Welcome to our April 2025 newsletter/blog.

Spring Statement and OBR Forecasts

The Chancellor of the Exchequer, Rachel Reeves, delivered her Spring Statement at the end of last month in which she outlined the government’s economic plans, including spending decisions, tax policies and efforts to boost growth while managing public finances.
 
What did the statement tell us about public finances and the economy?
 
The Statement came on the back of the latest forecasts prepared by the Office for Budget Responsibility (OBR). The forecasts showed a more challenging outlook than was the case last autumn. The OBR cited falls in business and consumer confidence, rising European energy costs, increased government borrowing costs and global uncertainties from issues such as the war in Ukraine and trade tariffs.
 
As a result, the OBR have downgraded their forecast of GDP growth to 1% for this year. Last autumn they predicted growth of 2%, so this is a significant adjustment in their expectations. However, their projections of growth in the next four years have been upgraded, suggesting that they see the long-term more positively.
 
The OBR have forecast inflation to average 3.2% this year, up from 2.6% in their previous estimate. They predict that inflation will fall to 2.1% in 2026 and 2% in 2027.
 
The forecasts also showed that without intervention, public finances would fall short of the targets set at the Autumn Budget.
 
What has the chancellor done about it?
 
Much has been made in recent weeks of the Chancellor’s self-imposed stability and investment rules, and whether she will be able to maintain them in the face of the aforementioned challenges.
 
However, the Spring Statement confirmed the Chancellor’s commitment to the rules.  Governments often use these fiscal rules to provide credibility to financial markets.
 
This decision meant there was pressure on the Chancellor to either raise taxes or reduce spending to cover the forecast shortfall.
 
In good news for businesses, the Chancellor made no direct increases to taxes. She confirmed her intention to have only one major fiscal event a year and so further tax changes will wait until the 2025 Autumn Budget.
 
Instead, the Statement outlines a number of plans to reduce public spending, including welfare reforms, and reduced day-to-day spending in government departments. In addition, it is clear the Chancellor has adopted a policy of growing the economy and is looking at ways to promote that, including by supporting increased homebuilding activity. Economic growth is aimed at ‘putting more money in people’s pockets’, but it also indirectly boosts the revenues the government receives.
The OBR have confirmed that the policies outlined in the Spring Statement largely restore the public finance targets set last Autumn.
 
A more detailed analysis of the various measures can be found on our web site.
 
If you are concerned about how any aspect of the Spring Statement may affect you, please get in touch with us. We would be happy to provide you with personalised advice.
 
In this month's newsletter:
•    Making Tax Digital (MTD) is back!
•    Tax on your side hustle
•    New Minimum Wage and National Insurance rates
•    Child Benefit Increases from 7 April: What Employers Need to Know
•    Identity verification coming to Companies House
•    We can help – Just ask us

Making Tax Digital (MTD) is back!

Making tax digital has come back onto the horizon with taxpayers being brought into the MTD regime from 2026 onwards.
 
In our last newsletter we advised of the HMRC tool where taxpayers could check whether they were required to comply with MTD
 
We have since contacted all of our clients where we think they will have to comply. If you received an e-mail form us then please read it carefully.
 
We have produced an infographic showing the basis on who will be caught for the first 2 tranches of implementation.
 
Since our e-mail, in the recent Spring Statement, Rachel Reeves has confirmed that from 6 April 2028 all taxpayers with relevant income over £20,000 will have to comply.
 
It is possible to sign up early and of you would like to be a guinea pig then please let us know and we will help you get started.
 
For all our clients who will be involved we strongly suggest that you start your move to software that is MTD enabled. Rushing to move over in February and March next year could be too late.
 
We will not be looking to assist clients between November and the end of January as the pressure of completing tax returns does not leave much time. That is unless all clients get their tax returns completed early this year!
 
We have experience of many clients moving form no bookkeeping or manual records to online electronic record keeping so we are well placed to help you. Get in touch for more information.
 
