Employment taxes

• Payrolling of BIK. The government has announced that the start date for mandatory payrolling of BIK has been delayed by one year, to 6 April 2027. In addition, HMRC has published a technical note to provide more information on how employers can prepare for the changes. An exception to mandatory payrolling is made for loan and accommodation BIKs as they can be difficult to value within the tax year. The technical note indicates that payrolling of these BIKs will be possible on a voluntary basis from April 2027. Learn more about payrolling of BIK. 
• Employment status. HMRC will revise its Check employment status for tax (CEST) tool and update its guidance to make it easier to use CEST with effect from 30 April 2025.
• Employment-related securities (ERS). From 1 May 2025, an employer making a joint election to transfer an ERS national insurance contributions (NIC) liability to an employee will no longer need to obtain pre-approval from HMRC where the template election on GOV.UK is used.
• NIC annual maximum refunds. The government will review the process to make it “easier and faster” for individuals to claim a NIC refund after the end of the tax year.

Business taxes

• Corporate interest restriction (CIR). The government will consider options to simplify and improve the CIR, in particular, the requirement for a group to nominate a reporting company (read the Tax Faculty’s article: HMRC relaxes its position on the corporate interest restriction).

• International tax rules. Following an earlier consultation on policy options in 2023, the government is consulting on draft legislation intended to:
  • simply the rules for transfer pricing in a number of areas, including UK-to-UK transfer pricing, the participation condition, intangibles and financial transactions. Separately, the government is consulting on proposals to remove the transfer pricing exemption for medium-sized enterprises, and introduce a new filing requirement relating to a business’s cross-border related party transactions;
  • bring the UK into line with the latest international consensus on both the definition of, and the attribution of, profits to a permanent establishment (as set out in articles 5 and 7 respectively of the OECD model tax convention); and
  • repeal the diverted profits tax and introduce a new charging provision for unassessed transfer pricing profits within the corporation tax rules.

• Restitution interest. Part 8C of the Corporation Tax Act 2010 applies a 45% corporation tax rate  to payments of restitution interest made by HMRC. The government has published draft legislation for consultation that is intended to:
  • clarify that the rules only apply to awards made at a rate of interest greater than a statutory rate under the taxes Acts; and
  • permit an assessment under the rules within two years of the end of the accounting period when the restitution claim is finally determined (if the normal time limit has expired).

Personal taxes

• Self assessment criteria. The government will align the online thresholds used to determine whether an individual needs to complete an income tax self assessment tax return at gross income of £3,000 for:
  • trading income;
  • property income (currently £2,500 profit or £10,000 gross income); and
  • other taxable income (currently, £2,500).
  This measure only applies to the reporting of income, not to the calculation of tax liabilities. According to the government, further details, including the alternative reporting mechanism, will be provided later this year. This measure was first announced in March 2025.

• Cultural gift scheme. Under the cultural gifts scheme, a person gifting a cultural object for the benefit of the public or nation can benefit from tax reductions. The government intends to reform the scheme by removing the restriction on jointly owned objects and by allowing more flexible use of tax credits.

VAT and customs duties

• Capital goods scheme (CGS). The government intends to simplify the CGS by removing computers from the assets covered by the scheme and increasing the capital expenditure value of land, buildings and civil engineering work from £250,000 to £600,000 (exclusive of VAT).
• Donations to charity. The government is seeking views on a new VAT relief for goods donated by a business to charity.
• Temporary admission (TA). In its response to a 2023 call for evidence, the government has announced a package of changes to TA procedures, covering three areas:
  • extending and simplifying timing requirements;
  • improving user experience and guidance; and
  • removing restrictions on accessing TA and how certain goods can be used while under TA.

Tax administration and compliance

• Dispute resolution. The government is seeking views on ways to modernise and improve HMRC’s approach to dispute resolution. The main areas under consideration are HMRC’s alternative dispute resolution and statutory review processes.
• Tackling non-compliance. The government has published its response to the October 2024 consultation on how HMRC addresses non-compliance. The government says that HMRC will further consider reform of revenue correction powers and approaches to taxpayer self-correction. Looking further ahead, HMRC will work to develop policy options to harmonise and simplify compliance powers across tax regimes, including HMRC’s enquiry and assessment powers.
• Valuation Office Agency (VOA). It has been confirmed that the functions of the VOA will be integrated with HMRC by April 2026.
• HMRC guidance and communications. HMRC will:
  • clarify its guidance on self assessment registration criteria;
  • simplify the language it uses in letters;
  • from June 2025, stop issuing six types of corporate tax letters to reduce communications with taxpayers;
  • help other parties leverage GOV.UK guidance in their AI-powered products and services;
  • reduce paper post, but not for critical correspondence or the digitally excluded, by investing in digital services; and
  • develop a new interactive compliance guidance tool.

Further information

• Tax update spring 2025: simplification, administration and reform - GOV.UK