In this month’s Enews, we look at HMRC’s warning for those sole traders and landlords who will soon be required to use Making Tax Digital. There is also the Chancellor’s plan to level the playing field for UK businesses and research on AI adoption to update you on. We also look at HMRC’s new online tool that will help businesses and individuals complete compliance checks. There are also new rules protecting consumers of crypto assets and a warning over Gen Z’s employment crisis to update you on. We look at HMRC’s changes to late and penalty interest rates. There are also record numbers filing self assessment in the first week of the new tax year and the outlook from a key employment survey to update you on. Finaly we look at backing from the UK’s professional tax and accounting bodies for HMRC’s e-invoicing initiative. There is also news on the unpreparedness of sole traders for MTD and HMRC’s child benefit reminder to parents of older teens to update you on.
- Sole traders and landlords get Making Tax Digital warning
- Chancellor unveils plans to maintain level playing field for British business
- Lack of trust and board expertise putting brakes on AI adoption
- HMRC launches new online help for compliance checks
- New cryptoasset rules aim to protect consumers
- Government warned over ‘lost generation’
- HMRC cuts late payment interest rate to 8.25%
- Record numbers file assessment in first week of new tax year
- One in four employers plan to make redundancies in next quarter
- Tax and accounting bodies back e-invoicing adoption
- Almost half of sole traders unprepared for MTD changes
- Parents of teens reminded to extend Child Benefit claim online
Sole traders and landlords get Making Tax Digital warning
Sole traders and landlords with an income over £50,000 have been warned that there is less than a year before they will be required to use Making Tax Digital for Income Tax (MTD for IT).
HMRC says the launch of MTD for IT on 6 April 2026 will mark a significant and time-saving change in how these individuals will need to keep digital records and report their income to the tax authority.
HMRC says that by keeping digital records throughout the year, sole traders and landlords can save hours previously spent gathering information at tax return time – allowing them to spend more time focusing on their business activities.
Quarterly updates will spread the workload more evenly throughout the year, bring the tax system closer to real-time reporting and help businesses stay on top of their finances and avoid the last-minute rush.
HMRC is urging eligible customers to sign up to a testing programme on GOV.UK and start preparing now.
Craig Ogilvie, HMRC’s Director of MTD, said:
‘MTD for IT is the most significant change to the self assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax.
‘By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year.’
Internet link: HMRC press release
Chancellor unveils plans to maintain level playing field for British business
Chancellor Rachel Reeves has said British businesses will be supported to trade freely as she takes action on practices that undercut fair trade, such as the dumping of cheap goods into the UK.
The government announced immediate action by the Trade Remedies Authority (TRA), the body responsible for defending the UK against certain unfair international trade practices.
The Chancellor also announced her intention to review the customs treatment of Low Value Imports, which allows goods valued at £135 or less to be imported without paying customs duty.
Major UK retailers have called on the government to amend the customs treatment, arguing that it disadvantages them by allowing international companies to undercut them.
William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), said:
‘There are still many twists and turns to go in the trade war between the US and China. It remains to be seen whether cheap Chinese goods will flood the UK as a result.
‘But the risk is present. It is sensible for the TRA to have all the necessary tools and resources to take action to prevent the UK being swamped with unfairly cheap products.
‘If domestic production suffers from a surge in imports or dumping of goods it is right that business has clearer access to make their case to the TRA. It must have the resources it needs to enforce a level playing field.’
Internet link: GOV.UK BCC website
Lack of trust and board expertise putting brakes on AI adoption
A lack of trust and a shortage of expertise at board level are limiting the adoption of AI in UK businesses, according to research from the Institute of Directors (IoD).
Just over half of survey respondents said limited expertise or understanding of models and tools at management and board level was restricting adoption of AI. In addition, 50% said that lack of trust in AI outcomes was their biggest concern.
Security risks, such as cyber, data protection and privacy, as well as employee skills gaps and ethical risks, are also significant barriers for business leaders.
Of the half of UK business leaders whose organisations use AI, 78% cite increased productivity and operational and administrative efficiencies as the most significant benefits.
Dr Erin Young, Head of Innovation and Technology Policy at the IoD, said:
‘While UK business leaders in early AI adoption are enthusiastic about greater productivity and efficiencies, they face a complex set of barriers to top-down implementation and governance – from skills and expertise gaps at board level, to a lack of trust and fundamental concerns about reliability, security and business value across AI capabilities, tools and applications.
‘Given a focus on addressing private sector user-adoption barriers in the UK government’s AI Opportunities Action Plan, it is important that these concerns are addressed strategically for businesses of all sizes across sectors in the Industrial Strategy.’
Internet link: IoD website
HMRC launches new online help for compliance checks
HMRC has launched a new online interactive tool to help guide both businesses and individuals through tax compliance checks.
