HMRC Stakeholder Digest - May 2025

5 May 2025

Please see the following message from HMRC, which we are sharing for information:

HMRC NEWS 

Welcoming HMRC’s new Chief Executive and First Permanent Secretary John Paul Marks

Last month, John Paul (JP) Marks joined HMRC as the new First Permanent Secretary and Chief Executive. 

JP Marks has been a civil servant for over two decades and previously served as Permanent Secretary of the Scottish Government for 3 years.

In this video JP introduces himself and sets out his priorities, including closing the tax gap and raising 7.5 billion more per year by the end of this Parliament; improving our day to day performance and the experience of our customers; and modernising and reforming our tax and customs administration

PERSONAL TAX 

Changes to the amount of Child Benefit

Child Benefit payments increased last month. 

As of April 7, 2025, parents will receive £26.05 per week - or £1,354.60 a year - for the eldest or only child and £17.25 per week - or £897 a year - for each additional child. Child Benefit is usually paid every 4 weeks and will automatically be paid into a bank account. There is no limit to how many children parents can claim for.

The quickest and easiest way for parents and carers to claim Child Benefit is by downloading the HMRC App or online through the digital service. As well as being able to view and manage Child Benefit payments a new function in the app means parents get a notification once their claim is received. Parents who claim online could receive payment in as little as three days.  

Families are encouraged to claim Child Benefit as soon as they can after their baby is born as it can only be backdated up to three months.

Introduction of Making Tax Digital (MTD) for Income Tax for sole traders and landlords

The way sole traders and landlords report their income and expenses to HMRC is changing. 

From April 2026, Making Tax Digital (MTD) for Income Tax means customers with gross income from self-employment and property more than £50,000 will need to use compatible software to keep digital records and send updates to HMRC each quarter. This will encourage growth and help customers stay on top of their tax affairs. 

Volunteering to test the service is the best way to prepare for the change.

Taking part gives customers the opportunity to become familiar with the processes and software before it becomes a legal requirement.

Repeal of furnished holiday letting regime, effective from April 2025

Property investors, landlords and their representative bodies should be aware that as of 1 April, furnished holiday let properties are now subject to the same rules as other property income and gains.

This change applies as of 1 April 2025 for Corporation Tax and Corporation Tax on Capital Gains and 6 April 2025 for Income Tax and Capital Gains Tax.

This change has been brought in to align rules for Furnished Holiday Lettings and other properties, so that all are treated fairly for tax purposes and to simplify tax rules for landlords.

For more information and updated guidance please refer to the Property Income Manual.

Expanding the Cash Basis

Last month we told you about changes to the cash basis which applied from 6 April 2024. 

Cash basis is a way to work out your income and expenses for your Self Assessment tax return if you’re a sole trader or partner. It means that you only need to declare income when you have actually been paid. The changes we’ve introduced make it easier for many businesses to use it. 

We can confirm the guidance for using the cash basis has been updated and is now available for review on GOV.UK

BUSINESS TAX

Employer National Insurance changes  

Changes to National Insurance rates and thresholds for employers for 2025 to 2026 took effect on 6 April 2025.

Some employers are now liable to pay employers’ National Insurance and report employee pay and deductions to HMRC for the first time. Guidance on Pay As you Earn (PAYE) and payroll for employers can be found online at GOV.UK.

How employers are affected  

  • The Employer Secondary Class 1 National Insurance contributions (NICs) rate increased to 15%. Class 1A and 1B NICs rates also increased to 15%.
  • The Secondary Threshold for when employers start to pay employer NICs on an employee’s salary is lower. Employers now need to pay employer NICs where they employ staff earning £5,000 a year or more and report payments to HMRC.
  • Those new to paying employer NICs need to register for PAYE with HMRC and use payroll software.
  • Employment Allowance (EA) reduces eligible employers’ NICs. From 6 April 2025, the threshold was removed which restricted it to employers with National Insurance bills of less than £100,000 the previous tax year. The maximum allowance also increased from £5,000 to £10,500.
  • Employers can check if they're eligible for EA and find out what they could get. Further guidance for employers, including details on connected companies, connected charities, single-director companies, employers of care and support workers is available on GOV.UK.
  • More eligible businesses will be able to claim, and at an increased amount. There have been no other changes to the EA eligibility criteria.
  • Small Employers’ Relief compensation rate increased to 8.5%, for those who paid £45,000 or less in Class 1 NICs, aligning it with employer National Insurance changes. Guidance on how to get financial help with statutory pay is available on GOV.UK. 

Paying your PAYE and VAT bill by direct debit 

HMRC reminds businesses and employers that you can make your PAYE or VAT payments simpler by signing up to pay by direct debit. 

Direct debit is the most accurate way to pay your PAYE and VAT tax bills, reducing the burden of having to make the payment yourself, so you don’t need to work out how much you need to pay or miss a payment deadline.  

Payments are automatically collected from your bank account based on the information you provide in your:

  • Full Payment Summary and Employer Payment Summary for PAYE tax bill 
  • VAT return 

Visit GOV.UK to pay your PAYE bill by Direct Debit, or to pay your VAT bill using Direct Debit. 

