For decades, business property relief has been the mechanism that allowed family businesses to pass from one generation to the next without a crippling tax bill. From April, that protection is being substantially reduced, and for the owners of mid-sized family firms, the consequences could be severe.

Under the current system, qualifying business assets attract 100 per cent relief from inheritance tax, meaning the full value of a business can be inherited without any IHT liability. From 6 April, that full relief will be capped at £1 million of combined business property relief and agricultural property relief per estate. Anything above that threshold will qualify for only 50 per cent relief, leaving the excess exposed to an effective tax rate of 20 per cent.

For a family business worth, say, £2 million, the arithmetic is stark. The first £1 million passes tax-free. The remaining £1 million attracts 50 per cent relief, reducing the taxable amount to £500,000. At the 40 per cent IHT rate, the family faces a bill of £200,000. For a £3 million business, the bill rises to £400,000. These are not theoretical numbers; they represent cash that must be found from somewhere, and for many family firms the options are limited to borrowing, selling assets or, in the worst case, selling the business itself.

The government has offered one concession: the tax can be paid in instalments over ten years, interest-free. But spreading the cost does not eliminate it, and for a business that needs every pound of working capital to operate, even staged payments represent a drain on resources.

The numbers behind the family business sector explain why the reforms have provoked such fierce opposition. There are 5.1 million family businesses in the UK, employing 15.8 million people and generating £2.8 trillion in turnover. They are not a niche; they are the backbone of the economy. More than a quarter of firms surveyed now believe they may not remain family-owned within the next decade, with the tax changes cited as a key factor.

Farmers have been particularly vocal, launching a High Court challenge and arguing that land values push many modest-sized farms well above the £1 million threshold despite generating relatively low incomes. But the issue extends far beyond agriculture. Manufacturing firms, construction companies, professional practices and retail businesses with premises and stock can easily exceed the cap without their owners considering themselves wealthy.

The reforms are expected to raise around £500 million a year by 2027, a figure that the Treasury considers significant but which critics argue is modest compared to the economic damage of forcing family businesses into distressed sales or early closures.

For any family business owner who has not yet taken professional advice on succession planning, the time to act is now. Trusts, lifetime gifts, insurance arrangements and restructuring options all take time to implement and must be in place well before they are needed. Waiting until a health crisis forces the conversation is a recipe for the worst possible outcome.

Read more:
Inheritance tax is coming for family businesses – and the £1 million cap changes everything

A quiet revolution in small business finance has reached what may be a turning point. Challenger and specialist banks now account for 60 per cent of all lending to UK small businesses – a figure that would have seemed implausible a decade ago, when the traditional high street lenders still controlled the market.

The shift has been dramatic. As recently as 2012, Lloyds, NatWest, Barclays, HSBC and Santander between them held 61 per cent of SME lending. Today that share has effectively been inverted, with newer entrants such as Allica Bank, OakNorth, Starling and a growing roster of specialist lenders capturing the ground that the big banks vacated in the years after the financial crisis.

For the first time in more than a decade, however, the challengers’ market share has plateaued. The 60 per cent figure is unchanged from the previous year, raising the question of whether the disruption of the SME lending market has reached its natural ceiling, or whether the high street banks are finally mounting a serious fightback.

There are signs of the latter. Lloyds has announced plans to make £9.5 billion available to small businesses, while a consortium of major banks has committed £11 billion to support SME exporters. Barclays has launched a £22 billion lending fund and made conspicuous moves to revive relationship banking, including bringing back the kind of dedicated business managers that most branches dispensed with years ago.

For small business owners, the competitive dynamic is unambiguously positive. More lenders chasing SME business means better terms, faster decisions and greater choice. The challengers built their market share by doing things the high street banks were not willing to do: lending against commercial property to established businesses that did not fit the big banks’ credit algorithms, offering human decision-makers rather than automated systems, and turning applications around in days rather than weeks.

The question is whether the incumbents’ renewed interest in SME lending represents a genuine strategic commitment or a cyclical response to other parts of their balance sheet becoming less attractive. Small business owners have long memories, and many who were turned away by their high street bank during the credit crunch or the pandemic are unlikely to rush back simply because the same institution is now advertising its enthusiasm for SME lending.

The practical advice for any small business looking for finance is to shop around more aggressively than ever. The lending market is more fragmented and more competitive than at any point in recent memory. A business that approaches only its existing bank is almost certainly leaving better deals on the table.

It is also worth noting that the total stock of SME lending rose to £68 billion in 2025, suggesting that the overall supply of credit to small businesses is increasing even as market shares shuffle. For a sector that has spent years complaining about a lending gap, that trend, if it continues, is the most significant development of all.

Read more:
Challenger banks now hold 60 per cent of small business lending – and the high street wants it back

For a generation of business owners approaching retirement, selling to an employee ownership trust looked like the perfect exit.

The business passed to the people who built it, the founder walked away with a tax-free gain, and everyone involved could feel good about the outcome. Now the picture is more complicated.

Employee ownership trusts were introduced in 2014, modelled on the John Lewis partnership and designed to encourage a form of succession that kept businesses intact and employees invested in their success. The tax incentive was generous: sellers who transferred a controlling stake to an EOT paid no capital gains tax on the proceeds. Over the following decade, the number of EOTs grew from a few hundred to around 2,500, with well-known names including Go Ape, Richer Sounds and The Entertainer among them.

The surge in popularity, applications jumped 40 per cent in 2023-24 alone, with the number of people declaring an EOT sale on their tax return rising 149 per cent, attracted the attention of the Treasury. Ministers became concerned that the relief was being exploited, particularly through offshore structures where EOT trustees would quickly resell the business to another buyer, allowing the original owner to pocket the proceeds entirely tax-free without any meaningful transfer of ownership to employees.

The government’s response has been a crackdown. New rules ban offshore EOT structures and introduce a four-year clawback clause, meaning sellers could lose their capital gains tax exemption if the business is sold on within four full tax years, up from just one previously. The effect has been swift: the Employee Ownership Association reports that EOT sales fell from 550 in 2024 to an expected 350 in 2025, a drop of more than a third.

