Government Publishes Tax Update Spring 2025

The Government published its Tax Update on Monday (28/04/25) for proposed changes to administration and simplification of tax and customs.  Not all elements will affect your finances, but we have pulled out the salient points.

You can view the full update at Tax update spring 2025: simplification, administration and reform summary - GOV.UK.

Key Ones that May Affect Many of Us

Electronic Invoicing Consultation

The government is committed to consult on establishing standards for the adoption of electronic invoicing (e-invoicing) within the UK to promote e-invoicing across UK businesses and the public sector to reduce paper usage and speed up processes.

Check Employment Status for Tax  (CEST) Digital Tool Revisions 

Reducing administrative burdens and increasing certainty for employers, and employees, to support economic growth with effect from 30 April 2025. These changes will make it easier for CEST’s users to use the tool. To support these changes, HMRC will also publish revised guidance that offers help on how to answer the revised questions. HMRC is committed to standing behind the outcomes of this tool where it has been used correctly. 

Employment Related Share/Securities Schemes

An employer can transfer employer’s National Insurance contributions liability to an employee who acquires employment related securities such as shares from the employer, in certain circumstances. They will simplify the process to make a joint election to transfer the NIC liability to employees, by removing the requirement on the employer to submit the election form to HMRC for pre-approval from 1 May 2025.

Reversal of Requirement to Report Detailed Employee Hours Paid

Your may not be aware that each time you are paid, your employer notifies HMRC as part of its payroll run and must report how many hours you have been paid but this was about to become even more technical.  The government does want to know hours worked to match against if Universal Credits have been paid, if you work too many hours, you lose benefits, but the government will not be taking forward and will not have to provide more detailed employee hours data to HMRC from 6 April 2026.

Mandating Payrolling of Benefits in Kind

Mandatory reporting and paying of Income Tax and Class 1A National Insurance contributions on benefits in kind via payroll software, will now be introduced from 6 April 2027 instead of 6 April 2026.

Reforming HMRC systems and  Income Tax Self Assessment Reporting Thresholds

Where trade, property and ‘other taxable’ income will be aligned and changed to £3,000 (gross) each. This will remove the requirement for up to an estimated 300,000 taxpayers to submit a Self Assessment return, so that taxpayers are only required to do so where necessary and can simply report their income through a new digital reporting service. Taxpayers will have a choice. You can remain in Self Assessment if you wish or use the new service.

Voluntary National Insurance contributions — Enhancing ‘Check Your State Pension forecast Service’

The government intends to further enhance the check your state pension forecast service, which supports people who want to make payments for voluntary National Insurance contributions to fill gaps in their National Insurance record.

Reviewing National Insurance contributions annual maximum refunds process

The government will review the process for refunding National Insurance contributions under the annual maximum rules. Currently, customers who pay more than they are liable for can make a claim for a refund from HMRC at the end of the tax year. The government will review the process to make it easier and faster for customers to access the refunds they are entitled to.

Simplifying HMRC Guidance and Communications

The government recognises that reporting requirements for taxable income must be easy for taxpayers to understand. HMRC will work with taxpayer representative organisations and stakeholders to ensure that guidance on when individuals need to register for Self Assessment is clear.

The various packages are designed to reduce administrative burdens to save taxpayers, employers and traders time with the aim to modernise and reform HMRC systems and processes to simplify dealings with HMRC and tackle backlogs such as:

Comment

Good luck with all of that, in particular for ‘dispute resolution’, given the ‘shambles’ that HMRC is in at present having created 30 hours additional works for us for two of our clients and still not refunded either of them money and certainly no interest.  They cannot even tell us whether a bank transfer or a cheque has been sent to one client, that is how inept their systems are.  The above list also just goes to show how complex successive governments have made taxation and no doubt all staff securing a Ph. D in stealth taxes to the destriment of UK businesses.