In this month’s Enews, we look at the tax implications of side hustles. There are also warnings on the Windsor Framework and cyber-attacks on UK businesses to update you on. We look at the unpopularity of some of the Labour government’s tax hikes. There are also warnings on reporting requirements for the holders of cryptoassets and news on a tax avoidance criminal offence to update you on. HMRC raises the alarm on Winter Fuel Allowance payments. There are also warnings around the impact of personal guarantees and news on recruitment at UK firms to update you on. We take a look at the Department for Work and Pensions’ (DWP’s) warning that future pensioners will be ‘worse off’, and the publication of draft legislation for Finance Bill 2025-26. There is also research carried out by the Federation of Small Businesses (FSB) that suggests that more small firms expect to shrink than grow to update you on.
- HMRC sends side hustle warning
- Windsor Framework starting to fracture the UK Internal Market, warns FSB
- More than 25% of UK businesses hit by cyber-attack in past year
- IHT on pensions most unpopular of Labour’s tax increases
- HMRC to fine crypto investors £300 for non-disclosure
- HMRC criminal tax offence plan risks going too far, warns CIOT
- HMRC warns of Winter Fuel Payment scams
- Harsh personal guarantees will chill growth ambitions, warns FSB
- Recruitment static as firms assess NICs impact
- Pensioners ‘set to be worse off’, warns DWP
- Government publishes Finance Bill supporting documents
- More small firms expect to shrink than grow
HMRC sends side hustle warning
HMRC is warning those earning extra income through a side hustle to check if they need to register for self assessment and file a tax return.
Side hustles can be any additional income stream, from online selling to content creation, from dog walking to property rental. It also includes gains or income received from cryptoassets.
Anyone who earns over the £1,000 threshold may need to register for self assessment and complete a tax return.
There is a checker tool on GOV.UK for those who aren’t sure if they meet the criteria. If they do and are new to self assessment they will need to register to receive their Unique Taxpayer Reference.
Guides for side hustlers can also be found at taxhelpforhustles.campaign.gov.uk.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘Whether you are selling handmade crafts online, creating digital content, or renting out property, understanding your tax obligations is essential. If you earn more than £1,000 from these activities, you may need to complete a self assessment tax return.
‘Filing early puts you in control – you will know exactly what you owe, can plan your payments, and avoid the stress of the January rush. You don’t need to pay immediately when you file – you have until 31 January to settle your tax bill.’
Internet link: HMRC press release
Windsor Framework starting to fracture the UK Internal Market, warns FSB
The Windsor Framework is creating severe disruption for small businesses and fracturing the UK Internal Market, warns the Federation of Small Businesses (FSB).
The Framework was negotiated as part of the UK’s exit from the EU and is intended to unlock opportunities for Northern Ireland.
However, FSB research found that 58% of those trading between GB and NI report moderate to significant challenges operating across the UK Internal Market. Over a third have already ceased trade rather than deal with new compliance demands.
In addition, strategic confidence is plummeting with 56% of affected firms not confident in planning for the year ahead, citing uncertainty and red tape.
Alan Lowry, Chair of FSB Northern Ireland, said:
‘Small businesses have shown immense resilience, but they cannot be expected to navigate complex new systems alone. The Windsor Framework was meant to offer opportunity – but, for many, it has delivered confusion, constraint and cost.
‘This report is a clear call to action. Policymakers must simplify processes, improve communication, and ensure support is accessible. Only then can the Windsor Framework become an enabler of growth rather than a barrier to trade.
‘Without immediate action, the Windsor Framework risks becoming a policy defined by missed opportunities, lost trade and disproportionate impacts on the smallest firms. A proactive response, led by the government, and delivered in partnership with industry, is essential to unlocking its full potential and preserving trust in the UK Internal Market.’
Internet link: FSB website
More than 25% of UK businesses hit by cyber-attack in past year
More than one in four UK businesses have been the victim of a cyber-attack in the last year with many risking ‘sleepwalking’ into disruption, according to a new report.
