HM Revenue & Customs (HMRC) recently published its latest round of penalties for businesses breaching money laundering regulations, and the numbers should make any business owner sit up and take notice.
While the 2025 Spending Review focused on long-term investment rather than introducing new taxes, the scale of spending suggests that future tax rises are likely.
Where have the Government recently invested funds?
The Chancellor pledged multi-year funding for health, defence and public infrastructure, setting departmental budgets until 2028–29.
Key announcements included:
However, funding for other vital areas like local government, policing, and the environment will either remain flat or fall.
Where will the money come from?
No tax rises today does not mean no future tax rises.
Despite assurances that new spending is fully funded, rising debt interest payments, global volatility and flatlining productivity all place pressure on the Chancellor’s future fiscal decisions.
From a technical standpoint, experts believe the most likely targets include:
These changes have the potential to impact both business cash flow and personal wealth, which is why advanced planning is essential.
What can you do to prepare for potential tax changes in the Autumn Budget?
The absence of immediate change should not create complacency.
Now is the right time for you to:
With significant investment flowing into defence, healthcare, infrastructure and technology, now might also be an ideal time to explore public sector contract opportunities and position your business to support the UK’s long-term development.
The UK Government has confirmed that it will reduce green levies for energy-intensive industries.
These cuts aim to drive growth in key sectors, such as manufacturing and clean energy.
What are green levies?
A green levy is an environmental charge added to energy bills to help fund renewable energy projects and reduce carbon emissions.
For many businesses, these levies have driven up energy costs and eroded international competitiveness.
What does the change mean for business?
Under the new plan, electricity bills for energy-intensive sectors could fall by up to 25 per cent from 2027.
More than 7,000 manufacturing firms are expected to benefit, according to early Government estimates.
Steel, chemical, ceramic, and paper manufacturers are among the sectors expected to see the most immediate impact due to their higher energy consumption.
However, a further trickle-down effect could benefit many more SMEs in future.
Eligibility criteria and exemption details are due to be confirmed after a two-year consultation.
What are the benefits of slashing green levies?
Key potential benefits of cutting green levies include:
However, there are concerns from environmental groups that rolling back levies could stall the UK’s progress toward net zero.
Next steps for business owners
Firms with moderate energy use may face higher levies or pricing adjustments elsewhere in the system, as the Government looks to offset the cost of exemptions.
While reforms and closer alignment with EU carbon pricing have been suggested to cover the shortfall, the full funding model remains unclear.
To prepare, you should:
Consult with your accountant for personalised preparation plans.
57 per cent of small to medium-sized enterprises (SMEs) have warned of rising costs over the next quarter, according to Intuit QuickBooks’ latest Small Business Insights survey.
Given this startling figure, all businesses should take care to manage cash flow constraints caused by inflation.
Boost financial awareness across your staff
Financial awareness should not just be the preserve of your finance professionals.
Educating your whole team on spending and budgeting will equip them to handle future financial decisions.
Model different scenarios
Model different scenarios, such as supply chain issues or customer downturn, to ensure your financial forecasting is adaptable.
Although it is difficult to predict every scenario, preparing for a range of possibilities will help you to respond effectively to new challenges.
Review your numbers regularly
Schedule a regular review of your income and expenditure to help you spot problems, identify opportunities to cut costs, and assess the impact of external and internal changes.
Cloud accounting software can enhance these reviews by providing real-time data and insights into your finances.
Software can also save you valuable time and money by automating routine tasks, such as sending invoices and reminders.
Keep your credit under control
One of the single largest contributing factors to poor cash flow is outstanding payments from customers.
Improving your credit control process, including recognising outstanding payments and chasing them effectively, can help to ensure you have sufficient cash flow.
However, when it comes to persistent late payers, it may be worthwhile assessing their continued benefit as a customer and seeking redress sooner rather than later if they have a substantial amount outstanding.
Do not panic
Amidst the pressures of inflation and rising costs, it is important to stay calm.
Panicking will lead to rushed decisions that are unlikely to serve your business interests in the long run.
Instead, take a moment to step back and review the situation calmly with our expert accountants.
Protect your business against rising costs by contacting our cash flow experts today.
The way families make Child Benefit repayments to HM Revenue & Customs (HMRC) is changing.
From the summer, many families will have the option to report their Child Benefit payments and pay the High Income Child Benefit Charge (HICBC) directly through their PAYE tax code instead of filing a Self-Assessment tax return.
How will it work?
For eligible employed parents, the option to pay directly through PAYE will be simpler compared to Self-Assessment.
However, those who wish to continue paying the HICBC through Self-Assessment may continue to do so.
Taxpayers who are required to file Self-Assessment tax returns for other reasons, such as self-employment, will still need to report the HICBC on these returns.
What is the HICBC?
The HICBC is a charge on families where one person earns £60,000 or more.
For every £200 over this amount, their Child Benefit is paid back at one per cent.
This means that families must pay back all their Child Benefit where either parent has income in excess of £80,000.
Families who effectively receive no Child Benefit because of the HICBC still receive the other perks of Child Benefit, such as National Insurance credits and a National Insurance number for each child when they turn 16.
