Enews October 2025

In this month’s Enews, there is news on how the digitally excluded can apply for a Making tax Digital exemption. There is also news on HMRC’s ability to recover debts from bank accounts and a warning about the damage long-term sickness is doing to the economy to update you on. There is news on what businesses want to see from the Autumn Budget. There is also the introduction of Vaping Products Duty next year and a reminder to young people to claim their tax-free savings to update you on. , there is news on how the Chancellor should use the Autumn Budget to reform the tax system. There is also a warning to the government over tax avoidance laws and news on HMRC’s use of ‘big data’ to update you on. There is news on HMRC’s measures to make Research and Development tax relief easier for businesses to understand. There is also news on enforcement action on employers that fail to comply with the minimum wage and HMRC’s latest tax guidance for businesses to update you on. There is news on a recommendation from the Low Incomes Tax Reform Group (LITRG) to make it easier for state pensioners to pay tax owed via a Pay as You Earn Scheme. There is also news on Chancellor Rachel Reeves’ ‘blitz on business bureaucracy’ and findings from the British Chambers of Commerce’s (BCC’s) latest Quarterly Recruitment Outlook to update you on.

 

• Digitally excluded can apply for MTD for Income Tax exemption now
• HMRC to resume taking tax owed by debtors directly from their bank accounts
• Long-term sickness blighting UK economy
• Budget must give UK business a competitive edge
• Countdown to Vaping Products Duty begins
• Over 750,000 young people yet to claim savings
• Chancellor should use budget to reform tax system, IFS says
• New tax avoidance law risks missing target, warns CIOT
• HMRC brings in extra £4.6 billion using ‘big data’ system
• Expert Advisory Panel to provide industry insight on R&D tax relief
• Employers named and shamed for minimum wage breaches
• Latest guidance for employers
• Give State Pension its own PAYE scheme, says LITRG
• Chancellor announces ‘blitz on business bureaucracy’
• Budget should tackle hiring issues, says BCC

Digitally excluded can apply for MTD for Income Tax exemption now

HMRC has opened up a service for landlords and self-employed to apply for exemption from Making Tax Digital (MTD) for Income Tax phase one.

From next April, people who are self-employed and landlords, and declare more than £50,000 of gross income in their 2024/25 self assessment tax return, will be legally required to follow the new MTD for Income Tax rules from April 2026 onwards.

Anyone who thinks they may be eligible for exemption must phone or write to HMRC. Third parties such as relatives and agents can do this on behalf of taxpayers if they are authorised. It will take up to 28 days for HMRC to respond with a decision.

Sharron West, Technical Officer at the Low Incomes Tax Reform Group (LITRG), said:

‘Because HMRC will deal with applications on a case-by-case basis, we don’t yet know how generous their interpretation of the rules will be, but we know that HMRC are keen to see as many people as possible manage their taxes online.

‘If you are already exempt from MTD for VAT, HMRC say you should contact them when the exemption application process opens so they can check your circumstances and confirm if you’ll also be exempt from MTD for Income Tax.

‘The clock is ticking and it’s time to get ready.’

Internet link: GOV.UK Chartered Institute of Taxation website

 

HMRC to resume taking tax owed by debtors directly from their bank accounts

HMRC has resumed its programme allowing direct recovery of money from debtors’ bank accounts.

The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a ‘test and learn’ phase’, the tax authority has confirmed.

DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said.

This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor’s account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers.

Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt.

Safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact.

The safeguards also include leaving a minimum of £5,000 in the debtor’s accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses.

HMRC said:

‘The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.’

Internet link: GOV.UK

 

Long-term sickness blighting UK economy

The UK must tackle its status as the sick man of the G7 if it wants to grow the economy, warns the British Chambers of Commerce (BCC).

Businesses want to see a major shake-up of the UK’s approach to ill-health which is excluding people from work and hobbling the economy, says the BCC.

It says around 7% of the UK workforce, almost 2.8 million people, is currently out of work due to long-term sickness, whereas the equivalent figure in Japan is just 3.5%.

The government’s own calculations put the lost economic output from this inactivity at a minimum of £130 billion, a figure which does not include welfare payments.

The BCC is calling for joint action by government and businesses to halt the rising tide of sickness and help people suffering ill-health to get back into work or stay there.

Shevaun Haviland, Director General of the BCC, said:

‘Sickness absenteeism is a growing concern. The UK has more than nine million people who aren’t working with one third of them suffering from long-term health conditions.  

‘This is a devastating loss of potential – for these individuals, the businesses that need them and our local economies.  

‘If the government is serious about growth, then we must turn the tide on this loss of talent. The evidence is also clear that being in work is good for health.  

