6th June 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 SPRING TAX UPDATE
On 28 April 2025, the Government made several tax policy announcements, launched consultations and confirmed previously announced developments. Key points included:

• Mandatory payrolling of benefits in kind (BIKs) will be delayed until 6 April 2027. This is to give more time for software providers, employers and tax agents to prepare for the change.  The mandate was previously intended to take effect from 6 April 2026. From 6 April 2027, mandatory payrolling will apply to most BIKs, except for employment-related loans and accommodation benefits. These may be payrolled voluntarily from April 2027.
• HMRC revised its Check Employment Status for Tax (CEST) digital tool on 30 April 2025, to make it easier to use. HMRC is committed to standing behind the outcomes of the tool where it has been used correctly, and has published guidance on how to answer the revised questions. The tool is used by workers to help them determine whether their work on a specific engagement should be classed as employed or self-employed for tax purposes.
• If you have multiple employments or are both employed and self-employed, a cap (the 'annual maxima') limits the total National Insurance Contributions (NICs) you need to pay. If you pay more than you need to, you can make a claim for a refund from HMRC at the end of the tax year. The Government have said that the process for refunding NICs under the annual maximum rules will be reviewed to make it easier and faster for taxpayers to access refunds.
• The VAT Capital Goods Scheme (CGS) is a mandatory scheme that ensures the VAT reclaimed on certain capital assets reflects the extent to which the asset is used for taxable business purposes over a prescribed time period. The Government has announced proposals to remove computers from the list of capital assets within the scheme and to increase the VAT-exclusive value of land and buildings that are caught by the scheme from £250,000 to £600,000. No date for these changes has been announced.
• A consultation has been published on the VAT treatment of business donations of goods to charity. Views are sought on a new VAT relief aligning the treatment of goods donated for distribution to those in need or use by the charity with the existing relief for goods donated for onward sale.

IT’S P11D SEASON! 
 
P11D forms for reporting expenses and benefits in kind provided to employees and directors in 2024/25 need to be submitted by 6 July 2025. Note that paper forms are no longer acceptable; the return must be made online using PAYE Online for employers or commercial software.
Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place to ensure that the expenses qualify.
 
Note also that trivial benefits provided to employees that do not exceed £50 do not need to be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays, and can include gifts of food and alcohol. Again, the employer needs to keep a record of the benefit provided and the justification. It should not be provided as a reward for past or future service.
 
OFFICIAL RATE OF INTEREST
For employers reporting beneficial loans and some employment related living accommodation on form P11D for 2024/25, the official rate of interest (ORI) to be used is 2.25%.  The charge applies where the amount of the loan exceeds £10,000.

The ORI increased to 3.75% on 6 April 2025. From 2025/26 onwards, the rate will be reviewed on a quarterly basis with any changes in the rate occurring following a quarterly review, where appropriate. If there are any in-year changes to the rate, these will take effect on 6 July, 6 October and 6 January.

DOUBLE-CAB PICKUPS – RULE CHANGES FOR BENEFIT IN KIND PURPOSES

Following a recent Court of Appeal ruling, from 6 April 2025, the classification of double-cab pickups (DCPUs) will need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability. If the vehicle is primarily suited to carrying goods or burden, for direct tax purposes it can be treated as a van. Most DCPUs are suited to both passenger transport and carrying goods, so they do not have a primary suitability. It therefore follows that most DCPUs are expected to be classified as cars when calculating the benefit in kind charge.
 
Transitional arrangements apply for employers that have purchased, leased, or ordered a double cab pickup before 6 April 2025, whereby they will be able to rely upon the previous treatment until the earlier of:

• disposal,
• lease expiry, or
• 5 April 2029.

2024/25 EMPLOYMENT-RELATED SECURITIES RETURNS DUE BY 6 JULY
The deadline for reporting shares and securities and share options issued to employees for 2024/25 is 6 July 2025. This is the same as the deadline for reporting expenses and benefits provided to employees on form P11D for 2024/25.

Employers must submit their employment-related securities annual returns online and attach the appropriate spreadsheet template if they have something to report. HMRC provide templates on their website that may be downloaded in order that the information may be entered and uploaded. Note that there are different templates for each of the four tax-advantaged employee share schemes – Company Share Option Plan (CSOP), Enterprise Management Incentives (EMI), Save As You Earn (SAYE) share options and Share Incentive Plans (SIP). In addition, employers need to report any other employment-related securities (non-tax-advantaged) issued to employees and directors.

We can of course assist you with the completion of the reporting obligations and with the valuation of the securities concerned.

VAT GROUPS AND ANTI-AVOIDANCE

HMRC have published Tax Avoidance Spotlight 70 ‘VAT grouping structure arrangements used by care providers’, highlighting tax avoidance arrangements used by state-regulated care providers to reclaim VAT.
 
The VAT legislation exempts supplies of welfare services where they are made by either a charity or a state-regulated care provider. The impact for the charity or state-regulated care provider is that they are unable to recover any VAT which relates to these supplies.
 
The arrangement identified in Spotlight 70 is intended to work as follows:

• An unregulated entity forms a VAT group with the state-regulated care provider, or charity. 
• Existing contracts for welfare services between the regulated body and the local authority or NHS are transferred to the unregulated provider. New contracts are drawn up with the unregulated care provider.
• The unregulated care provider then sub-contracts the physical provision of welfare services back to the regulated care provider. A facilitation measure in the VAT grouping legislation means that where services are supplied between members of the same VAT group, they are disregarded for VAT purposes. 
• As the supplies of welfare services are being made by an unregulated care provider, they are taxable at the standard rate of VAT.
• The VAT group can reclaim input tax in respect of those taxable supplies. Were it not for this arrangement, the reclaim would be blocked.

HMRC consider these specific VAT grouping arrangements to be a form of tax avoidance. They say that, where necessary, they will refuse VAT group registration applications that are designed to implement, or facilitate, these avoidance structures. They are also reviewing existing group arrangements where it is known or suspected that this avoidance arrangement is in operation. 

During this review, HMRC may request additional information and will assess each case individually.
 
If Spotlight 70 affects you, please talk to us – we are here to help.
                                                                             
ADVISORY FUEL RATES
The table below sets out the HMRC advisory fuel rates from 1 June 2025. These are the suggested reimbursement rates for employees' private mileage using their company car.
 
Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.
 
1400cc or less
            •           Petrol: 12p (12p)
            •           Diesel: (blank)
            •           LPG: 11p (11p)
 
1600cc or less
            •           Petrol: (blank)
            •           Diesel: 11p (12p)
 
1401cc to 2000cc
            •           Petrol: 14p (15p)
            •           Diesel: (blank)
            •           LPG: 13p (13p)
 
1601cc to 2000cc
            •           Petrol: (blank)
            •           Diesel: 13p (13p)
 
Over 2000cc
            •           Petrol: 22p (23p)
            •           Diesel: 17p (17p)
            •           LPG: 21p (21p)
 
The previous rate is shown in brackets.
 
You can continue to use the previous rates for up to 1 month from the date the new rates apply.
 
Note that for hybrid cars you must use the petrol or diesel rate. For fully electric vehicles the rate is 7p (7p) per mile.

30th May 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

Bonus as Salary or Dividend: Which Pays Off?
If you run your own company, you might have the option to take a bonus either as salary or as a dividend. But which one leaves you better off?

The answer depends on several factors: how much profit your company has, your existing income, the current rates of tax and National Insurance, and whether you’re taking advantage of available allowances.

