A swelling queue of British exporters hoping to recoup money lost to Donald Trump’s now-discredited emergency tariffs may discover that they are entitled to precisely nothing, the audit, tax and business advisory firm Blick Rothenberg has warned.

According to John Havard, a consultant at the firm, roughly 126,000 claims have been lodged through the US Consolidated Administration and Processing of Entries (CAPE) system since it opened for business on 20 April. Yet a sizeable proportion of those applications are expected to be bounced, either because the claimant is not legally eligible or because the paperwork has fallen foul of the portal’s exacting requirements.

“Some UK businesses hoping for compensation may find they are ineligible for it and receive nothing,” Mr Havard said. “A number of small British firms may never have encountered tariffs until President Trump’s second term. They are likely unaware that, although falling sales and higher shipping costs have inflicted significant harm on their finances, legally they are owed nothing by the US Government.”

Who actually owns the tariff bill

The crux of the issue, Mr Havard argues, lies in the small print of international trade contracts. Where British firms shipped goods to American customers on an “ex-works” or “cost and freight” basis, the legal obligation to settle the tariff sat with the US importer rather than the UK seller.

“Reimbursing the US importer for its additional costs does not qualify the UK entity to apply for a tariff refund,” he explained. In other words, even where British exporters voluntarily absorbed the cost to preserve a customer relationship, they cannot now walk into the CAPE system and ask for it back.

It is a hard truth for the cohort of SMEs that scrambled to keep American buyers on side after Mr Trump invoked the International Emergency Economic Powers Act (IEEPA) to slap tariffs on a wide range of imports, measures that were subsequently struck down by the US Supreme Court, opening the door to refund claims in the first place.

A system creaking under the weight of claims

An official status report timed at 7am Eastern on Monday 11 May 2026 indicated that of the 126,000 claims received, roughly 87,000 had been validated. The remainder are sitting in limbo, with many of the rejections traceable to mundane formatting problems in the CSV files uploaded to the portal.

“Rejections may be because the CSV files submitted to the online portal could not be read and processed by the system due to formatting mistakes,” Mr Havard said. “But some rejections will be due to the claimants’ ineligibility for refunds.”

He added that before businesses can even attempt to file, they must hold an account with US Customs and Border Protection’s Automated Commercial Environment. “Anecdotally there has been considerable activity in new account registrations since the Supreme Court ruled the IEEPA tariffs to be unlawful, but this presents another system for businesses to navigate before they can attempt to get refunds.”

A further pitfall is mistaken identity. “Another reason for rejection could be that the person who filed for a tariff refund is not in Government records as the listed importer, or that person’s broker, for the particular tariffs identified in the claim. This could be people trying to game the system, but it is also potentially because individuals do not fully understand who is supposed to make the claim.”

Refunds trickling out – and bank details missing

Despite Washington signalling that no payments would land before 12 May, Mr Havard said there is reliable evidence that some refunds have already been paid out, with at least one claimant receiving interest on top.

But the process is being held up at the final hurdle for nearly 1,900 claimants who have failed to supply bank details. “As at 7am Eastern time on Monday 11 May 2026, there were 1,880 consolidated refunds which could not be passed from the Office of Trade to US Treasury for payment because the claimant had still to provide the necessary bank account details,” Mr Havard said.

Importers whose applications have been rejected can correct errors and resubmit. “However, no amount of resubmission will help if the claim is invalid in the first place – or if they are not getting clear messages from CAPE to explain why they were rejected.”

The next legal front: the 10% global tariff

Even as refunds for the IEEPA tariffs begin to flow, a second courtroom battle is unfolding over Mr Trump’s replacement measure, a blanket 10% “global tariff” introduced under Section 122 of the Trade Act of 1974 after the Supreme Court struck down the original duties.

A coalition of small businesses and roughly two dozen, mostly Democrat-led, states challenged the move at the US Court of International Trade, which ruled by a 2:1 majority on 7 May that the new tariffs were also invalid. The Government has appealed to the US Court of Appeals for the Federal Circuit, which has granted an administrative stay, meaning the 10% levy continues to be collected on US-bound shipments while the legal process plays out.

“Whatever decision the Appeals Court eventually hands down, it seems inevitable that the losing side, as with the IEEPA tariffs, will want to make a further appeal to the US Supreme Court,” Mr Havard said.

The sums at stake are far from trivial. Estimates suggest some $8 billion of Section 122 tariffs were collected in March alone, a substantial slice of the wider tariff burden being shouldered by British exporters, which has weighed heavily on UK trade flows and prompted British factories to cut their exposure to the US market.

For SME exporters watching from this side of the Atlantic, the message from Blick Rothenberg is sobering: those who think a cheque is in the post would do well to check the terms of their export contracts, and the bank details on their CBP account, before they start spending it.

Read more:
Many British exporters chasing US tariff refunds may end up with nothing

HM Revenue & Customs has suffered a major blow in one of the longest-running and most consequential employment status disputes in British tax history, with a tribunal ruling that 60 football referees engaged by the Professional Game Match Officials Limited (PGMOL) were genuinely self-employed, not employees, as the tax authority had insisted for almost a decade.

The decision, handed down at the First-tier Tribunal, means HMRC will be denied £584,000 in employment taxes it had argued were owed. The department retains the right to appeal, but the verdict has already been seized upon by tax specialists as a potentially seismic moment for the millions of contractors, freelancers and businesses operating in the UK’s flexible labour market.

Specialist contractor insurance provider Qdos described the outcome as one of the most significant employment status rulings in history, warning that it lays bare a “fundamental flaw” in HMRC’s own Check Employment Status for Tax (CEST) tool, the digital instrument introduced in 2017 and used millions of times to determine whether a worker should be taxed as employed or self-employed.

The case turned on two principles long regarded as the bedrock of employment case law: mutuality of obligation (MOO), whether a worker is obliged to accept work and the engager obliged to provide it, and control, namely the extent to which a business directs how services are performed. The tribunal ruled that referees were neither mutually obliged to work for PGMOL nor sufficiently controlled in how they performed their duties to be classed as employees.

Seb Maley, chief executive of Qdos, said the ruling directly undermines HMRC’s interpretation of the very rules it polices.

“This landmark verdict directly challenges HMRC’s very understanding of employment status, exposing a fundamental flaw in the tax office’s employment status tool, which is in desperate need of an overhaul,” he said.

“For years, HMRC has insisted that mutuality of obligation exists in every contract, so much so that its CEST tool barely scratches the surface on it. The latest twist in this case highlights the need for a rigorous review of CEST, which has been used millions of times to set the employment status of individuals, in turn determining whether they pay tax as a self-employed worker or employee.”

Maley added that the result should reassure firms that engage contractors. “Make no mistake, this result is good news for businesses that engage contractors and self-employed workers, ultimately because it proves that factors like mutuality of obligation and control really aren’t as narrow as HMRC has been contending.”

He also took aim at the sheer length of the proceedings. “With the first hearing in 2018, we’re nearly a decade into this case, the result of which could yet be appealed. If that doesn’t highlight the desperate need for the simplification of employment status, I don’t know what does.”

A decade in the courts

The dispute stretches back to PGMOL’s engagement of referees as self-employed contractors during the 2014/15 and 2015/16 tax years. HMRC opened the first front in 2018, arguing at the First-tier Tribunal that the officials should have been treated as employees because they were mutually obliged to work for PGMOL.

The FTT disagreed, finding insufficient mutuality of obligation. HMRC appealed and lost again at the Upper Tribunal in 2020, which upheld the original ruling that the minimum test for employment had not been met.

A further HMRC appeal took the case to the Court of Appeal in 2022, which reversed the earlier decisions and concluded that mutuality of obligation did exist on each match day, sending the dispute back to the FTT for reconsideration.

PGMOL escalated matters to the Supreme Court in 2024, where its appeal was dismissed, again sending the case back to the FTT. It is at this latest hearing that PGMOL’s position has now finally been vindicated, with the judge ruling that the referees were neither mutually obliged to work nor sufficiently controlled by PGMOL to be employees.

For Britain’s SME community, which leans heavily on freelance and contract labour, the decision is more than a footnote in a niche sporting dispute. It strikes at the heart of how HMRC interprets and enforces the very employment status rules it designed, and adds further pressure on Whitehall to deliver the long-promised simplification of a system that has tied businesses, workers and the courts in knots for years.

Read more:
HMRC loses landmark £584,000 tax battle as referees ruled self-employed

Britain’s employers have been saddled with a £28bn increase in their National Insurance Contributions bill over the past year, a figure that is £4bn higher than the Treasury’s own forecast and one that accountants warn is already forcing redundancies across the high street.

Figures compiled by UHY Hacker Young, the national accountancy group, show that the total cost to employers of NICs rose by 24 per cent in the 12 months to 31 March 2026, climbing from £116bn to £143.9bn. The leap followed the Chancellor’s decision to raise the main rate of Employers’ NIC from 13.8 per cent to 15 per cent on 6 April last year, a policy sold as a targeted measure to shore up the public finances but which critics argue has become a stealth tax on jobs.

Phil Kinzett-Evans, partner at UHY Hacker Young, said the overshoot could not be explained away by wage inflation alone. “The increase in NIC has caused real pain for UK businesses and I’m not sure that the policymakers recognised or admitted this when they increased the tax,” he said.

While Whitehall has cushioned the blow for the public sector, with roughly £5bn earmarked to offset the higher bill, including £515m ring-fenced for local authorities, private employers have been left to absorb the hit themselves. For many, that has meant either passing costs on to customers through higher prices or taking the knife to headcount.

The consequences are already visible in the labour market. A string of high-profile redundancy announcements in hospitality and retail over recent months have been explicitly blamed on the NIC increase, and recruitment activity has slowed as firms think twice before taking on new staff. Research by Reed, the recruitment firm, found that 46 per cent of businesses said the tax rise would influence their hiring decisions.

Kinzett-Evans added that the timing has been particularly unfortunate, arriving just as employers brace for the additional compliance costs baked into the Employment Rights Act. “It’s now fairly widely recognised that the level of tax in the UK has got too high,” he said. “Businesses need to see a sensible economic plan that sees a reduction in the business tax burden.”

With the Chancellor under growing pressure from business groups to ease the squeeze ahead of the next fiscal event, the question of who ultimately pays for the NIC rise, shareholders, staff or shoppers, is fast becoming one of the defining economic debates of the year.

Read more:
Employers hit with £28bn National Insurance Shock as rate rise bites harder than treasury forecast

Britain’s small and medium-sized businesses have been dealt another blow at the till, with corporate lawyers, financial planners and founders rounding on what they describe as “a continual tax-grabbing assault on SMEs” that is quietly eroding the rewards of building a company in the United Kingdom.

From 6 April, Business Asset Disposal Relief (BADR), the regime formerly trading under the rather more flattering banner of Entrepreneurs’ Relief, climbed from 14 per cent to 18 per cent on the first £1m of qualifying gains. It is the latest step in a long retreat from the policy’s original settlement, when business owners paid just 10 per cent on lifetime gains of up to £10m. The rate has now risen by 80 per cent over the past decade, and by 28 per cent in this single adjustment alone.

For a generation of owner-managers who have spent the past twenty years pouring sweat and capital into their companies, the maths is becoming harder to swallow. And, in the words of one adviser, “if we’re wondering why there are so few homegrown UK success stories, this is part of the answer.”

Martin Rayner, director at Compton Financial Services, argues the latest move cannot be read in isolation. “BADR has now increased by 80 per cent over the past decade and by a further 28 per cent in this latest change alone, this is not a one-off adjustment, it’s an ever-increasing tax on entrepreneurial success,” he said.

“And this doesn’t exist in isolation. Employer NI increases and minimum wage rises, which ripple upward through salary structures, not just the lowest tier, are already squeezing owners before they even think about exit.”

Rayner is blunt about the wider implications. “SMEs represent 99.9 per cent of all UK businesses. They are the backbone of this economy and the starting point of every large company. The risks of starting and growing a business keep rising while the rewards keep shrinking.”

For Scott Gallacher, director of Leicester-based financial advisory firm Rowley Turton, the change has a tangible human cost, measured not in pounds, but in years.

“Changes such as the increase from 14 per cent to 18 per cent could mean some business owners having to work an extra year just to stand still,” he said. “When you add this to the earlier move away from 10 per cent, the cumulative impact becomes much more significant.”

On a £1m sale, the journey from 10 per cent to 18 per cent represents an additional £80,000 handed to the Treasury, “the equivalent of around two additional years of work for many, simply to end up in the same position,” Gallacher noted.

He cautioned against treating seven-figure exits as proof of extravagance: “While £1m may sound like a large number, in today’s terms it often represents a lifetime’s work rather than extraordinary wealth.”

Steven Mather, lawyer and director at Steven Mather Solicitor in Leicester, warned that the bite is sharper still on transactions above the £1m threshold.

“Three years ago, a sale at £5m would have cost £900,000 in tax. Now, the same sale costs £1.14m, almost an extra quarter of a million in tax. And for what? Nothing,” he said.

“A business owner who has worked really hard over the years, paying all the tax along the way, to get to the point of exiting and having to pay another shedload to the Government.”

For Mather, the contrast with the regime’s original architecture is stark. “When I first started, BADR was called Entrepreneurs’ Relief and was £10m at 10 per cent. That helped incentivise British entrepreneurs to build and grow in the UK. Now? Those people go and do it in the UAE where it’s all tax-free.”

Graham Nicoll, financial planner at NCL Wealth Partners, frames the change as a familiar Treasury technique dressed in new clothes.

“On paper, a 4 per cent increase may not look drastic, but in real terms for every £1m of sale proceeds it is an extra £40,000 going to HMRC, which is meaningful,” he said.

“The impact of this is the same as fiscal drag, in that reliefs are becoming less generous over time, rates are creeping up and lifetime limits have shrunk dramatically. Changes in tax impacts like these will influence business owners’ thinking about timing, succession planning, structure and much more.”

His starting point with clients, he says, is no longer about the deal but the destination. “What are you looking to achieve, what do you want life to look like after business and how much do you need to achieve this? Robust cash flow planning underpins effective exit planning conversations.”

For Colette Mason, author and AI consultant at London-based Clever Clogs AI, the contradiction at the heart of government policy is becoming impossible to ignore.

“Just last week, the Government launched the £500m Sovereign AI fund telling AI entrepreneurs to start, scale and stay in Britain. But why would you, if the exit is being taxed so punitively?” she asked.

“You can’t pour public money into helping founders build and then squeeze what they keep after years of grafting to make it work.”

Her conclusion is one increasingly heard in boardrooms and breakfast meetings from Shoreditch to Solihull: “At some point, people do the maths and build somewhere that lets them keep the reward, and that really isn’t Britain with the continual tax-grabbing assault on SMEs.”

For a Government that has staked much of its growth narrative on the dynamism of British entrepreneurs, the message coming back from those entrepreneurs is unambiguous. Build the company, take the risk, employ the staff, pay the tax, and then watch the reward shrink each April. It is, advisers warn, a model that flatters HMRC’s spreadsheet for now, but quietly empties the pipeline of the very success stories Britain says it wants to celebrate.

Read more:
BADR hike branded a ‘tax-grabbing assault’ as Britain’s founders eye the exit

British SMEs with transatlantic trade links have been warned they face a prolonged and uncertain wait before recovering tariffs wrongly collected by the United States, after Washington confirmed that its long-awaited online refund portal will handle only a fraction of outstanding claims when it goes live next week.

US Customs and Border Protection (CBP) is due to switch on its Consolidated Administration and Processing of Entries system, known as CAPE, on 20 April. The first phase of the portal is expected to cope with roughly 63 per cent of refund requests. The remaining 37 per cent, however, have been left without so much as a provisional timetable, raising fresh concerns for cash-strapped importers that have been out of pocket for the best part of two years.

John Havard, a consultant at audit, tax and business advisory firm Blick Rothenberg, said the scale of the backlog was “extraordinary” and that the uncertainty surrounding the more complex tranche of claims would do little to reassure small and mid-sized businesses that had counted on a swift resolution once the US Supreme Court struck down the tariffs imposed under the International Emergency Economic Powers Act (IEEPA).

“Many of these remaining cases are classed as final tariffs because the goods concerned will have entered the US more than a year before the refund claim is filed,” Havard said. “In such instances the claims procedure is going to be considerably more involved. We are unlikely to hear anything further until government officials next appear before the Court of International Trade to deliver their next mandated progress report.”

The numbers involved are eye-watering. Blick Rothenberg estimates that around 53 million unlawful tariff collection transactions were processed during the period in question, with the total refund bill potentially reaching $166 billion (£132 billion). More than 26,000 importers, collectively responsible for some $120 billion of IEEPA tariffs, have already registered with CBP to receive their money back electronically, following a White House directive requiring all federal payments to be made by electronic transfer.

The rules governing who can actually lodge a claim are tightly drawn. Only the official importer-of-record, or that party’s nominated US customs broker, will be entitled to submit a refund request. Businesses must also hold an active account with CBP’s Automated Commercial Environment before they can receive any money. Havard said there had been “considerable activity” in new account registrations since the Supreme Court’s ruling, suggesting that many firms had been caught flat-footed by the decision.

For those still waiting, there is at least one sliver of good news. In a previous statement to the US trade court, a government official confirmed that interest would be paid on all refunded amounts, offering modest compensation for what is shaping up to be a lengthy delay before cheques actually land.

For British exporters and importers with exposure to the US market, the practical advice is straightforward: ensure ACE registration is in order, confirm which party holds importer-of-record status on historic shipments, and brace for a drawn-out administrative process. The fundamentals of the refund entitlement are no longer in doubt; the mechanics of getting the money back, it seems, very much are.

