The government has announced a wide range of tax and admin changes as part of the Spring 2025 HMRC Tax Update, all designed to make life easier for UK businesses. These updates are part of HMRC’s ongoing mission to simplify the tax system, reduce paperwork, and support economic growth.
Whether you’re a small business owner, an employer, or a finance professional, here’s a clear breakdown of the most important changes and what they mean for you
1. Payrolling Benefits in Kind – Delayed Until 2027
HMRC has pushed back the deadline for the new rule requiring most employee benefits (like company cars or private health insurance) to be reported through payroll.
New start date: 6 April 2027 (was previously April 2026)
Employers will need to report Income Tax and Class 1A National Insurance on benefits using payroll software. HMRC has released updated guidance to help you prepare in time.
👉 This means one less form (the P11D) to deal with each year.
2. Capital Goods Scheme – Less Admin for Small Businesses
VAT rules for expensive business assets like buildings are getting simpler.
Changes include:
Raising the threshold for land, buildings, and engineering works from £250,000 to £600,000
Removing computers from the scheme altogether
This means fewer assets will fall into the scheme, reducing the admin load for small businesses managing their VAT claims.
3. No Requirement to Report Employee Hours
In a welcome U-turn, HMRC will not go ahead with a rule that would have required employers to report detailed employee hours worked in payroll from April 2026.
✅ This saves time and hassle, especially for businesses with varied or flexible hours.
4. Employment Status Tool – Now Easier to Use
The “Check Employment Status for Tax” (CEST) tool is being updated from 30 April 2025 to be more user-friendly.
The tool helps you decide if a worker is employed or self-employed.
While the logic hasn’t changed, the questions will be clearer, and new guidance will support its use.
HMRC will stand behind the results if the tool is used properly.
5. Simplified National Insurance on Shares
From 1 May 2025, employers transferring NI contributions on shares to employees can skip HMRC pre-approval if they use a new official template.
✅ This removes a major admin step in managing employee share schemes.
6. Fewer People Will Need to File a Tax Return
HMRC is raising the Self Assessment thresholds for side income (trading, rental, or ‘other’) to £3,000 gross.
This will remove around 300,000 people from needing to file a tax return.
A new digital reporting tool will be introduced as an alternative.
You’ll still have the option to stay in Self Assessment if preferred.
7. HMRC Goes (Mostly) Paperless
HMRC plans to reduce paper post significantly by 2028, saving £50 million per year.
Most letters will now go to your HMRC app or online portal
Paper will still be used for essential or digitally excluded customers
📲 You can already opt-in to paperless communications via the HMRC app.
8. Simpler Self Assessment Registration Guidance
Many people aren’t sure whether they need to register for Self Assessment—and HMRC is working to fix that.
They’ll be rewriting their guidance with:
Simpler language
Real-life examples
Collaboration with tax experts
The aim? To make it easier to understand if and when you need to register, particularly for side income like freelancing, casual work, or renting out property.
9. Reviewing National Insurance Refund Systems
If you overpay National Insurance (for example, by having multiple jobs), you currently have to apply manually for a refund after the tax year ends.
HMRC plans to:
Speed up the process
Reduce the paperwork
And ideally issue automatic refunds
This could save thousands of people time and stress every year—especially employees with multiple roles or fluctuating income.
10. More Behind-the-Scenes Improvements
HMRC is also rolling out broader improvements to how taxpayers and businesses interact with the system:
Interactive compliance check guidance tool launching 30 April
Easier language in letters and notices
Better support for AI-powered apps using GOV.UK tax info
Digital-first customs processing pilots with the US
Improved processes for temporary imports and parcel exports
These may not grab headlines—but they’ll improve everyday experiences for taxpayers and businesses behind the scenes.
What Should You Do Now?
Here are a few simple steps to help your business stay ahead of the Spring 2025 HMRC changes:
✔️ Check your payroll setup – especially if you offer employee benefits. The new payrolling rules are coming in 2027, but early prep will make things easier.
✔️ Go paperless with HMRC – Use the HMRC app to receive digital letters and reduce paper clutter (and missed deadlines).
✔️ Review Self Assessment status – If you or your team earn side income, make sure you understand the new thresholds and registration rules.
✔️ Look into VAT scheme updates – Especially if your business owns property or expensive equipment. The Capital Goods Scheme changes could save time and reduce paperwork.
✔️ Watch for NI overpayments – If you or your employees have multiple jobs, HMRC’s NIC refund review may affect you in the future.
Need help understanding how these changes apply to your business?
We’re here to make things simpler. Whether it’s payroll, VAT, Self Assessment, or staying compliant—we can walk you through it all.
👉 Book a free call with our team to chat about how to prepare and what to focus on first.
Let’s make tax feel a little less taxing!
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