For the small business owner who was genuinely considering employee ownership as a succession route, not as a tax dodge but as a way of securing the future of the business and rewarding loyal staff, the tightened rules are frustrating but not fatal. The core tax benefit remains intact for genuine transfers. The CGT exemption still applies where the sale is a bona fide transfer of control to employees with the intention of maintaining the business as an employee-owned entity.

What has changed is the level of scrutiny and the consequences of getting it wrong. Advisers report that sellers are now being more carefully questioned about their intentions, that the four-year clawback clause requires a longer-term commitment to the EOT structure, and that the professional fees involved in setting up a compliant trust have risen.

For small business owners exploring their exit options, the message is that employee ownership remains a viable and attractive route, but it is no longer the quick, clean, tax-free transaction that it appeared to be two years ago. Professional advice is essential, the timeline is longer, and the commitment must be genuine. Businesses that approach it on those terms will still find the model works. Those looking for a shortcut will find the door has closed.

Read more:
Employee ownership was booming – then the taxman changed the rules

It is one of the most perverse incentives in the British tax system, and HMRC’s own data now confirms what accountants and small business owners have been saying for years: thousands of firms are deliberately holding back growth to avoid crossing the £90,000 VAT registration threshold.

The numbers are striking. In the year to December 2025, 683,700 businesses reported turnover below the threshold, up from 671,000 a year earlier. Over the same period, the number of firms in the £90,000 to £150,000 bracket fell to 280,400 from 306,300. The bunching effect just below the line is unmistakable.

The reason is simple arithmetic. A sole trader or small business that crosses the £90,000 threshold must register for VAT and begin charging 20 per cent on top of their prices. For a business selling to consumers who cannot reclaim the tax, that either means a sudden price hike that risks losing customers, or absorbing the VAT and accepting a sharp cut to margins. Either way, the jump from £89,999 to £90,001 in turnover can leave a business materially worse off, a cliff edge that punishes growth rather than rewarding it.

The behavioural consequences are playing out across the economy in ways that should alarm policymakers. Industry advisers report that cafés and shops are reducing opening hours or closing on quieter days. Tradespeople are capping their workload or switching to four-day weeks. Some businesses are engaging in “business splitting”, separating activities into distinct legal entities to keep each one below the threshold.

None of this is illegal, but all of it represents productive capacity being left on the table. A plumber who could take on two more jobs a week is deliberately turning them down. A bakery that could open on Sundays is keeping its shutters down. A growing consultancy is declining new clients rather than crossing the line. In aggregate, the effect on employment, output and tax receipts is substantial, and entirely self-inflicted by a system that creates a penalty for success.

The House of Commons business and trade committee weighed in during February, warning that the threshold was “actively discouraging” firms from growing, particularly in labour-intensive sectors where margins are already thin. MPs called for reform, but no concrete proposal has yet emerged from the Treasury.

The policy options are well understood. A smoothing mechanism, gradually phasing in the VAT charge above the threshold rather than imposing it as a cliff edge, would remove much of the disincentive. Raising the threshold itself would take more businesses out of the system entirely, though at a cost to the Exchequer. A flat-rate scheme for the smallest firms already exists but is too complex and too poorly understood to solve the problem at scale.

For now, the choice facing tens of thousands of small business owners remains the same: grow and accept a sudden tax hit, or stay small by design. It is a choice that no sensible tax system should force, and until the Treasury acts, it will continue to hold back precisely the entrepreneurial energy that the government claims to want to unleash.

Read more:
The £90,000 ceiling that is quietly stopping small businesses from growing

A few weeks ago, the outlook for small business borrowing costs looked encouraging.

Markets were pricing in an 86 per cent chance of a Bank of England rate cut at the March meeting, with further reductions expected through the year. Business owners who had been waiting to refinance loans, take on new premises or invest in equipment had good reason to feel that relief was on its way.

That optimism has evaporated with remarkable speed. Military escalation between the United States and Iran, drone strikes on Gulf energy infrastructure and the spectre of a wider regional conflict have sent gas prices climbing, gilt yields rising and inflation expectations surging. Within days, the probability of a March rate cut collapsed to less than five per cent. The chance of a move in April is now below even odds.

For small businesses, this is not an abstract macroeconomic story. It is the difference between an affordable loan and an unaffordable one, between expanding and standing still, between managing cash flow and scrambling to cover interest payments.

The Bank of England held its base rate at 3.75 per cent at the March meeting, and the Monetary Policy Committee’s language offered little comfort to those hoping for swift easing. The direction of travel, the Bank indicated, now depends less on domestic economic data and more on developments in the Middle East. If tensions subside and energy prices retreat, the easing cycle could resume. But if the conflict deepens or spreads, expectations of multiple rate cuts in 2026 may quickly disappear.

New survey data from the Bank suggests that businesses themselves are already adjusting their expectations. Firms now anticipate inflation reaching 3.5 per cent over the next twelve months, up from three per cent previously and the highest year-ahead forecast since late 2023. Most now believe there will be at most one rate cut in the next twelve months.

For the 1.8 million mortgage holders facing renewals in 2026, many of them small business owners whose personal and commercial finances are intertwined, the shift is particularly unwelcome. Fixed-rate deals that were beginning to edge downward have stalled or reversed, and lenders are repricing products to reflect the changed outlook.

The practical advice for small business owners is to avoid planning around rate cuts that may not materialise. Anyone sitting on a variable-rate loan or approaching the end of a fixed term should consider locking in now rather than gambling on cheaper rates arriving later in the year. Cash flow forecasts built on the assumption of falling borrowing costs need revisiting.

For businesses that were planning capital investment contingent on cheaper finance, the calculation has changed. That does not necessarily mean shelving plans altogether, but it does mean stress-testing them against a scenario where rates stay at or near current levels for the remainder of the year.

Read more:
The rate cuts small businesses were counting on may not arrive this year

The annual ritual of stuffing receipts into a shoebox and scrambling to file a self-assessment return by 31 January is, for hundreds of thousands of self-employed people, about to become a thing of the past. What replaces it will be considerably more demanding.

From April 2026, sole traders and landlords with income above £50,000 will be required to submit quarterly updates to HMRC through Making Tax Digital-compatible software. Rather than one annual return, they will need to keep digital records throughout the year and file summaries every three months.

