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.’

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.’

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.’

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.’

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.’

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.’

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.’

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

• the new rates of the National Minimum Wage

• reporting expenses and benefits for the tax year ending 5 April 2025

• changes to notifications by employers to operate PAYE on a proportion of a globally mobile employee’s income and changes to Overseas Workday Relief.

• the tax treatment of double cab pickups.

• Capital Gains Tax — working out your adjustment for the 2024 to 2025 tax year.

The UK government is taking the right approach to tariff negotiations with the US despite downgrades to the economic outlook, says the British Chambers of Commerce (BCC).

The International Monetary Fund (IMF) has cut its growth forecast for global GDP to 2.8% from 3.3% this year.

The IMF predicts that the increase in tariffs and uncertainty will lead to a significant slowdown in global growth.

US growth is now expected to be 1.8% this year, down from the IMF’s estimate of 2.7% for the US in January. The forecast for the UK has also been cut from 1.6% to 1.1%.

William Bain, Head of Trade Policy at the BCC, said: 

‘The downgrades for both the UK and global economy should come as no surprise to anyone.

‘Firms were already facing into a wall of higher domestic costs, including the national insurance rise, before the US unleashed its explosive tariff proposals.

‘But there is strong support for the government’s approach to continue negotiation and not immediately retaliate. The US has been open to talks and the signals that a deal can be reached are promising.

‘But talk of recession remains premature, it is by no means certain. The government must do all it can to boost business confidence by providing practical support around infrastructure projects, reforming business rates and cutting red tape in the right areas.’

Tax compliance costs the UK’s small businesses nearly £25 billion a year, according to recent research conducted by the Federation of Small Businesses (FSB).

The average small firm spends £4,500 and 44 hours a year on tax compliance, according to the research.

These annual totals could include time spent trying to contact HMRC, the cost of staff time used to manage compliance, and the price of software subscriptions and/or an external accountant, among other outlays.

Poor levels of customer service from HMRC are a recurring theme within the report, making tax compliance even more difficult and stressful for small businesses.

Tina McKenzie, FSB’s Policy Chair, said:

‘Tax compliance is far from a niche issue – it affects all five and a half million small businesses in the UK, costing them £4,500 and 44 hours a year each on average.

‘Collectively, that adds up to an annual total cost to the small business community of nearly £25 billion and over 240 million hours.

‘This is money and time that could be far, far better spent on building up their business, and the overall cost to the economy in terms of lost growth and wasted productivity is enormous.

‘Given the challenges facing the economy, and the need for growth, reducing the burden placed on small firms by tax compliance must be a priority – something the government has recognised as a priority for other regulators. HMRC should be included in the government’s drive to make regulation better support growth.’

Reforms are needed to make the pension system easier to navigate successfully in order to help reduce the risk of a shortfall in retirement, according to the Institute for Fiscal Studies (IFS).

The think tank says that private sector employees are increasingly accumulating retirement savings in ‘defined contribution’ (DC) pensions (pension pots that do not guarantee a regular income through retirement).

Since 2015, people over 55 have been able to withdraw money from DC pensions in any way they choose.

According to the IFS, as this form of wealth becomes more important, people face too many complex and risky decisions through retirement.

This increases the risk that many exhaust their private resources and fall back purely on state pensions and benefits, especially later in retirement, the think tank added.

Bee Boileau, Research Economist at IFS, said:

‘The forthcoming Pension Schemes Bill is expected to introduce default retirement income solutions. Done well, these should improve outcomes for many, given the risks many face when drawing down pension savings through retirement at present.

‘But key questions remain – in particular, there will be some for whom a retirement income default will not be right. The government and pension providers must ensure that it is straightforward to opt out of whatever new defaults are introduced, and that as far as possible those making these decisions are sufficiently informed and helped.’

Pubs, clubs and restaurants will benefit from a reduction in the red tape that has stifled hospitality business, the government said.

Action includes moves to improve the application of licensing laws and strengthening businesses’ competitiveness. This will give diners, pub and partygoers more time and more choice to enjoy what the UK hospitality has to offer, the government says.

The changes include a landmark pilot that could see more alfresco dining and later opening hours in London, as the Mayor of London is granted new ‘call in’ powers to review blocked licensing applications in nightlife hotspots.