Read more:
US tariff refund backlog leaves UK exporters in limbo as Washington scrambles to process billions in claims

Changes to the off-payroll working rules coming into force this month will relieve scaling businesses of costly compliance obligations. Yet contractors who fail to adjust their rates risk being caught out, writes Business Matters.

From this month, a raft of amendments to the UK’s IR35 tax legislation will redraw the lines of responsibility between businesses and the freelancers they engage. For thousands of companies that have until now shouldered the burden of determining whether their contractors fall inside or outside the off-payroll working rules, the changes promise welcome relief. For freelancers, however, the picture is rather more complicated.

IR35, in essence, is the government’s mechanism for ensuring that individuals who work through intermediaries such as personal service companies, but whose engagements resemble those of employees, pay a broadly equivalent amount of income tax and National Insurance. According to HMRC, the framework has already shifted more than 130,000 workers into deemed employment tax status since 2021 – a figure that underscores both its reach and its continuing impact on the UK’s contracting workforce.

Under the current regime, responsibility for determining a contractor’s IR35 status rests largely with the hiring organisation – provided that organisation qualifies as medium or large under company law. Smaller companies have been exempt, with the onus falling instead on the contractor’s own personal service company. The April 2026 changes significantly raise the bar for what constitutes a “small” company, meaning many more businesses will now fall beneath that threshold and be freed from compliance duties.

A wider net for the small company exemption

Previously, a company qualified as small if it met at least two of three criteria: annual turnover of no more than £10.2 million, a balance sheet total of no more than £5.1 million, and no more than 50 employees. From April 2026, the turnover ceiling rises to £15 million and the balance sheet limit to £7.5 million, whilst the headcount threshold remains unchanged at 50 staff. The consequence is that a significant number of businesses that were previously classified as medium-sized will now be treated as small, and the obligation to issue a Status Determination Statement – the legal document setting out whether a contractor sits inside or outside IR35 – will pass back to the contractor.

Vincent Huguet, chief executive and co-founder of Malt, the European freelance talent platform, welcomes the reforms but sounds a note of caution. The shift in thresholds, he says, helps to move responsibility away from hiring managers, allowing them to concentrate on when and what they need rather than worrying about the tax implications of every engagement. Yet he warns that neither companies nor freelancers should become complacent.

The end of double taxation?

Alongside the threshold changes, the government is introducing a PAYE set-off mechanism designed to address one of the more contentious aspects of the existing rules. Until now, where a client failed to apply IR35 correctly, HMRC could pursue the full PAYE and National Insurance bill from the deemed employer without accounting for tax already paid at the contractor’s end through their personal service company. The new mechanism allows HMRC to offset those prior payments when calculating any outstanding liability.

Huguet describes this as an important step towards eliminating double taxation, noting that it removes the risk of a freelancer ending up paying more than their fair share and properly accounts for historic tax records.

Pricing: the freelancer’s blind spot

For contractors, however, the real sting may lie in the detail of their own rate cards. With a greater share of compliance responsibility now resting with them, freelancers must ensure their pricing properly reflects the full cost of engagement. Last year’s increase in employer National Insurance Contributions from 13.8 per cent to 15 per cent, coupled with the reduction in the payment threshold from £9,100 to £5,000 annually, has already made hiring more expensive. Because employer NIC is deducted from the assignment rate before a contractor’s pay is calculated, those costs feed directly into negotiations – whether the contractor is deemed inside or outside IR35.

Huguet’s message to freelancers is blunt: get your pricing right. Those who fail to factor in these shifting obligations risk undervaluing their services at precisely the moment when the regulatory landscape demands they take greater ownership of their tax affairs. For businesses, particularly those that find themselves newly reclassified as small, the changes offer a chance to engage freelance talent with less red tape – but only if both sides of the arrangement understand what is now expected of them.

Read more:
Thousands of growing firms freed from IR35 burden – but freelancers warned not to underprice

Fresh incentives designed to turbocharge Britain’s start-up and scale-up economy have officially taken effect, with the government forecasting that the measures will channel an additional £100 million into high-growth companies across the country.

The changes, first announced by chancellor Rachel Reeves in last autumn’s budget, target three pillars of early-stage business finance: employee share schemes, the enterprise investment scheme (EIS) and venture capital trusts (VCTs). Together, they represent the most significant expansion of tax-advantaged support for young companies in recent years.

At the heart of the package is a dramatic widening of the enterprise management incentive (EMI) scheme, the mechanism that allows employees to acquire company shares at a predetermined price, potentially well below market value if the business performs strongly. Gains realised on the sale of those shares are subject to capital gains tax rather than income tax, making the arrangement considerably more attractive for employees willing to back a growing firm.

Under the new rules, the gross assets ceiling for companies qualifying for EMI has quadrupled to £120 million, while the maximum number of employees a participating firm may have has doubled to 500. The cap on the total value of unexercised options held across a company at any one time has likewise doubled, rising to £6 million. The Treasury estimates that roughly 1,800 of Britain’s fastest-scaling businesses will now be eligible, opening up share-based rewards for an estimated 70,000 workers.

Dom Hallas, executive director at the Startup Coalition, welcomed the changes, describing them as a genuine boost for the ecosystem and noting that the expanded headroom would help ambitious firms compete more effectively for the talent that ultimately determines whether a business can scale successfully.

Eva Barboni, who leads the Enterprise Britain movement, echoed the sentiment, arguing that widening access to share ownership would strengthen the ability of British scale-ups to attract and hold on to the people they need to compete on the world stage.

Alongside the EMI expansion, the government has doubled the lifetime company investment limits for EIS and VCTs, two schemes that offer investors more favourable tax treatment when they back early-stage ventures. The ceiling now stands at £24 million, with annual company investment limits rising to £10 million. A higher gross assets threshold of £30 million before share issue and £35 million afterwards means a broader pool of companies can tap into the incentives.

Read more:
Budget tax breaks worth £100m come into force for founders and start-ups

Fresh analysis suggests the government’s proposed £2,000 cap on National Insurance relief for pension contributions could disproportionately affect middle-income workers, despite being framed as a measure targeting high earners.

According to research from Bishop Fleming, the structure of the UK’s National Insurance system creates what has been described as a “middle-income trap”, where workers earning between £35,000 and £50,270 face significantly higher effective tax rates on pension contributions above the cap than those on much higher salaries.

Tax specialists at the firm highlight that employees in this middle-income bracket would incur an 8 per cent National Insurance charge on contributions exceeding £2,000, compared with just 2 per cent for those earning above £125,000. The result, they argue, is that professions such as nurses, teachers and mid-level managers could face a far steeper penalty on additional retirement savings than top earners.

The analysis also points to wider consequences for salary sacrifice schemes, which have long been used by employers to boost pension contributions by sharing their National Insurance savings with staff.

Under the proposed changes, employers would face a 15 per cent National Insurance charge on contributions above the cap, significantly reducing the financial incentive to offer these “top-up” contributions. Industry experts warn that many businesses may scale back or remove these benefits altogether.

Combined with the employee charge, this creates what has been described as a “23 per cent efficiency cliff” for affected workers, effectively eroding the advantages of saving more into pensions through salary sacrifice.

While the government has indicated that a majority of employees will remain unaffected because their contributions fall below the £2,000 threshold, the analysis suggests the impact could be more widespread.

Data from the Office for Budget Responsibility indicates that a significant portion of the additional cost faced by employers is likely to be passed on to workers through lower wage growth or reduced benefits. This means even those below the cap could feel the effects indirectly, through smaller pay rises or the loss of pension enhancements.

The proposed changes are also expected to add to cost pressures facing businesses, particularly small and medium-sized enterprises.

Firms are already adjusting to wider employment reforms and rising labour costs, and the introduction of additional pension-related charges could force difficult decisions around pay, hiring and benefits.

For some employers, the choice may come down to reducing pension contributions or limiting wage increases in order to absorb the additional costs.

Experts warn that weakening incentives for pension saving could have longer-term consequences for retirement outcomes, particularly for middle-income workers who are already under pressure from rising living costs.

By reducing the attractiveness of salary sacrifice schemes and increasing the cost of saving, the reforms risk discouraging contributions at a time when policymakers have been encouraging individuals to build greater financial resilience for retirement.

The proposed National Insurance cap is likely to remain a point of contention as details are debated and refined.

While the policy aims to rebalance tax relief and generate additional revenue, critics argue that its design could lead to unintended consequences, shifting the burden onto middle earners and reducing incentives to save.

As businesses and employees begin to assess the potential impact, the focus will turn to whether adjustments are made to address these concerns, or whether the changes proceed in their current form with far-reaching implications for the UK’s pension landscape.

Read more:
NI pension cap risks hitting middle earners hardest, analysis warns

Individual insolvencies across England and Wales have surged by 18 per cent year-on-year, in what experts are warning is clear evidence of a deepening household financial crisis as rising borrowing costs, persistent inflation and accumulated debt continue to weigh heavily on consumers.

New data from The Insolvency Service shows that 11,609 people entered insolvency in February 2026, marking a 6 per cent increase on January and a significant jump compared with the same month last year. The figures paint a stark picture of mounting financial strain, particularly among vulnerable households and increasingly, middle-income earners.

The total comprised 768 bankruptcies, 4,210 debt relief orders (DROs) and 6,631 individual voluntary arrangements (IVAs), with DROs reaching their highest monthly level since their introduction in 2009. The record number reflects both structural financial pressures and policy changes, including the removal of the application fee in April 2024, which has made the process more accessible.

However, industry observers say the scale of the increase goes far beyond administrative changes. Darryl Dhoffer, founder of The Mortgage Geezer, described the data as a clear signal that many households have reached a tipping point after years of financial pressure. He pointed to what he described as the “lag effect” of higher interest rates, which is now feeding through into household finances after a prolonged period of tightening monetary policy.

While the Bank of England’s base rate currently stands at 3.75 per cent, elevated borrowing costs have continued to squeeze mortgage holders and consumers carrying unsecured debt. At the same time, inflation, although easing from its peak, remains above target at around 3 per cent, limiting the extent to which households are seeing meaningful relief in day-to-day costs.

Tony Redondo, founder of Cosmos Currency Exchange, said the figures highlight how cumulative financial pressures are now manifesting in real-world outcomes. He noted that while the removal of fees has contributed to the rise in DROs, the broader trend reflects households “finally collapsing under accumulated debt from previous years”.

He warned that the outlook remains fragile, particularly in light of geopolitical uncertainty and the potential for renewed inflationary pressures linked to energy markets. Any sustained increase in inflation could force the Bank of England to keep interest rates higher for longer, further intensifying the strain on borrowers approaching refinancing deadlines.

Financial planners echoed concerns that the current data may represent the early stages of a wider deterioration. Nouran Moustafa, practice principal at Roxton Wealth, said the figures should not be viewed as a one-off spike but rather as part of a broader pattern of economic fragility.

She emphasised that behind the statistics lies significant human impact, with many households operating without any financial buffer. In such conditions, even relatively small increases in costs or interest rates can push individuals into insolvency.

The pressure is not limited to households. Company insolvencies rose by 7 per cent month-on-month to 1,878 in February, although they remain below levels seen during the peak of business failures between 2022 and 2025. Analysts suggest this reflects a mixed picture, with some businesses stabilising while others continue to face tightening margins and weakening demand.

Anita Wright, chartered financial planner at Ribble Wealth Management, said the data reflects a broader liquidity squeeze across the economy. She noted that rising bond yields are feeding into higher borrowing costs for businesses, while consumers facing higher living costs are cutting back on spending, further compressing margins.

This combination of weak growth and persistent inflation, often described as stagflationary conditions, creates a particularly challenging environment for both households and businesses. While some firms have been able to absorb pressures through cost-cutting or the use of reserves, that resilience is finite, and insolvency rates tend to rise once those buffers are exhausted.

The implications are also being felt in the workplace. Kate Underwood, founder of Kate Underwood HR and Training, warned that financial stress among employees is increasingly spilling over into business operations. She highlighted rising levels of absenteeism, reduced productivity and higher staff turnover as workers struggle to cope with mounting financial pressures.

For small businesses in particular, the challenge is acute. Unlike larger corporates, they often lack the financial flexibility to absorb rising wage demands or offer higher salaries, making them more vulnerable to workforce instability driven by cost-of-living pressures.

The latest figures also come at a time when expectations for interest rate cuts have been significantly scaled back. Prior to the recent escalation in geopolitical tensions, markets had anticipated multiple rate reductions in 2026. However, rising oil and gas prices have shifted expectations, with policymakers now more cautious about easing monetary policy.

This change in outlook could prove critical. As Redondo noted, the combination of higher rates, depleted savings and thin margins leaves both households and businesses exposed to further shocks. Should borrowing costs remain elevated or increase further, the risk of a broader wave of defaults and insolvencies could intensify.

For now, the data underscores a fundamental issue facing the UK economy: a growing number of households and businesses are operating with little to no margin for error. In such an environment, the difference between stability and financial distress can be measured in relatively small shifts in costs or income.

As policymakers weigh the next steps on interest rates and fiscal policy, the sharp rise in insolvencies serves as a clear warning signal that underlying financial pressures are not only persistent but increasingly visible across the economy.

Read more:
Individual insolvencies surge 18% as experts warn households are at ‘breaking point’

Financial experts and industry figures are urging Chancellor Rachel Reeves to reconsider controversial plans to cap National Insurance relief on pension contributions at £2,000 a year, warning the move could undermine long-term savings and disrupt workplace pension schemes.

The proposal, currently under scrutiny in the House of Lords, would limit the amount of National Insurance relief available on pension contributions made through salary sacrifice arrangements. Critics argue that while the policy is framed as a measure to improve fairness, it risks acting as a disincentive to save and could have unintended consequences for both employees and employers.

Peers have already signalled concern, submitting amendments to raise the cap to £5,000. The revised legislation is expected to return to the House of Commons next week, setting up a potential flashpoint in the government’s wider fiscal strategy.

At the heart of the debate is the role salary sacrifice schemes play in encouraging pension contributions. These arrangements allow employees to exchange a portion of their salary for pension contributions, reducing both income tax and National Insurance liabilities while boosting retirement savings.

Nouran Moustafa, Practice Principal and independent financial adviser at Roxton Wealth, warned that imposing a £2,000 cap could have a material impact on long-term financial outcomes. She argued that the measure risks eroding retirement pots by tens of thousands of pounds over time due to lost compounding, while also weakening the behavioural incentives that encourage consistent saving.

For policymakers, she suggested, the trade-off is stark: short-term fiscal gains versus long-term retirement adequacy. By reducing incentives, participation in pension schemes could decline, potentially increasing future reliance on the state.

Other advisers echoed concerns that the policy could destabilise employer-backed pension structures. Rob Mansfield, an independent financial adviser at Rootes Wealth Management, said repeated changes to pension rules risk damaging confidence in the system altogether.

He pointed to the broader objective of fostering a savings culture, arguing that frequent policy adjustments could discourage individuals from committing to long-term financial planning. There are also doubts over whether the measure would deliver the expected tax revenues, as businesses may restructure remuneration to mitigate the impact.

From an employer perspective, the proposed cap could introduce additional complexity and cost. Kate Underwood, founder of Kate Underwood HR and Training, described the move as a “blunt tax grab dressed up as fairness”, warning it could force companies to rethink salary sacrifice schemes that have become a standard part of remuneration strategies.

She noted that many small and medium-sized businesses rely on these arrangements as a practical way to enhance pension provision without escalating direct salary costs. Introducing additional National Insurance burdens, she said, could lead to schemes being scaled back or scrapped entirely, with knock-on effects for employee engagement and morale.

There are also concerns that the cap could affect a broader group than intended. While the policy is often positioned as targeting higher earners, advisers argue it may also capture mid-career professionals who are increasing contributions later in life to catch up on retirement savings.

Rohit Parmar-Mistry, founder of Pattrn Data, said a hard cap risks penalising exactly those individuals who are finally in a position to save meaningfully. He suggested a more targeted or tapered approach would better address concerns about excessive tax advantages without discouraging responsible saving behaviour.

The debate comes at a time when the government is under increasing pressure to balance fiscal discipline with policies that support long-term economic resilience. Pension savings are widely seen as a critical component of that balance, reducing future pressure on public finances while supporting individual financial security.

With the legislation now moving back to the Commons, the coming weeks are likely to prove decisive. For businesses, advisers and savers alike, the outcome will signal whether the government intends to prioritise short-term revenue generation or maintain the incentives that underpin the UK’s workplace pension system.

For now, the message from across the industry is clear: any reform must be carefully calibrated. A policy designed to promote fairness, they argue, should not come at the cost of weakening one of the most effective mechanisms for building long-term financial stability.

Read more:
Experts warn pension tax cap risks undermining retirement savings as pressure mounts on Chancellor to rethink

Tax investigations by HM Revenue & Customs into the UK’s largest companies are now taking nearly three and a half years to resolve on average, according to new analysis by multinational law firm Pinsent Masons.

The research shows that open tax investigations handled by HMRC’s Large Business Directorate (LBD) last an average of 41 months, roughly three years and five months, although this is slightly faster than the previous year’s average of 45 months.

The number of active cases has also increased, rising from 2,031 investigations to 2,149 over the past year. The rise reflects both HMRC’s efforts to clamp down on tax non-compliance and the significant amount of time required to conclude complex corporate tax enquiries.

HMRC’s Large Business Directorate focuses on the UK’s largest enterprises, roughly 2,000 companies with annual revenues exceeding £200 million. These businesses collectively account for around 40 per cent of all tax collected by the UK government.

With more than 2,100 investigations currently open, the figures suggest that roughly half of Britain’s largest companies are under some form of tax scrutiny at any given time. In many cases, companies may face multiple simultaneous enquiries covering different aspects of their tax affairs.

