The Spring 2025 Tax Update brings a series of reforms aimed at simplifying tax administration and reducing burdens for UK businesses. Here’s a breakdown of the key changes:
1. Capital Goods Scheme Simplification
The government plans to simplify the Capital Goods Scheme by removing computers from the assets it covers and increasing the capital expenditure value threshold for land, buildings, and civil engineering work to £600,000 (exclusive of VAT). This change should reduce the number of capital assets within the scheme, making administration easier for small businesses.
2. Spirit Drinks Verification Scheme Overhaul
For those in the spirits industry, a new flat fee of £250 per facility every two years will replace the current verification charges, effective from July 2025. This simplification should bring cost savings and reduce red tape.
3. Corporate Interest Restriction Administration
HMRC is exploring ways to simplify the administrative rules around Corporate Interest Restriction, especially regarding the appointment of reporting companies. This is an ongoing discussion with stakeholders.
4. International Tax Rule Reforms
New draft legislation is being reviewed to modernise rules on transfer pricing, permanent establishments, and Diverted Profits Tax. These reforms aim to align UK rules with global standards and reduce ambiguity for businesses operating internationally.
5. Electronic Invoicing Consultation
The government is seeking feedback on proposed standards for electronic invoicing (e-invoicing), aiming to boost adoption across both the private and public sectors. The long-term goal is to improve efficiency and reduce paperwork.
6. Revisions to Employment Status Tool
The ‘Check Employment Status for Tax’ (CEST) tool is being updated to make it more user-friendly, with revised guidance to help users navigate the updated questions from April 2025.
7. Simplified Employer NIC Elections
From May 2025, employers using a standard form from GOV.UK to transfer NIC liabilities to employees will no longer need HMRC’s pre-approval. This reduces administrative overhead for employers managing share-based pay.
8. Reversal of Proposed PAYE Reporting Rule
Plans requiring employers to provide detailed employee hours via PAYE from 2026 have been scrapped, relieving businesses from potential new reporting obligations.
9. Delay to Payrolling of Benefits in Kind
Mandatory payrolling of benefits in kind has been pushed back a year to April 2027. Employers will have additional time to adjust payroll systems, and HMRC has released updated guidance.
10. New Self-Assessment Thresholds
From 2025-26, the thresholds for trading, property, and other taxable income will be aligned at £3,000 gross. This means up to 300,000 individuals could avoid filing a full Self-Assessment return, instead using a simpler digital reporting service.
These changes are part of a broader drive to make tax simpler, fairer, and more efficient for small businesses.