Salary: Pros and Cons
Taking a bonus as salary means it's taxed through PAYE, with income tax and National Insurance deducted at source. It can boost your pension contributions and improve borrowing power (e.g. for mortgages), but it may also push you into a higher tax band.

Dividend: Pros and Cons
Dividends aren’t subject to National Insurance and are often a more tax-efficient way of taking money out of a company. However, they can only be paid from company profits after corporation tax. Also, the tax-free dividend allowance has now been reduced to £500, so more of the dividend is now taxable than in the past.

So, which is better?
It depends. Sometimes it makes sense to mix both to strike the right balance between tax efficiency and personal financial goals.

We use tailored calculations and up-to-date tools to help clients compare the actual take-home pay of different options. What works best for one director-shareholder might not be right for another.

If you’re thinking about taking a bonus, we can help you work out the most tax-efficient way to do it, based on your company’s situation and your personal plans.

Get in touch if you'd like us to run the numbers for you.
 
When is Diversification a Good Business Strategy?
It’s long been said that putting all your eggs in one basket is risky. Many small business owners may fear that risk of becoming a reality.

Take the UK’s farming sector as an example. Faced with extreme weather, policy shifts and volatile prices, farmers have increasingly turned to other sources of income to keep their businesses viable. According to a recent BBC news article, nearly three-quarters now run at least one non-farming enterprise - anything from glamping to beauty salons to wedding venues.

It's not just farming where this lesson applies: when your main income stream becomes unpredictable or limited, diversification can help stabilise your business.

What does diversification look like?
In business terms, diversification means creating additional income streams that don’t rely on your core product or service. That could include:

• Renting out underused space or equipment
  
• Offering a new service that fits your customer base 
• Using your skills in a new market
• Turning a hobby or interest into a side income 
• Creating online or subscription-based offerings

At its best, diversification adds resilience. It spreads your risk and gives you more ways to grow. But it’s not just a fallback - it can also uncover new markets and help your business grow in a way that may not have been possible otherwise.

When is the right time to diversify?
Here are a few signs that it might be worth considering:

• Income is unpredictable or seasonal: If your sales swing wildly month to month, a secondary income stream can even things out. 
• You have unused assets: This might be space, equipment or even skills going to waste. For example, as some farmers have found, letting out buildings or land can be a smart use of what’s already there. 
• Customer habits are shifting: If demand for your core product or service is declining, diversification can help you adapt before things dip further. 
• You’re seeing unmet demand in your area or industry: If customers keep asking for something you don’t currently offer, that could be a sign there’s an idea worth exploring. 
• You’re relying too heavily on one client or sector: Many businesses felt this during the pandemic; when one client or industry struggles, it can take you with it.

A few things to keep in mind
It’s usually best to start small. You don’t need to go all in. You could try testing a new idea alongside your main business to see what works.

Try to build on what you already do or have. It’s usually easier, more cost-effective, and more likely to succeed than starting something completely new from scratch.

It’s important to be realistic about the time and costs that will be involved. Any new venture will need your attention. Make sure it’s worth the effort and doesn't distract from what’s already working for you.

Final thought
Diversification isn’t just about chasing trends. It’s about making your business more adaptable and more resilient. For some businesses, diversifying is not just a bolt-on. In a changing economy, it can be what keeps the whole business afloat.

If you're considering your business strategy, why not give us a call? We would be happy to help you review and appraise the options available to your business.
 
IMF Upgrades UK Growth Forecast: Steadier Ground Ahead?
The International Monetary Fund (IMF) has released its annual review of the UK economy and the message this year is more positive than many might have expected. The IMF has upgraded its forecast for UK growth in 2025 to 1.2%, noting that “an economic recovery is underway.”

While this may not be headline-grabbing growth, it’s a step up from earlier projections and a shift in tone from what has often been a cautious outlook.
 
Putting Things in Perspective
While the growth upgrade is welcome, it’s worth keeping in perspective. A forecast of 1.2% for 2025 is still relatively modest, and there are ongoing pressures to consider. These include inflation, which came in above expectations at 3.5% in April.

However, the IMF have expressed support for the government’s fiscal strategy, describing it as striking “a good balance between supporting growth and safeguarding fiscal sustainability.”

The IMF also noted that weak productivity continues to be a problem, but they feel the government’s Growth Mission stands a good chance of reversing this trend.

What Businesses Might Take from This
Growth forecasts matter for confidence. Even modest upgrades in official forecasts can shape investor sentiment, lending conditions, and customer demand.
Greater confidence could translate into more sales opportunities for your business.

Looking Ahead
The full IMF report will be published later this summer. In the meantime, the latest update is a reminder that despite ongoing challenges, the outlook for 2025 could improve.

If you'd like help reviewing your financial plans and forecasts, please get in touch. We’re always happy to talk things through and help you achieve a positive 2025.

See: https://www.imf.org/en/News/Articles/2025/05/27/cs-uk-aiv-2025
 
FSB Updates Guidance on Employers’ Liability Insurance
The Federation of Small Businesses (FSB) has recently updated its guidance on Employers’ Liability insurance - a useful reminder of the rules and risks around a business insurance that is legally required in the UK.

The guidance explains that if you employ anyone - including part-time, temporary, or even volunteer staff - you are likely required by law to have this cover in place. It’s there to protect businesses should an employee become ill or injured because of their work and the employer is found legally responsible.

What the FSB Highlights
The updated guidance gives practical examples of when this insurance might apply, such as:

• A worker being injured while using machinery
• An office employee developing repetitive strain injury
• A fall on a construction site leading to time off work

The costs of such claims can be significant. As the FSB notes, legal fees and compensation payments can run into tens of thousands of pounds, potentially enough to put a small business under real pressure.

The guidance also clarifies:

• The legal minimum cover is £5 million (though most insurers offer £10 million as standard) 
• Fines can reach £2,500 per day if a business is found not to have the required cover 
• The insurance certificate must be displayed or made accessible to staff – failure to do so can result in a £1,000 fine

Exemptions and Edge Cases
The FSB outlines a few cases where the cover may not be required: for example, some family businesses or sole traders without staff. But these are quite limited and the guidance suggests most businesses with paid staff will need the insurance.

Worth Reviewing
The FSB guidance could serve as a useful prompt for you to review your insurance arrangements, particularly if your staffing or business structure has changed recently.

You can find the full guidance on the FSB website.
 
Why You Shouldn’t Ignore Old Tech: New Guidance from the NCSC
The National Cyber Security Centre (NCSC) has released new guidance on how to properly retire old digital systems and devices – a process known as decommissioning. The guidance is aimed at IT teams, but there are useful takeaways for any small business that uses computers, software or online systems.

Why this matters
With so many demands on our time, it can be easy to leave old laptops or devices lying around when they’re no longer needed. But old tech can quietly become a security risk. It might still hold sensitive information or give someone a way into your systems without you realising it.

The NCSC says that getting rid of old systems safely is just as important as setting them up in the first place.

What should you do?
Here are some key tips from the guidance:

• Don’t wait until the end: Plan ahead. If you’re buying new systems or changing software, think about how and when you’ll stop using the old one. 
• Keep track of what you use: Make a basic list of your computers, software and devices. This helps you stay in control, especially if you’ve tried out different tools over the years. 
• Back up your data: Before getting rid of any computer or online service, save a full copy of the important data. This includes documents, emails, passwords, and anything you might need to recover later. 
• Wipe data properly: If you’re planning to sell, donate, or throw away an old device, make sure you clear all data first. A factory reset often isn’t enough. Look up how to securely wipe a device or ask someone to do it for you. 
• Check it’s really gone: If you’ve used someone else to help dispose of a device, ask for proof it was wiped properly. If you’ve done it yourself, keep a note of what you did and when – that may help if you encounter problems in the future.