The survey conducted by the Royal Institution of Chartered Surveyors (RICS) found that 27% of companies said their building had suffered a cyber-attack in the last 12 months, up from 16% a year ago.
Almost three-quarters of business leaders believe that a cybersecurity incident will disrupt their business in the next 12 to 24 months, the survey found.
The paper identifies operational technology such as building management systems, CCTV networks, Internet of Things (IoT) devices and access control systems as risk areas.
It also notes concerns that some buildings use outdated operating systems (OS). A building opened as recently as 2013 could conceivably use Windows 7; an OS that hasn’t received security updates from Microsoft in over five years.
Paul Bagust, Head of Property Practice at the RICS, said:
‘Buildings are no longer just bricks and mortar, they have evolved into smart, interconnected digital environments embracing increasingly sophisticated and ever-evolving technologies to enhance occupier experience.
‘It is inconceivable to imagine a world where technology will not continue to pose a growing risk to a building’s operation, and it is equally impossible to consider that the management of digital risks will not be needed as an imperative measure to safeguard the future of a building and prevent systems from being compromised.
‘Failure to identify these growing digital challenges and incorporate security countermeasures risks businesses sleepwalking into cyberattacks.’
Internet link: RICS website
IHT on pensions most unpopular of Labour’s tax increases
Inheritance Tax (IHT) on pensions is the most unpopular of the tax raising measures introduced by the Labour government during its first year, according to a survey.
The survey conducted by investment platform AJ Bell found that 44% of respondents were opposed to the pension IHT proposals while only 21% supported them.
Other measures were also strongly opposed, including the decision to raise employer National Insurance contributions (NICs), with 41% against the tax rise and just 24% in support. Raising rates of Capital Gains Tax (CGT) and restricting IHT relief available to farmers were also unpopular.
However, some tax raising policies attracted net support with 48% in favour of raising the rates of stamp duty on second homes.
Tom Selby, AJ Bell’s Director of Public Policy, said:
‘This data shows tax rises of every shade are divisive. While some tax increases attract a balance of support, they still divide the room.
‘Nothing that emerged from Rachel Reeves’ red box over the last year enjoys support from a majority of voters, illustrating that even less controversial tax changes are still politically fraught.
‘IHT is often described as the most hated tax and this data backs that up. Proposals to subject unused pensions funds to IHT on death are the most widely opposed of all the tax raising measures announced so far.
‘We’re urging the chancellor to instead consider alternative proposals which would be fairer and simpler, without undermining her plan to tax unused pensions on death.’
Internet link: AJ Bell website
HMRC to fine crypto investors £300 for non-disclosure
UK-based holders of cryptoassets will have to provide personal details to crypto service providers or face penalties of up to £300 from HMRC.
The regulations will be introduced in the UK on 1 January 2026 and are part of the OECD Cryptoasset Reporting Framework (CARF). This requires crypto platforms to share detailed information with tax authorities of clients’ crypto transactions.
In addition, HMRC is already requiring full disclosure on self assessment forms for the 2024/25 tax year, so taxpayers who own crypto – like Bitcoin, Ethereum or Dogecoin –will have to include any crypto gains or income in their tax returns.
HMRC said the ‘new rules will help unmask anyone evading tax due on their crypto profits. Those who don’t comply risk a £300 fine from HMRC’.
Once data is received from service providers, HMRC will be able to identify those who haven’t been correctly paying tax on their crypto profits.
The Treasury estimates the measure will raise up to £315 million in tax revenue by April 2030, the same amount needed to fund more than 10,000 newly qualified nurses for a year.
Jonathan Athow, HMRC’s Director General for Customer Strategy and Tax Design, said:
‘Importantly, this isn’t a new tax – if you make a profit when you sell, swap or transfer your crypto, tax may already be due.
‘These new reporting requirements will give us the information to help people get their tax affairs right.
‘I urge all cryptoasset users to check the details you will need to give your provider. Taking action now and having this information to hand will help you avoid penalties in the future’
Internet link: HMRC press release
HMRC criminal tax offence plan risks going too far, warns CIOT
HMRC plans to introduce a tax avoidance criminal offence risks overreach, the Chartered Institute of Taxation (CIOT) has warned.