Tax on your side hustle
 
HMRC is writing to individuals who may have tax to pay on online marketplace sales made in 2022/23 and earlier tax years. Separately, HMRC has launched a new campaign to help people understand the tax implications of their ‘side hustles’.
 
As part of its latest one-to-many campaign, HMRC has identified a number of individuals who have failed to declare income received from online marketplace sales in tax years up to and including the year ended on 5 April 2023.  
 
The letter explains that an individual who buys or makes goods to sell at a profit is likely to be trading. Income tax may be payable on any profits from the trade depending on the circumstances. For example, no tax will be due where total sales are less than the £1,000 trading allowance or where the person’s total taxable income is within their personal allowance for the year.  
 
HMRC says that capital gains tax (CGT) may be due on the sale of personal items depending on the nature of the items and how much they were sold for.  There may be no liability to CGT where the item is a chattel and the amount received for it was £6,000 or less. There is also the person’s CGT tax-free annual exemption amount to consider. This was £12,300 for 2020/21 to 2022/23, £6,000 for 2023/24 and is £3,000 for 2024/25.  
 
In the letter, HMRC reassures people who are simply selling unwanted personal belongings from their wardrobe or garage that they usually don’t have to worry about tax.  
 
If you have a side hustle then HMRC have put together a web page with some pretty pictures which explains what a side hustle is and the potential tax implications.
 
If you have any additional income, then you should review the page to see if it is relevant to you.
 
If you get such a letter or have a side hustle that you need to tell HMRC about, please get in touch to discuss any implications there may be for wither of these sources of income.
 
New Minimum Wage and National Insurance rates
 
The new National Minimum Wage and Employers National Insurance increases came into force from 5 April 2025 as planned.
 
For many businesses, the April payroll will represent a sizeable step up in labour costs.
As a reminder, here is a quick recap of the changes.
 
The new minimum wage rates are as follows:      Hourly Rate

National Living Wage (21 and over)    £12.21
18-20 Year Old Rate    £10.00
16-17 Year Old Rate    £7.55
Apprentice Rate    £7.55
Accommodation Offset    £10.66
 
Employers National Insurance changes:
 
The percentage rate of Employers’ National Insurance (NI) that’s paid on an employee’s earnings increases to 15% (from 13.8%).
 
The threshold that an employee needs to be earning before any Employers’ NI is due drops to £5,000 a year. Previously this was £9,100.
 
If you use online payroll software, the new Employers’ NI rates should be automatically included. However, please check with your payroll software provider if you are not sure.
 
If you need any help using the new rates or calculating the amount of minimum wage that is due to a worker, please get in touch. We would be happy to help you!
 
Child Benefit Increases from 7 April: What Employers Need to Know

From 7 April 2025, families receiving Child Benefit will see an increase in their payments. HM Revenue and Customs (HMRC) has announced that the weekly rate will rise to £26.05 for the eldest or only child and £17.25 for each additional child. This means an annual payment of £1,354.60 for the first child and £897 for each subsequent child. These payments, usually made every four weeks, are automatically into claimants’ bank accounts.
 
One way parents can manage their Child Benefit is via the HMRC app, which allows them to make and adjust claims and update their details.
 
What This Means for Employers
 
While Child Benefit is a personal entitlement for families, there are several ways this update can be relevant to businesses and employers:
 
•    Supporting Employees’ Financial Wellbeing: This increase in Child Benefit can provide a small but valuable financial boost to employees with children. Encouraging staff to check their eligibility and claim what they are entitled to can help reduce financial stress and improve overall wellbeing.
 
•    Payroll Considerations and High-Income Employees: Employees earning between £60,000 and £80,000 may be subject to the High Income Child Benefit Charge (HICBC). From summer 2025, affected employees will be able to opt to have this charge deducted via their PAYE tax code, reducing the need to file a Self Assessment tax return. Employers may need to provide guidance on this option and ensure payroll systems are updated if and when new tax codes are received from HMRC.
 
•    Maternity and Parental Leave Advice: Employees taking maternity or parental leave should be reminded to claim Child Benefit as soon as possible after their child’s birth. Claims can only be backdated up to three months, so prompt action is crucial.
 