Final thought
You don’t need to be a tech expert to take simple steps that protect your business. The NCSC’s guidance is a good reminder that old systems aren’t just clutter – they can be a risk if they’re not dealt with properly.

If you’re not sure where to start, make a list of the tech you use now, and think about what’s no longer needed. That’s often the first and most important step.
You can find more detail on the NCSC website if you’d like to explore further.
 
£30 Million Boost to HLS Payments: What It Means for Your Farm
Thousands of farmers in England are set to benefit from a £30 million uplift to Higher Level Stewardship (HLS) payments from January 2025. This could mean more money in your pocket for the work you’re already doing to protect the environment and maintain the countryside.

From 1 January 2025, payment rates will rise for 157 different HLS options.

The aim is to better recognise the work farmers do in protecting rare species, restoring habitats and maintaining traditional countryside features. The uplift also aims to bring these payments more closely in line with those offered under Environmental Land Management (ELM) schemes.

If you're already in an HLS agreement, you don’t need to do anything. The increase will be automatic, with payments starting to land from December 2025.

If you're unsure how this change might affect your current agreement or you want to explore entering an environmental scheme, please give us a call and we would be happy to help you.

For a full list of HLS payment rates from 1 January 2025, see here.

See: https://www.gov.uk/government/news/30m-boost-for-farmers-leading-the-way-in-nature-restoration
 
Changes to Planning Rules Could Make Life Easier for Small Housebuilders
The government has set out new plans aimed at helping small and medium-sized housebuilders get projects moving faster and with fewer hurdles. For housebuilders that have found themselves stuck in a slow, expensive planning process for a small site, these changes might be of interest.

23rd May 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 bank holiday weekend.

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

Interest Rates Cut, Trade Talks Shift - What It Means for Your Business
In the last couple of weeks, the Bank of England cut interest rates from 4.5% to 4.25%, and a new ‘trade deal’ was announced between the UK and the US.
Let’s see what these news items can tell us about the latest developments in the economy.

Split opinions
At its meeting to discuss the Bank Base Rate, the Monetary Policy Committee (MPC) voted by a majority of 5-4 to reduce it to 4.25%. Two of the opposing members voted for reducing the rate to 4.0%, while the remaining two voted for keeping the rate at 4.5%.

This represents a wide range of opinion, which is perhaps to be expected given the uncertainty both domestically and globally in recent months. It could suggest that your guess is as good as ours on what direction the economy will take in the coming months.

Inflation and growth
At 2.6% in March, inflation is still above the Bank’s target of 2%. It was, however, a reduction from 2.8% in February and so is a step in the right direction.
Most tellingly, though, the MPC noted that this was close to their expectations in February. Perhaps this gives them added confidence in their predictions of how inflation is going to develop over the medium term.

The Bank believes that inflation will increase to 3.5% between July and September because of energy costs. However, the committee believes that inflation will fall back after that.

The latest growth figures showed 0.7% growth in the January-to-March period, stronger than the 0.6% that had been forecast. Critics point out that the period excludes the effects of the Chancellor's increase in employers' National Insurance Contributions. 

This may mean that we should not expect big cuts to the base rate in the rest of 2025.
  
Trade news: Progress, but no big breakthrough
Just as the Bank was cutting rates, the UK government struck a limited tariff deal with the United States. This isn’t a full trade deal (despite some headlines), but it does make it easier to sell certain goods to the US - like cars, steel and aluminium.

It’s a step in the right direction, especially for manufacturers, but there are still a lot of loose ends. Many businesses won’t see immediate changes, and the finer details - especially around quotas and product rules - still need to be worked out.

What does this mean for business owners?
You might be wondering how all this affects you and your business day to day. Here’s the takeaway:

• Borrowing costs may ease a little. If you have loans or overdrafts tied to the base rate, the interest may drop slightly. But banks don’t always pass on the full cut straight away.

• Exporters may see new opportunities, particularly in manufacturing. If you’re selling to the US or considering it, this new tariff agreement could make a difference. But you may need to await the fine print - limits and paperwork still apply.

• Consumer confidence could improve. If the cost of borrowing continues to fall and inflation keeps steady, shoppers may feel a bit more comfortable spending again.

• Keep an eye on costs and planning. The economy is still unpredictable. While interest rates are lower, energy costs and trade uncertainties mean it's still worth budgeting cautiously.

A balancing act
The interest rate cut shows that the Bank believes inflation is under better control. However, they remain cautious about what will happen over the coming months.

So, while this may be a small bit of good news, the message is clear: we’re not out of the woods yet.
 
Don’t Miss Out: Parents of Teenagers Need to Extend Child Benefit by 31 August
If you’re a parent of a 16 to 19-year-old who’s staying in full-time education or training, HM Revenue and Customs (HMRC) is reminding families to extend their Child Benefit claim by 31 August to avoid the payments stopping altogether.

Why it matters
Child Benefit is worth up to £1,354.60 per year for your first child and £897 for each additional child. It’s a welcome boost for many families, but it won’t continue automatically once your child turns 16. Unless you confirm they’re still in approved education or training, payments will stop at the end of August following their 16th birthday.

With many teens finishing GCSEs this summer, now is the time to get this sorted.

How to extend your claim
It’s quick and easy to extend your Child Benefit online or via the HMRC app. If you’re eligible, you don’t need to wait for anything from HMRC, you can do it today. Alternatively, HMRC is sending out reminder letters between May and July that include a QR code to take you straight to the right page on GOV.UK.

What counts as approved education or training?
You’ll still qualify if your child is studying full-time in non-advanced education (like A-levels, NVQs up to level 3 or home education), or attending approved unpaid training. It doesn’t count if the course is part of a job contract.

Are you an employer? Here’s what to keep in mind
If you employ parents of older teenagers, this reminder might be helpful to share. It’s also worth being aware of changes coming for those affected by the High-Income Child Benefit Charge.

From this summer, families can now opt to pay this charge through their PAYE tax code instead of filing a Self Assessment return, a move designed to cut paperwork. This might reduce admin for some of your employees. You’ll just need to look out for any updates to their tax code for payroll processing.

What about families who opted out of Child Benefit?
If someone in your team previously opted out because of the High-Income Charge, it’s now easier to opt back in if circumstances have changed. They can restart payments through the app or website.

And don’t forget Child Trust Funds
If your teenager has recently turned 16, they can take control of their Child Trust Fund, which could be worth thousands of pounds. They’ll be able to withdraw the money once they turn 18.  If they’re not sure where it’s held, there’s a free online tool to track it down on GOV.UK.

Next steps

• Parents: If your child is staying in education or training, log in to the HMRC app or GOV.UK to extend your Child Benefit claim before 31 August.

• Employers: Consider sharing this information with staff or including it in internal communications, especially for those balancing work and parenting teens.

• High-income families: Check if the new digital option for paying the Child Benefit Charge via PAYE could save you time.

As always, if you have questions or aren’t sure how this might affect your personal or business situation, feel free to get in touch.

See: https://www.gov.uk/government/news/parents-of-teens-reminded-to-extend-child-benefit-claim-online

New Immigration Changes: What Businesses Need to Know
The government announced major changes last week to the immigration system as part of its plan to reduce net migration and encourage more home-grown skills. If you run a business, even if you don’t currently recruit from overseas, it’s worth understanding what’s changing and how it could affect your future hiring plans.