The penalty regime is sharp enough to concentrate minds. Miss a quarterly deadline and HMRC will issue an immediate £100 fine. If the return is still outstanding after three months, daily penalties of £10 begin to accumulate, up to a maximum of £900. Leave it longer than six months and the charge rises to £300 or five per cent of the outstanding tax, whichever is greater.

For the self-employed plumber, freelance designer or buy-to-let landlord who has managed their own tax affairs for years, this represents a fundamental change in habit. The days of reconstructing a year’s finances from bank statements and memory in late January are over. HMRC wants near-real-time visibility of trading income and expenses, and it is prepared to fine people who cannot keep up.

The practical burden falls heavily on smaller operators. Larger businesses already running cloud accounting packages such as Xero, QuickBooks or FreeAgent may find the transition relatively painless, most of these platforms are already MTD-compatible or will be by April. But the sole trader who tracks income on a spreadsheet, or worse still on paper, faces a steeper learning curve and the cost of new software subscriptions.

Accountants report that awareness among their smaller clients remains patchy. Many assume the change applies only to VAT-registered businesses, which have been filing quarterly under MTD since 2019. It does not. This is a separate obligation covering income tax, and it will eventually extend to those earning above £30,000 from April 2027 and £20,000 from April 2028.

The advice from tax professionals is consistent: do not wait until April to act. Choose MTD-compatible software now, start recording income and expenses digitally from the beginning of the new tax year, and build the quarterly filing into your routine before the first deadline arrives. The cost of software, typically between £10 and £35 a month, is tax-deductible, which takes some of the sting out.

For small business owners who also hold rental property, the picture is more complex still. Income from self-employment and property lettings may need to be reported through the same MTD system, and the interactions between the two can catch people out.

HMRC has positioned Making Tax Digital as a modernisation programme that will reduce errors and close the tax gap. For the self-employed, it feels more like an administrative step change that demands better record-keeping, better software and, for many, a closer relationship with their accountant than they have been used to.

Read more:
Quarterly tax returns are coming – and the fines for getting it wrong start at £100

If you run a small business with staff who work from home for part of the week, expect some awkward questions in the coming months.

From 6 April, HMRC is scrapping the homeworking tax relief that has been available to employees since 2011,  and many of your team may not yet realise it is going.

The relief, which was worth £6 a week and could be claimed without receipts, allowed employees who were required to work from home to offset a small amount against their income tax. For basic-rate taxpayers that meant a saving of around £62 a year; for higher-rate taxpayers, roughly £124. It was not a fortune, but it was simple to claim and widely taken up, particularly after the pandemic normalised remote working.

The Treasury’s reasoning is blunt. Officials say that more than half of all claims fail verification checks, suggesting that large numbers of people have been claiming the relief despite not meeting the qualifying conditions. By removing the entitlement entirely, HMRC expects to claw back around £30 million a year, a modest sum in Whitehall terms but one that tells a story about the scale of non-compliance.

For small employers, the direct impact is limited. This was always a tax relief claimed by individual employees on their personal returns, not a cost borne by businesses. But the knock-on effects are worth thinking about.

Staff who have been quietly pocketing the relief may look to their employer to make up the difference, particularly if hybrid working was the company’s decision rather than the employee’s preference. Some may push for a formal homeworking allowance or ask for expenses to be reimbursed directly, heating, broadband, the cost of a decent desk chair.

Employers are not obliged to provide any of this, but in a tight labour market where retention matters, ignoring the conversation entirely is a risk. A number of larger firms already pay a flat-rate homeworking allowance as part of their benefits package. For smaller businesses without deep pockets, the smarter move may be to review what is already being provided informally and decide whether to formalise it.

There is also a communication point. If your employment contracts or staff handbook reference the HMRC relief as part of the rationale for hybrid working arrangements, those documents may need a quiet update.

The change is relatively small in financial terms, but it lands at a moment when many employees already feel squeezed. Small businesses that get ahead of the conversation, rather than waiting for the first confused payslip query, will handle the transition more smoothly.

Read more:
HMRC scraps homeworking tax relief – and your staff will want to know why

The biggest shake-up to statutory sick pay in a generation lands on 6 April, and for small employers already stretched by rising costs, the changes demand immediate attention.

From that date, the three unpaid “waiting days” that have been a feature of the SSP system for decades will be abolished. Staff who fall ill will be entitled to statutory sick pay from their first day of absence rather than their fourth, a shift that the government says will benefit around 1.3 million additional workers but which business groups warn will land squarely on the shoulders of small firms.

The weekly SSP rate itself rises modestly, from £118.75 to £123.25. But the real sting for smaller employers lies in the structural changes. The lower earnings limit, the threshold below which workers were previously ineligible for SSP, is being scrapped altogether. In its place, a new formula will calculate SSP at 80 per cent of average weekly earnings, or the flat rate, whichever is lower. That means part-time staff, casual workers and those on lower hours who were previously outside the system will now qualify.

The government’s own impact assessment puts the additional cost to employers at roughly £450 million a year across the economy. For a small business employing a dozen people, even a handful of extra short-term absences paid from day one can make a noticeable dent in the monthly wage bill, particularly in sectors such as hospitality, retail and care where sickness absence rates tend to run higher.

HR advisers are urging small firms to review their absence policies now rather than scramble in April. Businesses that currently offer enhanced company sick pay from day one may already absorb SSP within their existing schemes, but those relying on the waiting-day buffer to manage costs will feel the difference immediately.

Payroll systems will also need updating. Any firm still running manual calculations or older software should check with their provider that the new rates and rules are reflected before the first April pay run.

There is a practical wrinkle for absences that straddle the changeover date, too. The government has published transitional guidance confirming that where a period of sickness began before 6 April but continues beyond it, the old rules, including waiting days, will still apply for that particular absence.

For many small employers, this is not simply a payroll tweak. It is a prompt to look again at how absence is managed, how return-to-work conversations are handled, and whether occupational health support could reduce the frequency and length of sickness spells. The firms that treat this as a compliance exercise alone may find themselves absorbing costs that smarter absence management could mitigate.

Read more:
Sick pay from day one: what every small employer needs to know before 6 April

Around one million taxpayers who missed the 31 January self-assessment deadline now face an additional financial hit unless they settle what they owe to HMRC by 3 March.