This is why many parents continue to register for Child Benefit, despite not receiving a payment each month.
What should I do now?
To pay the HICBC via PAYE, you will need to register through HMRC’s online service.
HMRC will contact you when the service goes live.
If you have previously opted out of Child Benefit payments and would like to opt back in, you can restart your payments online or via the HMRC app.
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The tax gap, the difference between the amount of tax owed and collected, has long been a thorn in HM Revenue and Customs’ (HMRC’s) side.
HMRC believe that last year, a total of £46.8 billion of tax was left uncollected, which equates to just over five per cent of the overall tax owed in the country.
Once again, SMEs have been identified as the largest contributors to the tax gap and inevitably are once again in the sights of the tax authority.
Why are SMEs being targeted by HMRC?
In the 2023/24 fiscal year, SMEs failed to pay 40 per cent of the Corporation Tax they owed, which meant that only £22 billion of the £36.7 billion owed was collected.
As the Government is currently trying to find the funds needed to make the June 2025 Spending Review possible, it is no wonder that the potential £14.7 billion of unclaimed tax has piqued its interest.
While it is unlikely to be able to recoup every penny, the Government plans to raise an extra £7.5 billion by closing the tax gap.
To achieve this, HMRC have been awarded £1.7 billion to fund an additional 5,500 compliance and 2,400 debt management staff.
Why don’t SMEs pay their taxes?
Plenty of SMEs do pay their taxes, but there is a valid concern over why so many seem not to.
Many of those responsible for operations in SMEs find the tax system confusing, or they may not have the resources or support to achieve accurate financial record-keeping.
A slow adoption of digital reporting can also be blamed in part for this, with some SMEs seeing digital solutions as expensive or complicated.
The enforcement of Making Tax Digital (MTD) for Income Tax may go some way to address the tax gap for micro businesses, sole traders and landlords, as it is going to be significantly harder for finances to slip through the cracks.
However, with MTD for Corporation Tax being scrapped, there will be no forced digitisation of records relating to Corporation Tax, which is why HMRC is expanding its operations.
With SMEs now firmly on the radar for tax compliance, we can expect further scrutiny to prevent the tax gap from growing any larger.
If you have made more than £1,000 from a side hustle last year, you might need to tell HM Revenue & Customs (HMRC), and the earlier you do it, the better.
The countdown is on. From April 2026, the Government will overhaul Statutory Sick Pay (SSP) as part of its Employment Rights Bill reforms.
Every year, the Chartered Institute of Payroll Professionals (CIPP) compiles a survey report determining the latest trends in payroll.
When this is published, it provides a valuable moment of reflection with a chance to consider how the future of payroll can move towards greater compliance.
Overall compliance is quite a mixed picture, so we are going to take a deeper look at the CIPP survey report.
Since 2019, all employees have been entitled to itemised payslips.
This was meant to empower employees to understand exactly how the fruits of their labour were being divided to avoid any confusion or friction.
As of the latest CIPP report, compliance with this has now reached 91.16 per cent.
While this is a good score, it is disconcerting that, after more than half a decade, compliance is still not absolute.
In other good news, compliance around Full Payment Submission (FPS) for payday reporting has increased by more than 10 per cent in the last year.
The previous survey listed this compliance as only being around 58 per cent, so while it is a relief to see improvement, there is still a long way to go.
A vast number of businesses may face repercussions from not fulfilling these compliance requirements.
If the recent changes to Companies House are anything to go by, there is a current trend of cracking down on noncompliance.
As this is an area where many businesses still seem to struggle, it is worth any payroll advisor giving particular focus to improve the rates of compliance in this regard.
Knowing that this may be something that clients struggle with may allow for conversations to take place to determine the extent of the knowledge concerning this.
Businesses are risking fines from HM Revenue and Customs (HMRC), so accountants can work alongside them to improve the overall quality of payroll compliance.
Disturbingly, the CIPP report does not chart entirely positive trends.
Compliance on holiday pay reference periods fell by 6.8 per cent.
This may be because of the nuances and complexities that surround holiday pay, with many businesses not able to accurately determine their full responsibilities.
This is resulting in diminishing rates of compliance and is a cause for concern for payroll experts.
Compliance training and raising awareness of the rules around holiday pay will help stem this issue before it becomes a greater problem.
While not a compliance issue, a disturbing 57.57 per cent of employers do not use any tools to help their employees understand their payslips.
This is a missed opportunity to help employees feel more connected to their wages and take greater control over their finances.
Payroll is not simply about ticking boxes for compliance, but should be about protecting and empowering employees.
There is scope for accountants to introduce best practices to businesses rather than solely focusing on compliance checks.
Employers can be shown the benefit of empowering employees, as this increases employee satisfaction and leads to a healthier work culture.
The main payroll focus of accountants should be on boosting compliance.
Many businesses fall into noncompliance through ignorance, so accountants can use their unique skills and expertise to highlight pitfalls and work to rectify issues.
The CIPP are due to release their next survey report soon, and it will be fascinating to chart the trends further.
