HMRC's Spring 2025 tax update

On 28 April 2025, the Government made several tax policy announcements. These included a delay to the introduction of mandatory payrolling of Benefits In Kind until April 2027, simplifications to the VAT Capital Goods Scheme and revisions to the Check Employment Status for Tax (CEST) tool.

HMRC sign

The simplification, administration and reform measures announced are designed to save taxpayers' and traders' time, increase certainty, and allow businesses to focus on adding value to the economy.

The announcements seek to modernise and reform HMRC systems and processes to simplify the experience for individuals and traders.

Employers

Delay in mandatory payrolling of benefits

The introduction of mandatory payrolling for Benefits In Kind (BIKs) is delayed by a year, to 6 April 2027.

  • This is to give more time for software providers, employers, tax agents and other stakeholders to prepare for the change.  
  • While mandatory payrolling will apply to most BIKs, employment-related loans and accommodation benefits will not be mandated. These may be payrolled voluntarily from April 2027. 
  • Employers who make an error relating to mandatory payrolling in their Real-Time Information (RTI) returns for 2027-28 will not be charged penalties for inaccuracies unless there is evidence of deliberate non-compliance. 

See Payrolling of benefits

Check Employment Status for Tax (CEST) tool revisions  

HMRC is revising its Check Employment Status for Tax (CEST) digital tool with effect from 30 April 2025, to make it easier to use.

  • HMRC is committed to standing behind the outcomes of the tool where it has been used correctly, and will publish guidance on how to answer the revised questions.

See Employment status & detailed checklist

Employment-Related Securities: employer’s National Insurance Contributions (NICs) elections process 

An employer can transfer their NICs liability to an employee who acquires Employment-Related Securities (ERS), such as shares from the employer, in certain circumstances, via a joint election process. 

  • The requirement for the employer to submit the election form to HMRC for pre-approval,  where the employer is using the election form template on GOV.UK, will be removed from 1 May 2025.

See Employee Shares: the Employment-Related Securities rules

VAT

Capital Goods Scheme

The Capital Goods Scheme will be simplified by:

  • Removing computers from the assets covered by the scheme.
  • Increasing the capital expenditure value of land, buildings and civil engineering work covered by the scheme to £600,000 (exclusive of VAT).  

See Capital Goods Scheme

Consultation: VAT treatment of business donations of goods to charity 

A consultation has been published on the VAT treatment of business donations of goods to charity.

  • Views are sought on a new VAT relief aligning the treatment of goods donated for distribution to those in need or use by the charity, with the existing relief for goods donated for onward sale.
  • The consultation closes on 21 July 2025.

See Consultation: VAT treatment of business donations to charity

Terminal markets order consultation: summary of responses

A summary of responses to the consultation on the legislative reform of the VAT terminal markets order has been published.

VAT online marketplace liability

HMRC report that VAT compliance on sales of goods from overseas sellers improved significantly following reforms in 2021, which require online marketplaces to account for VAT in certain circumstances.

  • Some compliance challenges remain, and the government will therefore explore, including through engagement with stakeholders, the merits and value of further reform to these rules.
  • For stakeholders who wish to register their interest in engaging with the Government on this issue, please emailThis email address is being protected from spambots. You need JavaScript enabled to view it.

See Online Marketplaces: Selling goods in the UK

National Insurance (NI)

Reviewing NICs annual maximum refunds process

The process for refunding NICs under the annual maximum rules will be reviewed.

  • Taxpayers 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 current process will be reviewed to make it easier and faster for taxpayers to access refunds.

See National Insurance: What's the maximum payable?

Voluntary NI contributions: enhancing the 'check your state pension forecast' service 

  • The 'check your state pension forecast' service, which supports people who want to make payments of voluntary NICs to fill gaps in their NI record, will be enhanced.

Tax compliance

Clarifying Self Assessment registration obligations

  • HMRC will work with taxpayer representative organisations and stakeholders to ensure that guidance on when individuals need to register for Self Assessment is clear.

See Do I have to file a tax return?

Simplifying the language used in HMRC letters

  • The Government and HMRC will work with the Administrative Burdens Advisory Board and other stakeholders to simplify the language used in HMRC letters.