According to leading audit, tax and business advisory firm Blick Rothenberg, anyone who has not paid their 2024/25 tax liability by that date will be subject to a 5% surcharge on outstanding amounts, in addition to late payment interest that has already begun to accrue.

Robert Salter, a director at Blick Rothenberg, said the clock is already ticking. “The one million taxpayers HMRC estimates missed the 31 January deadline to settle their 2024/25 UK tax liabilities must pay up by 3 March 2026 or face a 5% surcharge on any underpaid taxes plus late payment interest,” he said.

Late payment interest began accruing from 1 February 2026 at an annualised rate of 7.75%, meaning the longer the delay, the higher the total bill.

Salter illustrated the potential cost with a typical example. A taxpayer with a £2,000 self-assessment liability who pays on 1 April 2026 would incur an additional charge of around £125 on top of the original tax owed. That figure would continue to rise the longer the debt remains outstanding, as further 5% surcharges can be applied if the tax is still unpaid six and twelve months after the original deadline.

The surcharge regime has been a central feature of the UK’s self-assessment system for nearly three decades. “Most people would agree that it is appropriate for taxpayers who haven’t settled their liabilities to be subject to extra costs,” Salter noted.

However, he cautioned that economic pressures are making compliance more difficult for many. Frozen tax thresholds and fiscal drag have increased the effective tax burden in recent years, pulling more individuals into higher bands. At the same time, households continue to feel the impact of the cost-of-living crisis.

“Many taxpayers could be struggling to settle their liabilities on a timely basis,” Salter said.

While it is difficult to forecast the exact revenue HMRC may collect from late payment penalties this year, official statistics show that the tax authority has previously received more than £300 million in self-assessment-related penalties in a single year.

There are also concerns that the penalty total could rise further. A significant number of taxpayers have yet to submit their 2024/25 tax returns, while others who have filed may still not have paid the tax due.

“With the sharp increase in effective tax rates in recent years, HMRC’s penalty ‘record’ could be exceeded in the coming months,” Salter warned.

Taxpayers who are unable to pay in full are encouraged to contact HMRC as soon as possible to discuss a Time to Pay arrangement, which may help mitigate additional penalties, though interest will generally continue to accrue until the balance is cleared.

Read more:
Taxpayers warned to pay HMRC by 3 March or face 5% surcharge

More than 860,000 self-employed people and landlords will have to start filing regular digital tax updates with HMRC from April as the government’s long-planned Making Tax Digital (MTD) programme enters its next phase.

From 6 April 2026, sole traders and landlords earning more than £50,000 a year from self-employment and property income will be required to keep digital records and submit quarterly updates to HMRC using compatible software. The reform represents one of the biggest changes to the self-assessment system in decades.

The government says the overhaul will modernise tax administration, reduce errors and help taxpayers keep better track of what they owe. Critics, however, argue it risks piling further administrative pressure on small business owners already grappling with rising costs and tighter margins.

What is Making Tax Digital?

Making Tax Digital is a government initiative designed to move the UK tax system away from annual paper-based self-assessment returns towards digital record-keeping and more frequent reporting.

Under the new rules, affected taxpayers must:
• Keep digital records of income and expenses.
• Submit four quarterly updates to HMRC.
• Submit an end-of-year final declaration to confirm their overall tax position.

For a sole trader, this means at least five submissions per year — four quarterly updates and one final year-end return.

For individuals who are both self-employed and landlords, the reporting burden increases further. Separate updates are required for each income stream, meaning some taxpayers could face more than 10 submissions annually, particularly if VAT reporting is also required.

The rollout is being phased in by income level. From April 2026, the £50,000 threshold applies. From April 2027, the threshold falls to £30,000, affecting an estimated further 970,000 people. By 2028, those earning more than £20,000 will also be required to comply, potentially bringing millions more into the system.

Key deadlines for those starting in April 2026

For taxpayers entering the system next April, the first compliance cycle will include:
• 6 April 2026 – begin keeping digital records under MTD
• 7 August 2026 – first quarterly update due
• 7 November 2026 – second quarterly update due
• 31 January 2027 – traditional self-assessment return for 2025/26 still required
• 7 February 2027 – third quarterly update
• 7 May 2027 – fourth quarterly update
• 31 January 2028 – first full MTD annual declaration deadline

HMRC says free software options will be available, and that digital tools will generate summary reports to submit directly to the tax authority.

The penalty system has also been redesigned. Rather than issuing immediate fines for late submissions, HMRC will operate a points-based system. A £200 fine will only be triggered once four penalty points have been accumulated, allowing for occasional missed deadlines without instant financial consequences.

While ministers argue the system will ultimately reduce errors and smooth out tax administration, many small business representatives fear it will increase compliance costs.

Taryn Lee Johnston, owner of publishing firm The FCM Group, said quarterly reporting adds further strain to already stretched entrepreneurs.

“Quarterly reporting under Making Tax Digital was sold as a way to modernise the system. The concern is not just frequency, but cost, time and mental bandwidth,” she said.

“Many small business owners do not have in-house finance teams. They will either need to pay accountants more or spend more hours on compliance rather than growing their businesses.”

She added that at a time when the government is seeking to boost entrepreneurship and economic growth, increasing reporting requirements may send “a conflicting message”.

Others in the sector warn that preparation will be critical. Gwion Thomas, founder of accounting app LITT, said affected taxpayers should not underestimate the shift.

“While HMRC’s goal of improving accuracy is positive, the priority now is preparation,” he said. “Don’t leave it to a last-minute scramble and understand what you need well ahead of April’s rollout.”

Some technology providers argue the new system could help business owners manage cash flow more effectively.

Research from enterprise software company Sage suggests that almost a quarter of UK business owners spend more than six hours completing their annual tax return. Lisa Ewens, senior vice president for small business at Sage, said spreading tax reporting across the year could reduce pressure.

“Digital tax tools can help spread the workload, reduce last-minute stress and give business owners back valuable time,” she said. “They also provide a clearer picture of what’s owed throughout the year, so owners can plan and budget with more confidence.”

The bigger concern for some is not just the April changes but the expanding scope of the regime. As income thresholds fall over the next two years, hundreds of thousands more sole traders and landlords will be brought into quarterly reporting.