‘Employers recognise the problem and want to do more, but the increasing cost and complexity of the landscape means many lack the resources to respond quickly and effectively.’

Internet link: BCC website

 

Budget must give UK business a competitive edge

The Autumn Budget must sharpen the UK’s competitive edge to stay ahead of the pack in an increasingly dog eat dog world, says the British Chambers of Commerce (BCC).

The BCC is calling for immediate action to cut the costs deterring investment, simplify regulations to unleash business and update its strategic offer.

The business group makes over 40 recommendations in a new report.

These include committing to no further increase in taxes that add to labour costs.

It also wants to see the axing of the windfall tax on oil and gas to address energy costs for business and the government providing a clear strategy for the North Sea’s transition to a renewable future.

In addition the BCC says the Budget should put rocket boosters under our economic diplomacy to unlock the full potential of ‘Brand Britain’.

Shevaun Haviland, Director General of the BCC, said:

‘There is also growing speculation about what’s coming in the Autumn Budget, which is still weeks away. This is eroding business confidence further as the government’s messaging of ‘tough choices’ adds to the fear.

‘But the Budget can be the decisive moment we need to back British business and put the economy on the front foot.

‘The UK is bursting at the seams with innovative ‘can-do’ businesses that are eager to grow and make the most of the UK’s extraordinary talent, creativity and technical expertise.’

Internet link: BCC website

 

Countdown to Vaping Products Duty begins

There is now less than a year until the UK Government introduces Vaping Products Duty (VPD) and vaping duty stamps (VDS) on 1 October 2026.

VPD, a new excise duty, will apply to all vaping liquids (or e-liquids) sold or supplied in the UK, at a flat rate of £2.20 per 10ml and VDS must be attached to individual vaping products.

From 1 April 2026, any business involved in the manufacture or importation of vaping products, or storage of duty-suspended vaping products, must apply for approval from HMRC. This will enable them to continue operating lawfully in the UK once VPD and the VDS Scheme come into effect.

With just six months until approval registration opens, HMRC is urging all affected businesses to prepare now to avoid disruption as approval may take up to 45 working days.

What this means for businesses:

• UK manufacturers of vaping products must apply for approval for both VPD and the VDS Scheme.
• Warehouse keepers will be able to apply for VDS Scheme approval directly.
• Overseas manufacturers must appoint a UK representative to apply for the VDS Scheme on their behalf.
• Importers will be required to pay the new duty. They must also register for VPD and the VDS Scheme if they are acting as a UK representative for an overseas manufacturer.

Rachel Nixon, HMRC’s Director of Indirect Tax, said:

‘We are working closely with the vaping sector ahead of these changes. Businesses are encouraged to visit GOV.UK and search ‘prepare for vaping duty’ to access guidance and updates. Early preparation is essential to ensure a smooth transition and to avoid disruption to operations.’

Internet link: HMRC press release

 

Over 750,000 young people yet to claim savings

Over 750,000 18-to-23-year-olds have yet to claim their matured Child Trust Funds, according to HMRC.

The tax authority says that the accounts are worth £2,242 each on average.

Child Trust Funds are long term, tax-free savings accounts which were set up for children born between 1 September 2002 and 2 January 2011 with an initial government deposit of at least £250.

Young people can take control of their account at 16, but once the account holder turns 18 it matures, and they can decide whether they want to withdraw the money or re-invest it.

Young people can use the GOV.UK locator tool to find their Child Trust Fund quickly and for free. It requires the young person’s National Insurance number and date of birth.

More than 563,000 young people went online to find their Child Trust Fund in the 12 months to the end of August 2025, says HMRC.

It takes about five minutes to submit a request to find a Child Trust Fund using the online tool and, for most, less than three weeks to hear back.

Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:

‘If you’re between 18 and 23, you could be sat on a savings payout and not even realise it. Just search ‘find my Child Trust Fund’ on GOV.UK to find your savings account today.’

Internet link: HMRC press release

 

Chancellor should use budget to reform tax system, IFS says

Chancellor Rachel Reeves should use the Autumn Budget to reform the UK’s tax system, says the Institute for Fiscal Studies (IFS).

The think tank says this would help Ms Reeves to raise more revenue while limiting the hit to the economy.

The IFS warns the Chancellor against raising the levels of existing taxes to bring in the estimated £30 billion she requires to stay on course for her targets to repair the public finances.

Changes to wealth-related taxes, including Capital Gains Tax, would be more effective than the introduction of an annual wealth tax, the think tank added.