Jake Landman, partner and head of tax disputes at Pinsent Masons, said the growing number of cases partly reflects HMRC’s push to close the UK’s estimated £47 billion tax gap, the difference between the amount of tax owed and the amount actually collected.

“The increase in open investigations is being driven by HMRC’s increased efforts to tackle the tax gap as well as the time required to complete complex corporate investigations,” he said.

Over the past year alone, HMRC opened 1,879 new investigations into large businesses, an increase of 21.1 per cent, equivalent to 327 additional cases compared with the previous year.

Landman warned that prolonged investigations can place significant operational and financial strain on businesses, particularly during a period of economic uncertainty.

“Having businesses’ tax affairs under investigation for three, four or even five years runs counter to efforts to make the UK a more business-friendly environment,” he said. “Lengthy investigations create additional administrative and financial burdens at a time when business confidence is already fragile.”

Corporate tax disputes can be especially complex, often involving international operations, transfer pricing arrangements, and disputes over the interpretation of evolving tax legislation. These factors frequently contribute to the extended duration of investigations.

However, the data also shows that HMRC has made some progress in clearing its backlog. The tax authority closed 1,761 cases during the past year, up from 1,617 the year before.

That improvement has helped reduce the average investigation duration by four months year-on-year.

“HMRC does deserve credit for reducing the average time it takes to complete investigations,” Landman said. “But the fact remains that some cases remain open for more than four years, which highlights the need for additional resources if the system is to become more efficient.”

The issue has drawn increasing scrutiny from lawmakers. The Public Accounts Committee is currently conducting an inquiry into HMRC’s approach to tax compliance among large businesses.

The parliamentary investigation is examining how effectively HMRC ensures that multinational companies and major UK corporations pay the correct amount of tax, as well as whether the current investigative process strikes the right balance between enforcement and maintaining a competitive business environment.

In its call for evidence, the committee has asked businesses, advisers and experts to provide insights into how HMRC handles tax disputes with large corporations and whether improvements are needed to reduce delays and increase transparency.

The inquiry forms part of a wider debate about the UK’s tax enforcement system, particularly at a time when government finances remain under pressure and policymakers are seeking ways to improve compliance while maintaining the country’s attractiveness to global investors.

For many large businesses, the findings highlight the growing complexity of the UK tax landscape and the increasing importance of robust tax governance and compliance frameworks as scrutiny from regulators intensifies.

An HMRC spokesperson: “We’ve made strong progress in resolving large businesses enquiries more efficiently, cutting the average length of closed cases from 36 months in 2021-22 to 17 months in 2024-25. These cases are often complex and international, but we won’t compromise on securing the right tax just to close a case quickly. We apply the law consistently so every business is treated fairly.”

Read more:
HMRC investigations into big businesses now last nearly three and a half years on average

The government has convened a new taskforce to unlock up to £1bn in additional lending for small businesses, pressing Britain’s major banks to commit fresh capital to alternative community lenders.

Ministers are seeking “concrete commitments” over the next five years to expand funding for the community development financial institution (CDFI) sector, not-for-profit lenders that support businesses unable to secure loans from mainstream banks.

The initiative follows a review which found that many small firms are being pushed towards high-cost borrowing because of rising rejection rates, regulatory complexity and broker practices. Borrowing costs for some companies were described as “prohibitively high”.

CDFIs lent £141m to around 5,000 businesses in 2024, according to Responsible Finance. Of that, £82m went to roughly 1,000 small and micro businesses, while £59m supported around 4,000 start-ups.

The taskforce aims to scale lending to small firms from £82m to £500m over five years, contributing to an overall £1bn boost in available finance.

Blair McDougall, the small business minister (pictured), said the initiative brings together “local knowledge and relationships” with financial backing from the British Business Bank and major lenders.

The group will be chaired by Bob Annibale, chair of Big Issue Changing Lives and Grameen America. He said one of the first priorities would be encouraging banks to redirect rejected applicants to CDFIs rather than leaving them without options.

Loan rejection rates from high street banks have climbed to around 40 per cent, according to the British Business Bank, compared with 5–10 per cent in the 1990s.

Several lenders have already committed funds. In 2024, Lloyds Banking Group announced a £43m investment in three CDFIs via its Community Investment Enterprise Fund, while JP Morgan provided £4m to strengthen CDFI operational capacity.

Industry figures say that alongside fresh capital, CDFIs will need investment in staffing and technology to manage higher volumes of lending.

The move reflects Labour’s pledge to improve access to finance for small firms rejected by mainstream banks and comes as ministers seek to stimulate growth among smaller enterprises facing elevated borrowing costs.

Read more:
Taskforce aims to unlock £1bn in small business lending

Post Office Limited is set to receive more than £104 million in taxpayer support after being hit with a substantial bill for historic non-compliance with off-payroll working rules, commonly known as IR35.

A newly published government document confirms that the Department for Business and Trade will provide up to £104,441,881 to cover the Post Office’s outstanding tax liability to HM Revenue & Customs. The funding will be paid directly to HMRC after officials concluded that the Post Office is “not in a position to fund it” itself.

The disclosure, published on 29 January 2026, appears in a notice from the Subsidy Advice Unit, which has accepted a request to advise on the legality and proportionality of the proposed subsidy. The document confirms that the support relates to the Post Office’s historic handling of contractors under the off-payroll working regime, alongside other legacy issues including those linked to the Horizon IT system.

The scale of the liability has grown significantly over time. In its 2023/24 annual report, the Post Office made a £72 million provision following an HMRC review into how it had classified contractors and freelancers. That provision increased to £101 million in its 2024/25 accounts, with the organisation stating it expected the matter to be settled during the 2025/26 financial year.

The Post Office is not alone in facing large IR35-related tax bills. In recent years, several major public sector bodies, including Defra, the Ministry of Justice, the Home Office and the Department for Work and Pensions, have disclosed liabilities linked to off-payroll non-compliance, with combined totals running well beyond £200 million.

Seb Maley, chief executive of IR35 specialist Qdos, described the Post Office bill as extraordinary. He said the figures were more commonly associated with football transfers than tax compliance failures and suggested it could be the largest IR35 liability ever issued to a single organisation.

Maley questioned how such widespread misclassification could occur across public bodies, pointing to what he described as a systemic failure in assessing employment status. He said the case raised serious doubts about whether proper IR35 assessments had been carried out and warned against over-reliance on HMRC’s Check Employment Status for Tax (CEST) tool.

While government-owned organisations can ultimately rely on Treasury support when liabilities emerge, Maley warned that private sector firms do not have the same safety net. He said the Post Office case should act as a stark reminder to businesses of the financial risks associated with getting IR35 wrong.

Read more:
Post Office to receive £104m taxpayer bailout to cover historic IR35 breach

Labour has been urged to stop workers accessing their private pensions from the age of 55 in an effort to curb early retirement and tackle rising unemployment, according to a leading think tank.

The Resolution Foundation, which has close links to senior Labour figures, said current pension and tax rules encourage wealthier workers to leave the labour market years before state pension age, worsening labour shortages and weakening the public finances.

Under existing rules, savers can draw on their private pension from age 55, 11 years before the state pension age, which is due to rise from 66 to 67 this year. Up to a quarter of a private pension, capped at £268,275, can be taken tax-free from that point.

In a new intervention, the think tank said ministers should consider limiting access to private pension wealth before state pension age, either by raising the minimum access age or by reducing the amount that can be withdrawn tax-free.

“To reduce the financial incentives for people to retire early, the Government should consider limiting access to private pension wealth before the state pension age,” the foundation said. “This could be done either by raising the age at which tax-relieved private pension wealth can be accessed or by reducing the amount that is tax-free.”

The call comes amid signs of a weakening labour market. Figures from the Office for National Statistics show the UK unemployment rate has climbed to 5.1 per cent, up from a post-pandemic low of 3.6 per cent in 2022. The Resolution Foundation said the rise has been driven largely by people under 25 and over 50 leaving or failing to enter work.

Employment rates among so-called “prime-age” workers in the UK remain comparable with high-employment European economies such as Denmark, Germany and Norway, but Britain lags behind when it comes to keeping older workers in jobs.

Data cited by the think tank shows that by age 55, around a quarter of people in Britain are not in employment. That figure rises to more than a third by age 60 and over half by 64. At the current state pension age of 66, only 30 per cent remain in work.

Among people aged 50 to 65 who are not working, 41 per cent cite sickness or disability as the main reason, while 31 per cent say they are retired. A further 12 per cent are home-makers and 6 per cent are unemployed and actively seeking work.

The minimum age for accessing private pensions is already scheduled to rise to 57 from April 2028, a change the Resolution Foundation itself recommended in a post-pandemic report in 2023. The think tank now suggests further reform may be needed.

Nye Cominetti, an economist at the Resolution Foundation, said generous tax reliefs were distorting behaviour at the top end of the income scale.

“Our pensions and tax rules currently incentivise very wealthy people to retire early,” he said. “These generous tax breaks should be restricted. By doing so, the Government can boost both employment and the public finances.”

“The UK does reasonably well on its overall employment rate compared with other rich countries,” he added, “but trails the best-performing nations when it comes to the share of people over 50 in work. The Government should offer a mix of carrots and sticks to improve their job prospects.”

The foundation noted that UK unemployment is now close to the European Union average of 6 per cent for the first time since the euro was launched in 2002, suggesting the problem is largely domestic rather than driven by global conditions.

Some countries have already gone further. Denmark, often cited as a high-employment economy, has linked its state pension age to life expectancy, meaning workers must now wait until age 70 to receive payments. The UK state pension age is scheduled to rise to 68 by 2042, fuelling speculation that future governments could adopt a similar approach.

Despite incentives to retire later, the number of pensioners still working has been rising as cost-of-living pressures bite. More than 1.5 million people over the state pension age are now in employment, according to estimates from HM Revenue & Customs, based on the latest Survey of Personal Incomes. Around 1.56 million over-65s are on payrolls, a 12 per cent increase compared with 2020–21, while 562,000 pensioners were self-employed in 2024–25.

A Treasury spokesperson said the government remained focused on retirement security, pointing to its commitment to the triple lock, which it said was worth £470 a year to recipients of the new state pension.

“We have also launched a pensions commission to look at what more is required to ensure the pensions system is strong, fair and sustainable,” the spokesperson added.

Read more:
Labour urged to raise private pension access age to curb early retirement

Thousands of taxpayers chose to spend part of their Christmas break tackling their tax affairs, with more than 4,600 people filing their Self Assessment returns on Christmas Day alone, new figures show.

Data released by HM Revenue and Customs reveals that 37,435 people submitted their returns between Christmas Eve and Boxing Day, suggesting that for a growing number of taxpayers, festive filing is becoming a seasonal habit.

Christmas Eve proved the busiest of the three days, with 22,350 returns filed. The peak hour was between 11am and noon, when 3,159 customers hit submit. On Christmas Day itself, 4,606 people completed their returns, with the busiest hour falling between 1pm and 2pm. Boxing Day saw a further 10,479 returns filed, peaking mid-afternoon.

While many opted to deal with tax rather than turkey, HMRC found attitudes were mixed when it spoke to shoppers at Manchester’s Christmas markets, where most said they would rather focus on festive food than finances.

With just one month to go until the 31 January filing deadline, HMRC is urging those who have yet to complete their return to get started as soon as possible.

Myrtle Lloyd, HMRC’s chief customer officer, said millions of people had already filed and could start the new year with “one less thing to worry about”.

“For anyone yet to file, don’t leave it until the last minute,” she said. “Filing now means you know exactly what you owe and have time to arrange payment.”

Taxpayers who submit their return by 30 December may be able to pay any tax owed through their PAYE tax code, while filing early also gives more time to explore payment plans if needed.

HMRC highlighted the use of its app and online support tools, including step-by-step guidance, webinars and YouTube videos, to help customers complete their returns and pay what they owe. The department also pointed to a new digital PAYE service for the High Income Child Benefit Charge, allowing some claimants to leave Self Assessment altogether and settle the charge through their tax code instead.

HMRC also reminded customers that Winter Fuel Payments received in autumn 2025 do not need to be included on returns for the 2024-25 tax year, as these will be recovered in the following year’s return.

With the deadline fast approaching, the message from HMRC is clear: filing early can reduce stress, provide clarity on liabilities and make the start of 2026 a little easier.

Read more:
Festive filers sleigh their Self Assessment returns as thousands log on over Christmas

First-time buyers, the self-employed and older borrowers could soon find it easier to secure a mortgage under a package of reforms proposed by the Financial Conduct Authority, as the regulator moves to modernise lending rules to reflect changing working lives and demographics.

The FCA said it plans to simplify mortgage regulations and loosen restrictions on lenders to allow more flexible products, better suited to people with irregular incomes, later-life borrowing needs and non-traditional career paths. The changes are intended to support what the regulator described as “under-served consumers” and widen access to affordable home ownership.

Among the proposals, the FCA said it is reviewing rules around interest-only mortgages, with a view to making them more accessible for older borrowers, and will launch a focused market study into the lifetime mortgage sector to ensure it meets the needs of future customers.

The regulator also wants to encourage greater use of data and technology, including artificial intelligence, to help mortgage brokers deliver faster, more accurate advice, while retaining human oversight. In addition, it plans to simplify rules on mortgage advertising and disclosures so consumers can more easily understand information online.

David Geale, executive director for payments and digital finance at the FCA, said the reforms are designed to bring the mortgage market into line with modern realities.

“We want to widen access to affordable mortgages to meet the needs of consumers today,” he said. “Different working patterns and income levels at different stages of life need to be better reflected in how lenders assess affordability.”

The proposals follow pressure from government for regulators to support economic growth and build on steps the FCA has already taken this year to ease constraints in the mortgage market.

In March, the regulator clarified that lenders have flexibility in how they apply interest rate stress tests, the assessments used to judge whether borrowers could afford repayments if rates rise in future. The FCA had become concerned that some lenders were applying these tests too conservatively, unnecessarily restricting access to otherwise affordable mortgages.

Following that intervention, the FCA said lenders had widened borrowing options and that many borrowers could now access around £30,000 more than before.

Despite higher interest rates and rising living costs, the regulator noted that mortgage performance has remained strong. It said that 99 per cent of mortgages taken out since 2014, when lending standards were tightened, are not in arrears, and that the number of first-time buyers has held up even as house prices remain elevated.

As part of the review, the FCA will also examine ways to help people with uneven or unpredictable incomes, such as freelancers and the self-employed, get onto the housing ladder. It is also considering how borrowers who previously struggled with debt but have since improved their credit profiles could be better supported.

For older homeowners, the regulator is looking at how more of the wealth tied up in property could be accessed safely and fairly, particularly as concerns grow that people are saving too little for retirement.

Geale said: “As a society we’re saving too little for later life, yet people have huge wealth tied up in property. The mortgage market should be able to help unlock that wealth at the right time, offering fair value as part of a wider financial plan, not as a last resort.”

Specialist interest-only and later-life mortgage products could, he suggested, help retirees and older workers meet their financial goals without being forced to sell their homes.

In a speech last month, FCA chief executive Nikhil Rathi said the regulator had examined who was being “locked out of homeownership, why and for how long”.

He said the authority wanted to enable a “mortgage market of the future” that adapts to rapid changes in technology, employment patterns and demographics, while meeting consumer expectations, particularly in later life.

Rathi added: “Can some of the nation’s £9 trillion of housing wealth be unlocked more effectively and put to more productive use, particularly to sustain living standards in later life?”

The FCA will begin a public consultation on the proposed rule changes in early 2026, with the first reforms expected to come into force later in the year.

Read more:
Mortgage rules to be eased to help first-time buyers, self-employed and older borrowers

In just four months, millions of small businesses, sole traders and landlords will need to change how they track and report their finances to HMRC.

Making Tax Digital for Income Tax (MTD for IT) will come into effect and means moving away from annual, paper-based tax returns to more frequent, digital reporting.

Under the new rules, you’ll need to use HMRC recognised software to keep digital financial records, send quarterly updates on income and expenses and complete an annual declaration that confirms your final tax position for the year by the usual 31 January deadline. It’s a big change and the biggest shift in personal tax since self assessment was introduced more than 30 years ago.

MTD for IT will be rolled out in stages. If you’re a small business, sole trader or landlord that has an annual income of more than £50,000 then you’ll be included from April 2026. It will then be extended to include those earning over £30,000 by April 2027, and anyone turning over more than £20,000 from April 2028.

With such a big shift ahead, the coming months will be very important. Taking steps to get ready for the changes will help you move through the transition with confidence and build new habits that you’ll rely on for years to come.

Why MTD for IT is happening

The introduction of MTD for IT is part of the UK government’s wider push to modernise the tax system and bring it in line with the digital tools that already power much of the economy. For years, policymakers have emphasised the need to invest in technology and reduce the administrative burden created by outdated, paper-based processes. MTD for IT is one of the key steps in this ambition to build a more modern and future-ready tax system.

A fully digital approach to tax is intended to make financial admin feel easier and simpler. However, for those that still rely on paper notes or spreadsheets, the shift might feel overwhelming. More than two-fifths (42%) of the smallest businesses are not using any finance or accounting tools, and only 27% believe they get their tech and software choices right according to our survey. For many of you, MTD for IT will mean using digital accounting tools for the first time and getting comfortable with a whole new way of working.

Choosing the right tools to help

Getting ready for a new digital way of doing tax, starts with picking the right software for bookkeeping. Look for HMRC recognised options that are simple to use. Ideally, digital tools should bring your financial admin together so you have one place where you can log your expenses, manage tax and keep on top of your finances.

It also helps to choose tools that make your everyday jobs feel easier and quicker. Features like being able to snap a picture of a receipt on the go using a mobile app will mean that you can log expenses instantly and automatically update your accounts. It’s a small change but one that can save you time and cuts down the chance of making mistakes that often creep in with more manual ways of working.