With youth self-employment rising and many individuals operating side hustles alongside salaried work, the number of people affected could continue to grow.

For now, those earning above £50,000 from self-employment or property income have just over a month to ensure they are ready for digital record-keeping and quarterly updates.

Whether Making Tax Digital becomes a genuine productivity boost or another layer of administrative burden will likely depend on how seamlessly small businesses adapt — and how effectively the new system performs once fully in operation.

Read more:
More than 860,000 to move to Making Tax Digital from April as quarterly reporting begins

Sole traders are spending the equivalent of more than three working days each year dealing with tax administration, as the rollout of Making Tax Digital (MTD) for Income Tax approaches.

Research from Monzo Business found that sole traders devote an average of 27 hours annually to tax-related admin — around two hours a month for more than half of those surveyed. Based on the 2026 minimum wage, that time equates to approximately £343 in lost productivity.

The findings come just weeks before HMRC’s MTD for Income Tax rules take effect, requiring sole traders and landlords to submit quarterly digital updates of income and expenses using approved software.

While 70 per cent of those surveyed said they were aware of the upcoming changes, 28 per cent admitted they were not confident their business would be ready. Nearly seven in ten currently do not pay for digital tools to manage their tax affairs.

More than half of respondents said handling business taxes and accounting causes stress, and 44 per cent admitted submitting a tax return late because the process felt too confusing or time-consuming.

The changes form part of HMRC’s wider Making Tax Digital programme, which aims to modernise the UK tax system and reduce errors through digital record-keeping and submissions.

Monzo Business, which serves more than 800,000 business customers, is launching a free built-in tax tool powered by Sage’s embedded accounting technology. The bank says the tool will allow users to categorise transactions, track income and expenses in real time and prepare for quarterly submissions without relying on spreadsheets.

Jordan Shwide, general manager at Monzo Business, said: “With Making Tax Digital coming soon, we want sole traders to feel supported, not overwhelmed. By building a simple tax tool directly into everyday business banking, we’re helping reduce admin and stress.”

The research highlights the time constraints faced by the UK’s smallest businesses. Nearly nine in ten sole traders said they take regular tea or coffee breaks during the day, yet the 27 hours spent on tax administration equate to around 138 missed hot drink breaks annually.

As the new tax year approaches, accountants and business groups have urged sole traders to review their systems and ensure they are compliant with digital reporting requirements.

For many, the success of Making Tax Digital will depend not only on awareness but on whether accessible tools can reduce administrative burden rather than add to it.

Read more:
Sole traders spend 27 hours a year on tax admin ahead of Making Tax Digital changes

If you’re a sole trader or landlord earning more than £50,000 a year, HMRC is about to change how you report your tax — whether you feel ready or not.

From 6 April 2026, more than 864,000 people will be pulled into Making Tax Digital (MTD) for Income Tax, a system that requires you to keep digital records and send HMRC quarterly updates using approved software.

This isn’t optional. And it isn’t something you can leave until next January.

Under the new rules, you’ll need to log income and expenses digitally throughout the year and submit a short summary to HM Revenue and Customs every three months. HMRC insists these are “light-touch updates”, not extra tax returns, but they are still deadlines, admin and another thing to remember.

At the end of the tax year, you’ll still file a final return by 31 January. The difference is that HMRC will already have most of your numbers, meaning no more frantic receipt-hunting in the week after Christmas, in theory, at least.

HMRC says the system is designed to reduce errors and spread the workload across the year. In reality, it means tax admin becomes a constant background task, not a once-a-year panic.

What changes — and what doesn’t

If you’re joining MTD in April 2026, you’ll still submit your 2025–26 tax return in the usual way by 31 January 2027. The first full MTD tax return, covering 2026–27, won’t be due until January 2028.

There is also a 12-month “soft landing”. For the first year, HMRC won’t issue penalty points for late quarterly updates. After that, penalties kick in only once you rack up four points, triggering a £200 fine.

Free software is available, and more than 12,000 people have already tested the system voluntarily. HMRC is pushing webinars, videos and guides — and exemptions exist if you genuinely can’t use digital tools.

But none of that removes the core shift: you’ll be expected to stay on top of your numbers all year, not just when the deadline looms.

Why acting now matters

This isn’t just a software switch. It’s a habit change.

If you wait until April to choose software, learn how it works, or speak to your accountant, you’ll be learning under pressure — while still running your business, managing tenants, chasing invoices and dealing with everyday cashflow stress.

HMRC is being unusually clear on this point: sign up early, pick software now, and talk to your adviser before the system goes live.

Read more:
Act now: 864,000 sole traders and landlords are about to get dragged into digital tax

UK fintech Sidekick has raised £7.8m in Series A funding as it looks to widen access to investment products that have traditionally been locked inside private banks.

The round was led by Eos Ventures and the Development Bank of Wales, with backing from Koro Capital and existing investors including Seedcamp, MS&AD Ventures and TheVentureCity.

Founded in 2022, Sidekick is aimed squarely at professionals whose finances have outgrown entry-level investing apps but who don’t see the value, or accessibility, in traditional private banking. The platform targets people managing larger balances, multiple income streams and longer-term financial decisions, without the opaque fees and relationship-manager model that still dominates wealth management.

Unlike most consumer investing platforms, Sidekick has been built around complexity rather than simplicity. Alongside long-term public market investing and personalised portfolios, the platform offers access to private markets and Lombard lending, borrowing against an investment portfolio without selling assets, a facility historically reserved for high-net-worth clients inside private banks.

Its managed portfolios include an “All Weather” strategy designed to spread risk across different market conditions, while its cash products are aimed at users holding larger balances. One of these, Multi Shield Savings, allows customers to distribute cash across multiple partner banks from a single account, helping them maximise FSCS protection without micromanaging multiple providers.

The company now supports more than £145m in customer assets, reflecting growing demand from professionals who want visibility and control as their financial lives become more complicated — not less.

Founder and CEO Matt Ford (pictured) said many high-earning professionals still feel uncertain about whether they’re actually making their money work for them. He said Sidekick was built to remove unnecessary complexity while giving users access to tools that have historically been restricted to private banking clients.