Here are the key points and what they might mean for your business.

Hiring from overseas will get harder
If your business sponsors skilled workers from outside the UK - or you’ve considered doing so - it’s about to become more difficult and more expensive.

• The definition of a 'skilled worker' is being tightened. Roles will now need to be at graduate level or above to qualify and the minimum salary levels will go up.

• A special list that allowed some roles to be hired at lower salaries is being scrapped.

• From now on, only jobs facing long-term shortages - and where there’s a plan to train UK workers - will be allowed to bring in overseas staff.

In short, unless the role is highly skilled and in short supply, filling it through immigration is likely to become a challenge.

No more social care recruitment from overseas
If you run a care business or provide care services, this one is especially important. The government plans to stop new overseas recruitment for social care roles. Those already here on care visas can stay for now, but no new applications will be allowed. This change will be phased in by 2028, but it’s a clear signal that care businesses need to start planning for UK-based recruitment now.

There may be more pressure to train locally.
The government has said the measures will include new requirements to boost domestic training.

Fewer international graduates staying after their studies?
If you employ graduates, the government is planning to reduce the ability for graduates to remain in the UK after their studies to a period of 18 months. Universities will also face stricter rules for sponsoring students.

This may mean fewer international graduates entering the local job market, something to keep in mind if your business has hired from this group in the past.

Support for high-growth, high-skill businesses
On a more positive note, if your business is in a science, tech, or design-related field, you may benefit from plans to make it easier for top global talent to come to the UK.

What can businesses do now?
Even if your business doesn’t hire from abroad, these changes are part of a wider shift in how recruitment and workforce planning will work in the UK. Here’s what you might consider:

• Think local: Look at how you can train, promote or support current staff before looking externally.

• Review your hiring plans: If you’re growing your team, consider the impact of fewer overseas candidates and a more competitive domestic market.

• Keep an eye on updates: These changes will roll out over the coming months and years, so it’s worth keeping informed.

If you’re not sure how these changes apply to your business or want to discuss your workforce plans, please get in touch. We’re happy to help.

See: https://www.gov.uk/government/news/immigration-white-paper-to-reduce-migration-and-strengthen-border

New Free HSE Tool Helps Employers Tackle Work-Related Stress
Last week was Mental Health Awareness Week, and to mark the occasion, the Health and Safety Executive (HSE) launched a free online learning module to help employers better understand and manage work-related stress in their teams.

The new resource is part of HSE’s Working Minds campaign, which aims to help businesses take practical steps to improve workplace mental health and meet their legal obligations.

Why does this matter to your business?
According to HSE, around half of all work-related ill health is down to stress, depression or anxiety. That’s a significant figure, and one that many business owners are likely to recognise - whether it’s seen in staff absence, reduced productivity, or just a general drop in morale.

Importantly, managing stress at work isn’t just good for your people - it’s also something the law expects employers to take seriously. As Kayleigh Roberts from HSE puts it: "Preventing work-related stress isn’t just the right thing to do for your workers - it’s also a legal requirement".

The new module offers guidance in conducting effective risk assessments, identifying the root causes of work-related stress and implementing solutions.

Six key areas to watch
The HSE has identified six main areas that can cause stress at work if they’re not managed well: demands, control, support, relationships, role, and change.

A simple framework: The 5Rs
The module also builds on the Working Minds campaign’s 5Rs, a straightforward approach to managing stress:

• Reach out and have conversations
• Recognise the signs and causes of stress
• Respond to risks by agreeing on action points
• Reflect on the actions taken
• Make it Routine to check in regularly

Next steps
If you’re an employer, especially in a small business where everyone wears multiple hats, this is a helpful, free tool that can make a real difference to how you support your team.

To access the online learning module, you can register here.

See: https://press.hse.gov.uk/2025/05/12/hse-provides-free-online-learning-to-help-employers-tackle-work-related-stress/

Thinking About Your Tax Return?
H M Revenue and Customs have reported that a record number of people- nearly 300,000 - have already filed their 2024–25 tax return, just weeks into the new tax year. While the deadline isn’t until 31 January 2026, it’s worth thinking about it sooner rather than later.

Filing early can have a few helpful benefits:

• More time to budget: Knowing what you owe means you can plan ahead or spread the cost through regular payments.

• Faster refunds: If you’ve overpaid, you’ll get your money back sooner.

• Less pressure later on: Getting things sorted now avoids the January rush.

If you think you may need to file a return, or you’re not sure, just get in touch and we’ll help you work it out. And if you’re ready now, feel free to send over your information - we’re happy to get a head start.

ICO Consulting on Updated Guidance on Encryption
The Information Commissioner’s Office (ICO) has launched a consultation on its draft updated guidance on encryption.

The questions in the survey are split into four sections, as follows:

• Section 1: About you and your organisation.
• Section 2: Your views on our approach to encryption and data protection law.
• Section 3: Questions about the encryption scenarios that the guidance includes.
• Section 4: Any additional comments about the guidance.

The consultation will be running until Tuesday, 24 June 2025.

To access the draft guidance, see here.

To respond to the consultation, see here.
 
What’s Making Employees Angry at Work - and What Employers Can Do About It
A recent ACAS survey has revealed what’s really getting under employees’ skin at work and the results may strike a chord with many business owners.

Top of the list? Nearly half of workers (49%) said the thing that angers them most is seeing colleagues who aren’t doing their job properly. Not far behind, 44% resent it when others take credit for their work, and 39% said an over-demanding boss causes the most frustration. Rude behaviour, whether from customers or other staff, also made the list at 37%.

These types of workplace tensions are more than just minor irritations. Left unchecked, they can affect morale, productivity, and ultimately, your bottom line.

According to ACAS, workplace conflict is estimated to cost UK organisations £30 billion a year.

So, what can businesses do?
Stewart Gee from ACAS says the key is to address issues early, before they escalate: “Anger over a lack of recognition, rudeness, their boss or a colleague seen as not pulling their weight can impact productivity and escalate to conflict if left unresolved at work”.

Often, a quiet word or informal conversation is enough to clear the air. Encouraging open communication and setting clear expectations can go a long way.

Where issues persist, mediation or support from an HR professional may help avoid the need for formal processes.

Some practical steps for employers could include:

• Encourage early conversations before frustrations build up
• Lead by example in how you treat staff and handle conflict
• Offer clear training and inductions so expectations are understood
• Check in regularly with your team, especially in busy periods

Taking a thoughtful, proactive approach to resolving workplace frustrations can help foster a more positive and productive environment for everyone.

Sometimes, simply making space for honest conversations is the best place to start.

See: https://www.acas.org.uk/colleagues-not-doing-jobs-properly-makes-staff-angriest-at-work

16th May 2025 – Hillmans Weekly Update

16th May 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

Raft of tax administration measures announced: How will these affect businesses and employers?
James Murray, the Exchequer Secretary to the Treasury, made a Written Ministerial Statement that included a number of tax simplification, administration and reform measures. In total, 39 measures were announced.

Many measures are intended to reduce burdens on employers and small businesses, whereas others are designed to modernise H M Revenue & Customs (HMRC) systems and processes.

Here are five highlights included among the measures announced.

1. Delay to payrolling benefits
Mandatory payrolling of benefits in kind will now be delayed to April 2027 instead of April 2026.