The Interactive Compliance Guidance tool available on GOV.UK provides information to help customers understand:
- HMRC compliance checks.
- Why HMRC has requested specific information or documents.
- How to request extra support due to health or personal circumstances.
- How to appoint someone to act on your behalf.
- What to do if you disagree with a decision made by HMRC.
- How to pay a tax assessment or penalty.
The new tool brings together existing compliance guidance and videos in one place, making it easier to find and navigate the appropriate information, HMRC says.
Joanne Walker, Low Incomes Tax Reform Group (LITRG) Technical Officer and Customer Experience Advisory Group (CEAG) member, said:
‘When unrepresented customers have a tax compliance problem, it can be difficult for them to find the help they need.
‘This new interactive tool from HMRC makes compliance guidance readily accessible in one place, and easier for people to find the information that is relevant to them. The links to the extra support available will be especially valuable for the most vulnerable customers.’
Internet link: HMRC press release
New cryptoasset rules aim to protect consumers
The government is introducing legislation to regulate cryptoassets and improve consumer protection for the asset class.
The new rules will apply to firms offering services for cryptoassets like Bitcoin and Ethereum.
The government says that around 12% of UK adults now own or have owned crypto, up from just 4% in 2021. But it says owners have too often been left exposed to risky firms and scams.
Under the new rules, crypto exchanges, dealers and agents will be brought into the regulatory perimeter. Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection and operational resilience, like their counterparts in traditional finance.
Chancellor of the Exchequer, Rachel Reeves said that the UK and US will use the upcoming UK – US Financial Regulatory Working Group to continue engagement to support the use and responsible growth of digital assets.
Ms Reeves said:
‘Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers. Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the UK.’
Internet link: GOV.UK
Government warned over ‘lost generation’
The government should urgently tackle the jobs crisis among young people or it will risk facing a ‘lost generation’, according to the British Chambers of Commerce (BCC).
In a report the BCC says immediate action is needed to remove barriers preventing almost a million people in Generation Z from engaging with work, education and contributing to society.
The report highlights that the economic benefit of tackling the challenge of young people not in employment, education of training (NEETs) could add £69 billion to UK output.
And it calls for government to align its response to the issue across all departments as the problem is likely to worsen in the short term.
The report also calls for business to look for ways to open up employment opportunities to young people, as just 13% of firms currently have specific recruitment, training or retention plans for under 25s.
SMEs in particular are missing out on the benefits of a targeted approach to youth employment, the BCC adds.
Shevaun Haviland, Director General of the British Chambers of Commerce, said:
‘The UK’s active workforce is rapidly ageing, while the number of young people who are not in employment, education or training is at its highest level for a decade.
‘Generation Z face a double whammy of increasing barriers to entering the workforce, and reducing opportunities as the number of vacancies continues to fall.
‘But research shows the longer we leave this pool of talent to drift away from the workplace the harder it becomes for them to engage.’
Internet link: BCC website
HMRC cuts late payment interest rate to 8.25%
HMRC will reduce late payment and repayment interest rates from 28 May following the 0.25% cut in the base rate last week.
The Bank of England cut the base rate to 4.25% on 8 May, triggering a 0.25% cut in HMRC interest rates which are pegged to the base rate.
From 28 May, the late payment interest rate will be cut to 8.25% from 8.5%, which was the highest rate charged since February 2000.
The repayment interest rate will be cut to 3.25% from 3.5% from 28 May.
HMRC late payment interest is set at base rate plus 4%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.
Following the cut to the base rate David Bharier, Head of Research at the British Chambers of Commerce said:
‘Many firms, desperate for financial respite, will be keen to see further rate cuts in the months ahead.
‘National insurance hikes, alongside other cost pressures, are already having an impact, including increased prices, hiring freezes, and reduced investment.
‘The next few months are likely to remain volatile and the full impacts of a global trade war are still uncertain. Businesses will be looking to government to provide stability and avoid any further pain.’
Internet link: GOV.UK BCC website
Record number file assessment in first week of new tax year
Almost 300,000 people filed their tax return in the first week of the new tax year, setting a new record, HMRC has revealed.
Self assessment taxpayers can submit their tax return for the 2024/25 tax year between 6 April 2025, the first day of the new tax year and the deadline on 31 January 2026.
This year 299,419 filed in the first week, up 28,503 compared to the 270,916 people who did so in 2020.
There were 57,815 early filers on 6 April, which was lower than the 67,870 people who did so in 2024.
HMRC is encouraging people to file early so they know what tax they owe sooner, plan for any payments in advance and can avoid the stress of leaving it until January.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘Filing your self assessment early means you can spend more time growing your business and doing the things you love, rather than worrying about your tax return.
‘You too can join the thousands of customers who have already done their tax return for the 2024/25 tax year by searching ‘self assessment’ on GOV.UK and get started today.’