The funding will be used to expand Sidekick’s investment offering, grow its team and scale operations, including building out roles in Cardiff across customer service, compliance and operations, supported by the Development Bank of Wales.

Investors said the raise reflects a gap in the market. While banking, trading and payments have been reshaped by technology over the past decade, private banking has largely remained expensive, opaque and slow to evolve, leaving a growing cohort of professionals underserved.

Why this lands with sole traders and consultants

For people who don’t get paid the same amount every month, wealth management has always felt slightly misaligned. One good quarter can be followed by a thin one. Cash piles up, then drains away. Tax bills arrive on fixed dates regardless of when clients decide to pay.

Traditional private banks weren’t built for that reality, and neither were beginner investing apps designed around spare change and round-ups. The gap in the middle is where a lot of self-employed professionals sit: too complex for simple tools, not “wealthy enough” for the velvet rope.

Platforms like Sidekick aren’t about chasing yield or pretending income is smooth. They’re about giving people with lumpy earnings, delayed invoices and growing balances somewhere sensible to park money, invest long-term, and access liquidity without blowing everything up. That’s not luxury finance, it’s modern self-employment finance catching up with how people actually live.

Read more:
UK fintech Sidekick raises £7.8m to open up private-bank style investing to professionals

For most sole traders and small operators, cashflow isn’t a spreadsheet problem, it’s a waiting problem. Clients pay late. Platforms hold funds. HMRC wants its cut on time regardless. Meanwhile, rent, software subscriptions and suppliers don’t care whether your last invoice is still “with accounts”.

To help, American Express has launched a new Flexible Payment Option designed to give small business owners more breathing room when cashflow gets tight, without forcing them into loans, overdrafts or personal savings.

Available to new Business Platinum and Business Gold Cardmembers, the feature allows businesses to choose how they repay their monthly card balance. Instead of being forced to pay everything off in one go, cardholders can pay the full balance, the minimum amount due, or anything in between, with interest only applied to the amount carried forward.

Crucially, nothing changes for those who can pay in full. If the balance is cleared by the statement due date, no interest is charged. Cardholders also continue to benefit from up to 54 days interest-free before payment is due, helping keep cash in the business for longer.

For many sole traders and small business owners, managing uneven income is the reality, invoices land late, clients delay payment, and costs don’t wait. American Express says the new option is aimed at supporting businesses through those short-term pressure points, without pushing owners towards separate borrowing or dipping into personal finances.

Ruchi Sharma, Vice President of UK Commercial at American Express, said the feature gives business owners flexibility when opportunities, or unexpected costs, arise, allowing them to smooth payments rather than stall growth.

The Flexible Payment Option is built directly into the card and managed through the Amex app or online account, meaning there’s no separate application process or loan product to juggle.

Alongside payment flexibility, Business Platinum and Gold Cards continue to operate without a pre-set spending limit, with available spending power adjusting dynamically based on how the business uses the card. Cardmembers can also earn Membership Rewards points on everyday spending, which can be redeemed for travel, experiences or purchases.

For self-employed people running lean operations, the launch reflects a wider shift towards embedded finance tools that sit quietly in the background, there when needed, invisible when not, rather than rigid lending products that assume predictable monthly income.

Read more:
American Express rolls out flexible payment option for small businesses feeling the cashflow squeeze

Most self-employed workers and freelancers in the UK are failing to put money aside for retirement, raising concerns about long-term financial security for a growing part of the workforce, according to new research.

A study by Aviva found that just 38 per cent of self-employed people and 40 per cent of freelancers are actively saving into a pension or retirement plan. Among digital nomads — workers who use technology to work remotely while living and travelling in different locations, the figure falls to just 34 per cent.

The findings suggest that the majority of people working outside traditional employment structures are not building dedicated retirement savings, potentially leaving themselves financially exposed later in life.

The research, based on a survey of 500 self-employed and freelance workers in the UK, also revealed widespread uncertainty about pension products. Fewer than one in four respondents said they understood the retirement savings options available to them, with only 24 per cent of self-employed workers and 22 per cent of freelancers aware of products such as self-invested personal pensions (SIPPs) or stakeholder pensions. Awareness among digital nomads was only marginally higher at 25 per cent.

While some respondents plan to take action, progress remains slow. Nearly a third of digital nomads said they intend to start saving for retirement soon, but 30 per cent admitted they are currently doing nothing to prepare. Among the wider self-employed and freelance community, 23 per cent and 18 per cent respectively said they plan to begin saving, yet around a third in each group are taking no specific steps at all.

Despite these gaps, flexible working continues to appeal strongly. More than four in five digital nomads said they plan to continue this way of working long-term, with almost half expecting to do so indefinitely. However, confidence about future finances is mixed: just over half of self-employed workers said they felt secure about their long-term financial position, compared with 50 per cent of freelancers.

Alistair McQueen, head of savings and retirement at Aviva, said the research highlighted a structural weakness in retirement planning for people outside PAYE employment.

“This research highlights a clear gap in retirement planning for people who are self-employed and freelance,” he said. “Without auto-enrolment or employer contributions to fall back on, many risk reaching later life without the savings they’ll need.”

McQueen added that even modest action could make a significant difference. “Small, regular steps, such as opening a personal pension and setting an affordable monthly contribution, can have a big impact over time. Flexible ways of working require flexible ways of saving, and taking action today can help build the financial security needed tomorrow.”

With self-employment, freelancing and remote working continuing to expand across the UK economy, Aviva warned that improving awareness and engagement around retirement saving will be critical to avoiding a future wave of financial insecurity among independent workers.

Read more:
Most self-employed and freelancers failing to save for retirement, Aviva finds

Seven in ten UK sole traders are still unprepared for the biggest change to the tax system in a generation, just three months before it comes into force, according to new research.

The findings, from Sage and IPSE, reveal widespread uncertainty ahead of the rollout of Making Tax Digital (MTD) for Income Tax in April. The reform will require millions of sole traders to move from annual self-assessment to quarterly digital reporting to HMRC.

The survey of 1,000 sole traders found that 70 per cent are not ready for the change. A third are still tracking income and expenses using pen and paper, while almost two thirds rely on spreadsheets to complete their tax returns — methods that will no longer be sufficient under the new rules.

