prime Minister and Chancellor met with business leaders last week and unveiled proposals to give occupational defined pension schemes more flexibility.

Restrictions will be lifted on how well-funded, occupational defined benefit pension funds that are performing well will be able to invest their surplus funds. It is hoped that this will pave the way for future growth across the economy.

Currently, around 75% of such pension schemes are in surplus amounting to £160 billion. However, restrictions have meant that businesses have found it difficult to invest these funds, even when both trustees and sponsors want to do so.

The proposals will allow trustees, if they agree, to share a portion of the scheme surplus with a sponsoring employer. The employer can then choose to invest the funds in its core business and/or provide additional benefits to members of the pension scheme.

Jonathan Lipkin, Director of Policy, Strategy & Innovation at the Investment Association said: “With the right guardrails in place, the government’s proposals could help channel more funding into the economy, by enabling schemes to invest more widely and take on greater risk, while allowing for members to receive an uplift to pension benefits.”

See: https://www.gov.uk/government/news/pension-reforms-to-go-further-to-unlock-billions-to-drive-growth-and-boost-working-peoples-pension-pots
 
Deposit return scheme to launch in October 2027
New legislation for England and Northern Ireland has come into force that will allow for a deposit return scheme for drinks containers in England and Northern Ireland. Scotland is also progressing similar regulations.

A deposit return scheme, which more than 50 countries worldwide are now using, gives people a financial incentive for returning empty bottles and cans to a collection point, such as at a supermarket. According to government supplied statistics, the average return rate in Europe is 90% with Germany leading the way at 98%.

The legislation will allow for the appointment of the Deposit Management Organisation, the scheme administrator, in April 2025. The deposit return scheme will then launch in October 2027.

It is estimated that 30 billion single-use drinks containers are bought each year in England, Scotland and Northern Ireland. The deposit return scheme could provide significant help in ensuring more of these materials are recycled rather than being put to waste.

Businesses will no doubt have opportunity to demonstrate their commitment to the environment as these regulations take effect.

See: https://www.gov.uk/government/news/government-to-clean-up-communities-with-deposit-return-scheme-for-plastic-bottles-and-cans