What to consider next

Once software is in place, use the remaining time to become more comfortable with digital record-keeping and quarterly reporting. With the right set-up, your income and expenses should flow straight into your software and quarterly updates, giving you a good idea of how your business is doing and what your tax bill is looking like after each quarterly update. This should mean fewer end-of-year tax surprises.

Up-to-date digital records will also make it easier to understand what’s coming in and going out. Our research shows nearly two in five small business owners (38%) are unaware if they were in profit the month before, and over half (55%) struggle with cash flow management. With everything captured in one place, you will be able to get a clearer view of your numbers so you can spot early warning signs or issues – from unpaid invoices to unexpected costs, and changing profit margins.

Get ready now

If you want extra assurance that everything is set-up right, an accountant or bookkeeper can also be a huge help. They can translate HMRC’s guidance into practical steps, help you select the right digital tools and guide you on how to manage the new reporting requirements. This kind of support will make the changes feel more manageable.

The move to MTD for IT might take some time to get used to, but taking action now will make the transition much easier. By taking steps to get ready for the changes, you can ease the pressure of the looming deadline and put yourself on a stronger financial footing for the future.

Get ready for MTD for IT – sign-up for one of our webinars that will break-down everything you need to do to prepare for the changes and view our range of MTD ready plans here with new customers getting 95% off for six months.

By Stuart Miller, Director, Public Policy & Tech Research, Xero

Read more:
What will Making Tax Digital for Income Tax mean for small businesses in 2026 and beyond?

One of Britain’s biggest DIY investment platforms has warned that prolonged budget speculation inflicted real financial damage, after savers rushed to drain about £600 million from their pensions amid fears Rachel Reeves would slash tax-free lump sum rules.

Michael Summersgill, chief executive of AJ Bell, said months of rolling briefings and hints of a tax raid had prompted thousands of customers to make precautionary withdrawals in September and October, convinced the Treasury was preparing to cap the 25% tax-free pension commencement lump sum.

Under current rules, savers aged 55 and over can withdraw up to £268,275 tax-free. Reeves ultimately chose not to touch the allowance, but Summersgill said the period of uncertainty had again shaken confidence.

“We saw the same pattern last year when similar fears led to £300 million of early withdrawals,” he said. “Speculation alone can be damaging, and this year has been no exception.”

While the Treasury backed away from altering pension lump sum rules, it did press ahead with controversial changes to the Isa system, and Summersgill did not mince his words.

From April 2027, savers under 65 will only be allowed to put £12,000 per year into cash Isas, even though the overall £20,000 annual allowance remains unchanged. The government intends the remaining £8,000 to flow into stocks and shares Isas to boost investment in UK markets.

But in a move that shocked many in the industry, HMRC will also impose a new tax charge on interest earned on uninvested cash held within stocks and shares Isas by under-65s. Transfers from stocks and shares Isas into cash Isas will be banned to prevent workarounds.

Summersgill called the changes “the polar opposite of simplification” and said the interest charge was “just crazy, so unhelpful”.

“How the government has got this lost along the way, I do not know,” he added. “There is nothing positive about the interventions being proposed.”

AJ Bell reported a 22% rise in pre-tax profits to £137.8 million for the year to 30 September, with revenues up 18% to £317.8 million. Platform assets hit a record £103.3 billion, helped by £7.5 billion of net inflows and £9.3 billion of market gains.

But shares fell 7.6% after the firm said it would step up spending by more than £15 million in the coming year to accelerate growth, funding new technology, marketing and additional engineering hires.

Summersgill said the increased investment was vital: “There’s a huge growth opportunity. I’m not doing my job if we don’t invest aggressively to capture it.”

The company expects pre-tax margins to ease to around 39–40% in 2026, down from 43.4% this year, reflecting the ramp-up in spending.

Read more:
AJ Bell hits out at ‘crazy’ Isa overhaul as tax fears trigger £600m pension exodus

A long-standing tax relief that helps home-based workers cover household expenses will be scrapped from April 2026, in a move that will affect an estimated 300,000 employees and raise tens of millions for the Treasury.

The relief — originally introduced more than a decade ago and widely used during the pandemic — allows employees who are required to work from home and receive no reimbursement from their employer to claim either their actual additional costs or a standard rate of £6 per week without providing receipts.

From 6 April 2026, this entitlement will be abolished, removing a benefit worth £62 a year for basic-rate taxpayers and £124 a year for higher-rate taxpayers. The Treasury says the decision is aimed at tackling widespread non-compliance, arguing that more than half of claims fail verification checks.

HMRC said claims surged during and after the pandemic, with many employees continuing to claim the allowance even when no longer formally required to work from home. Ministers argue the move is about restoring “fairness” to the system.

While employers will still be allowed to reimburse home-working costs tax-free, the government acknowledges that the change may create pressure on businesses to cover expenses themselves — effectively shifting the burden from HMRC onto firms already facing tight margins.

The relief was first introduced in 2011–12 as a £4-per-week allowance, increased to £6 during the pandemic. At that time, eligibility rules were loosened so millions forced to work remotely could claim without meeting the traditional requirement of being contractually obliged to work from home.

Budget documents show the Treasury expects to raise £10 million in 2026–27, rising to £30 million in 2027–28, and stabilising at £25 million per year thereafter.

Civil servants insist the measure will have “no significant macroeconomic impact”, though it represents yet another incremental cost rise for working households.

HMRC says the policy has “no direct impact” on employers because it targets individual taxpayers, but officials concede some businesses may face increased expectations to provide tax-free reimbursements in the absence of the relief.

The decision comes amid a broader tightening of tax reliefs and deductions as the government seeks to close revenue gaps while claiming to protect “fairness” in the tax system.

Read more:
HMRC to scrap homeworking tax relief from 2026, hitting 300,000 employees

A major VAT reform unveiled in the Budget is expected to unlock millions of pounds’ worth of surplus goods for charity and significantly reduce the volume of usable products sent to landfill.

From 1 April 2026, businesses will be able to donate goods to registered charities without incurring a VAT charge, removing a long-criticised tax barrier that has deterred companies from giving away unsold, returned or surplus items.

Under current rules, gifting goods — even to a charity — can trigger VAT on a “deemed supply” basis, meaning many firms choose to destroy stock rather than shoulder a tax liability. The government says the new relief will eliminate that cost entirely for donations made to HMRC-registered charities.

The decision follows a comprehensive consultation that drew strong support from charities, retailers, manufacturers and waste-reduction bodies. The Treasury said respondents “universally” highlighted the existing VAT charge as a key factor behind unnecessary waste.

HMRC explored extending the relief to social enterprises and unregistered community groups, but ultimately restricted eligibility to registered charities because of their governance and reporting requirements, helping to minimise fraud risk. Importantly, the relief will be open to charities of all types, not just those involved in poverty alleviation.

The scheme will use a simple two-tier valuation system:
• A £100 per-item limit for most donated goods.
• A £200 per-item limit for essential items including white goods, furniture, computers, phones and tablets — targeting support for households experiencing digital or material poverty.

Goods subject to excise duty, such as alcohol and tobacco, are excluded.

The relief covers donations used directly in charitable activities — for example, hygiene products supplied to a shelter — as well as goods redistributed to individuals and families in need.

To keep administration light, valuation will default to cost price, with businesses allowed to apply a lower figure for older or depreciated stock. Documentation requirements are minimal: proof of delivery to a qualifying charity and a simple certification confirming charitable use. Charities will not be faced with new compliance burdens, as record-keeping responsibilities sit entirely with the donating business.

HMRC will publish full technical guidance ahead of the 2026 launch, but the Treasury believes the policy could release a significant volume of items that currently end up discarded, supporting the circular economy, easing pressure on landfill, and strengthening UK charities’ supply of essential goods.

Greg McNally, founding partner of VAT consultancy VITA, welcomed the change, calling it “a long-overdue correction to a flawed system” that will help businesses reduce waste while supporting grassroots organisations across the country.

Read more:
Budget’s new VAT relief set to boost business donations and cut landfill waste

Chancellor Rachel Reeves has delivered her second Budget, unveiling a wide-ranging package of tax, spending and regulatory measures shaped by weeks of leaks — and an accidental early publication of the OBR’s official forecasts.

Here is a comprehensive overview of the main changes affecting households, businesses and the wider economy.

Personal taxation

Reeves confirmed that income tax and National Insurance thresholds will be frozen until 2031, extending the existing freeze by an additional three years. The move will gradually pull more earners into higher tax bands as wages rise.

The annual cash ISA allowance for under-65s will be capped at £12,000, with the remaining portion of the £20,000 limit available only for investment ISAs. Dividend tax rates will rise by two percentage points from April, while all tax rates on savings income will increase from 2027.

Wages, benefits and pensions

Reeves announced that the controversial two-child benefit cap will be scrapped from April, allowing families on Universal Credit and tax credits to receive payments for all children.

The National Living Wage will rise by 4.1% to £12.71 for over-21s. Rates for 18–20-year-olds will jump 8.5% to £10.85, part of a longer-term plan for a single adult wage rate.

State pensions will increase by 4.8% in April under the triple lock, outpacing current inflation. Meanwhile, from 2029, the amount employees can contribute via salary sacrifice without paying National Insurance will be capped at £2,000 a year. The Help to Save scheme for low-income households will be extended beyond 2027.

Housing and property

Properties in England valued at over £2 million will face a new council tax surcharge of £2,500 to £7,500, following a revaluation focusing on bands F, G and H. Taxation on rental income will rise by 2 percentage points from April 2027.

Transport

The temporary 5p fuel duty cut will be extended yet again, running until September 2026 before phasing out over six months.

A new mileage-based tax for electric and plug-in hybrid vehicles will be introduced from 2028, marking the first major restructuring of motoring taxes in the EV era.

Regulated rail fares in England will be frozen next year, the first such freeze since 1996. Premium cars will be excluded from the Motability scheme.

Business taxes

The £135 tax exemption on small imports from overseas retailers will be scrapped from 2029 to address concerns about unfair competition for UK businesses.

A major overhaul of gambling taxation will see the tax on profits from online bets rise from 21% to 40%. The longstanding 10% bingo tax will be abolished.

Drinking and smoking

The sugary drinks levy will be expanded from 2028 to include pre-packaged milkshakes and lattes, reversing exemptions granted in 2018.

Taxes on tobacco will rise by 2% above RPI, while alcohol duty — including on draught drinks — will also increase in line with the higher RPI measure in February.

The economic outlook

The OBR now expects UK GDP to grow 1.5% in 2025, an upgrade from its 1% forecast in March. However, growth between 2026 and 2029 is forecast to average just 1.5%, down from earlier expectations of 1.8%.

Inflation is predicted to average 3.5% this year, falling to 2.5% next year and returning to the 2% target in 2027.

Other measures

English regional mayors will gain new devolved powers to tax overnight hotel stays, mirroring existing or planned powers in Scotland and Wales.

Finally, the cost of a single NHS prescription will remain frozen at £9.90 for another year in England.script for broadcast, I can produce that too.

Read more:
Budget 2025: Key announcements at a glance

Experts are warning that Rachel Reeves’ decision to cap the National Insurance advantages of pension salary sacrifice at £2,000 a year risks dismantling one of the UK’s most widely used workplace savings tools, and may force smaller employers to freeze hiring or scale back staff benefits.

The Treasury expects the change to raise £4.7 billion in 2029/30, rising from workers and employers who currently benefit from unlimited NI relief when pension contributions are made via salary sacrifice. But financial planners, accountants and HR specialists say the policy could have far-reaching consequences for retirement savings, recruitment and business investment.

Anita Wright, chartered financial planner at Ribble Wealth Management, described the move as a clear revenue-raising measure dressed up as reform.

“The so-called ‘pension salary sacrifice raid’ limits NI advantages workers and employers have legitimately enjoyed for years,” she said. “A £4.7bn yield tells you how widely relied upon the system is.”

Simon Thomas, managing director at Ridgefield Consulting, said the cap undermines a tool that has been particularly valuable for fast-growing companies.

“Salary sacrifice has been a legitimate and effective way to boost retirement savings while helping employers reward staff tax-efficiently,” he said. “For many scale-ups and start-ups that cannot compete on headline salaries, enhanced pension contributions form a crucial part of how they attract and retain talent.

“The £2,000 cap reduces the tax efficiency so significantly that many businesses may scrap the schemes entirely. Combined with higher employer NI from last year, this places pressure on margins and curbs their ability to recruit competitively.”

Smaller employers say the change adds yet another cost at a time of rising wages, business rates and energy bills.
Kate Underwood, founder of Kate Underwood HR & Training, said the move will stall recruitment: “Salary sacrifice was one of the only ways to keep the numbers vaguely sensible. Now employers will pay more NI on anything above the cap. Most small businesses won’t start sacking people because of this alone — but they will slow hiring, delay replacing leavers and cut perks.

It makes attracting experienced candidates harder because you’ve just lost one of the few tools available to build a competitive package.”

Consumers saving for retirement also face higher costs.

Philly Ponniah, chartered wealth manager at Philly Financial, said many workers depend on sacrifice to manage their finances.
“Capping sacrifice at £2,000 is a big shift. It’s raising billions precisely because so many rely on the system. Removing relief after that point means higher NI for workers and employers — effectively a cut to take-home pay at a time when budgets are already stretched.

It won’t stop pension saving, but it makes it more expensive, especially for middle earners. Long-term, it weakens one of the few tools that supports consistent saving.”

David Stirling, independent financial adviser at Mint Wealth in Belfast, warned that the long-term impact on pension pots could be severe.

“This may look clever on paper to the Chancellor, but in practice higher earners lose the biggest perk of pension planning, employers may scale back contributions, and long-term pots could shrink by tens of thousands.
All in the name of ‘fairness’, savers now face a bureaucratic minefield while the Treasury pockets billions in extra NI.”

Across the board, experts agree the policy represents not just a tax rise, but a structural shift — one that risks depressing savings rates, increasing workforce stagnation and piling further financial pressure on businesses already grappling with rising costs and weak demand.

Read more:
£4.7bn ‘salary sacrifice raid’ could see pension benefit scrapped by thousands of employers, experts warn

Officials and liquidators are pursuing businesses behind 21 movies that sought nearly £16 million in incentives from a joint HMRC and British Film Institute scheme.

Businesses controlled by prolific film producer Alan Latham — whose films have featured stars including Elizabeth Hurley, Kelsey Grammer, and Bill Nighy — are being investigated by HM Revenue & Customs (HMRC) amid questions over how taxpayer funds were used to finance dozens of little-known productions.

Liquidators are examining the collapse of Highfield Grange Production Services, one of Latham’s key holding companies, which listed £20.4 million in film investments now written down to zero. Creditors, including HMRC, have been left facing losses after Highfield fell into liquidation following a tax dispute.

The tax authority is also seeking to wind up GSP Studios International, Highfield’s main shareholder and another Latham-controlled entity.

A Times investigation found that more than 20 films linked to Latham attempted to access £16 million in creative industry tax reliefs, part of a government scheme run jointly by HMRC and the British Film Institute (BFI) to boost UK film production.

Among the titles are Christmas in Paradise, a romantic comedy starring Elizabeth Hurley (pictured) and Kelsey Grammer, shot in the Caribbean as part of a promotional deal for St Kitts and Nevis, and Miss Willoughby and the Haunted Bookshop, featuring Grammer again.

Many of the companies behind these films have not filed accounts for several years — a criminal offence — while others face being struck off the corporate register. The movies are absent from the BFI’s list of projects that received final certification, but some were granted “interim certification”, which allows funds to be released before completion.

Questions have also been raised about the accuracy of the production budgets used to claim tax relief.

For example, Solis — a 2018 sci-fi film starring Steven Ogg of The Walking Dead fame — was reported in company accounts to have cost £4.7 million, qualifying for nearly £1 million in interim tax credits. Its director, Carl Strathie, has said publicly that the film’s real budget was closer to £700,000.

Another film, Gatecrash (2020), is listed as having cost £4.5 million, yet individuals familiar with the project claim the budget was about £750,000. It received nearly £900,000 in tax credits.

Liquidators at Begbies Traynor, who are overseeing Highfield’s administration, said they have conducted “thorough investigations” into why the film investments were written off. In filings this year, they confirmed that solicitors had been instructed to pursue “connected parties” with “substantial claims” against two unnamed special purpose vehicles.

They added that “substantial amounts of money have been identified as having been paid to other connected companies” and that transactions were being investigated for “having the effect of diminishing the company’s assets.”

A statement of affairs signed by Latham listed £3.7 million owed to GSP Studios International, another of his companies, now also facing HMRC action.

The episode has raised wider questions for HMRC and the BFI, which oversee the certification and administration of the UK’s £500 million-a-year film tax credit scheme.

The BFI confirmed that it works closely with HMRC and the government to “uphold the integrity of the system,” adding: “We take any concerns about potential misuse seriously. The tax incentives have helped attract investment, create jobs across the UK and showcase British creativity worldwide.”

An HMRC spokesperson said only: “We take compliance within creative industry tax reliefs seriously.”

Latham, an accountant turned film producer, has held more than 150 directorships and remains linked to more than 60 active companies. He did not respond to multiple requests for comment.

There is no suggestion of wrongdoing by any actors or crew members involved in the productions.

In 2022, Latham told the Mail on Sunday that “inefficiency” was to blame for his companies’ repeated failure to file accounts, after investors complained about losing money in one of his earlier films, The Comedian’s Guide to Survival, which grossed just £75.

Read more:
HMRC and BFI investigate film producer Alan Latham over £16m taxpayer-funded movie projects

Britain’s booming creator economy is fuelling a surge in “side hustles”, with millions of people turning content creation into extra income — but new research suggests many could face unexpected tax bills.