Isaac Delestre, a Senior Research Economist at IFS, said:

‘Revenue-raising seems likely to be a major goal of the coming Budget. But if Rachel Reeves limits her ambition to collecting more revenue, she will have fallen short.

‘Almost any package of tax rises is likely to weigh on growth, but by tackling some of the inefficiency and unfairness in our existing tax system, the Chancellor could limit the economic damage.

‘The last thing we need in November is directionless tinkering and half-baked fixes. There is an opportunity here. The Chancellor should use this Budget to take real steps down the road towards a more rational tax system that is better geared to promoting the prosperity and well-being of taxpayers.’

Internet link: IFS website

 

New tax avoidance law risks missing target, warns CIOT

New legislation aimed at tackling rogue tax agents and those pushing tax avoidance schemes won’t catch all of those it is aimed at, warns the Chartered Institute of Taxation (CIOT).

Instead the measures could make it harder for some taxpayers to get the advice they need to comply with tax laws, the Institute added.

The CIOT argues that the current proposals are not well targeted, imposing potentially unworkable conditions on tax agents. Meanwhile, many of the ‘bad actors’ who are the real target of these measures will be out of scope and able to continue their abuse of the system, it adds.

The Institute says it is concerned that, without changes, the proposals will lead many reputable advisers to withdraw from giving advice where the meaning of complex tax legislation is unclear, or where the potential tax liability is high.

Ellen Milner, CIOT Director of Public Policy, said:

‘The government are 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, the current proposals are set to miss their target. According to HMRC, the market for tax avoidance schemes is now dominated by about 20 operators. These people are not mainstream tax and accountancy professionals and are largely based overseas. The legislation as drafted will struggle to capture these people.’

Internet link: CIOT website

 

HMRC brings in extra £4.6 billion using ‘big data’ system

HMRC brought in an extra £4.6 billion in tax revenue last year by using its ‘big data’ system.

The tax authority’s Connect system uses data from a wide range of financial sources to analyse tax returns and detect potential evasion.

In a response to a freedom of information request from law firm Pinsent Masons, HMRC said it generated on average £3.4 billion in additional annual yield from Connect cases.

However, this rose by over a third in the 2024/25 tax year when Connect generated approximately £4.6 billion.

Connect, which was introduced in 2010, has grown in scale over the last 15 years to become one of the largest datasets held by the UK government.

It has now become a key part of tax investigations, with around 4,300 HMRC staff now using it.

The increasing scale of the Connect system allowed HMRC to conduct more than half a million cases in the last year alone.

Ian Robotham, a tax expert at Pinsent Masons, said:

‘HMRC has spent time building up the amount of data sources that it can access and analyse.

‘The algorithms that it uses allows HMRC to spot anomalies that would otherwise go unnoticed by the human eye.

‘With thousands of HMRC staff now using Connect, taxpayers are facing a level of oversight that would have been unthinkable just a few years ago.’

Internet link: Pinsent Masons website

 

Expert Advisory Panel to provide industry insight on R&D tax relief

HMRC has appointed six independent industry specialists to a new Research and Development (R&D) Expert Advisory Panel.

The introduction of the panel is one of a number of practical enhancements that the tax authority says will make it easier for UK firms to understand R&D tax relief.

R&D tax reliefs are valuable incentives designed to encourage businesses to invest in innovative science and technology projects, driving economic growth across the UK.

These improvements include an expanded reporting channel for agents; and a user-friendly free online tool to help businesses check their eligibility before submitting a R&D claim.

HMRC says that together, these enhancements are designed to support business innovation, improve claim accuracy, and strive to make the system work for everyone.

The new panel brings together experts with real world experience, offering deep sectoral knowledge across manufacturing, technological development, life sciences and AI, says HMRC.

Jonathan Athow, HMRC’s Director General, Customer Strategy and Tax Design, said:

‘HMRC welcomes the advisory panel and their sectoral insight and expertise. Along with the new guidance tool, we are delivering on feedback from agents and businesses, making it easier for genuine innovators to access the support they deserve, while protecting the system from abuse.’

Internet link: HMRC press release

 

Employers named and shamed for minimum wage breaches

The government has named and shamed nearly 500 employers who failed to pay the National Minimum Wage (NMW).

The employers have been fined over £10 million for failing to comply with NMW laws.

In addition, £6 million has been repaid to 42,000 workers by employers who have been underpaying their staff.

The government says that enforcement of workers’ rights is set to be beefed up through the new Fair Work Agency which will shield workers from employers who flout the law.

It says that this strong enforcement does not just protect workers; it protects those businesses who do right by their staff from being undercut.

By taking swift action against these employers, the government is sending a clear message that it will not tolerate those who short-change their workers, regardless of their size or sector, it adds.