HMRC plans to create a new strict liability criminal offence for failing to disclose notifiable arrangements under the Disclosure of Tax Avoidance Schemes (DOTAS) regime without a reasonable excuse.
The CIOT argues that DOTAS is much too wide in its current formulation to be suitable for a criminal offence. Applying the proposed offence to all the DOTAS hallmarks seems excessive, it adds.
This is especially true, since the proposal is intended to be a response to specific issues with disguised remuneration mass-marketed tax avoidance schemes, the CIOT warns.
John Barnett, CIOT’s Vice President, said:
‘The government is right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.
‘However, every proposal to increase HMRC’s powers like this needs to be tested against a hypothetical test of what would happen if an HMRC officer decides to use or target the legislation inappropriately.
‘The present proposal places too high a level of reliance on HMRC’s unpublished (and as such, not transparent) internal governance process to provide appropriate, independent safeguards and work effectively, so that such an outcome could never happen in practice.
‘It is essential for building and maintaining trust in the tax system that the way HMRC use their powers and operate safeguards can be effectively monitored and subjected to appropriate oversight.’
Internet link: CIOT website
HMRC warns of Winter Fuel Payment scams
HMRC has issued a warning to be on high alert for scams linked to Winter Fuel Payments after receiving 15,100 reports of bogus activity in June.
Fraudsters have been targeting vulnerable individuals using SMS messages and phishing websites. During June, HMRC took action to remove 4,600 fake websites linked to Winter Fuel Payments.
HMRC is urging individuals to be alert to suspicious communications and to report any suspect phone calls, emails or texts via GOV.UK. HMRC will never contact people by text to claim Winter Fuel Payments or request personal information.
Anyone who is eligible for Winter Fuel Payments will receive the payments automatically without having to make a claim. Any recovery of the payment for pensioners whose total income is over £35,000 will be collected via Pay As You Earn (PAYE) or self assessment, dependent on how the individual pays tax on their income.
Kelly Paterson, HMRC’s Chief Security Officer, said:
‘Don’t be fooled by these attempts by scammers to take your money or access your personal information.
‘Never let yourself be rushed. If someone contacts you saying they’re HMRC, wanting you to urgently transfer money or give personal information, be on your guard. If a phone call, text or email is suspicious or unexpected, don’t give out private information or reply, and don’t download attachments or click on links.
‘I’m urging people to be alert to scams relating to Winter Fuel Payments and to report any suspicious texts, phone calls or emails to HMRC.’
Internet link: HMRC press release
Harsh personal guarantees will chill growth ambitions, warns FSB
Personal guarantees risk holding back the growth the economy needs, the Federation of Small Businesses (FSB) has warned.
Research by the FSB shows that 60% of limited company directors would borrow to grow their business – if they did not have to put hard-earned assets like savings or their houses on the line.
By contrast, only 13% would go ahead if a personal guarantee is required.
The FSB says the practice is now widespread, with 78% of directors who applied for finance being asked for a personal guarantee. Faced with this, a quarter decided not to take up finance at all.
The FSB is now calling on the government to close the Financial Conduct Authority (FCA) loophole that leaves these loans unregulated and unsupervised by banks.
It says that without action, would-be entrepreneurs could be deterred from starting up, with personal risk outweighing ambition and ideas left unrealised.
Tina McKenzie, Policy Chair of the FSB, said:
‘Personal guarantees should never be the default setting – they must be a last resort, used with care and absolutely necessary. If we are serious about building a climate where small firms can thrive and new ideas can take root, we need to rein in their overuse.
‘Otherwise, the speed of small business growth will slow to a snail’s pace at a time we need it the most, and we risk turning away a wealth of entrepreneurial talent.’
Internet link: FSB website
Recruitment static as firms assess NICs impact
Recruitment at UK firms remained static in the second quarter of 2025 as businesses continued to assess the impact of the rise in employer National Insurance contributions (NICs), says the British Chambers of Commerce (BCC).