According to Tide, the UK’s leading business management platform, the average social media earner now makes £1,223 a year — exceeding the HMRC £1,000 trading allowance that lets individuals earn small sums tax-free.

Yet more than half of social media users remain unaware of the rule, putting them at risk of self-assessment penalties that start at £100 and can quickly escalate.

Tide’s study found that 42% of UK adults have received either money or gifts in exchange for social media posts on platforms such as TikTok, Instagram, X (Twitter) and YouTube.

For some, this means small perks or free products. But for a growing number of creators — particularly younger users — it has evolved into a significant revenue stream.

A fifth (21%) of earners now make more than £1,000 a year from their content, while 55% of 18–24-year-olds report earning from social media — the highest of any age group. Despite this, only 36% of young creators have filed a tax return with HMRC.

The problem, says Tide’s UK Managing Director, Heather Cobb, is that many casual creators don’t realise their side hustles count as taxable income:

“It’s great that TikTok and Instagram have opened new ways for people to earn. But even if you’re paid in free products, those items have a value — and that value counts towards the £1,000 allowance. If you don’t track it, you could face unexpected penalties.”

Under HMRC’s trading allowance, individuals can earn up to £1,000 in gross income from self-employment or side hustles each tax year before needing to declare it. Once earnings exceed that amount — whether through cash payments or the value of gifted items — individuals must register for self-assessment and report their income.

Only 44% of those who earn from content creation say they have done so. With late filing fines and “failure to notify” penalties potentially running into thousands of pounds, Tide estimates that total fines across the UK could exceed £2 million annually.

Cobb urged creators to separate business income from personal finances early on: “Track your earnings from day one. Open a separate business account, keep receipts, and record the value of gifts. Tools like Tide Accounting can help manage tax and expenses easily.”

For many, social media income has become the first step towards entrepreneurship.

Megan Paul, a Tide member and founder of Gel by Megan in Warwickshire, said her business began as an Instagram hobby: “Posting photos of my nail art started as a creative outlet, but it soon grew into paid brand work and now my own training academy.

Taxes and self-assessments can feel daunting, but local business communities and modern finance tools make it much easier. I’d encourage anyone earning online to take it seriously — it could be the start of something bigger.”

The rise of the “TikTok Tax” underscores how quickly passion projects can evolve into taxable businesses. As the boundaries between personal and professional blur, experts say the UK’s tax system and financial education must keep pace.

With millions of creators earning, gifting, and collaborating online, understanding basic business management and compliance has become essential — not just to avoid penalties, but to build sustainable digital careers.

For the new generation of side hustlers, keeping on top of tax may not be glamorous — but it’s the price of turning likes and views into legitimate income.

Read more:
The TikTok tax: Millions risk HMRC fines as side hustlers surge past £1,000 earnings threshold

What began as isolated disputes over niche items is now reshaping how cakes, baked goods and sweet snacks are treated for tax purposes.

The result is that products previously considered zero-rated are increasingly being reclassified as standard-rated confectionery, subject to 20% VAT.

The change centres on a single phrase in VAT legislation, which defines confectionery as: “Chocolates, sweets and biscuits; drained, glace or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.”

HMRC and the courts are treating this final clause as decisive. If a product is sweetened and typically finger-eaten, it is now likely to be deemed confectionery.

That logic has already been applied to cases ranging from mega marshmallows to M&S’s viral Strawberry and Crème ‘sandwich’, raising industry-wide questions about how far the category could extend.

HMRC has gone beyond case-by-case challenges and is now issuing ‘One to Many’ letters to producers, wholesalers and retailers. These urge businesses to file error correction notices for potential underpayments dating back four years.

The language of the letters suggests HMRC assumes errors have already been made. Voluntary disclosure may soften penalties, but businesses risk significant retrospective liabilities if they fail to act.

What food businesses should do now

Alex Nicholson, Head of VAT at Johnston Carmichael, advises companies to take a proactive stance:

• Track case law timelines – understanding when products were ruled taxable is key to assessing backdated exposure.
• Review past HMRC correspondence – previous clearance or reliance on HMRC behaviour may provide a defence.
• Audit product ranges broadly – don’t just review the items HMRC highlights; a full audit may reduce risk.
• Explore legal challenges – not all HMRC interpretations are unassailable, and viable counterarguments remain.

For many businesses, the issue is not just future liability but historic exposure. Margins across food production and retail are already squeezed by inflation, wages and regulation. Unexpected backdated VAT bills could be devastating for smaller producers and costly even for established players.

The expansion of the confectionery definition signals a fundamental shift in HMRC’s approach. The courts’ willingness to support that shift suggests that zero-rating sweet products will become increasingly rare.

The takeaway is clear: the days of relying on historic VAT treatments are over. Businesses that move quickly to review and adapt their VAT positions will be best placed to limit financial and reputational damage.

Read more:
HMRC has stepped up its campaign to expand the scope of ‘confectionery’ under VAT law – and the courts are backing them

The Treasury is weighing plans to grant newly listed companies a stamp duty exemption in November’s autumn budget, as ministers look to revive London’s competitiveness as a global IPO hub.

Officials are considering a two- or three-year holiday on the 0.5% tax levied on UK share transactions, according to reports. The move would form part of chancellor Rachel Reeves’s wider capital markets reforms designed to encourage more businesses to list in the UK.

Investors currently pay stamp duty when purchasing UK-listed shares, a system that many in the City argue discourages investment at a time when London is trying to regain ground lost to New York, Frankfurt and Asian markets.

The US, China and Germany impose no such tax, while Ireland’s 1% levy is the only higher rate in a major developed market. London’s Alternative Investment Market (AIM) is already exempt.

City figures have long called for the complete abolition of stamp duty on shares, suggesting the boost to market activity could ultimately increase tax revenues. But with stamp duty raising £3.3 billion in 2023, or around 0.3% of total tax take, a full removal may be difficult to justify against a tight fiscal backdrop.

Reeves has already acknowledged that Labour’s manifesto pledge not to raise taxes is under strain due to global conflicts, higher borrowing costs and new US tariffs. Against that backdrop, a tax cut for City investors may prove politically sensitive.

Still, targeted relief for IPOs could align with the government’s strategy to attract high-profile listings back to London. Three companies — Beauty Tech, Princes, and Fermi America — have announced listing plans this month, while lender Shawbrook is expected to press ahead with a long-awaited IPO.

Jonathan Parry, partner at White & Case, said: “A stamp duty holiday on LSE listings would send another powerful signal that London is open and actively competing for IPO business. Removing this additional tax for investors in newly listed companies would help stimulate demand, attract global capital and support valuations.”

A Treasury spokesperson added: “We’re making the UK the best place in the world for businesses to start, scale, list and stay. We’ve already exempted PISCES transfers from stamp duty and taken forward ambitious reforms to strengthen public markets, with three more companies announcing plans to float in London this month.”

While no final decision has been made, Treasury officials are under pressure to send a strong message that London remains an attractive listing venue. Any stamp duty holiday would also test whether targeted relief can meaningfully shift global IPO flows back to the UK without creating a long-term hole in tax receipts.

Read more:
Treasury weighs stamp duty holiday for new London share listings in autumn budget

HSBC has warned business banking customers that personal identification documents submitted during account applications may have been compromised following unauthorised access to a third-party platform.

In an email sent to customers earlier this month, the bank confirmed that identity documents, images and contact details provided when opening a business account were exposed in the breach. HSBC stressed that its own systems remained unaffected, with passwords, PIN codes and biometric security such as Voice ID uncompromised.

The breach raises concerns about potential identity theft and fraud. HSBC said there was no evidence of fraudulent activity arising from the incident so far, but urged customers to monitor their accounts, credit reports and bank statements closely for suspicious activity.

To mitigate risks, the bank is offering affected customers a complimentary 12-month subscription to Experian’s Identity Plus service, providing monitoring of personal information and alerts for possible misuse. A dedicated helpline managed by Experian has also been set up to handle queries until 8 October 2025.

One affected customer, who declined to be named, told Business Matters: “I provided passport details in good faith to HSBC as it was necessary for identification before opening up a business account. Now I’m worried that money will be taken out of the company account by crooks, with the third-party platform having been hacked. Worse, that my passport details could be sold on the dark web.

I had reservations about providing ID proof in the first place because cyber attacks are now so prevalent but you put your trust in the banks to get online security right, including tech partners. Frankly, nowhere is safe in the online world these days and businessmen and women need to be constantly on alert for data breaches involving their details. In the wrong hands, lives and livelihoods are devastated and there is little redress.”

This latest breach comes after recent high-profile cases, including Harrods’ data breach affecting loyalty scheme members, which also highlighted the vulnerability of customer information in the hands of external providers.

Cybersecurity experts warn that the growing reliance on third-party platforms for data storage and verification continues to expose companies and their clients to heightened risks. The incident underscores the need for firms, particularly financial institutions, to strengthen due diligence on their technology partners.

HSBC said it had worked with external specialists to investigate the incident and had taken steps to prevent further unauthorised access. The bank reiterated that it would never request sensitive information such as PIN codes or passwords by phone or email and urged customers to remain cautious of potential phishing attempts in the wake of the breach.

Speaking about the breach, a HSBC spokesperson said: “We recently became aware of unauthorised access to a third-party platform which held personal identity information and documents provided by applicants for a new HSBC UK business banking account. We have implemented measures to prevent further unauthorised access and have contacted those potentially affected.

“HSBC’s systems are separate and have not been impacted. Customers can continue to use their account as normal.

“We take the safety of customers’ and applicants’ information very seriously and use a range of measures to keep this information safe.

“We are sorry for any concern and inconvenience this may cause.”

Read more:
HSBC warns UK business banking customers of third-party data breach

Thousands of taxpayers risk falling foul of HMRC’s rules this autumn, with two crucial deadlines approaching in October.

Missing either of them could leave households facing an instant £100 fine, with penalties spiralling to as much as £1,600 for serious delays.

Andrea L Richards, accountant and chief executive of Accounts Navigator, has urged individuals to act swiftly to avoid unnecessary charges, highlighting the 5 October self-assessment registration deadline and the 31 October paper return deadline.

Who needs to file?

A tax return is required in a range of circumstances. This includes the self-employed who earned more than £1,000 in the past tax year, members of business partnerships, individuals liable for Capital Gains Tax, or those paying the High Income Child Benefit Charge outside PAYE.

Others who may be caught by the rules include those receiving untaxed income such as rental earnings, tips, savings interest or income from overseas.

5 October deadline: Registering for self-assessment

Anyone submitting a self-assessment for the first time must notify HMRC by 5 October 2025. Failing to do so can extend the filing timetable, but Richards warns that delaying registration increases the risk of penalties if the final return is not submitted on time.

31 October deadline: Paper tax returns

Taxpayers choosing to file a paper return must ensure it reaches HMRC by 31 October 2025. Missing this deadline triggers an automatic £100 penalty, even if no tax is owed. Additional fines and interest may follow if the delay continues.

Online filing after October

Many believe that switching to online filing by the 31 January 2026 deadline will protect them from penalties if they miss the October cut-off. However, HMRC calculates late filing penalties from the point the first return was due, meaning the £100 charge will already have been applied. Filing online after October can help in some situations, but Richards stresses it is safer to meet the initial paper deadline where possible.

How penalties escalate

Penalties increase rapidly the longer a return is delayed. After three months, HMRC can impose daily charges of £10, capped at £900. Returns more than six months late attract an additional £300 fine or 5% of tax owed, whichever is greater. At 12 months, a further £300 or 5% is added, taking potential penalties to £1,600 — on top of any outstanding tax liability.

Consequences of not filing

Failure to file a return altogether leaves taxpayers exposed to harsher action. HMRC can issue an estimated tax bill, demand immediate payment with interest, and in extreme cases begin court proceedings.

Appeals against penalties

While HMRC does allow appeals against late filing penalties, taxpayers must first complete and submit the outstanding return. Only those with a “reasonable excuse” covering the entire late period will be considered for relief.

Read more:
Double HMRC deadlines this October could hit taxpayers with £100 instant fines

Mounting speculation that Chancellor Rachel Reeves may target retirement savings in her November Budget is already sending ripples through financial markets and prompting British expatriates across Europe to explore moving their pensions out of the UK.

Wealth manager deVere Group has reported a sharp rise in enquiries from expats in Portugal, Spain, France and the Netherlands, with savers increasingly considering cross-border pension structures to shield themselves from potential reforms.

James Green, investment director at deVere, said the concern was palpable: “Even the possibility of new or extended taxes on pensions is enough to set serious savers in motion. The conversation has shifted from curiosity to preparation.”

The backdrop is stark. Reeves faces a £20 billion hole in the public finances, with government borrowing costs now at their highest in over a decade. Ten-year gilt yields are hovering around 4.75 per cent, adding billions to the Treasury’s annual debt-servicing bill.

With income tax hikes politically explosive after Labour’s pre-election promises, pensions are seen as an obvious — and tempting — target. Analysts note that past governments have repeatedly turned to retirement savings when fiscal pressure mounts.
In 1997, Gordon Brown famously scrapped the dividend tax credit on pension funds, a move critics dubbed a “£5 billion-a-year raid”. Then in 2010, George Osborne reduced annual pension contribution allowances from £255,000 to £50,000 and cut lifetime allowances.

There has also been successive freezes to allowances since 2021 have quietly dragged more middle-class savers into higher tax brackets — a “stealth raid” by another name.

Against that history, the mere suggestion that Reeves could tighten rules on lump-sum withdrawals, extend freezes or alter inheritance tax treatment of pensions is enough to galvanise expats into action.

One destination attracting attention is Malta, whose EU-recognised pension framework offers flexibility and potential tax advantages. Savers can withdraw up to 30 per cent of their pot tax-efficiently without a lifetime cap, schedule phased income on their own terms, and in many cases keep pension assets outside UK inheritance tax for non-residents.

Portugal’s still-favourable regime, alongside options in Spain and France, also strengthens the appeal for those retiring abroad. “People recognise that Malta’s framework provides protection and efficiency that could prove vital if the UK moves the goalposts again,” Green said.

This trend is not limited to the ultra-wealthy. deVere, which manages retirement planning for 80,000 expatriate clients, is seeing middle-class savers explore transfers too. “Frozen allowances and stealth tax rises have already drawn millions into higher brackets. Even a modest extension of those freezes would hurt many middle-class pensioners,” Green warned.

For Reeves, the political challenge is acute. Any perception of a “pension raid” risks damaging Labour’s relationship with both older voters and professionals in their 40s and 50s saving aggressively for retirement.

Market confidence is also at stake. Green argues that heavy taxation on pensions discourages long-term saving and undermines capital markets: “It weakens the very economy the government aims to strengthen. Savers will naturally look to jurisdictions where the rules are clearer and more stable.”

Already, wealth managers are reporting conversations shifting from “what if” to “what next”. The fact that people are taking steps before any policy has even been announced shows how fragile trust has become in the stability of UK pension rules.

Reeves must balance fiscal necessity with political optics. Pensions offer a substantial revenue stream, but the Labour leadership is wary of reviving memories of past “raids”. Industry voices are urging restraint:
• Think tanks such as the Institute for Fiscal Studies argue that while pension tax relief is costly — worth £50bn a year — it underpins retirement saving and should not be undermined by short-term fixes.
• Business groups warn that further uncertainty could accelerate capital flight and deter inward investment, compounding the UK’s growth problem.
• Expats and financial advisers stress that any move would disproportionately affect internationally mobile professionals who already feel targeted by rising surcharges on property and restrictions on non-dom status.

With the Budget set for November 26, advisers are cautioning against waiting until Reeves makes her move. Cross-border pension transfers require time to process, and delaying until after any announcement could shut off options.

“Planning ahead is critical,” Green said. “Waiting until after the Budget could mean missing the opportunity to make compliant, efficient transfers before new measures take effect.”

For now, no changes have been confirmed. But with fiscal pressures mounting, history suggesting pensions are a perennial target, and expats already voting with their feet, the fear of a raid may prove almost as damaging as the policy itself.

Read more:
Reeves’ rumoured pension raid spurs expats to shift billions abroad

Forget bricks and mortar — from Oscars to rare whisky, luxury assets are becoming the new collateral of choice in Britain’s growing bridging market.

Suros Capital, a specialist in lending against high-value possessions, is carving out a niche by financing deals secured against everything from Warhol paintings and Rolex watches to gold bullion and Banksy prints.

Ray Palmer, director at Suros, told Business Matters the firm’s loan book includes some of the strangest transactions in the market. Among them: a £6m loan against 21,000 bottles of wine stored in a Second World War bunker, a £60,000 Macallan whisky bottle, and even an Academy Award. Other approaches — ultimately rejected — included racehorses, Fabergé eggs and a bizarre offer of 50 tonnes of dirt supposedly containing 2% gold.

But the glamour comes with unique challenges. Unlike property, where value and authenticity are straightforward, luxury asset lending requires rigorous checks. “We have to prove that a Rolex is a genuine Rolex or that a wine can be traced back to the vineyard,” Palmer explained. “Forgery in the art world is rife, so we use everything from auction history to x-rays and UV light to authenticate items.”

Suros relies on a network of auction-house professionals and maintains its own £30m cash vault with £300m of insured jewellery inside to secure loans. Despite the eccentric assets, Palmer says the principles remain the same: speed, valuation, and risk control.

The firm believes lending against art could grow as sellers hold onto pieces during a market downturn, using them as security instead of offloading at low prices. Still, managing expectations remains tough. “Most people overestimate what their assets are worth,” Palmer admitted.

Read more:
Oscars, Warhols and whisky: inside the weird world of luxury asset lending

HM Revenue & Customs has relaunched a controversial scheme giving it the power to take money directly from people’s bank accounts – including cash Isas – if they repeatedly fail to pay their tax bills.

