How will these affect businesses and employers?
James Murray, the Exchequer Secretary to the Treasury, made a written ministerial statement recently that included a total of 39 tax simplification, administration and reform measures.
Many measures are intended to reduce burdens on employers and small businesses, whereas others are designed to modernise HM Revenue & Customs (HMRC) systems and processes.
Here are five highlights included among the measures announced.
1. Delay to payrolling benefits
In good news for employers, mandatory payrolling of benefits in kind will now be delayed to April 2027 instead of April 2026. This will give employers more time to prepare.
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.
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 £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 has worked to make this tool easier to use.
The way the CEST tool works out if a worker is self-employed or employed is not being changed though.
4. VAT Treatment of Business Donations of Goods to Charity
The government is consulting on the VAT treatment of business donations of goods to charity.
The consultation is looking 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 here