The BCC’s latest Quarterly Recruitment Outlook (QRO) showed that 55% of firms attempted to recruit in the last three months, broadly similar to the 54% in the first quarter.
Of those firms trying to hire staff, 73% said they experienced difficulties, a slightly improved picture from the previous quarter.
Labour costs remain the biggest cost pressure for businesses, cited by 73% of respondents, the same as in the first quarter of the year.
Jane Gratton, Deputy Director of Public Policy, at the BCC, said:
‘While it is still early days, firms are beginning to sound the alarm on the impact of NICs and other employment costs. There could a big shock coming further down the line.
‘Increased labour costs and persistent skills shortages are making recruitment a significant challenge for SMEs.
‘At the same time, growth and productivity is being stymied by persistent skills shortages, particularly in sectors like transport, logistics and construction.
‘We need urgent action by policymakers to tackle the long running skills crisis. That means a more flexible and responsive training system, better support for people facing barriers to work, and a firm commitment to no further tax hikes on business.’
Internet link: BCC website
Pensioners ‘set to be worse off’, warns DWP
The Department for Work and Pensions (DWP) has warned that pensioners retiring in 2050 are set to be worse off than those retiring today.
According to the DWP, nearly half of working-age adults in the UK are not saving into a private pension. More than three million self-employed workers do not currently save into a pension, it added.
Just one in four low earners are saving into a private pension, the DWP also found. The DWP warned that action needs to be taken to boost retirement savings.
In order to tackle the issue, the DWP is utilising the Pensions Commission and has initiated the next review of the State Pension age. This is currently 66 years old and will rise to 68 by 2046.
Paul Nowak, General Secretary of the Trades Union Congress (TUC), said:
‘Everyone deserves dignity and security in retirement, but right now many workers – especially those in the private sector – will find themselves without enough to get by on.
‘Far too many people won’t have enough pension for a decent retirement, and too many – especially women, BME, disabled workers and the self-employed – are shut out of the workplace pension system altogether.’
Internet link: GOV.UK
Government publishes Finance Bill supporting documents
The government recently published draft legislation for Finance Bill 2025-26 for consultation.
The legislation includes an Inheritance Tax overhaul; measures intended to refine and simplify the Making Tax Digital for Income Tax (MTD for IT) and penalty reform regimes; tax adviser regulation; and changes to the treatment of carried interest.
Most measures included in the draft Finance Bill comprise a tax information and impact note (TIIN), which sets out what the policy seeks to achieve, and a summary of the expected impacts; draft legislation; and an explanatory note which provides a more detailed guide to the legislation.
The consultation closes on 15 September 2025. The final contents of the next Finance Bill will be decided by Chancellor Rachel Reeves.
Internet link: GOV.UK
More small firms expect to shrink than grow
The proportion of small firms expecting to contract, sell or close outnumbered the percentage hoping to grow, the Federation of Small Businesses (FSB) has warned.
The share of small businesses who said they expected their business to shrink or close, or to sell up the business over the next 12 months was 27%. This outweighed the 25% who predicted their business would expand in the second quarter of this year.
It is the first time in the history of the Small Business Index (SBI) from the FSB that the proportion of small firms bracing for contraction, sale or closure outnumbered the percentage hoping to grow.
The FSB says that the gloomy finding likely reflects small business sentiment around the introduction of higher levels of employer National Insurance contributions and rises in the National Living Wage.
It also reflects fears around the impending Employment Rights Bill, which the FSB says looks set to impose a new raft of costs and risks onto the shoulders of small employers.
Tina McKenzie, the FSB’s Policy Chair, said:
‘Confidence being so low and not showing any improvement since the start of the year, is bad enough.
‘But add in the fact that stagnation and pessimism among small businesses spells huge risk for the overall economy, and the upcoming Small Business Strategy needs to be ambitious enough to meet the scale of the challenge facing the UK’s small firms.’
Internet link: FSB website