Under the Direct Recovery of Debts (DRD) programme, banks and building societies will be forced to hand over cash owed to the taxman from anyone with debts of at least £1,000. Taxpayers will be allowed to keep a minimum balance of £5,000 to cover essentials, but anything above that can be seized once the 30-day appeal window has passed.

The scheme, first introduced in 2015, was paused during the pandemic but has now been relaunched in a “test and learn” phase after Chancellor Rachel Reeves granted HMRC the authority in her March 2025 Spring Statement.

Officials say the crackdown will target those who can afford to pay but refuse, with a particular focus on self-assessment taxpayers – such as the self-employed, landlords and those earning significant investment income. HMRC staff will visit debtors in person before any cash is taken.

Critics have branded the powers “draconian”. Dawn Register, tax dispute resolution partner at BDO, said: “Given the pressure on public finances, it’s clear HMRC is determined to get tougher on those who can pay but don’t pay. The relaunch of this draconian power underlines how important it is not to stick your head in the sand and ignore HMRC demands.”

The move comes as HMRC faces a mountain of unpaid liabilities. The latest figures show £42.8bn in unpaid tax – far higher than before the pandemic – with the Government aiming to claw back an extra £11bn by 2030. To do so, HMRC has invested £630m in debt recovery, including hiring 2,400 new enforcement staff.

While the Treasury insists safeguards will prevent overreach, campaigners warn the policy risks hitting taxpayers hard at a time when household finances are already under strain.

Read more:
HMRC handed ‘draconian’ new powers to raid bank accounts and Isas of tax dodgers

Women in the UK are on track to lose out on more than £93,000 in earnings over a 40-year career because of the gender pay gap, new analysis reveals.

Research by Instant Offices shows how inequalities between men and women in the workplace compound over time, leaving women with a significant lifetime shortfall that directly impacts pensions, savings and long-term financial security.

The average UK salary for full-time employees was £37,430 in 2024, up £2,467 on the previous year. Graduate starting salaries in 2025 are expected to average £31,000, though they vary widely depending on industry and region.

Salaries typically climb with age, peaking in the 40–49 bracket. The most striking jump comes when workers move from their 20s into their 30s, with average earnings rising by £7,696 in a single year.

Yet even at entry level, a gap exists. Men aged 18–21 earn on average £520 more per year than women. By the time employees reach their 40s, this disparity has grown to almost £3,000 annually — despite this being the peak earning decade for both genders.

The UK’s average gender pay gap stands at 9%, but it grows steadily throughout a career.

• Men in their 30s earn £1,664 more per year than women on average.
• By their 40s, the gap has widened to £2,756 annually.
• In their 50s, women earn £3,484 less than male peers each year.

Over four decades, these small yearly gaps accumulate into a £93,392 lifetime shortfall. And that figure doesn’t even account for the knock-on effect of lower pension contributions, bonuses or investment opportunities. Factoring those in, the true cost likely exceeds £100,000.

The gender pay gap is not just a “moment-in-time” inequality. It shapes a woman’s entire financial trajectory, leading to reduced pension pots, less disposable income for investments, and greater vulnerability to financial shocks.

It also has wider economic consequences, reducing the total spending power and productivity of half the workforce.

Experts say meaningful change requires employers to act. Strategies include:

• Conducting regular pay audits to ensure parity across roles.
• Introducing transparent salary bands, so employees can see how they can progress.
• Supporting career progression for women, through mentorship and fair promotion practices.
• Offering flexible working and parental leave, helping women to balance career and caregiving responsibilities.
• Monitoring recruitment and promotion practices to reduce bias.
• Investing in professional development equally across genders.

While women can and should advocate for their worth, the onus is on employers to fix systemic imbalances. Without change, millions of women will continue to face a career-long financial penalty simply for being female.

As the analysis makes clear, tackling the gender pay gap is not just about fairness today — it’s about ensuring equality of opportunity, wealth and security over a lifetime.

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UK women risk losing £93,000 in lifetime earnings due to gender pay gap

Contactless card payments could soon exceed the current £100 cap – and even become unlimited – under proposals from the Financial Conduct Authority (FCA).

The regulator is consulting on plans that would give banks and card providers the freedom to set their own limits, potentially making the four-digit PIN a rarity for UK shoppers.

The changes would bring physical cards in line with digital wallets on smartphones, which already allow unlimited tap-and-go payments thanks to biometric security features such as fingerprints or facial recognition.

From £10 to £100 – and beyond

Since their introduction in 2007, contactless card limits have risen steadily: from £10 initially, to £15 in 2010, £20 in 2012, £30 in 2015, £45 in 2020 during the pandemic, and £100 in 2021.

If approved, the latest plan could be rolled out as early as next year. However, the FCA stressed that any higher-value transactions would only be permitted for low-risk payments, with providers carrying the burden if fraud occurs.

The proposals come despite strong opposition from the public. An FCA consultation revealed that 78 per cent of consumers favoured keeping the £100 limit, citing fears of theft and overspending.

Protections already in place include a requirement to enter a PIN after a series of five consecutive contactless payments, or once cumulative spending exceeds £300. The FCA acknowledged that raising limits would likely increase fraud losses, but said detection systems are improving and customers remain protected by reimbursement rules if fraud occurs.

David Geale of the FCA reassured cardholders: “People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently.”

Some banks already allow cardholders to lower their contactless limit or switch the feature off entirely. Under the new proposals, this flexibility could be expanded, with customers given more control over their own spending caps.

UK Finance, which represents the banking industry, said: “Any changes will be made thoughtfully with security at the core.”

The FCA said the move is part of a wider push to stimulate economic growth by removing regulatory barriers, echoing calls from the Prime Minister for regulators to support the economy. Similar systems already operate in Canada, Australia and New Zealand, where card providers set their own limits.

But the consultation, which runs until 15 October, highlights the balancing act between consumer convenience, fraud prevention and economic stimulus. For some shoppers, unlimited contactless could be a welcome sign of progress. For others, it risks eroding trust in the security of one of Britain’s most widely used payment methods.

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Contactless payments could go unlimited

The separate tax controversies involving Premier League footballers and former deputy prime minister Angela Rayner should serve as a “wake-up call” about the importance of taking sound, professional advice, a senior tax expert has warned.

Steven Martin, senior tax manager at Hampshire-based accountancy and business advisory firm HWB, said the two cases – though very different in scope – highlight the serious financial, legal and reputational consequences of inadequate or incomplete guidance.

“While they differ, as one concerns Stamp Duty only and the other is about wider tax planning and investment strategy, they both underline why trusted, reliable guidance is more crucial than ever,” Martin said.

He added: “Missteps, even unintentional, can have serious consequences. Sound advice isn’t just about minimising tax; it’s about ensuring compliance, protecting assets and making informed, ethical decisions in an increasingly scrutinised financial environment.”

The so-called V11 case saw a group of former Premier League players lose fortunes after investing in tax-avoidance schemes dressed up as film funds and US property ventures. Many of the ventures collapsed, leaving players saddled with significant tax liabilities. Some were pushed into bankruptcy, while others faced lengthy legal battles with HMRC.

“These were persuasive, high-risk investments presented by advisors without the appropriate expertise,” Martin said. “The players relied on assurances without fully understanding the risks.”

By contrast, the Angela Rayner case involved a much narrower issue – Stamp Duty Land Tax (SDLT). Following legal review, she was found liable for the higher, second-home rate of SDLT on her Hove property, resulting in an underpayment of around £40,000. The fallout from the case ultimately led to her resignation from government last week.

“This was a case of insufficient or inappropriate guidance on a specific area of tax law, particularly around trusts,” Martin said. “It illustrates how even a seemingly straightforward transaction can carry risks if advice lacks depth or understanding of the client’s full circumstances.”

While the two controversies differ in context, Martin said they both point to the same conclusion: “unqualified or incomplete advice in areas of complex tax or investments can be perilous.”

He stressed that individuals should always work with regulated, qualified professionals – and seek multiple perspectives when dealing with complex matters.

“Trusted advisors not only save money by ensuring correct decisions upfront, they also protect reputations,” Martin said. “Misplaced trust can mean the difference between a secure retirement and financial ruin.”

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Rayner and footballers’ tax troubles are a ‘wake-up call’, adviser warns

The UK’s capital gains tax (CGT) system underwent significant changes in October 2024, following the Chancellor Rachel Reeves’ Autumn Budget.

The adjustments affect everyone from casual investors to landlords, entrepreneurs, and those disposing of crypto assets — and, crucially, HMRC’s outdated self-assessment software has not kept up with the mid-year changes.

For anyone filing a 2024–25 return, here is a comprehensive guide to the new rules, the key numbers, and what it means for your finances.

Old vs new CGT rates

Before October 30, 2024, CGT rates were set at relatively modest levels for both basic-rate and higher-rate taxpayers. For assets sold earlier in the 2024–25 tax year, the following rates still apply:

• Basic-rate taxpayers: 10% on most gains (18% on residential property).

• Higher/additional-rate taxpayers: 20% on most gains (28% on residential property).

After the budget, those rates increased significantly:

• Basic-rate taxpayers: 18% on most gains (26% on residential property).

• Higher/additional-rate taxpayers: 24% on most gains (30% on residential property).

The result is a much steeper tax bill for anyone realising gains after October 2024. For example, a higher-rate investor who made a £50,000 gain on shares in September 2024 would owe £10,000 in CGT under the old rules. The same gain realised in November would attract £12,000 in tax.

Annual exemption cut in half

Alongside rate rises, the government halved the annual CGT allowance from £6,000 to £3,000 for the 2024–25 tax year.

That means fewer gains can be realised tax-free and many more individuals — particularly those disposing of second homes, buy-to-let properties, or large share portfolios — will now fall into the CGT net.

The cut is especially impactful for first-time CGT payers. According to the Institute of Chartered Accountants in England and Wales (ICAEW), many taxpayers are unfamiliar with the complexity of CGT reporting and may struggle with the timing issues created by the mid-year rate change.

Interest charges and penalties

HMRC applies strict interest and penalty regimes where tax is underpaid or reported incorrectly.

• Interest on late CGT payments: 8% (variable, tied to the Bank of England base rate plus a margin). Even a short delay can be costly. For example, a £10,000 underpayment left outstanding for six months could rack up £400 in interest.

• Penalties for “careless” errors: Up to 30% of the tax owed. If HMRC considers a taxpayer should have known about the rate change or mis-used the self-assessment system without checking, penalties may apply in addition to interest.

• Deliberate errors: Higher penalties (up to 70%) are possible where HMRC believes taxpayers intentionally mis-reported their liabilities.

This is why advisers are warning that anyone filing their own return should be especially vigilant this year.

Why HMRC’s system is causing confusion

The central complication is that HMRC’s self-assessment software was finalised before the October 2024 budget. As a result, it automatically applies the old CGT rates to the entire tax year, even for disposals that should attract the higher rates.

HMRC has issued a separate online calculator to help taxpayers correct their liabilities, but those unaware of the tool may unknowingly file an incorrect return.

Tax specialists report that HMRC is already sending out “nudge letters” to individuals who declared gains after October 30, asking them to amend their returns if the wrong rate has been applied.

Practical examples

1. Basic-rate investor sells shares in July 2024

   • Gain: £10,000.

   • Old rate: 10%.

   • Tax due: £1,000 (less £3,000 exemption if unused).

2. Same investor sells in November 2024

   • Gain: £10,000.

   • New rate: 18%.

   • Tax due: £1,800 (less £3,000 exemption).

3. Higher-rate landlord sells a rental property in September 2024

   • Gain: £50,000.

   • Old property rate: 28%.

   • Tax due: £14,000.

4. Same landlord sells in December 2024

   • New property rate: 30%.

   • Tax due: £15,000.

The timing of a sale within the tax year therefore has a material impact on the final bill.

Crypto and complex assets

The changes are particularly problematic for investors with high-frequency transactions, such as cryptocurrency traders. Identifying which sales fall before or after October 30 requires meticulous record-keeping. Accountants report widespread confusion, with some taxpayers unsure how to apportion gains accurately.

What taxpayers should do

• Use HMRC’s CGT calculator rather than relying on the self-assessment system.

• Check transaction dates carefully to ensure gains are taxed at the correct rate.

• Consider professional advice, especially if gains are complex or involve property, crypto, or large share disposals.

• File early to allow time to identify and correct errors before the January 2026 deadline.

The bottom line

The mid-year rate rise has created one of the most confusing CGT reporting seasons in years. With the annual exemption halved, rates higher across the board, and HMRC’s software lagging behind the changes, taxpayers need to take extra care.

Failing to do so could mean hefty penalties and interest charges, even for those who intended to pay the correct amount.

For investors and homeowners, the message is clear: check your dates, double-check your calculations, and don’t rely solely on HMRC’s self-assessment portal.

Read more:
CGT changes at a glance: what investors need to know about the new rules

The Government is weighing a major shake-up of landlord taxation that could see National Insurance contributions applied to rental income for the first time.

Under the proposal, being considered by Chancellor Rachel Reeves ahead of her Autumn Budget, landlords would pay NI on top of income tax already levied on rental earnings. Treasury officials believe the move could raise around £2 billion annually, helping plug a £40 billion fiscal shortfall while allowing Labour to maintain its manifesto pledge not to raise the main rates of VAT, income tax or NI.

Currently, rental income is exempt from NI. A landlord earning between £50,000 and £70,000 from property could face an additional £1,000 in tax each year if the policy is introduced.

Industry figures have reacted with concern, warning the measure risks destabilising the private rental market at a time when supply is already under strain.

Marc von Grundherr, director at London estate agency Benham & Reeves, said: “This move smacks of political point-scoring rather than sound housing policy. Applying National Insurance to rental income threatens to undermine rental supply by squeezing small and medium-scale landlords, who may pull up stakes or restructure. We’re already seeing supply pressures in many areas, pushing costs onto tenants.”

Siân Hemmings-Metcalfe, operations director at Inventory Base, called the proposal “a move too far” given the upcoming Renters’ Rights Bill: “Layering yet another financial burden onto landlords at a time when the rental sector is about to be reshaped risks deterring responsible landlords. The focus should be on stability and encouraging long-term investment, not short-term populism designed to plug holes in the Treasury’s coffers.”

Sam Humphreys, head of M&A at Dwelly, said many landlords already operate on tight margins: “Measures like this could be the tipping point that drives them out of the sector altogether. Once stock is lost, it is incredibly difficult to rebuild, and the people who pay the price are tenants facing rising rents and fewer housing choices. If the Government wants to improve affordability, it should be working to increase supply – not choking it further with punitive taxation.”

The idea of extending NI to landlords’ rental income highlights the challenges facing Reeves as she looks to balance the books while sticking to Labour’s tax commitments.

While raising revenue from property is politically less sensitive than broad-based tax hikes, analysts warn that squeezing landlords could have the unintended consequence of making housing even less affordable.

With the Autumn Budget weeks away, the measure is likely to fuel fierce debate over how far the Government can go in targeting landlords without worsening the rental crisis for tenants.

Read more:
Government looks at applying National Insurance to rental income in Autumn Budget

HMRC’s use of artificial intelligence to profile people’s social media activity will increase tax compliance, according to leading audit, tax and business advisory firm Blick Rothenberg.

Fiona Fernie, a partner at the firm, said that HMRC’s CONNECT system has been deploying advanced analytics since the early 2000s to spot underpaid tax. “CONNECT uses (and has always used) advanced analytics such as pattern recognition, predictive modelling, and machine learning, which are all forms of AI. Social media is just one of the many sources CONNECT reviews,” she explained.

CONNECT, developed by BAE Systems Applied Intelligence at an estimated cost of between £45 million and £100 million, has reportedly helped recover more than £3 billion in unpaid tax.

Fernie highlighted the efficiency gains such technology offers HMRC investigators. “CONNECT can identify the patterns and anomalies in the data it reviews in seconds where human investigation would take months,” she said. “It not only enables real-time risk profiling; it also supports the work carried out by HMRC staff during the course of investigations.”

However, she stressed that AI outputs are not used in isolation. “The information gleaned and analysed by the CONNECT system is always also looked at by human investigators. As long as there is appropriate human oversight and safeguards, I do not see any problem with the use of AI to identify possible indicators that tax is not being paid at the correct levels.”

HMRC has recently confirmed it uses publicly available online data to support compliance activities, including social media posts, blogs and other internet content without privacy restrictions. This mirrors the approach of other government departments such as the Department for Work and Pensions.

Fernie suggested HMRC may be underplaying the extent of its AI usage. “It is strange for HMRC to state that AI is only used as part of criminal investigations into tax fraud, as CONNECT uses real-time risk profiling as a tool to help determine targets for investigation.”

The growing use of AI in tax enforcement comes as governments worldwide deploy technology to close compliance gaps and secure revenues — a trend that places increasing importance on digital footprints, even in everyday online activity.

Speaking about the claims, a HMRC spokesperson said: “Use of AI for social media monitoring is restricted to criminal investigations and subject to legal oversight.”

“AI supports our processes but – like all effective use of this new technology – it has robust safeguards in place and does not replace human decision-making.

“Greater use of AI will enable our staff to spend less time on admin and more time helping taxpayers, as well as better target fraud and evasion to bring in more money for public services.”

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AI profiling of social media will boost HMRC’s tax compliance, say advisers

HMRC has admitted for the first time that it uses artificial intelligence (AI) to monitor taxpayers’ social media accounts as part of criminal investigations into tax fraud.

The tax authority said AI tools are used alongside the department’s traditional checks to analyse online posts, including those about expensive holidays or large purchases, if they appear inconsistent with a person’s declared income. Officials insist the technology is deployed only in criminal cases, with “robust safeguards in place” and within the law.