The government says that if successful, this approach could be rolled out to other mayors to work with their own local police forces across England.

Businesses have long indicated that the current licensing system lacks proportionality, consistency, and transparency – creating barriers to growth and investment for business.

Chancellor of the Exchequer, Rachel Reeves, said:

‘British businesses are the lifeblood of our communities. Our Plan for Change will make sure they have the conditions to grow – not be tied down by unnecessarily burdensome red tape.

‘We’ve heard industry concerns and we’re partnering with businesses to understand what changes need to be made, because a thriving night time economy is good for local economies, good for growth, and good for getting more money in people’s pockets.’

Price increases are the most likely response to US tariffs by affected firms, according to a survey conducted by the British Chambers of Commerce (BCC).

The survey found that 32% of firms with trade exposure to the USA say they will increase prices in response to the tariff.

Alongside increasing prices, 15% said they would seek alternative suppliers, while 13% said they expected to absorb the costs.

Shevaun Haviland, Director General of the BCC, said:

‘This data sets out very clearly the immediate impact of US tariffs and the extent of business concern. With retaliatory moves by other countries likely to escalate, the prospect of a global trade war is increasing, alongside a widening of the economic fallout.

‘But there is strong support for the government’s approach to continue negotiation and not immediately retaliate. We believe a deal can be done as the US has already been open to talks. But firms don’t want to have all our eggs in one basket and want to see closer trading relationships with the EU and other markets.

‘They do not consider this to be an either/or scenario and we must continue to pursue a three-pronged approach of better trade relations with the US, the EU and the Indo-Pacific region.

‘This survey also gives an early warning sign on the economic impact in the UK of these tariffs, with price increases being the most likely response by firms.’

The first Finance Act of the Labour government has gained Royal Assent and passed into law.

The Finance Act 2025 makes major changes to the tax rules for non-doms, removes the VAT exemption for private school fees, increases some rates of Capital Gains Tax (CGT) and Stamp Duty Land Tax, and extends the energy profits levy on the oil and gas sector.

The abolition of the remittance basis of taxation for non-UK domiciled individuals sees it replaced with a residence-based regime with effect from 6 April 2025. This means all longer-term UK residents will be taxed by the UK on their worldwide income and gains as they arise.

The Act removes the VAT exemption on the supply of private school fees, vocational training and board and lodgings when supplied by a private school or similar institute.

The Act increases the main rates of CGT from 10% and 20% to 18% and 24% respectively for disposals made on or after 30 October 2024.

John Barnett, Chair of the Technical Policy and Oversight Committee at the Chartered Institute of Taxation (CIOT), said:

‘Moving from domicile to residence as the basis for taxing people who are internationally mobile makes sense.

‘As well as being a major simplification, it is a fairer and more transparent basis for determining UK tax.

‘Residence is determined by criteria far more objective and certain than the subjective concept of domicile. Replacing the outdated remittance basis is also sensible and the Temporary Repatriation Facility offers a helpful transition.’

The government’s employment reforms are causing employers to put their hiring plans on hold, according to the Institute of Directors (IoD).

The IoD noted that there was a small increase in payrolled employees in the latest Labour market data released by the Office for National Statistics (ONS).

Estimates for payrolled employees in the UK increased by 9,000 between December 2024 and January 2025, said the ONS.

However, the ONS data also showed static job vacancies and increase in the unemployment rate.

Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:

‘Our data shows that half of business leaders facing higher National Insurance bills plan to reduce employment in response, and that business hiring intentions over the next year remain around lows last seen at the height of the Covid-19 pandemic.

‘The government missed an opportunity at Report Stage of the Employment Rights Bill to show that it has listened to business feedback about how to avoid the reforms damaging employment prospects.

‘The government’s Better Regulation Action Plan is a welcome shift in narrative, but such commitments will ring hollow if the principles are not first applied to its plans to increase the regulation and cost associated with employing staff.’

Chancellor Rachel Reeves has unveiled plans to cut red tape as the government aims to kickstart economic growth.

The government says its Action Plan will save businesses across the country billions of pounds by cutting the number of regulators, streamlining their core legal duties and cracking down on complexity in the regulatory system.