In response, Sage has launched a £25,000 prize draw aimed at encouraging sole traders to prepare for the transition. One winner will receive £25,000 to help cover the cost of a future tax bill, as a growing number of self-employed workers face the prospect of increased administrative burdens and unfamiliar reporting requirements.

Lisa Ewens, senior vice president for small business at Sage, said many sole traders are underestimating the scale of the change.

“This is one of the biggest shifts sole traders have faced in decades, yet most are still not ready,” she said. “Leaving it late risks stress, mistakes and unexpected tax bills. The earlier people start, the easier this transition becomes.”

Under MTD for Income Tax, sole traders will be required to keep digital records and submit income and expense updates every three months, replacing the once-a-year self-assessment process. While the government has argued the system will improve accuracy and reduce errors, experts warn that poor preparation could result in compliance issues and added pressure on already stretched small businesses.

Alongside the prize draw, Sage is offering free MTD-ready accounting software to help sole traders begin keeping digital records and familiarise themselves with quarterly reporting before the April deadline.

Sole traders can enter the £25,000 competition by signing up to Sage’s free MTD-ready software, with entries closing on 31 January.

Read more:
Seven in ten sole traders unprepared for major tax change as £25,000 prize launched

2026 is here and small business owners felt the squeeze during 2025, with increases to the rate of National Insurance Contribution for employers and increases to the minimum wage resulting in higher per-employee costs.

Despite increasing energy costs adding to their concerns, the outlook among SME owners remains bullish, with 73% expecting growth in 2026 – although this viewpoint varies across sectors.

With the new year now underway,  we asked Carl Johnson, UK Sales Director at Anglo Scottish Asset Finance to take a look at seven overlooked strategies that can help small businesses boost their bottom line in 2026.

Carry out a subscription audit each quarter

If your business is reliant on monthly subscriptions for services such as office suites, cloud storage, project management or communications software, carrying out regular audits of these can help reduce flabby expenditure on unnecessary items.

Exporting and itemising your monthly business bank statements is a good place to start. This’ll help you get a handle on exactly how much you’re spending. Then, consult your team leads to find out whether there’s any duplication taking place – there’s no point spending on tools like Microsoft Office if everyone is using Google alternatives.

Once you know which are unnecessary, you can cut out the corporate spend.

Leverage grants, tax and expense opportunities

We find that many SME owners are unaware of the opportunities available to help support their bottom line, particularly in terms of grants, levies and subsidies listed by the government.

You might be surprised to find that your business activities are actually eligible for R&D tax relief (the remit is wider than you might think), while there are a number of region-specific grants available that traditionally go under-utilised. Where investment in technology is required, schemes like the Gigabit Broadband Scheme could help your business upgrade connectivity on a cheaper budget, with vouchers up to £4,500 available.

Maximising finance

One of the issues SMEs face more acutely than larger corporations is maintaining a healthy and regular cash flow, particularly in capital-intensive sectors like manufacturing or construction.

Unexpected outages to business-critical machinery can have a massive impact on your ability to meet your obligations on time and on budget, while late payments from suppliers and partners can also make it difficult to maintain a consistent cash flow in the short- and medium-term.

By spreading the cost of assets or larger invoices over longer periods of time with finance, SME owners can eliminate the burden that comes with spending significant sums in one go, making their business more financially resilient and helping save money in the long run.

Reviewing and renegotiating with suppliers

If your business has long-term relationships with suppliers, it may be worth revisiting these to see whether more favourable terms are available. If price is the only motivation, it can be tempting to switch suppliers to a cheaper competitor – but if you’re lucky enough to have a long-lasting and positive relationship with an existing supplier, renegotiating your existing contract might be a good way to increase your financial freedom.

The suppliers you spend the most money with are those that might be able to offer reduced terms or extended payment schedules to retain your custom, offering you more financial freedom going forward.

Invest to reduce energy costs

Energy is usually one of the largest controllable overheads, and prohibitive energy costs remain a barrier to growth for SMEs that operate in carbon-intensive sectors. Optimising your energy usage and spending is a great way to slash your monthly fixed costs – and though there’s going to be an up-front cost associated with becoming more sustainable, you’d save in the long run by enjoying cheaper monthly payments.

Switching to LEDs and motion-sensor-controlled lighting options can save your business between 20% and 50% on your energy bills. It also means longer lifespans and no more lights being left on, so you could save money on your energy spend each month while reducing your maintenance spend, too!

Reduce excess inventory

Often, smaller businesses find it more difficult to plan for changes in demand and keep larger quantities of stock to accommodate any spikes in demand. High stock levels are great for protecting yourself against these unexpected changes, but also mean working capital is tied up.

Getting more visibility over your sales data is step one – review your stock levels versus sales forecasts and negotiate smaller, more frequent payments as part of your discussions with suppliers. More flexibility could help you save money.

Leveraging remote work

While 2025 saw several larger businesses pledging to return their staff to the office full-time following a period of hybrid working, these corporations have far less to gain compared to SMEs, who can enjoy difference-making money-saving by leveraging remote work smartly.

If your business is capable of delivering work with your staff being remote, consider how much money you could save on overheads if your staff were at home on Mondays and Fridays, for example. Provided that you have the tools to keep your team connected on these days and still deliver a great service, this energy-saving exercise could dramatically reduce weekly energy costs onsite – scaling over the course of the year to huge impact.

With less time tied to full-office occupancy and fixed-cost burdens being cut, this could essentially result in a 40% saving on energy spend.

So, which of these measures apply to your business? If you want to get a head start and boost profitability in 2026, begin putting these procedures in place and reap the benefits throughout the year.

Read more:
Seven overlooked money-saving tips for small businesses in 2026

Almost one in five self-employed people in the UK expect to struggle to pay their Self Assessment tax bill this month, underlining the mounting financial pressure facing sole traders and freelancers at the start of 2026.

With the 31 January deadline fast approaching, new research suggests around 880,000 of the UK’s 4.4 million self-employed workers are worried about finding the cash to settle their tax bill, leaving many exposed to late-payment penalties and interest.