Business Secretary Peter Kyle said:

‘Every worker deserves a fair day’s pay for a fair day’s work, and this government will not tolerate rogue employers who short-change their staff.

‘I know that no employer wants to end up on one of these lists. But our Plan to Make Work Pay cracks down on those not playing by the rules.

‘This ensures a level playing field where all businesses pay what they owe whilst workers receive the boost to their living standards they deserve.’

Internet link: GOV.UK

 

Latest guidance for employers

HMRC has published the latest issue of the Employer Bulletin. The October issue has information on various topics, including:

• Making your PAYE Settlement Agreement payment.
• Guidance for labour supply chains featuring umbrella companies.
• New Advisory Electric Rate for fully electric company cars.
• Spotlight 71 — Warning for agency workers and contractors who are moved between umbrella companies.
• ‘Tax Help for Hustles’ campaign — new resources for employees.
• Update on Winter Fuel Payments recovery through the tax system.

Internet link: GOV.UK

 

Give State Pension its own PAYE scheme, says LITRG

The Treasury should make it easier for state pensioners to pay any tax they owe with a Pay as You Earn (PAYE) scheme, says the Low Incomes Tax Reform Group (LITRG).

The LITRG told the Treasury that there is a ‘pressing need’ to change the way the payments are taxed to make the process easier to understand and manage.

This is due to the increasing number of pensioners finding out that they owe income tax on their state pension for the first time. The LITRG has recommended that the State Pension be given its own PAYE scheme, so that any tax is collected at source by the DWP before State Pension payments are made.

Currently, any tax due on a person’s State Pension is collected by adjustments to tax codes, self assessment or simple assessment.

Sarah Weston, Technical Officer at the LITRG, said: ‘The continued freezing of the tax-free personal allowance and triple-lock pension increases mean growing numbers of people are facing a tax bill on their State Pension for the first time.

‘Some people are unaware of this and can end up with a nasty shock if they receive an unexpected tax bill from HMRC after the end of the tax year. For those who are affected, it can be unclear and confusing.

‘We think that bringing the State Pension into its own separate scheme of PAYE would be a simplification that will make it easier for HMRC to collect the tax it is owed.’

Internet link: LITRG website

 

Chancellor announces ‘blitz on business bureaucracy’

Chancellor Rachel Reeves recently announced a ‘blitz on business bureaucracy’, with cuts to red tape that the government says will save firms £6 billion.

Ms Reeves says the government will be ‘scrapping pointless paperwork’ and speeding up planning to deliver on the Prime Minister’s 25% admin reduction target – a central commitment in the Modern Industrial Strategy.

The government says the crackdown on ‘needless form-filling will see over 100,000 firms qualify for simpler corporate reporting rules’, removing the need for small business owners like family-run cafes to submit lengthy Director reports to Companies House.

Businesses will also save time and money when building, with the Chancellor setting out plans for digital planning checks that could see developers sending photo evidence to authorities online which are then approved using trained AI models.

John Foster, Chief Policy and Campaigns Officer at the Confederation of British Industry (CBI), said: ‘There is a fierce urgency in the need to get the UK economy growing at a sustainable rate so it can make a meaningful difference to our nation’s prosperity. For businesses to fully contribute to this mission they need room to invest, not be constantly battling costly regulation that adds little or no value.

‘The government deserves credit for recognising this challenge and taking action to address it. We now need business and government to work together at pace, to deliver a growth-enabling regulatory system that sensibly balances appetite to risk while giving businesses confidence to invest and thrive.’

Internet link: GOV.UK, CBI website

 

Budget should tackle hiring issues, says BCC

The British Chambers of Commerce (BCC) has called for Chancellor Rachel Reeves to use the Autumn Budget to combat ‘persistent’ hiring problems.

According to the BCC’s latest Quarterly Recruitment Outlook, 54% of businesses have attempted to hire employees in the last three months. However, most firms continue to face recruitment challenges, with 75% of employers stating they have experienced issues.

Just 22% of businesses hired new employees in the third quarter of this year, the BCC found. 25% reported that they intend to increase their workforce in the next three months.

‘Employers are battling against sky-high employment costs and widespread skills shortages,’ said Jane Gratton, Deputy Director of Public Policy at the BCC.

‘With 72% of firms saying costs are putting pressure on them to raise prices, the spectre of higher inflation will continue to hover.

‘The government should use the tax system to help people stay in – or quickly return to – employment when they experience ill health. Tax breaks for health services that businesses provide to their workforce are an obvious solution, to protect people’s livelihoods and keep skills in the workforce.’

Internet link: BCC website