Payrolling benefits is a way to report and tax employee benefits through the payroll system, rather than submitting them at the end of the tax year via form P11D. Currently, employers can voluntarily choose to payroll benefits, however the government intends for this to become mandatory.

Delaying the introduction of mandatory payrolling of benefits will give employers more time to prepare. In addition, HMRC will work to make sure that the new requirements are easy for employers to implement.

2. Simplification to Capital Goods Scheme
The VAT Capital Goods Scheme (CGS) makes you adjust how much VAT you can reclaim on expensive items like buildings or equipment if how you use them changes over time - especially if you move between taxable and exempt activities.

While no date has been mentioned yet, new legislation will be put forward to remove computers from the assets covered by the scheme. The capital expenditure value of land, buildings and civil engineering work at which CGS begins to apply will be increased to £600,000 (excl. VAT) from its current level of £250,000 (excl. VAT).

This will be a welcome simplification for affected businesses.

3. Updates to Check Employment Status for Tax (CEST) Digital Tool
HMRC is making this tool easier to use, and updates to the tool may have been made by the time you are reading this.

These are accessibility changes only though. How the CEST tool works out if a worker is self-employed or employed is not being changed.

This is unfortunate as there are occasions where the determination the CEST arrives at is not necessarily accurate. If you would like a second opinion about the results of a check you have carried out, please contact us and we would be happy to help you.

4. VAT Treatment of Business Donations of Goods to Charity
The government is to begin a consultation on the VAT treatment of business donations of goods to charity.

The consultation will look at what types of goods are donated, how they are distributed, and if there is scope to make adjustments that will balance preventing tax evasion with avoiding burdensome administration requirements.

The consultation is available to view here.

5. Less paper in the post
HMRC is aiming to reduce the amount of paper correspondence it sends out, and use digital formats instead. It expects to be able to save £50 million in print and postage costs annually by the 2028-29 tax year.

Therefore, we should begin to see fewer letters from HMRC arriving in the post as they make use of online methods. Certain critical correspondence will continue to be sent by paper post, and promises have been made not to abandon those who are unable to access correspondence by digital means.

If you are affected by these or any other measures announced in the Tax Update Spring 2025 announcement, please call us and we will be happy to help you understand how your personal situation is affected and what you need to do.

To review the Exchequer Secretary’s statement in full, please see: https://questions-statements.parliament.uk/written-statements/detail/2025-04-28/hcws607
 
Low Value Import Rules Under Review – What It Could Mean for Small Importers and E-Commerce Sellers
The government has announced a formal review of the UK’s Low Value Imports regime, which currently allows goods worth £135 or less to be imported without paying customs duties. The review comes in response to concerns from some large UK retailers, who argue that the current system gives an unfair advantage to overseas sellers.

For small businesses that rely on cross-border e-commerce, drop-shipping, or fulfilment centres based outside the UK, this review could lead to significant changes in how goods are taxed at the border.
 
 
What’s Being Reviewed?
The existing system was designed to simplify trade and reduce admin costs, particularly for lower-value items. It’s widely used by:

• Online sellers sourcing products from international suppliers. 
• Drop-shipping businesses shipping goods directly to customers. 
• Small retailers importing goods in low volumes.

However, large domestic retailers like Next and Sainsbury’s have argued that this setup disadvantages UK-based sellers who must charge VAT and, in some cases, pay tariffs on similar goods.

In response, the Chancellor announced that the Low Value Imports regime will be reviewed, with stakeholder engagement beginning next month. According to the government, the review will consider:

• The impact on UK consumers, including any changes in pricing or availability of goods.  
• Administrative complexity, especially for smaller importers.  
• Fairness and competitiveness for UK-based and international sellers.  
• The need to support innovation and flexibility in online retail models. 

Why It Matters for Smaller Businesses
For many SMEs and independent e-commerce businesses, the low value threshold helps keep costs down and margins sustainable. Changing the rules could mean higher import costs, more paperwork, or even reduced access to overseas suppliers.

That said, the government has signalled it will aim to strike a balance - ensuring fairness for all types of businesses without placing unnecessary burdens on those who rely on efficient global supply chains.

What’s Next?
The Low Value Imports review will launch in the coming weeks, with decisions likely to follow later this year. No changes have been confirmed yet, and any reform will need to take into account both business impact and consumer outcomes.

We’ll continue to track the consultation and share updates as they become available.

International business can open up many opportunities, even for small businesses. If you need any help or advice on import taxes please get in touch. We would be happy to help you.

See: https://www.gov.uk/government/news/chancellor-unveils-plans-to-maintain-level-playing-field-for-british-business

New Reforms Aim to Tackle the Growing Problem of Small Pension Pots
The government has announced plans to address the growing issue of small, forgotten pension pots - a problem affecting millions of workers who change jobs frequently and accumulate multiple small pensions over time.

Currently, there are around 13 million small pension pots in the UK, each worth £1,000 or less. That number is growing by about one million a year. For savers, this means difficulty in keeping track of retirement savings and can mean paying multiple flat rate charges which leads to lower returns. Problems are caused for the pensions industry too; they estimate that the administrative costs of managing these small pots could be as much as £225 million a year.

What’s Changing?
Under reforms being introduced through the Pension Schemes Bill, small pots will be automatically consolidated into a single pension scheme that meets certain standards - including providing good value for savers. Individuals will still have the right to opt out if they wish.

This “pot for life” approach is expected to:

• Cut down on flat rate fees applied to each small pot. 
• Make it easier for savers to manage their pensions. 
• Reduce admin costs for pension providers. 
• Improve long-term returns - the government estimates that the pension of an average earner could be boosted by around £1,000.

How It Will Work
Key features of the proposed system include:

• A Small Pots Data Platform to help identify and match savers’ small pots. 
• Clear criteria for what qualifies as a “consolidator” scheme (including good value, scale, and consumer protection). 
• An opt-out option for savers who prefer not to consolidate their pots.

Industry Reaction
The proposals have received broad support from across the pensions sector. Organisations such as the Pensions and Lifetime Savings Association, Which?, and leading pension providers have welcomed the move, saying it will reduce complexity and help people get better outcomes from their savings.
 
 
What to Watch For
The Pension Schemes Bill is due to be introduced to Parliament later this spring. If passed, it will mark a significant shift in how pensions are managed, particularly for workers with multiple jobs over their careers.

Employers may want to start reviewing how the reforms could affect their workplace schemes and communications with staff.

If you have pension pots with various providers, then there could be value in consolidating them even if their value is more than £1,000.

See: https://www.gov.uk/government/news/1000-retirement-savings-boost-from-plans-to-bring-together-small-pension-pots

New Rules Aim to Curb Sudden Bank Account Closures
From April 2026, banks and payment service providers will face stricter rules around how and when they can close customer accounts, under new legislation aimed at improving transparency and giving people and small businesses more time to respond to account closures.

The changes mean that:

• Customers must be given at least 90 days’ notice before their account is closed or a payment service is terminated - up from the current 60 days. 
• A written explanation must be provided, outlining why the account is being closed. This is intended to help customers challenge the decision, including through the Financial Ombudsman Service if necessary.

These new protections are expected to apply to contracts agreed from 28 April 2026, and are part of a wider government plan to give people and businesses more certainty and security when it comes to accessing banking services.

Why It Matters for Businesses
Small business owners in particular have raised concerns in recent years about accounts being shut down with little or no warning, often without a clear explanation. Clearly this is very disruptive and has left businesses with no time to complain or find a replacement bank.