It says regulators have signed up to 60 growth boosting measures, including fast-tracking new medicines to market through a new pilot to provide parallel authorisations from key healthcare regulators, so that patients can access the medicine they need quicker

Other measures will aim to boost infrastructure building by simplifying guidance to protect bat habitats and streamlining mortgage lending rules, including making it easier to re-mortgage with a new lender and reduce mortgage terms.

The UK’s business groups welcomed the announcement.

Dr. Roger Barker, Director of Policy at the Institute of Directors (IoD), said:

‘The Government’s Better Regulation Action Plan is a welcome shift to a more growth friendly approach.

‘In addition to the measures announced today, we would also like to see the government apply more rigorous and timely impact assessment procedures when considering new regulation. Non-regulatory solutions should always be considered, and the business case for new regulation should be subject to proper independent scrutiny by the Regulatory Policy Committee. There should also be a commitment to reviewing the ongoing effectiveness of existing regulation at regular intervals.’

Kate Nicholls, Chief Executive of UKHospitality, said:

‘A plan to cut red tape and reduce the burden on businesses is long overdue.

‘In sectors like hospitality, businesses have been struggling with too much cost and too many regulations for decades, and it has held back growth.’

Chancellor Rachel Reeves should consider increasing taxes at this month’s Spring Statement, according to the Resolution Foundation.

The Foundation noted that the UK’s economic outlook has declined markedly since the Budget last Autumn. Weaker growth and higher interest rate expectations look set to turn the UK’s projected current surplus of £10 billion into a deficit of around £5 billion.

This is likely to mean either cuts to public services, welfare, or tax rises.

The Foundation warned that any changes to Personal Independence Payments (PIP) and incapacity benefits must be handled very carefully so that the system is improved and able to support people back into work.

Instead, the think tank said, the government should raise taxes to meet the fiscal rules.

It says that extending the freeze in personal tax thresholds by a further two years to 2029-30 would raise around £8 billion. Such a measure would not affect living standards and would be paid for by wealthier families, it added.

James Smith, Research Director at the Resolution Foundation, said:

‘The Chancellor must act decisively to meet her fiscal rules.

‘Crucially, she should avoid turning the Spring Statement into a ‘sticking plaster’ Budget, with long-term thinking on welfare reform undermined by the quest for short-term savings that could cause real harm.

‘And with Britain’s fiscal pressures more likely to intensify rather than fade away, continuing to rule out tax rises is going to make future Budgets even more challenging to deliver.’

25,000 first-time buyers are predicted to miss the 31 March stamp duty deadline, according to property website Rightmove.

This is based on homes priced up to £625,000, which is the current maximum stamp duty threshold to be considered a first-time buyer.

In total, an estimated nearly 74,000 home-movers in England are currently going through the legal completion process and will just miss the deadline and complete in April.

The net effect for this group, who are set to complete just one month later, is a collective £142 million in additional stamp duty tax, compared with what they would have paid if they’d been able to complete in March. For first-time buyers, it is a total of £34 million extra in costs.

Rightmove’s Property Market Expert Colleen Babcock said:

‘We expect a rush to complete close to 31 March as first-time buyers and home-movers try to avoid paying extra in tax. Our numbers show how there is a relatively small, but disproportionately impacted group of first-time buyers who will be caught out by the changing thresholds, highlighting some disparities in the way the current system works.

‘We think it would make sense to grant a short extension to the deadline and help these movers, rather than have them face higher charges when they complete later in April.’

Chancellor Rachel Reeves has set herself a trap with self-imposed fiscal rules that could force her into tax hikes and deeper spending cuts as the economy deteriorates, the Institute for Fiscal Studies (IFS) has warned.

The Chancellor’s rules around borrowing have left Britain’s economic policy ‘entirely exposed’ to global changes and could force her into major tax and spending decisions at this month’s Spring Statement, previously billed as a non-event, the IFS said.

The Treasury has committed to delivering only one major fiscal event a year but the prospect of missing her own targets at the first hurdle could see Ms Reeves intervene earlier, it added.