GENERAL TAX

HMRC launches new online interactive help for compliance checks 

Business and individuals can now benefit from HMRC’s new online interactive compliance guidance tool that guides customers through tax compliance checks. It is one of several recently launched interactive guidance tools. These include our popular ‘VAT Registration Estimator’ and guidance to support people working for themselves, such as the ‘Set up as a sole trader: step by step’ and ‘Check what taxes may apply to you as a sole trader’. 

This new interactive compliance guidance tool will also benefit caseworkers by providing a single point of reference where customers can be directed toward answers for questions they may have. Information on why HMRC requests specific information, where to find extra support and how to appoint someone to act on their behalf are spotlighted.

Changes to tax rules for non-domiciled individuals

The previous tax rules for non-UK domiciled individuals have ended, replaced by a new system based on tax residence. Updated guidance is now available on GOV.UK.

These changes affect: 

  • individuals and employees with non-domicile status 
  • employers who employ globally mobile employees 
  • new arrivals with foreign income, gains, or non-UK assets
  • trustees of property settled into trust by individuals who previously held non-domicile status—or who have changed their residence status 

Employers and their tax representatives 

Any HMRC directions issued before 6 April 2025 have ceased to take effect. Employers wishing to operate PAYE on a proportion of an employee’s income for the 2025/26 tax year must check the employee's eligibility under the new rules and notify HMRC. 

Please review the guidance on globally mobile employees at GOV.UK.

Individuals and their tax representatives 

Qualifying new residents in the UK may claim 100% tax relief on Foreign Income and Gains during their first 4 years of residence. Consult the new guidance on the 4-year Foreign Income and Gains regime. Non-UK assets are subject to Inheritance Tax if an individual has been UK resident for at least 10 out of the last 20 tax years immediately preceding the chargeable event (including death).

Please consult the guidance to check if you're liable to Inheritance Tax on non-UK assets and trusts.

Closure of the HMRC online community forums

HMRC’s online Customer and Agent Forums will close on 30 June 2025 in response to the increasing popularity of our newer digital support channels.   

HMRC’s Digital Assistant, Webchat, and social media channels offer a range of tailored support for customers, addressing queries quickly and efficiently with our online guidance often removing the need to get in touch at all for many enquiries.  

The closure aligns with HMRC's Digital Channel Strategy, which prioritises services that are quick and easy to use, allow customers to self-serve and provide automated solutions with real-time support.  

Closing the forums also allows us to redirect resource to support our most popular channels and develop technologies that meet current and future customer needs.    

In preparation for the closure, the forums will stop accepting new queries from early June 2025.

Open consultations:

Consultation on Climate Change Levy: electrolytic hydrogen and energy context

At Spring Statement 2025, the government committed to removing Climate Change Levy (CCL) costs from electricity used in electrolysis to produce hydrogen. This will support the growth of low carbon hydrogen production, which will play an important role in decarbonising the power system and hard to electrify industrial and transport sectors. 

The government also announced that it will conduct a wider review of CCL, recognising that it is important for the UK’s tax system to remain agile and up to date with changing contexts. 

The government has published a consultation to determine the best legislative route to remove costs from electricity used in electrolysis to produce hydrogen and inform the scope of the wider CCL review. The consultation is open now until 7 May 2025.

Consultation update/new consultation as part of the Tax Administration Framework Review 

The government has published two documents, as part of HMRC’s review of the tax administration framework: 

  1. A summary of responses to the October 2024 consultation on new ways to tackle non-compliance, setting out the government response and next steps for HMRC which includes further considering reform of revenue correction powers, approaches to taxpayer self-correction and longer-term work to develop and test policy options to harmonise and simplify compliance powers across tax regimes.
  2. A consultation which seeks views on options for simplifying, modernising and improving HMRC’s approach to dispute resolution. Reform is being driven by an aim to resolve cases earlier and more effectively with dispute resolution methods.

Events and dates for your diary:

April events

30 April, Business Application Software Developers Association (BASDA) Annual Summit 2025 ‘‘AI Transformation: Harnessing the Future of Business Innovation

As artificial intelligence (AI) continues to revolutionise industries, this year’s BASDA Summit explored the latest trends, opportunities, and strategies for leveraging AI to drive business growth.

Jonathan Athow, Director General of Customer Strategy and Tax Design at HMRC delivered a plenary session in the morning about HMRC’s strategic priorities and the key role of external software and services. Later, Daljit Rehal, Chief Digital and Information Officer at HMRC joined a panel to discuss how businesses can navigate AI trends to support their growth.

May 2025 diary dates 

Here’s where you’ll find HMRC and our representatives in May. 

14, 15 May, Accountex London 2025, ExCeL London, London     

Accountex London 2024 is the world’s largest accounting and finance expo which will bring together around 10,000 accountancy and finance professionals.             

Senior representatives from HMRC will speak to delegates about Making Tax Digital and HMRC’s digital future. They will also join stakeholder panels to discuss HMRC and the future of tax, and trust in the tax systems. A Making Tax Digital exhibition stand will have subject experts on hand to provide advice and support.

Visit the Accountex London website to find out more. Please note that HMRC bears no responsibility for the accuracy, legality, or content of this external site or for that of subsequent links.