The new rules should help to improve matters. There will however still be some exceptions - for example, where account closure is necessary for financial crime prevention.

Therefore, it’s worth being aware of these upcoming changes. While they don’t come into force until 2026, they could influence how banks handle account management going forward.

See: https://www.gov.uk/government/news/millions-of-people-and-businesses-protected-against-debanking

Cryptoasset Firms Face New Rules Under UK’s Draft Legislation
The UK government has published draft legislation that would bring cryptoasset services such as exchanges, brokers and custody providers within the scope of financial regulation for the first time. The announcement was made by the Chancellor during a major summit in London as part of UK Fintech Week.

If passed, the rules will apply to firms offering crypto-related services to UK customers - whether based in the UK or overseas. These businesses would be required to meet defined standards around transparency, customer protection, and operational resilience, similar to those in traditional financial services.

The legislation follows a 2023 Treasury consultation, and forms part of the government’s wider "Plan for Change" strategy aimed at supporting innovation in financial services. The goal is to create a more stable and secure environment for consumers, while ensuring the UK remains a centre for digital finance.

Background and Impact
According to Financial Conduct Authority (FCA) research, around 12% of UK adults currently own or have owned cryptoassets - a sharp increase from 4% in 2021. While crypto adoption has grown, the sector has also seen high-profile failures and scams, which has naturally raised concerns.
In practical terms, crypto businesses targeting UK customers will likely face new compliance requirements and potential oversight from regulators like the FCA.

International Cooperation
The Chancellor also noted plans for further engagement with US regulators, including discussions on a potential “transatlantic sandbox” to explore cross-border approaches to digital securities. This follows meetings in Washington between UK and US officials earlier this year.

What’s Next?
The government is seeking feedback on the draft legislation before introducing final measures. The Chancellor also announced that the government will be publishing a Financial Services Growth and Competitiveness Strategy on 15 July alongside the Chancellor’s Mansion House speech. This has the aim of supporting long term growth in the financial services sector.

The regulatory shift is significant for any business involved in or considering entry into the crypto space.
See: https://www.gov.uk/government/news/new-cryptoasset-rules-to-drive-growth-and-protect-consumers 
 
New International Rules to Cut Legal Costs for UK Businesses
From 1 July 2025, UK businesses involved in cross-border disputes will benefit from a major change in how their legal judgments are recognised overseas, thanks to new international rules being introduced under the 2019 Hague Convention.

The UK has officially signed up to the Convention, which means that if a UK court makes a judgment in a civil or commercial case involving a business in another participating country, that decision will be far easier to enforce abroad. As a result, businesses should save time, money, and legal uncertainty.

What’s Changing?
Currently, even when a UK business wins a case in a UK court, getting that judgment recognised and enforced in another country can be complex and slow. In some cases, it can even lead to near-identical legal proceedings starting all over again in the foreign country.

Under the new rules:

• UK civil and commercial court judgments will be recognised and enforced automatically in other countries that have signed the Hague 2019 Convention. 
• The same will apply in reverse - judgments from participating countries will be recognised in UK courts. 
• This will apply to proceedings that begin on or after 1 July 2025.

Why It Matters for Business
For UK companies trading internationally, particularly SMEs, this change could reduce the cost and complexity of resolving disputes across borders. Instead of navigating multiple legal systems, businesses will have one consistent set of rules that simplify enforcement.

It also makes the UK more attractive as a base for resolving disputes, reinforcing the reputation of UK courts and legal professionals in the global legal market.

The Convention is already in use by 29 countries including EU member states, Ukraine, and Uruguay, with more expected to join in the future.

Looking Ahead
Businesses involved in regular cross-border activity - especially those drafting contracts or managing overseas disputes - should be aware of the upcoming changes.

See: https://www.gov.uk/government/news/government-signs-new-international-agreement-in-boost-to-british-business

9th May 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 Bank Holiday weekend.

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

Cyber Attacks on Retail Giants: What Every Business Should Learn
The recent wave of cyber attacks on UK retailers, including Marks & Spencer, Co-op and Harrods, is a reminder that no organisation is too big - or too prepared - to be targeted. But while the headlines may focus on the big names, there are important lessons here for businesses of all sizes.

The National Cyber Security Centre (NCSC) is working with the affected businesses. In a recent statement they said they are not yet in a position to say if the attacks are linked. However, they are saying that they have insights and there is a lot they do know.

For instance, while not confirming any details, NCSC have commented and provided advice on press speculation that social engineering was used to target IT helpdesks. By impersonating support staff - or posing as employees locked out of their accounts - a hacker might use social engineering tactics to trick people into handing over login credentials and security codes.

It’s a disturbingly simple method, but one that works.

The takeaway? People, not just passwords, are your first line of defence.
In its latest guidance, the NCSC urges organisations to review their password reset processes - especially for senior employees who have access to sensitive parts of your network. That means thinking carefully about how identity is verified when someone calls the IT help desk. Is there a secondary check? Would a fraudster be spotted?

Some in the cyber community are even suggesting codewords to help authenticate real users. But that only works if it’s part of a broader culture of awareness, where staff are trained to question the unexpected, even if it sounds routine.

Small businesses aren’t immune
While the recent attacks have hit household names, the tactics used don’t discriminate by size. If anything, smaller businesses - often without dedicated cyber security teams - can be seen as easier targets. That’s why it’s essential for you to act now:

• Review how password resets are handled internally. Who has access? What verification steps are in place?
• Use multi-factor authentication wherever possible. A password alone is no longer enough. 
• Monitor for unusual logins. Logins from unexpected locations or at odd times should trigger a red flag. 
• Recognise social engineering. You and your staff need to know how to recognise potential threats. Making updates regular and having short refresher sessions can go a long way.

Organised or opportunistic?
The advice from NCSC seems to indicate that these recent incidents are not about high-tech hacking. It’s about gaining trust and then gaining access. This makes it vital to see cyber security not as an IT issue, but a business-wide responsibility.

NCSC have warned that online criminal activity is rampant and attacks like the ones experienced by high profile retailers are becoming more and more common. Businesses of all sizes need to be prepared. The best defence for most organisations starts internally - with stronger processes, clearer communication, and a healthy dose of scepticism.

Now is the time to ask: could this happen to us?

See: https://www.ncsc.gov.uk/blog-post/incidents-impacting-retailers
 
UK-India Trade Deal Set to Unlock Major Export Opportunities for UK Businesses
The UK and India signed a new trade agreement last week that will reduce tariffs and open up one of the world’s fastest-growing markets to British businesses. The deal – described by the government as the most significant bilateral trade agreement since Brexit – is expected to boost trade by £25.5 billion a year by 2040.

For UK exporters, key benefits include lower tariffs on whisky, gin, aerospace, electricals and medical devices, cosmetics, and food products like lamb, salmon, chocolate and biscuits. Tariffs on whisky, for example, will be halved from 150% to 75%, with further reductions planned.

Indian exports will also benefit, with cuts to UK tariffs on clothing, footwear, jewellery and certain foodstuffs. Businesses are likely to benefit from lower costs for these goods once the deal comes into force – potentially within a year.

The agreement also includes improved access for UK firms in services and public procurement, as well as a three-year exemption from double social security payments for Indian nationals on short-term work visas in the UK.

Rain Newton-Smith, who is chief executive of business lobby group, the CBI, said that the deal provided a “beacon of hope amidst the spectre of protectionism”.

