The Treasury has released a surprise Tax Update Spring 2025 containing 26 technical measures designed to simplify administration, modernise HMRC systems, and reduce business compliance costs. Published on 28 April, the package covers PAYE, National Insurance, VAT, and customs in lieu of the expected Tax Administration and Maintenance Day, which did not take place earlier in the year.
Payrolling benefits pushed back to April 2027
Headline change for employers is a one-year deferral of mandatory payrolling of income tax and Class 1A National Insurance on benefits in kind. Instead of April 2026, real-time reporting and payment will begin on 6 April 2027, giving software developers and payroll teams additional time to build and test the functionality. HMRC has committed to further engagement on design and delivery, and has updated its technical note to reflect the new timetable.
The delay eases pressure on an already demanding 2026 compliance calendar, when making tax digital for income tax and compulsory Companies House identity verification are due to start. Firms now have an extra 12 months to embed payroll processes, employee communication and software upgrades before benefits-in-kind must flow through real-time information submissions.
CEST tool revision and wider employer measures
HMRC will roll out a revised Check Employment Status for Tax (CEST) tool on 30 April 2025, accompanied by fresh guidance to help users answer updated questions. The department “is committed to standing behind the outcomes of this tool where it has been used correctly,” it said.
Another near-term change will simplify employer’s National Insurance elections for share awards. From 1 May 2025, companies that shift the liability to employees will no longer need to seek pre-approval if they employ the GOV.UK template election form.
Focus on simplification, digitalisation and guidance
Alongside employer-specific updates, the spring package includes:
- Capital Goods Scheme reform – computers were removed from the regime, and the qualifying expenditure threshold for land and buildings was lifted from £250,000 to £600,000.
- Spirit Drinks Verification Scheme fee cut to a flat £250 every two years.
- A commitment to explore ways for third parties to incorporate HMRC guidance into AI-powered products, aiming to help taxpayers locate information faster.
- Withdrawal of six non-essential corporation tax letters from June 2025, saving paper and cost.
- Consultations on VAT treatment of charitable donations, landfill tax reforms and dispute resolution enhancements, transfer pricing and electronic invoicing.
The Administrative Burdens Advisory Board (ABAB) influenced several items, and HMRC plans to work further with stakeholders to refine guidance language and clarify self-assessment registration triggers. These initiatives align with the government’s ambition to move towards a “digital first” tax authority while cutting red tape for employers and small businesses.
James Murray, Exchequer Secretary to the Treasury, said in a written statement on 28 April 2025:
“Measures announced today will support economic growth by reducing burdens on employers and small businesses, modernising HMRC systems and processes to simplify the experience for individuals and traders, and simplifying HMRC guidance and communications.”
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