Professional standards in compliance: improving guidance and support for taxpayers in compliance checks

A new interactive compliance guidance tool is being developed within GOV.UK to provide a better understanding of what to expect and what needs to be done at each stage of a compliance check, making it easier for taxpayers to get things correct and to understand their rights.

  • The launch is planned for 30 April 2025, and the tool will be continuously developed thereafter.

Making it simpler for third parties to use HMRC guidance in AI-powered products and services

  • The Government and HMRC will work with the Government Digital Service to explore how best to help businesses and other third parties leverage GOV.UK guidance in their own AI-powered products and services so taxpayers can benefit from the latest AI solutions to help them find the information they need.    

Consultation: improving HMRC’s approach to dispute resolution

A consultation has been published seeking views on options for simplifying, modernising and reforming HMRC’s approach to dispute resolution. 

  • The consultation focuses on the ease of access and use of HMRC’s Alternative Dispute Resolution (ADR) and statutory review processes. It closes on 7 July 2025. 

See Consultation on improving HMRC's approach to dispute resolution

Consultation outcome: new ways to tackle non-compliance

A summary of responses to the consultation on new ways to tackle non-compliance has been published. This consultation explored ways to simplify and modernise HMRC’s approach to correcting taxpayer inaccuracies.

  • The summary of responses includes the Government’s intention to consider further reform of revenue correction notices, approaches to taxpayer self-correction and broader reform of enquiry and assessment powers, including options to harmonise and simplify compliance powers across tax regimes.

See Consultation responses to tackling non-compliance

Companies

Ceasing Corporation Tax letters

  • HMRC will stop issuing six types of non-essential letters connected with Corporation Tax from June 2025. There will be no change to the overall Corporation Tax process.

Corporate Interest Restriction administration

The Government will engage with stakeholders on opportunities to simplify and improve the administration rules for Corporate Interest Restriction and reporting company appointments under the regime.

See Corporate Interest Restriction (CIR)

Consultation: transfer pricing scope and documentation

A consultation on two proposals for changes to the UK’s transfer pricing rules has been published.

  • The first proposal amends the current exemption from transfer pricing for Small and Medium-sized Enterprises (SMEs), bringing medium-sized enterprises into the scope of transfer pricing.
    • This sits alongside wider reforms that will largely give an exemption from transfer pricing for transactions wholly within the UK.
  • The second proposal introduces a requirement for in-scope multinationals to report certain information to HMRC on their cross-border related party transactions by filing an international controlled transactions schedule.
  • The consultation closes on 7 July 2025.
  • See Consultation: Transfer pricing – scope and documentation

Reform of transfer pricing, permanent establishment and Diverted Profits Tax

The Government has published a Consultation on draft legislation for the reform of the UK’s international tax rules.

  • The consultation includes proposed changes to UK tax legislation in three areas: transfer pricing, permanent establishment, and Diverted Profits Tax. It follows a policy consultation on these issues in the Summer of 2023.
  • The consultation closes on 7 July 2025. 

Restitution interest: changes to Part 8C of the Corporation Tax Act 2010

Draft regulations for technical consultation have been published to modify Part 8C of the Corporation Tax Act 2010.

  • This will make clear that the legislation applies only to awards made at a rate of interest greater than a statutory rate under the Taxes Acts.
  • The regulations will also permit a Part 8C assessment to be made within two years of the end of the accounting period when the restitution claim is finally determined (if the normal assessing time limit has expired).
  • See Corporation Tax: changes to restitution interest rules

Stamp Taxes

Consultation outcome: modernisation of the Stamp Taxes on Shares Framework

A summary of responses to the Stamp Taxes on shares modernisation consultation has been published. 

  • For the majority of proposals, the Government will be proceeding as outlined in the consultation document. Draft legislation will be published in due course, with a view to legislating for a single tax on securities to replace Stamp Duty and Stamp Duty Reserve Tax.
  • An online service is being designed and built for the reporting and payment of the single tax. 
  • The Government is aiming to introduce the single tax, its legislative framework, and the portal in 2027.

See Changes to share stamp taxes planned

Consultation: modernisation of the Stamp Taxes on Shares Framework – 1.5% charge

A consultation has been published seeking views on aspects of the 1.5% higher rate charge, which applies to certain transfers of UK securities overseas, with a focus on reducing unnecessary legislation and improving clarity.