India is expected to become the world’s third-largest economy in the coming years, and this deal could help more UK firms tap into that growth. Businesses looking to grow their export footprint or diversify into new markets may find fresh opportunities in the Indian market.

Exporting, whether of goods or services, can be an excellent way to grow your business. If you would like to explore the value or exporting to your business, such as by considering a cost-benefit analysis, or simply want advice on dealing with Customs, please give us a call. We would be happy to help you.

See: https://www.bbc.co.uk/news/articles/c5y6y90e5vzo
 
What the New Planning Reforms Could Mean for Your Business
The government has published its Impact Assessment on the Planning and Infrastructure Bill, which indicates benefits to the economy of potentially up to £7.5 billion over the next decade.

It’s worth noting that this was the Impact Assessment’s higher estimate for how much money the Bill could add to the economy over 10 years. Its central estimate was £3.2 billion and the lower estimate was £1.3 billion.

The reforms contained in the Bill are intended to reduce red tape and speed up decision-making, with the goal of delivering 1.5 million new homes and a range of major infrastructure projects. These include new roads, railways and renewable energy developments – all areas that have traditionally been slowed down by lengthy planning processes.

What does this mean for small businesses?
While big numbers like £7.5 billion grab headlines, the real interest for smaller businesses lies in the potential knock-on effects of increased building work.

Here are a few things to watch:

• Opportunities for local contractors and trades: More housing and infrastructure means more work across the construction supply chain – from groundwork to plumbing, electrical, joinery and more. 
• Increased demand for construction-related services: Planning consultancies, architects, legal advisers and environmental surveyors may all see increased demand. 
• Growth for suppliers: Builders’ merchants, plant hire businesses, and local suppliers could benefit from larger volumes and faster project turnover. 
• Boost to regional economies: With major developments potentially reaching approval faster, towns and cities could see regeneration projects coming to life sooner – good news for hospitality, retail, and service-based businesses in those areas.

What’s next?
The Bill is still making its way through Parliament, so we may still be some way from the reforms becoming reality. However, the government’s intentions are clear. The aim is to make 150 major infrastructure decisions during this Parliament, 17 of which have already been made.

Keep it in perspective
While this all sounds positive, the true impact will depend on how effectively the changes are implemented and how quickly they feed through into actual projects on the ground. For now, businesses in construction, energy, transport and related services may want to keep a close eye on opportunities in their region – especially those tied to new developments or local authority plans.

As always, if you'd like help understanding how government policy might affect your business directly – or you're looking to prepare for upcoming changes – we're here to support you.

See: https://www.gov.uk/government/news/reforms-to-get-britain-building-will-boost-economy-by-billions
 
Consultation on US tariffs Concludes
The UK government has concluded its four-week consultation with businesses and other stakeholders on potential retaliatory action to the tariffs imposed by the US government on a range of products. Over 200 responses were submitted during the process.

The government will now analyse the feedback to try and understand the potential impact of introducing UK tariffs in response. While no decisions have yet been made, officials have confirmed that all options remain on the table.

At the same time, the UK is continuing negotiations with the US on a broader economic prosperity deal which is aimed at removing current and future tariffs altogether.

For now, businesses affected by the US tariffs – or concerned about future changes – should stay informed. The outcome of both the consultation and the ongoing US talks will influence future trade costs or opportunities.

See: https://www.gov.uk/government/news/business-review-on-us-tariffs-has-concluded
 
Helping Employees Save on Childcare: What Employers Need to Know
With many families finding out where their child will be starting school this September, now is a good time for working parents to start planning childcare. The government’s Tax-Free Childcare scheme can save them up to £2,000 a year per child – and this could be good news for employers as well as employees.

Why this matters for employers
Childcare is one of the biggest financial pressures for working families. By signposting Tax-Free Childcare, employers can support staff wellbeing, reduce financial stress, and make it easier for parents to return to or stay in work.

For every £8 a parent pays into a Tax-Free Childcare account, the government adds £2 – up to £500 every three months per child (or £1,000 if the child is disabled). The scheme can be used for a wide range of approved childcare, including:

• Childminders
• After-school clubs
• Holiday and other wraparound care

This support applies to children aged 11 or under (or up to 16 if the child is disabled).

What employees need to know
To be eligible, the parent and their partner (if they have one) must:

• Be earning at least the National Minimum Wage or Living Wage for 16 hours per week on average
• Each earn less than £100,000 per year
• Not be receiving Universal Credit or childcare vouchers

Each eligible child needs their own account, and parents must reconfirm their details every three months to continue receiving the top-up.

A useful tool for returning parents
This scheme can be particularly helpful for parents returning to work after parental leave, or those increasing their hours. As many employees will be finalising childcare for September, now is a good time to raise awareness.

What employers can do

• Share the GOV.UK link with staff: https://www.gov.uk/tax-free-childcare 
• Include information about Tax-Free Childcare in any parental leave packs or policies you provide employees with. 
• Encourage managers and HR teams to raise awareness, especially among new parents

By promoting Tax-Free Childcare, you can show support for working families and may be able to reduce a barrier that helps you keep a valued employee.
See: https://www.gov.uk/government/news/save-up-to-2000-a-year-on-childcare-for-your-new-school-starter
 
Celebrating Excellence: 197 Firms Honoured with The King’s Awards for Enterprise
Nearly 200 businesses from across the UK have received The King’s Awards for Enterprise – the UK’s most prestigious recognition for outstanding business achievement.

This year, 197 firms were honoured for their success in international trade, innovation, sustainable development, and promoting opportunity through social mobility.

Out of the 197 winners, 176 are small or medium-sized businesses (SMEs), and 27 are micro-businesses with 10 employees or fewer. This reflects the vital role that smaller firms play in driving UK growth. It is estimated that just a 1% increase in SME productivity each year for the next 5 years would add £94 billion to the UK economy.

Minister for Services, Small Businesses and Exports, Gareth Thomas said the awards celebrate “the very best of British business talent,” and praised winners for helping to boost the UK economy.

Examples of winners include:

• Sonardyne International – recognised for both International Trade and Sustainable Development in the engineering and manufacturing of their underwater equipment. 
• Delta Fire – awarded for Innovation and Sustainability in its manufacture of specialist front-line firefighting products. 
• Mixergy, based in Oxford – recognised for their energy-efficient smart hot water tanks.

Now in its 59th year, the awards (formerly The Queen’s Awards) will be presented locally by His Majesty’s Lord Lieutenants, with representatives from winners also invited to a Royal reception later in the year.

See: https://www.gov.uk/government/news/british-businesses-celebrated-in-third-year-of-the-kings-awards-for-enterprise

2nd May 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 Bank Holiday weekend.

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

MTD for Income Tax - FAQs
As covered in our update last week, Making Tax Digital for Income Tax (MTD for IT) will be introduced from 6 April 2026. Below are some frequently asked questions and answers.

Who will be affected by MTD for IT, and when?
Individuals with self employment and/or income from property will need to comply with MTD for IT once they are mandated. The commencement date for MTD for IT is 6 April 2026, but a phasing-in program will mean that some individuals are not immediately within the regime. MTD for IT applies from:

• 6 April 2026 for sole traders and landlords with qualifying income over £50,000 in 2024/25.
• 6 April 2027 for those with qualifying income over £30,000 in 2025/26.
• 6 April 2028 for those with qualifying income over £20,000 in 2026/27.

If an individual’s qualifying income exceeds the threshold in a tax year, HMRC will notify them that they are mandated to comply with the MTD for IT rules.