The disclosure comes amid growing concerns in Westminster over the expanding role of AI in tax enforcement and fears it could be used more widely in future.

Senior Conservative MPs have warned that reliance on automated tools could lead to mistakes, with inadequate human oversight.

Bob Blackman MP said: “If they start taking legal action against individuals based on that, it seems draconian… Without a human check, you can see there’s going to be a problem.”

Sir John Hayes, former security minister and chair of the Common Sense Group of Tory MPs, drew parallels with the Post Office Horizon scandal: “The idea that a machine must always be right is what led to the Post Office scandal. I am a huge AI sceptic.”

The AI monitoring tools operate alongside Connect, HMRC’s data analytics system used for routine tax investigations. Connect, introduced more than a decade ago, cross-references billions of data points – from bank transactions to property records – to flag potential tax evasion.

Chancellor Rachel Reeves has set a goal of recouping £7 billion of the UK’s £47 billion “tax gap”, with HMRC officials last month publishing a strategy that envisions AI being embedded into “everyday” tax processes.

The department is trialling AI-powered “assistants” to help the public complete tax returns and to support compliance officers in reviewing them. If patterns in a return suggest false information, the system could issue a warning that might later be used as evidence if fraud is proven.

Concerns about AI’s role in decision-making intensified after a tribunal ordered HMRC to reveal by 18 September whether AI was used in assessing claims for research and development tax credits. The ruling followed a Freedom of Information request from tax expert Tom Elsbury, who argued AI might already be determining the outcome of some claims.

Ministers maintain there is always a human “in the loop” for decisions affecting individuals, and HMRC insists humans retain the “final say” in enforcement actions.

The Department for Work and Pensions has also trialled AI tools, with 20,000 civil servants using the technology to draft documents and summarise meetings. A government source said HMRC has approached around a dozen tech firms for proposals on using AI to help close the £46.8 billion in unpaid tax – much of it linked to offshore accounts.

A HMRC spokesperson said: “Use of AI for social media monitoring is restricted to criminal investigations and subject to legal oversight.”

“AI supports our processes but – like all effective use of this new technology – it has robust safeguards in place and does not replace human decision-making.

“Greater use of AI will enable our staff to spend less time on admin and more time helping taxpayers, as well as better target fraud and evasion to bring in more money for public services.”

Read more:
HMRC admits using AI to monitor taxpayers’ social media

More than £105 million in Premium Bond prizes remains unclaimed by savers across the UK, with 2.6 million prizes still waiting to be collected — including 11 worth £100,000, according to new figures from National Savings and Investments (NS&I).

The Treasury-backed savings institution confirmed that over 140 of the unclaimed prizes are valued at £10,000 or more, while the majority — more than 1.8 million — are for the minimum £25 prize.

Alongside the 11 unclaimed £100,000 prizes, there are also 19 prizes worth £50,000, 38 of £25,000, and 75 of £10,000 that have yet to be claimed by their lucky winners.

Are you one of the 2.6 million missing out?

Premium Bonds function like a lottery. Each £1 bond is assigned a unique number entered into monthly prize draws, with winnings ranging from £25 to two £1 million jackpots each month. All prizes are tax-free.

Prizes are classified as “unclaimed” if they remain untouched after 18 months, although there is no time limit on claiming. Some data in NS&I’s records goes back to 1957, when Premium Bonds were first introduced.

According to NS&I, many savers have their winnings automatically reinvested into more Premium Bonds (up to the £50,000 per person limit), or paid directly into a nominated bank account. Those with these systems in place are unlikely to have any unclaimed prizes.

However, the most common reason for unclaimed prizes is outdated contact details, particularly where cheques have been returned due to customers moving house without updating their NS&I records.

“Eleven people in the UK have £100,000 with their name on it, just sitting, collecting dust,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.

“It really is worth checking whether you’ve already won big. It’s not just Premium Bonds — vast sums in savings, investments and pensions go astray this way. Admin is kryptonite for many people.”

How to check if you’re owed money

NS&I encourages anyone unsure whether they still hold Premium Bonds to use its free tracing service. Bondholders can check using:
• The NS&I website
• The NS&I app
• A printed tracing form
• A letter with personal details submitted by post

If your details are up to date, NS&I will contact you if you win a prize. If not, you may have to initiate the tracing process.

You can also use the My Lost Account service, operated by NS&I in partnership with UK Finance and the Building Societies Association, to locate forgotten accounts and savings. However, this process can take up to 90 days.

“These processes can take time and require a lot of personal details, especially for older accounts,” said Coles. “Bear in mind that some of these date back nearly 70 years.”

Are Premium Bonds worth it?

Premium Bonds offer an “effective interest rate” — the average return based on all prizes awarded. This currently stands at 3.6%, having been cut from 3.8% for the August draw. However, this rate is skewed by larger prizes. Many bondholders may win nothing at all, particularly if they hold small amounts.

Other easy-access savings accounts offer higher guaranteed returns, including Chip at 5% (first year only) and Trading 212’s Cash ISA at 4.87%, both of which offer tax-free interest.

However, for higher earners or those who have maxed out their ISA allowance (£20,000) and personal savings allowance, Premium Bonds remain a tax-efficient option.

Basic-rate taxpayers can earn up to £1,000 in interest tax-free; higher-rate taxpayers can earn £500; additional-rate taxpayers receive no savings allowance, making Premium Bonds a useful tool for sheltering cash from tax.

Read more:
£105m in Premium Bond prizes unclaimed – including 11 jackpots worth £100,000

The Lionesses’ historic Euro 2025 victory is set to deliver a significant windfall not just for the players, but also for the UK taxman, with HMRC expected to receive £788,900 from the team’s prize money, according to analysis by tax and advisory firm Blick Rothenberg.

Each player is expected to receive an average bonus of £73,000, which pushes their earnings above the £125,140 threshold where the highest effective marginal tax rate of 47% applies. That means players could be paying around £34,300 each in combined income tax and National Insurance Contributions (NIC), according to Robert Salter, Director at Blick Rothenberg.

“The Lionesses will be delighted with their win at Euro 2025 for what it represents and the hard work that went into it,” Salter said. “But they will have a hefty tax bill to pay to HMRC on their prize money.”

Salter noted that although the Lionesses still earn less than their male counterparts, their tournament bonuses are substantial enough to trigger the UK’s top tax bracket. The 47% figure comprises 45% income tax and 2% employee NIC.

In addition to the tax paid by players, the Football Association (FA) is also expected to face a £255,000 liability in employer NIC on the prize bonuses, further increasing HMRC’s overall take from the team’s success.

And the revenue doesn’t stop there. Many of the Lionesses are expected to earn significantly more in the coming months from sponsorship deals, marketing campaigns, and media appearances, all of which are subject to income tax. Salter said these post-tournament earnings, especially image rights and appearance fees, will continue to drive up the players’ taxable income — and with it, HMRC’s share.

“Their earnings are likely to increase significantly over the coming months, given their success and the ongoing growth in the profile of the Women’s game,” Salter added. “HMRC will be getting even more tax ‘wins’ in the future.”

While the Lionesses’ on-pitch victory has been widely celebrated across the country, their financial success off the pitch is proving to be a win for the Treasury as well — a reminder that even sporting triumphs come with a tax bill.

Read more:
HMRC scores tax windfall from Lionesses’ Euro 2025 prize money

Taxpayers have been warned to settle their tax bills by 31st July or risk incurring late payment interest at 8.25%, as HMRC intensifies its crackdown on unpaid liabilities.

The alert comes from Blick Rothenberg, a leading audit, tax and business advisory firm, which says taxpayers who have yet to pay their second payment on account for the 2024/25 tax year must act quickly to avoid financial penalties.

“From May 2022, HMRC increased late payment interest from 3.5% to 8.25% as part of their agenda to crack down on people that owe tax,” said Tom Goddard, Senior Associate at Blick Rothenberg. “People who owe money for the 2024/25 tax year must pay their bill as soon as possible.”

What are payments on account?

Payments on account are advance payments made towards the next year’s income tax bill, calculated based on a taxpayer’s previous year’s liability. They are paid in two instalments — one by 31st January, and the second by 31st July.

For example, someone with a £10,000 second payment on account who delays payment until 31st December 2025 would face nearly £350 in interest charges, Goddard explained.

“This is also an incentive to get your tax return submitted early,” he added. “By doing so, you ensure your July payment is accurate — rather than risk overpaying and waiting for a refund.”

Can payments be reduced?

Yes — if a taxpayer reasonably expects that their income for 2024/25 will be lower than in 2023/24, they may reduce their payments on account. However, Goddard warned that over-reducing the figure could lead to interest charges and potential penalties if the estimate proves too low.

“Now that the 2024/25 tax year has ended, those who have already made a claim to reduce their payments on account should check whether this was appropriate based on their final income levels and, if necessary, adjust their payments,” he said.

Who needs to pay?

Payments on account generally apply to those with self-employment income, rental profits, or investment income, where tax isn’t deducted at source.

Taxpayers do not need to make payments on account if:
• Their 2023/24 tax liability was under £1,000, or
• More than 80% of their tax was collected through PAYE.

Capital Gains Tax (CGT) is also excluded from payments on account.

What if you can’t pay?

Goddard urged those struggling financially to contact HMRC directly as soon as possible.

“HMRC may offer a payment plan to help alleviate some of the financial burden, allowing payments to take place over a more manageable timeframe,” he said.

With just days left before the 31st July deadline, taxpayers are advised to check their status, file their returns if possible, and take action — or risk costly charges and escalating interest in the months ahead.

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Taxpayers who haven’t settled their bill with HMRC must pay by 31st July or face fines and interest

For centuries, land ownership has been a cornerstone of British wealth.

Today, in an era of inflation, political scrutiny, and shifting tax policy, UK farmland is once again in vogue—not merely as a legacy asset but as a strategic, tax-efficient investment for high-net-worth individuals (HNWIs) and business owners seeking long-term capital protection.

Yet the rules underpinning this pastoral advantage are under threat. As Chancellor Rachel Reeves advances proposals to reform Agricultural Property Relief (APR), what has long been a discreet haven for generational wealth may soon face profound change.

The enduring appeal of land

Farmland continues to offer a powerful value proposition: scarcity, price resilience, and unparalleled tax reliefs. According to the Royal Institution of Chartered Surveyors (RICS), UK farmland values rose 7.3% in 2024, buoyed by investor demand, food security concerns, and the monetisation of natural capital through carbon credits and biodiversity offsets.

“Farmland offers both legacy and leverage,” says Henry Pemberton, a land advisor at Savills. “From a tax and wealth planning perspective, it has few rivals.”

The tax architecture: APR, BPR and CGT deferral

At the heart of farmland’s appeal are Agricultural Property Relief (APR) and Business Property Relief (BPR) — powerful tools that offer 100% relief from inheritance tax when structured correctly.

• APR applies to land actively farmed or let out for agricultural use, provided it’s held for two years (or seven if let).
• BPR can extend that protection to mixed-use or diversified estates that generate trading income, such as from holiday lets or renewable energy.
• Capital Gains Tax (CGT) can often be deferred through hold-over or rollover relief, further increasing the asset’s efficiency in estate planning.

Sarah Allardyce, a tech entrepreneur, purchased 88 acres in Kent following a business exit in 2020. Combining regenerative agriculture with solar power and biodiversity credits, she structured her land investment to optimise reliefs.

Her strategy included:

• APR on her farmland after two years of direct farming.
• BPR on a consultancy operated from the property.
• Income from a wildflower offset scheme leased to a local conservation group.

“I didn’t buy land for the subsidies,” she said. “But the tax reliefs certainly sweetened the model.”

The storm gathers: Reform proposals on the table

In her July 2025 Budget, Chancellor Rachel Reeves launched a consultation on overhauling APR — a move the Treasury says could raise £1.2 billion in additional IHT by 2030. Proposed changes include:

• Restricting APR eligibility to working farmers, excluding passive investors.
• Reassessing relief on non-agricultural activities, including renewable energy, glamping, and rewilding.
• Limiting APR for land held in corporate or offshore structures.

Critics argue these reforms would penalise environmental stewardship, deter new entrants, and destabilise family-owned estates that rely on APR for intergenerational continuity.

Enter, the Jeremy Clarkson effect

Among the most vocal opponents is Jeremy Clarkson, whose Amazon Prime series Clarkson’s Farm has turned him into an unlikely agricultural advocate. In a recent episode, Clarkson railed against the idea that his farm might be deemed “inactive” under new rules.

“So let me get this straight,” he said. “I pay for the tractor, the barn roof, the seed, the diesel, I risk everything on the weather… and then the Chancellor tells me the land isn’t ‘active’ enough to qualify for relief? Madness.”

Clarkson has joined forces with the National Farmers’ Union and a coalition of rural MPs to resist the proposed changes, warning they will erode rural resilience and discourage sustainable innovation.

Case study: Family planning in the countryside

The Hunter-Bennett family, former logistics business owners, invested £6.5 million in a 400-acre Suffolk estate in 2022. With two adult children managing the estate full time, they secured full APR and BPR relief through a UK LLP and trust structure.

Now, amid the policy uncertainty, they are reviewing holiday let income streams and rewilding credits to ensure future eligibility.

“If these reforms go through as written, we may need to unwind parts of the trust or explore restructuring,” said trustee Mark Bennett.

Outlook: Tax shelter, but for how long?

Despite the turbulence, farmland continues to offer unmatched advantages: scarcity, cultural capital, diversification, and long-term tax sheltering. But the rules are no longer guaranteed. Savills has reported a 30% increase in farmland acquisitions via trusts and family investment companies in Q2 2025, as advisors rush to secure current reliefs before any legislative changes are enacted.

“What was once an evergreen shelter is now under audit,” says Pemberton.

Conclusion: Invest in land — but stay alert

Farmland still offers a uniquely British blend of prestige, protection, and performance. But the future of tax efficiency in the sector is under scrutiny, and the window to act may be closing.

For HNWIs and business owners seeking stability, the message is clear: invest in land — but do so with urgency, foresight, and a team that understands both the soil and the statute book.

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Fields of fortune: Why farmland remains a tax-efficient safe haven — for now

In the polished galleries of Mayfair and the rarefied auction houses of Sotheby’s and Christie’s, a quiet financial revolution is under way.

Britain’s wealthiest investors are increasingly channelling capital into fine art — not merely for aesthetic enjoyment, but as a shrewd, tax-efficient store of value.

Once considered the preserve of collectors and connoisseurs, art is now firmly on the radar of the financial elite. In 2023, the global art market was valued at over $65 billion, with the UK accounting for a substantial 17 per cent, making it the second-largest art economy after the United States. Amid economic turbulence, soaring interest rates, and volatile equity markets, high-end art has proven resilient, particularly at the top end of the market.

According to Deloitte’s 2024 Art & Finance Report, 85 per cent of wealth managers now consider art and collectibles to be viable components of a diversified wealth portfolio.

“Art is increasingly seen as an alternative hedge,” says Laura Kingsley, a wealth advisor at a Knightsbridge family office. “It’s less correlated to equities and, crucially, offers bespoke structures that make it extremely attractive from a tax perspective.”

The tax appeal of tangible beauty

Under UK tax law, fine art can qualify as a “chattel” — a tangible, movable item — offering potential capital gains tax (CGT) relief. Artworks sold for less than £6,000 may be exempt entirely due to the chattel exemption, while those sold above this threshold benefit from marginal relief, often resulting in a lower CGT liability than property or shares. Some pieces, particularly those made from materials expected to degrade, can even be classified as “wasting assets” and are therefore exempt from CGT altogether — though HMRC may contest this.

For inheritance tax (IHT) planning, placing artworks into trusts or corporate structures can defer or mitigate tax exposure. Schemes such as the Cultural Gifts Scheme and Acceptance in Lieu allow donors or their heirs to reduce tax liabilities by offering artworks to public collections, creating both fiscal and cultural value.

“These are powerful tools,” says Fiona Holder, an art tax advisor at Withers LLP. “They allow investors to reduce tax, enhance legacy, and avoid forced sales — all in one elegant move.”

The collector-turned-strategist

One London-based fintech entrepreneur, Amanda Sloane (name changed), began acquiring post-war British art in 2016, initially out of nostalgia. But as values climbed, her strategy evolved. Her £2.5 million collection now includes works by Bridget Riley, David Hockney, and Frank Auerbach, with a portfolio valuation of £4.1 million by 2025.

Key pieces are held in a Swiss bonded warehouse to defer VAT and simplify estate planning. The collection itself is owned via an offshore discretionary trust, shielding it from IHT, and she has donated a Hockney sketch through the Cultural Gifts Scheme, reducing her income tax bill by £180,000.

“At some point, you realise the art is working harder than your index fund,” she says. “Plus, I’d rather see a Hockney every morning than log into an ISA.”

Family offices embrace structured elegance

The Yewtree Family Office, based in Surrey and backed by third-generation property wealth, began investing in contemporary art in 2019. Their £6 million collection includes pieces by Yayoi Kusama, Banksy, and Lynette Yiadom-Boakye. Structured through a UK limited company, the artworks benefit from tax-deductible storage and maintenance costs. Pieces are insured, professionally inventoried, and circulated between private residences and public loans — bolstering both social standing and long-term valuation.

A gifting strategy via the Acceptance in Lieu scheme will eventually offset the family’s future IHT bill as assets pass to the next generation.

“Art offers more than returns,” the family said. “It tells a story. It represents legacy. And in today’s fiscal environment, it also offers protection.”

Caveats of the canvas

Despite its advantages, art investing is not without risk. Liquidity is a persistent issue — even high-value pieces can take years to sell. Valuations are subjective, and without proper documentation (known as provenance), artworks can become legally unsellable. Investors must also contend with market cycles, fashion trends, and forgery risks.