Internet link: HMRC press release
One in four employers plan to make redundancies in next quarter
The number of employers expecting to increase staff numbers in the next three months has fallen to a record low outside of the pandemic, according to research from the Chartered Institute of Personnel and Development (CIPD).
One in four employers plan to make redundancies in the next three months, the report added.
A survey of 2,000 businesses found issues such as rising employment costs and growing global uncertainties.
The CIPD said the rate of employers expecting to increase headcount has fallen sharply among large private sector employers and in retail in particular.
James Cockett, Senior Labour Market Economist at the CIPD, said:
‘From April, employers across the UK have begun to feel the full effect of increases to National Insurance Contributions and the National Living Wage outlined in last year’s budget.
‘They’re also looking at the potential impact of the Employment Rights Bill on employment costs and plans, and this comes at a time of global uncertainty. Employer confidence is low, which is being reflected in their hiring plans.
‘The Employment Rights Bill is landing in a fundamentally different landscape to the one expected when it formed part of the Labour manifesto in summer of last year.
‘It was always going to be a huge change for employers but they’re operating in an even more complex world now. It’s vital the government works closely with employers to balance the very real risk of reductions in investment in people, training and technology with their desire to reduce poor employment practice.’
Internet link: CIPD website
Tax and accounting bodies back e-invoicing adoption
The UK’s professional tax and accounting bodies have backed the adoption of e-invoicing in their responses to a government consultation.
The Chartered Institute of Taxation (CIOT) says that HMRC will need to prioritise the effective implementation of e-invoicing if it is to drive its adoption among UK businesses.
The CIOT has recommended that any e-invoicing software should be built to flexible, agreed minimum standards that accommodate variations in invoicing requirements in tax legislation, while ensuring clear expectations around operability, security, and data accessibility for taxpayers.
Ellen Milner, CIOT Director of Public Policy, said:
‘If the UK government desires greater adoption of e-invoicing without mandating its use, HMRC will need to consider a package of options to encourage voluntary adoption.
‘This may include an educational and training campaign, financial incentives, providing a better business experience, effective implementation and systems that instil confidence to move along the digital journey.’
ICAEW’s Tax Faculty also responded to the consultation on increasing the adoption of e-invoicing by UK businesses and the public sector.
It said:
‘Many countries, including EU member states, have already introduced e-invoicing mandates or national frameworks. ICAEW believes that the UK’s current lack of a co-ordinated e-invoicing policy places its businesses at a growing disadvantage and could deter capital investment. The government’s consultation is a timely opportunity to close the gap and lay the foundations for future digital transformation.
‘However, successful implementation of e-invoicing will require careful planning, targeted support and alignment with existing international standards.’
Internet link: CIOT website ICAEW website
Almost half of sole traders unprepared for MTD changes
Almost half of UK sole traders feel unprepared for upcoming Making Tax Digital (MTD) for Income Tax changes, according to research conducted by IRIS Software.
The new MTD rules mandate digital record-keeping and quarterly Income Tax updates starting April 2026 and non-compliance can lead to significant penalties.
The study found that almost one in three sole traders have never heard of MTD,
MTD for Income Tax will require self-employed individuals, landlords and small businesses earning over £50,000 to keep digital financial records and submit quarterly updates using compatible software from April 2026. The threshold drops to £30,000 in 2027 and to £20,000 in 2028.
The changes could place a significant burden on business owners, who will be required to submit at least five updates to HMRC each year.
Mark Chambers, Managing Director at IRIS Accountancy, said:
‘These findings highlight an important moment of opportunity for the UK’s sole traders. With MTD just around the corner, there’s a real chance for businesses to modernise their financial processes, unlock efficiencies, and gain better visibility of their income and expenses.
‘It’s encouraging to see that nearly a quarter feel ready to meet the requirements, but that leaves a significant portion not experiencing the benefits of digitalised tax reporting that compliance will bring.’
Internet link: IRIS Software website
Parents of teens reminded to extend Child Benefit claim online
Parents of 16 to 19-year-olds will receive reminders from HMRC to extend their Child Benefit claim by 31 August if their child is staying in education or training or payments will automatically stop.
Child Benefit will automatically stop on 31 August on or after a child’s 16th birthday if it’s not extended.
Between May and July, letters will be sent to parents reminding them to go online to confirm if their teenager is staying in full time education or approved training after they finish their GCSEs to continue receiving their Child Benefit.
Parents can extend their claim via the HMRC app or online on GOV.UK. The letters also contain a QR code which takes parents straight to the digital service on GOV.UK.
Child Benefit is currently worth £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.
Myrtle Lloyd, HMRC’s Director General for Customer Services, said:
‘Child Benefit is an important boost to families. As soon as you know what your teenager is planning to do, extend your claim in minutes to guarantee your payments continue in September. Simply go to GOV.UK or the HMRC app to confirm today.’
Internet link: HMRC press release