Matthew Oulton, Research Economist at IFS, said:

‘Rachel Reeves has engineered a trap for herself, albeit in difficult circumstances. Aiming to meet inflexible, pass–fail fiscal targets by the slimmest of margins was a risky strategy from the outset.

‘It was always possible that economic conditions would deteriorate, put her on track to miss those rules, and push her into making tax and spending changes at what isn’t supposed to be a fiscal event later this month.

‘This scenario is far from guaranteed and she could still get lucky. But if not, she will have to choose between her fiscal rules and her commitment to holding only one fiscal event per year.’

Activity in the private sector is expected to fall for the fourth consecutive quarter, according to a Growth Indicator from the Confederation of British Industry (CBI).

Business volumes in the services sector are expected to decline to -23%, and distribution sales are anticipated to fall significantly in the three months to May.

Private sector activity fell again in the three months to February at a faster pace than the quarter to January.

However, manufacturers expect output to return to growth.

Alpesh Paleja, Deputy Chief Economist at the CBI, said:

‘There are some glimmers of hope in our latest surveys. Growth expectations have become marginally less negative, driven by a predicted return to growth in the manufacturing sector. But overall, the data still paints a picture of a tough operating environment for businesses, with consumer-facing sectors faring particularly badly.

‘We do expect some tailwinds to growth over the year ahead. Rising real incomes will hopefully give households more confidence to spend, giving some relief to the sectors suffering the most.’

The government’s proposed amendments to the Employment Rights Bill will do little to alleviate employer concerns, warns the Institute of Directors (IoD).

Changes to a number of proposals, including application of zero-hours contracts to agency workers and Statutory Sick Pay, have been announced.

In February, the IoD set out four key changes to the Employment Rights Bill which would significantly soften the negative impact of the reforms on hiring.

This included delaying protection against unfair dismissal so that they only come into effect after six months rather than on day one and increasing the planned reference period for the entitlement to guaranteed hours to 52 weeks.

Alexandra Hall-Chen, Principal Policy Advisor for Employment at the IoD, said:

‘While any steps to mitigate the impact of the government’s employment reforms on businesses are welcome, the changes announced today do not address the key areas of the reforms which are of particular concern to employers.

‘Substantial further amendments to the Bill will be required if it is to avoid undermining the government’s growth mission. Our own data shows that directors’ headcount expectations have dropped to lows last seen in the depths of the Covid-19 pandemic. Urgent and substantive action from government is needed to restore business confidence in hiring.’

New company car advisory fuel rates have been published and took effect from 1 March 2025.

The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 March 2025 are:

Engine size Petrol

1400cc or less 12p

1401cc – 2000cc 15p

Over 2000cc 23p

Engine size Diesel

1600cc or less 12p

1601cc – 2000cc 13p

Over 2000cc 17p

Engine size LPG

1400cc or less 11p

1401cc – 2000cc 13p

Over 2000cc 21p HMRC guidance states that the rates only apply when you either:

• reimburse employees for business travel in their company cars

• require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 7p per mile.

If you would like to discuss your company car policy, please contact us.

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

• end of year reporting

• payrolling employees’ benefits and expenses

• get ready for changes to National Insurance

• new online iForm for PAYE employment expenses

• expanding the cash basis

• relevant motoring expenditure – National Insurance contributions.

Please contact us for help with tax matters.

The overwhelming majority of businesses say the rise in employers’ NICs will force them to change their plans, according to research by the British Chambers of Commerce (BCC).

With under six weeks until the NICs rise comes in, 82% of firms say the tax hike will cause them to rethink. In addition, 58% of surveyed businesses say it will impact recruitment plans, and 54% that it will affect their prices.

Meanwhile, more than a third of firms suggest investment and day-to-day operations will be impacted.

Alex Veitch, Director of Policy at the British Chambers of Commerce said:

‘The clock is ticking down to the NICs rise, and firms are already telling us they are sitting on a powder keg of costs.

‘The government has pledged to retain the NICs tax position through the life of this parliament, but our new evidence should give pause for thought. We need the government to publish a wider tax roadmap for business, setting out the direction of travel for costs like NICs and business rates.

‘Business rate reform must be an urgent priority, creating a system that incentives investment. Getting on with planning and skills reforms will also remove blockers to growth.’