Other taxes, duties, and announcements 

Cultural Gifts Scheme

  • From April 2026, the Cultural Gifts Scheme will be reformed by removing the restriction on jointly owned objects and allowing tax credits to be used more flexibly. 

See Cultural Gifts Scheme and Acceptance in Lieu

Reducing HMRC's outbound post

The Government is committed to modernising HMRC to become a digital-first organisation.

  • HMRC will reduce paper post sent, saving £50 million per year by 2028-29, while maintaining paper post provision for critical correspondence and the digitally excluded.
  • This will be achieved by investing in digital services to send and receive taxpayer information. Legislation to support a digital-first approach will be brought forward.

Reducing HMRC’s central London estate

  • The Government will reduce the HMRC estate in central London by 25% to improve value for money. By 2030, 85% of HMRC staff will be based outside of London.

Valuation Office Agency

  • The Government will bring the functions of the Valuation Office Agency, an Executive Agency of HMRC, within HMRC by the end of this financial year.

See Valuation Office subsumed by HMRC

Consultation: Soft Drinks Industry Levy (SDIL)

A consultation has been launched on proposed changes to the Soft Drinks Industry Levy (SDIL).

  • The proposals are to:
    • Reduce the minimum sugar content at which the SDIL applies to qualifying drinks from 5g to 4g. The SDIL standard rate would apply from 4g to 7.9g total sugar per 100ml, as opposed to 5g to 7.9g total sugar per 100ml currently.
    • Remove the exemption for milk-based drinks whilst introducing a ‘lactose allowance’ to account for the natural sugars in the milk component of these drinks.
    • Remove the exemption for milk substitute drinks with ‘added sugars’ beyond those sugars derived from the principal ingredient, such as oats or rice.
  • The consultation closes on 21 July 2025.
  • See Consultation: Strengthening the Soft Drinks Industry Levy

See Soft Drinks Industry Levy

Consultation: Single Remote Gambling Duty

A consultation has been published on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV and radio) into a single tax, rather than taxing it through the current three-tax structure.

Consultation: reform of Landfill Tax

A consultation has been published on the reform of the Landfill Tax.

  • Views are sought on the Government’s ambition to transition to a more circular economy, simplify the tax, reduce opportunities for error and non-compliance, and crack down on waste crime.
  • The consultation closes on 21 July 2025.
  • See Consultation on reform of Landfill Tax

Spirit Drinks Verification

The Spirit Drinks Verification Scheme will be simplified by reducing the fees operators pay to HMRC for verification. 

  • For operators whose current verification is due to expire on or after 1 July 2025, HMRC will charge a new flat fee of £250 per facility every two years for the next three fee cycles.

Vaping Products Duty: technical consultation response

The Government has published its response to the Vaping Products Duty technical consultation.

  • This sets out how the Government will implement the Vaping Duty Stamps scheme using hybrid physical duty stamps with digital elements, which will enable tracing through the supply chain.
  • See Vaping Products Duty consultation

Previous announcements and consultations

Reversal of the requirement to report detailed employee hours

As announced on 28 January 2025, the Government will not be taking forward the draft Income Tax (Pay As You Earn) (Amendment) Regulations 2025.

  • Employers will no longer have to provide more detailed employee hours data to HMRC from 6 April 2026.

See Proposed RTI reporting changes dropped

Income Tax Self Assessment criteria review

The Income Tax Self Assessment reporting thresholds for trading, property and ‘other taxable’ income will be aligned and changed to £3,000 (gross) each. 

  • Individuals with taxable income below these new thresholds can report their income through a new digital reporting service. Taxpayers will have a choice. They can remain in Self Assessment if they want or use the new service.
  • The changes will take place within this Parliament, with further details set out on publication of the transformation roadmap later this year.

See Side-hustle reporting threshold to treble

Electronic invoicing consultation

In February 2025, HMRC and the Department for Business and Trade published a consultation on promoting e-invoicing across UK businesses and the public sector.

  • This seeks views on the impact that different e-invoicing models would have on UK businesses.
  • The consultation closes on 7 May 2025. 

See E-invoicing consultation 

External links

HMRC: Summary of tax update spring 2025: simplification, administration and reform

Written statement to Parliament: Tax Update Spring 2025: Simplification, Administration, and Reform