•    National Insurance Credits Awareness: Claiming Child Benefit also provides National Insurance (NI) credits, which contribute to an individual’s State Pension entitlement. Employees who choose to opt out of receiving payments (to avoid HICBC) should still make a claim to secure these NI credits.
 
Key Actions for Employers
 
•    Inform staff about the Child Benefit increase and encourage eligible employees to claim.
 
•    Educate high-income employees about the upcoming PAYE tax code option for HICBC.
 
•    Ensure payroll teams are aware of the changes, particularly around HICBC deductions.
 
•    Remind new parents of the importance of claiming Child Benefit promptly to secure payments and NI credits.
 

By keeping employees informed about these changes, businesses can contribute to their financial wellbeing and support parents in managing their family finances.
 
If you or your employees would like any further information or help, please feel free to contact us. We would be happy to help!
 
See: https://www.gov.uk/government/news/child-benefit-boost-for-millions-of-families
 
Identity verification coming to Companies House
As part of the changes being gradually introduced by the Economic Crime and Corporate Transparency Act (ECCT), identity verification is set to become a Companies House requirement.
 
This is one of a number of changes that the Act is making to better protect the data held at Companies House.
 
Identity verification will ultimately become a compulsory part of incorporation and new appointments for new directors and persons with significant control (PSCs).
 
All existing directors and PSCs will also need to verify their identity as part of the annual confirmation statement filing, once Companies House make this mandatory. Anyone who files a document will also need to have their identity verified.
 
Mandatory identity verification is still being prepared for. However, individuals will be able to voluntarily verify their identity from 8 April 2025 using their GOV.UK One Login or via an Authorised Corporate Service Provider (ACSP).
 
Changes for third party corporate service providers
 
Last week also saw the introduction of a new service for third party corporate service providers, such as accountancy firms, to apply to register as an ACSP.
 
Ultimately, third party providers will have to register to be able to file information and confirm they’ve verified the identities of their clients.
 
ACSPs have to be:
•    Based in the UK
•    Register with Companies House
•    Be registered with a UK supervisory body for anti-money laundering (AML) services
•    Retain records of identity verification checks.
 
We are pleased to say that we are in the process of registering as an ACSP and will be able to continue helping you with any incorporation, identity verification and document filing. If you need any company secretarial support, please feel free to contact us at any time.
 
See: https://www.gov.uk/government/news/companies-house-launches-registration-of-authorised-corporate-service-providers

Stewart & Partners Property Group
 
The Stewart & Partners Property Group is for clients who have an interest in the property sector, be it buy to let, property investment or construction.
 
Our web site pages give an overview of the property industry including buy to let, property investment and property development.
 
The major resource for all our property clients and contacts are the many helpsheets we have produced which give initial advice an many areas where clients need help. Check out the pages for yourself.
 
We also produce a monthly newsletter dedicated to the property industry. If you are interested then sign up to receive the newsletter. The newsletter has suffered form the problem with our MailChimp account and will be reinstated shortly.
 
How to Grow your Business
 
We have written a booklet titled How to Grow Your business which offers ten strategies you can use to take your business to the next level.
 
Download a free copy from our website.
 
We can help – Just ask us
 
Are you considering starting a new arm to your business or do you have a query about tax planning? Do you need advice about financing or cashflow, maybe you just need help in accessing a loan.
 
We have a broad range of experience that goes far beyond just preparing accounts and tax returns. We also have access to a broad range of tools that will help with providing answers. Get in touch as we will probably have an answer to help you with your challenges.
 
Even if you just want help planning for the future with all the proposed tax changes, we are here for you.

And finally ....

It's great to be back and to be giving you you the information you need for your business.

If you appreciate receiving these e-mails then let us know. If you don't, then let me know what additional content would improve the newsletter.

Keep an eye out for the refreshed proerty newsletter coming towards the middle fo the month.

If you have any queries you can book a free 15 minute zoom meeting with me.
 
Finally, don’t forget to make time for yourself and do not let your business run you, you should run your business.