What is ‘qualifying income’?
Qualifying income is a person’s gross income (turnover), before expenses are deducted, from self-employment and property combined.

Does qualifying income include VAT?
HMRC will look at the tax return ‘income’ boxes to calculate qualifying income. For those using the Cash Basis, it is possible to include VAT in the tax return figures for income and expenses. If VAT is included, HMRC will include it in the individual’s qualifying income, therefore it’s best not to use VAT-inclusive figures in the tax return.

Are there any exemptions for those with a low volume of transactions?
No. If qualifying income is over the thresholds outlined above, an individual will be mandated regardless of the volume of transactions.

What do I need to do if I am mandated?
You will keep digital records in MTD-compatible software and send a quarterly update summary of your business income and expenses to HMRC. This means that each quarter, you will need to enter details of each item of income and expenditure into your software.

In addition to the quarterly record-keeping and reporting requirements, you will still need to submit an end-of-year tax return, where you enter any other sources of income (such as employment, savings or dividends) and finalise your tax position. The end-of-year return also needs to be submitted using MTD-compatible software.

Will I need to make quarterly payments to HMRC?
At this point, there are no plans to mandate quarterly payments. The due date for payment will remain 31 January following the end of a tax year, with payments on account due on 31 January and 31 July.

I’ve heard that there’s an easement for those with turnover below £90,000. What does this involve?
There is an easement, but it’s not as generous as we would like! The easement allows businesses with turnover below the VAT threshold to send totals for ’income’ and ‘expenditure’ to HMRC each quarter, instead of totals for a longer and more detailed list of income and expense categories. Each individual item of income and expenditure will still need to be entered into the MTD-compatible software, although each item can be simply categorised as either ‘income’ or ‘expenditure’.

Apparently there’s an easement for recording income from jointly held property. What does this mean?
There is a separate easement for recording and reporting jointly held property income, that can be used in conjunction with the easement for those with turnover below £90,000 (provided income for the property business is below the threshold). If both easements are used, for jointly held property, the individual can enter a single income figure into the MTD-compatible software each quarter and a single, annual total expenses figure in quarter 4.

Where an individual receives property income and incurs residential property finance costs (such as mortgage interest), they must create a separate digital record for these costs and send them separately from other expenses, even if taking advantage of this easement.

I already submit quarterly VAT returns. How will this work alongside MTD for IT quarterly updates?
MTD for IT quarterly updates are for set periods. The quarters end on 5^th July, 5^th October, 5^th January and 5^th April, although it is possible to elect to use ‘calendar quarters’ ending on 30^th June, 30^th September, 31^st December and 31^st March.

VAT quarters can end on the last day of any month, depending on your ‘VAT stagger’. If your VAT quarters do not align with the calendar quarters for MTD for IT, it may be worth considering changing your VAT stagger, so that your VAT returns are aligned with your MTD for IT quarterly updates.

What will happen if I don’t comply with the new rules?
Once you are mandated to comply with MTD for IT, a range of penalties will apply to both the quarterly updates and the end-of-year returns. A new penalty regime for late filing and late payment will apply to those who are mandated. Penalties for errors will apply to the end-of-year tax return, but not the quarterly updates.  This does not mean that erroneous ‘nil’ returns can be submitted for the quarterly updates, however. HMRC will have powers to issue penalties of up to £3,000 per quarter if you do not keep digital records. At this time, it is unclear how HMRC will use these powers because guidance has not yet been issued.

CHANGES TO THE TAXATION OF NON-UK DOMICILED INDIVIDUALS
From 6 April 2025, a new regime for the taxation of UK resident non-domiciled individuals came into effect. HMRC have published a brand-new manual on the regime which can be viewed here.
 
Until 5 April 2025, special tax rules applied to individuals who were resident in the UK but whose domicile (i.e. their permanent home, usually determined by their father’s permanent home at the time the individual was born) was outside the UK. Such individuals could choose to either pay UK tax on their foreign income and gains as they arose or, alternatively, they could claim the remittance basis, which meant only foreign income and gains remitted to the UK were taxed.

From 6 April 2025, all UK residents will be taxed on the arising basis of assessment. The remittance basis will no longer be an option. A new regime for Foreign Income & Gains (FIG) will be available to individuals for their first four years of UK tax residence after a period of 10 years non-residence. Individuals who make a claim to use the new 4-year FIG regime will not pay tax on FIG arising in those four years. Former remittance basis users will continue to pay tax on FIG that arose before 6 April 2025 that they remit to the UK.

New rules also apply for Inheritance Tax (IHT) purposes. The new test for whether non-UK assets are in scope for IHT is whether an individual has been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises. This is known as being a ‘long-term UK resident’. Where an individual is a long-term UK resident and becomes non-UK resident, they will remain in scope for IHT for a minimum of 3 years and a maximum of 10 years depending on the amount of time they resided in the UK.

HOLIDAY LETTINGS AND PROPERTY

The Furnished Holiday Lettings (FHLs) regime was abolished on 6 April 2025. What does the abolition mean for your holiday letting property?

The property will become part of either your main UK or overseas property business. This means that some of the beneficial tax rules that previously applied will no longer apply, such as:

• Tax relief for dwelling-related loan interest will be restricted to basic rate (20%).
• New capital expenditure will generally not qualify for capital allowances, Instead, the replacement of domestic items relief may apply.
• Capital Gains Tax reliefs for trading business assets (such as Business Asset Disposal Relief, Gift Relief and Rollover Relief) will no longer be available.
• Income from the property will no longer be included in ‘relevant UK earnings’ for the purposes of calculating maximum pension relief.

However, all is not lost! There are some transitional measures that you may benefit from:

• It will be possible to carry forward losses that were generated by an FHL business prior to 6 April 2025. These losses will be available for set off against future years’ profits of either the UK or overseas property business, as appropriate.
• Where an FHL business had a capital allowances pool at 5 April 2025, the pool can be carried forward within the general property business. Going forwards, it will be possible to claim writing-down allowances on the pool.
• For Business Asset Disposal Relief (BADR), where the FHL conditions were satisfied in relation to a business that ceased prior to 6 April 2025, relief may continue to apply to a disposal that occurs within the normal 3-year period following cessation. 

If your property previously qualified as an FHL and you have questions about the new tax treatment, please get in touch with us!

VAT: ‘Food’ or ‘Confectionery’?

Group 1 of Schedule 8 VAT Act 1994 specifically makes ‘food’ zero-rated, although there is a long list of ‘excepted items’ which do not qualify for the zero-rating and are therefore standard-rated. Excepted item No. 2 is “Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance”.

Note 5 expands on the meaning of ‘confectionery’, saying that it “includes chocolates, sweets and biscuits; drained, glace or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers”.

Over the years, there have been numerous court and tribunal cases that have considered whether or not a food item meets the definition of ‘confectionery’. The most recent case has concerned ‘Mega Marshmallows’; the kind usually toasted on a skewer over outdoor fires and barbecues.
 
In HMRC v Innovative Bites Ltd ([2025] EWCA Civ 293), the Court of Appeal (CoA) has allowed HMRC’s appeal and has remitted the case to the First Tier Tribunal (FTT) to consider whether mega marshmallows are a “sweetened prepared food which is normally eaten with the fingers”. The CoA found that both the First-Tier and Upper Tribunals had not put sufficient emphasis on the manner in which Mega Marshmallows are ‘normally eaten’.

It will be interesting to read the First-Tier Tribunal’s ruling, as toasted marshmallows are normally eaten from a skewer, albeit one that is held with fingers!