“There’s no Financial Services Compensation Scheme for a fake Rothko,” warns Holder. “This is not a DIY pursuit. You need experienced advisors who understand both the art world and tax code.”

Where money meets meaning

As regulatory scrutiny tightens and traditional tax strategies come under the spotlight, fine art offers a unique blend of discretion, diversification and durability. With the right structure and support, it can deliver not just capital preservation, but cultural resonance.

In an era where spreadsheets meet brushstrokes, it seems Britain’s wealthy are increasingly choosing to hang their assets on the wall — and let them work in silence.

Read more:
Brushed with value: How fine art is becoming the tax-efficient investment of choice for the wealthy

Bereaved families will face increased financial and administrative pressure following the government’s decision to include pensions in inheritance tax (IHT) calculations from April 2027, despite widespread opposition from both the public and the pensions industry.

Under the new rules, pension pots will be treated as part of an individual’s estate when calculating inheritance tax liabilities. The Treasury expects the policy to raise £1.46 billion per year by 2029–30, with 10,500 estates set to pay inheritance tax as a result, and a further 38,500 estates facing higher tax bills, according to HM Revenue & Customs (HMRC).

The move has been described by critics as the Labour government’s most unpopular tax change to date. A recent AJ Bell poll of 2,050 adults found that 44 per cent opposed the change, with just 21 per cent in support.

Renny Biggins, head of retirement at The Investing and Savings Alliance, which represents over 270 financial services firms, said the decision was deeply disappointing.

“Despite significant pushback from the industry, pensions will now form part of inheritance tax calculations,” he said.

Initially, the government had proposed that pension scheme administrators would be responsible for calculating and paying any tax owed on pension pots. However, following intense lobbying from the pensions industry, the Treasury has shifted the burden to personal representatives, typically either solicitors or bereaved family members.

They will now be required to identify and report all pension assets and pay any IHT due within six months of death to avoid interest charges—placing yet another burden on grieving families.

The government’s summary of responses to the HMRC consultation published this week noted that although some supported the principle of taxing pension wealth, “the majority strongly opposed the proposal to make pension scheme administrators liable”.

Former pensions minister Sir Steve Webb warned that the changes risk overwhelming grieving families with complex bureaucracy at an already difficult time.

“Life is tough enough when you have just lost a loved one without having extra layers of bureaucracy on top,” said Webb, who is now a partner at consultancy Lane Clark & Peacock.

He explained that family members would now have to track down all pensions held by the deceased, obtain statements from each scheme, collate the data, and use HMRC’s online calculator to determine the IHT liability—then pay the tax within six months.

“Complications will no doubt arise when families cannot locate all pensions or when providers are slow to supply the necessary information,” Webb added.

He urged the government to rethink its penalty rules, warning that families could be unfairly fined for late payments caused by delays beyond their control.

“While the changes HMRC has made are undoubtedly good news for pension schemes and those who administer them, it is hard to see that they are good news for bereaved families.”

Critics say the inclusion of pensions in IHT calculations represents a major shift in how retirement savings are treated—reversing previous assurances that pensions would remain outside the tax net and could be passed on tax-free in most circumstances.

Industry experts have questioned the practical feasibility of the policy, warning that many individuals have multiple pension pots, often spread across different providers, with some dormant or difficult to trace.

With inheritance tax already considered one of the most complex areas of the tax system, the addition of pensions is expected to create a significant administrative burden, particularly for families with modest estates.

The Treasury insists the change is a matter of tax fairness, ensuring that pension wealth is treated in line with other assets like property and investments. However, the debate is likely to intensify as the April 2027 implementation date approaches—and as more families become aware of the additional red tape they may soon face during an already difficult period of loss.

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Families face red tape nightmare with inheritance tax on pensions from 2027

HM Revenue and Customs (HMRC) collected a staggering £2.2 billion in inheritance tax (IHT) in the first three months of the current tax year, new data released this morning reveals—£100 million more than the same period last year.

The increase highlights a worrying trend: more families are being drawn into the IHT trap due to frozen thresholds, rising property prices, and soaring inflation. The government’s take from IHT has now been steadily climbing for two decades, adding to what experts call the highest overall tax burden in 70 years.

Nicholas Hyett, Investment Manager at Wealth Club, called IHT “a meal ticket for HMRC” and criticised the long-standing freeze on the nil-rate band, which has remained at £325,000 since 2009 and is set to stay fixed until at least 2030. The £175,000 residence nil-rate band, introduced in 2017 to protect the family home, also hasn’t budged since 2020.

“These freezes are a form of stealth tax,” Hyett said, “designed to quietly increase the government’s take without the political backlash of a headline-grabbing hike.”

As property values and inflation continue to rise, many families who would not consider themselves wealthy are now being caught by a tax once associated only with the very rich.

Hyett also pointed to the Chancellor’s recent U-turn on IHT rules for non-doms, citing the exodus of wealthy individuals from the UK, while other sectors—such as farmers and AIM investors—face continued uncertainty.

With inheritance tax taking centre stage ahead of the Autumn Budget, financial planners are encouraging families to review their estate strategies.

“In this environment, lifetime gifts are probably more attractive than ever,” said Hyett, especially regular gifts from surplus income, which are immediately IHT-free and popular for paying grandchildren’s school fees.

Alongside inheritance tax, Insurance Premium Tax (IPT) receipts also rose sharply, hitting £2.17 billion in Q1. Emily Jones, Client Consulting Director at Broadstone, said the surge was being fuelled by rising demand for private health insurance, as NHS delays push more people toward employer-backed or self-funded care.

“Employers are stepping up, but rising IPT costs risk pricing out smaller businesses,” said Jones. “If the government wants a healthier workforce and a more resilient NHS, a targeted IPT exemption for health insurance should be on the table.”

With a £20 billion fiscal black hole to fill and tax revenues climbing quietly through frozen thresholds and stealth levies, the Autumn Budget is shaping up to be one of the most politically sensitive in recent memory. Both IHT and IPT may stay untouched in headline terms—but beneath the surface, the Treasury’s quiet tax grip is tightening.

Read more:
Inheritance tax haul hits £2.2bn in just three months amid rising property prices and frozen thresholds

The Financial Conduct Authority (FCA) has unveiled long-awaited plans to regulate the booming £13 billion ‘buy now, pay later’ (BNPL) sector — with proposals that could require affordability checks on even the smallest of loans.

Under the new rules, which form part of a formal consultation launched on Friday, BNPL lenders would need to conduct creditworthiness assessments on loans under £50 — a measure the regulator says is necessary to protect consumers from spiralling debt and financial harm.

The FCA said BNPL has evolved from a fringe product into a mainstream payment method, used by 10.9 million UK adults in the 12 months to May 2024. Around 1.1 million of these individuals had BNPL debts of £500 or more, while more than 5 million owed at least £50. Over half of all BNPL agreements currently involve loans under £50, which the FCA argues must be included in the scope of new rules to prevent widespread harm and “loan stacking” across multiple providers.

The proposals mark a significant shift in how short-term credit is treated, with firms like Klarna, Clearpay and Laybuy among the major lenders expected to come under the new regime.

Sarah Pritchard, the FCA’s deputy chief executive, said the regulator had been seeking oversight of the sector for some time amid concerns about its explosive growth.

“BNPL can offer flexibility, but our job is to ensure consumers are properly protected. People can benefit from BNPL while being protected,” she said.

The market has expanded rapidly from £60 million in 2017 to over £13 billion in 2024, often promoted at online checkouts to help customers spread the cost of purchases without interest. But critics have warned the ease of access can mask potential dangers for younger or financially vulnerable consumers.

BNPL is particularly popular among 25–34 year-olds, many of whom live in some of the UK’s most economically deprived areas. The FCA’s move is designed to ensure that those at greatest risk are not exposed to excessive borrowing without proper safeguards.

The new regime, due to take effect from 15 July 2026, will require BNPL lenders to become FCA-authorised. Once live, firms will have six months to register for authorisation or face losing the ability to lend.

Consumer groups have welcomed the proposals. Vikki Brownridge, chief executive of debt charity StepChange, said the regulation was long overdue.

“BNPL is now as common as using an overdraft. While it can be useful, it can also deepen financial difficulties. Struggling consumers must have the same protections as with any other form of credit,” she said.

The proposals also include mandatory support for customers experiencing financial hardship, along with the right to refer complaints to the Financial Ombudsman Service.

The FCA’s consultation is open until 26 September 2025, giving BNPL providers, consumer advocacy groups and industry stakeholders time to respond. The regulator is expected to publish its final rules early next year.

With the BNPL sector now firmly entrenched in the UK’s consumer finance landscape, the FCA’s intervention could mark a turning point — transforming a once lightly regulated payment method into a core part of the UK’s credit framework.

Read more:
New ‘buy now, pay later’ affordability checks may cover even smallest loans under FCA proposals

Tennis champions Jannik Sinner and Iga Swiatek may have lifted Wimbledon trophies this summer—but their victories come with a costly UK tax bill of more than £1 million each, according to leading tax experts.

Audit, tax and business advisory firm Blick Rothenberg has warned that despite not being UK tax residents, both the Italian men’s singles champion and the Polish women’s winner will face substantial tax liabilities on their UK earnings.

Robert Salter, Director at Blick Rothenberg, explained that while the players may not live in the UK, their £3 million Wimbledon prize money is still taxable under HMRC rules, alongside elements of their commercial income.

“Wimbledon will be obliged to operate withholding tax, at a flat rate of 20%, on the prize money that they pay to these stars,” said Salter. “However, Jannik Sinner and Iga Swiatek will ultimately be taxed in the UK at the top rate of 45% on their winnings—less any allowable business expenses they can deduct.”

In addition to their prize earnings, a portion of each player’s image rights income may also fall under the UK tax net, as HMRC considers this to be partly sourced from their presence and publicity during the tournament.

Salter added that while international tax law gives HMRC a clear legal basis to tax non-resident athletes on UK-sourced earnings, the UK’s system remains one of the least favourable for global sports stars.

“Many countries—including Germany—offer far more generous tax treatment to travelling athletes,” he said. “The UK’s relatively punitive regime has previously deterred stars like Usain Bolt and Rafael Nadal from participating in certain UK events, due to the financial impact.”

That said, Wimbledon remains one of the most prestigious events in the global sporting calendar, and its profile continues to attract top-tier athletes despite the associated tax burden.

While the organisers benefit from unparalleled visibility and global recognition, the players are left to weigh the cost of glory against their HMRC bill. For champions like Sinner and Swiatek, a Grand Slam title may be priceless—but the taxman still takes a significant share.

Read more:
Wimbledon winners face £1m UK tax bills despite non-resident status

Chancellor Rachel Reeves is preparing to unveil a reduction in the tax-free allowance for cash ISAs, as part of a broader move to channel household savings into London-listed firms and reinvigorate the UK’s capital markets.

According to the Financial Times, Reeves will use her Mansion House speech to announce a cut to the current £20,000 tax-free cash savings limit available under the Individual Savings Account (ISA) wrapper. While the total ISA limit is expected to remain unchanged, the shift will likely reduce how much savers can shelter in cash ISAs specifically.

The controversial reform is aimed at steering more of the UK’s estimated £300 billion in cash ISA holdings toward long-term investment in equities—particularly those listed in London. The Treasury hopes this will unlock fresh capital for UK businesses while potentially delivering better returns for savers over time.

Advocates of the move argue that cash ISAs, while popular, offer limited returns compared to stocks and shares ISAs, especially over the long term. Charles Hall, a longtime supporter of ISA reform, told City AM: “It makes sense for the Chancellor to address the limits on Cash ISAs to encourage savers to invest in products with higher returns. We should also ensure that taxpayers’ money is focused on encouraging investment in UK companies.”

The proposed change comes just a week after trading platform IG Group launched a “Save our Stock Market” campaign, which included a proposal to abolish cash ISAs altogether.

However, the policy is already facing stiff opposition from major investment and savings institutions. AJ Bell’s CEO Michael Summergill said he was “fundamentally opposed” to the cut and warned it would “negatively impact savers without achieving the desired effect of getting people investing.” AJ Bell’s research found that only 25% of savers would redirect extra funds into UK equities if the cash ISA limit were cut.

Sarah Coles, head of personal finance at Hargreaves Lansdown, echoed the concern, noting that cash ISAs often serve as a gateway product for new savers. “This is an issue which requires a carrot, not a stick, approach. We know through extensive research that the barriers to investing are behavioural, so it’s through encouragement and increased confidence that we will increase the number of retail investors.”

She warned that limiting how much can be moved from cash into stocks and shares ISAs could have the unintended consequence of reducing overall investment uptake.

The exact size of the reduction has not yet been confirmed. Reeves has previously said she would not lower the overall £20,000 ISA cap but has stopped short of ruling out changes to the cash component specifically.

If implemented, this would mark the biggest shake-up to the UK’s flagship tax-free savings product since its creation by Gordon Brown in 1999. The Treasury declined to comment.

Read more:
Reeves to cut cash ISA allowance in push to revive UK capital markets

Millions of consumers will be offered free, tailored financial support from banks and pension providers under sweeping new proposals from the City regulator, in a bid to steer people away from risky online advice and poor money decisions.

The Financial Conduct Authority (FCA) has unveiling plans to overhaul long-standing restrictions that prevent firms from offering personalised financial suggestions unless they conduct full individual assessments — a costly and time-consuming process that leaves most consumers unable to access formal advice.

Under the new “targeted support” regime, firms would be permitted to send “ready-made suggestions” to customers to help them navigate complex financial decisions — from investing cash savings in the stock market to avoiding early depletion of pension pots.

The FCA estimates that only 9 per cent of UK adults currently access conventional financial advice, leaving the vast majority to manage investments and savings without expert guidance. Regulators hope the reforms, which are open for consultation until August, will plug this growing advice gap and stop savers turning to unregulated sources, including social media influencers and AI chatbots.

Sarah Pritchard, executive director at the FCA, described the changes as “once-in-a-generation reforms that will help people navigate their financial lives and give them greater confidence to invest”. She said the proposals represent a “win-win for consumers and firms alike”.

The move comes amid growing concern over the seven million people who hold over £10,000 in cash savings but have not moved into investment markets, potentially missing out on higher returns. Under the new rules, banks and insurers could send prompts encouraging such customers to consider stocks and funds, providing clickable routes to take action.

Financial firms could also give guidance on major retirement decisions, such as whether to choose an annuity or drawdown option. While these are currently considered areas of regulated advice, the new framework would allow companies to offer nudges and suggestions, stopping short of full personalised recommendations.

The cost of full financial advice has long excluded all but the wealthiest. With advisers typically charging 1 to 3 per cent upfront and annual fees of around 2 per cent, access is generally limited to those with more than £200,000 in liquid assets.

Consumer groups have cautiously welcomed the move but warned of potential risks. Holly Mackay, chief executive of financial data platform Boring Money, described the proposals as “highly positive”, estimating that 5.9 million people could benefit. However, she added: “There is a danger that banks see targeted support as meaning targeted sales.”

James Carter, head of platform policy at Fidelity International, said that many savers are already turning to unregulated sources like TikTok influencers or generative AI for advice. “That could result in poor financial decisions. I’m beginning to hear more stories of people using ChatGPT to make conclusive decisions about their financial futures,” he said.

The Association of British Insurers also welcomed the move. Yvonne Braun, its director of long-term savings policy, said: “We know facing complex financial decisions can feel overwhelming, especially in retirement. The FCA’s decision to press ahead with this crucial proposal is very welcome and should be a relief to millions of savers.”

The FCA’s consultation will close on August 29, with a final policy statement due by December. Subject to approval, the first targeted support messages could start reaching consumers as early as April next year.

Read more:
FCA to allow millions free financial support in major policy shift

Marks & Spencer’s new strawberry and cream sandwich has captured attention on social media — but now it’s caught the eye of tax experts, too.

Marketed as a sweet take on the viral Japanese strawberry sando, M&S’s half-sandwich — part of its meal deal range — is prompting questions over whether it should be classified as a standard sandwich (zero-rated for VAT) or as a confectionery item (subject to 20 per cent VAT).

Wrapped in typical savoury packaging, the new snack consists of sweetened bread and a generous helping of strawberries and cream, mimicking the Japanese original made with soft milk bread. While shoppers are debating the flavour, accountants and barristers are debating its tax status.

“If the bread is sweetened and designed to be eaten with fingers, the case for classifying it as confectionery is surprisingly strong,” said Simon Knivett, VAT manager at HW Fisher. That would make the item subject to VAT under a 1988 change aimed at catching cereal bars and other “sweetened prepared foods”.

The legal uncertainty echoes the now-legendary VAT ruling on Jaffa Cakes, which saw McVitie’s successfully argue the treat was a cake — and therefore zero-rated — not a biscuit. Another similar case is currently unfolding over whether “mega marshmallows” should be taxed as confectionery, with London-based wholesaler Innovative Bites challenging HMRC’s decision to apply the full VAT rate.

Max Schofield, a barrister at Devereux Chambers, said the outcome of that case could have broader implications: “If giant marshmallows, because they’re eaten with fingers and are sweet, fall under confectionery rules, so could sweet sandwiches.”

Adam Craggs, a partner at law firm RPC, added: “The M&S strawberry sandwich may soon join the curious canon of VAT case law. The legislation is notoriously complex and often leads to outcomes that can feel arbitrary or absurd.”

M&S has not commented on whether the item is being sold with or without VAT applied, but with increased popularity — and online debate from VAT professionals — HMRC may soon have a decision to make.

As one tax commentator wryly observed on LinkedIn: “Anyone buying this monstrosity should be charged 100% VAT — just on principle.”

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Sweet or taxable? M&S strawberry sandwich sparks new VAT debate