The findings point to a broader squeeze on the self-employed, for whom January has become an annual stress point rather than a fresh start. One third of respondents said maintaining healthy cash flow was their biggest concern, while the same proportion worried about whether they could afford to pay themselves at all amid rising living costs. A further 34 per cent cited escalating energy bills as an additional strain on already tight margins.

Tax policy is compounding those pressures. Almost two thirds of those surveyed said they are concerned about the ongoing freeze on income tax thresholds, which continues to pull more self-employed workers into higher effective tax bands despite stagnant real incomes.

Mike Parkes, technical director at GoSimpleTax, said the research reflected a familiar and recurring challenge for many people running businesses on their own.

“For a lot of self-employed workers, January is the most financially stressful month of the year,” he said. “Tax bills land on top of worries about cash flow, energy costs and everyday expenses. For some people, this pressure comes around every single year.”

He added that the scale of the issue was being made worse by delays in filing. More than 5.6 million people have still not submitted their Self Assessment return, meaning many may not yet know how much they owe or have had time to plan for it.

“Filing earlier gives people clarity,” Parkes said. “It allows them to understand what they owe, spread the cost where possible and avoid nasty surprises at the last minute.”

With weeks still to go before the deadline, GoSimpleTax is urging sole traders, freelancers and landlords who are worried about paying their bill to act now rather than wait until the final days of January.

Many self-employed workers deal with irregular income and unpredictable workloads, making it harder to set money aside consistently throughout the year. But Parkes stressed that help is available, from digital tools that simplify tax calculations to payment options that can reduce short-term strain.

“For those feeling the pressure, it’s important to remember you’re not alone,” he said. “There are tools and support available to help people get through January without it becoming a financial crisis.”

Read more:
Nearly 900,000 self-employed Brits fear they won’t afford their January tax bill

More than half of the UK’s self-employed workforce has thought about walking away from their accountant, as frustration over fees, poor communication and a lack of clarity reaches breaking point.

New research from TaxZap’s Accountant Breakup Tracker reveals that 58% of self-employed people have considered “breaking up” with their accountant, while 14% say they have already done so. With the 31 January Self Assessment deadline looming, the findings shine a light on a professional relationship many sole traders now see as more stressful than supportive.

The survey asked freelancers, contractors, landlords and sole traders how they really feel about working with an accountant, and the results suggest growing dissatisfaction. High fees emerged as the single biggest turn-off, with more than a quarter of respondents saying cost was their main frustration. Others cited confusing paperwork, missed deadlines and painfully slow communication, particularly when urgent clarification was needed.

Several respondents said they were left feeling unclear about what their accountant had actually done for them, or what they were paying for. One in five admitted they didn’t really understand the value they were receiving, while almost a third said their accountant only appeared during tax season. That absence for the rest of the year has led many to describe the relationship as distant, transactional or judgemental, rather than collaborative.

The language used by respondents was telling. Accountants were described as “emotionally unavailable”, “terrible communicators” and “always late”, echoing the sort of red flags more commonly associated with failed personal relationships than professional services.

Despite paying for help, Self Assessment remains a major source of stress for the self-employed. Time pressure is the biggest challenge, followed closely by complex language, uncertainty about what needs to be declared, and the overall cost of getting support. For many, it’s not the tax itself that causes anxiety, but the admin wrapped around it.

The data also shows a clear generational divide. Self-employed people over the age of 55 are the most likely to ditch their accountant altogether, while younger workers are more inclined to stay put. That reluctance appears to stem less from satisfaction and more from fear, with many younger freelancers feeling they lack the confidence to manage their taxes themselves.

Aaron Hickey, CEO of TaxZap, said the results highlight how outdated the traditional accountant model feels for many modern self-employed workers. He said Self Assessment season is stressful enough without cryptic jargon, slow replies and invoices that “make your eyes water”, adding that January deadlines only heighten the pressure.

He noted that while older workers are increasingly willing to walk away, younger people often feel trapped, having been made to feel out of their depth by complex language and an implied sense of judgement. According to Hickey, technology now offers a genuine alternative, allowing sole traders and freelancers to manage their own taxes with confidence, saving time, money and stress in the process.

For many in the self-employed community, the relationship with their accountant is being reassessed. Expectations have shifted, and clarity, transparency and year-round support are no longer optional extras. As tools improve and confidence grows, more sole traders are asking a simple question: do they still need an accountant, or do they just need something better?

Read more:
58% of self-employed Brits have considered dumping their accountant

After several delays, Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is now set to begin from April 2026, marking a major shift in how landlords and self-employed individuals report income to HM Revenue & Customs.

If you earn income from self-employment, property, or a combination of both, the changes will affect how you keep records, submit information, and interact with the tax system. While the first group affected is still more than a year away from implementation, preparation is increasingly important.

What is Making Tax Digital for Income Tax?

MTD ITSA is a government initiative designed to modernise the tax system by moving away from annual, paper-based reporting. Instead of submitting a single self-assessment return at the end of the year, affected taxpayers will be required to keep digital records and submit quarterly updates to HMRC using compatible software.

At present, landlords and the self-employed typically record income and expenses manually and report them once a year. Under MTD, that process becomes more frequent and fully digital.

What will landlords and the self-employed need to do?

Once MTD ITSA applies, individuals will be required to keep digital records of their income and expenses using approved software. These records will feed into quarterly submissions to HMRC, providing regular updates on business and property income.

At the end of the tax year, a Final Declaration will still be required. This replaces the traditional self-assessment return and confirms all income sources, reliefs, and adjustments before the final tax bill is calculated. Tax will continue to be payable by 31 January following the end of the tax year, meaning payment deadlines themselves are not changing.

Digital records must be retained for five years after the 31 January following the relevant tax year, in line with existing self-assessment requirements.

When does MTD ITSA start?

The rollout is being phased in based on income levels, calculated on gross income from self-employment and property combined.

From April 2026, MTD ITSA will apply to individuals earning more than £50,000 a year. From April 2027, the threshold drops to £30,000. A further extension to those earning over £20,000 is expected from April 2028, although this remains subject to confirmation.

Common questions landlords are asking

Landlords with multiple UK rental properties will report all rental income together rather than submitting separate reports for each property. Overseas property income must be reported separately from UK property income but is still subject to MTD rules.

For jointly owned properties, only your share of the rental income counts towards the MTD threshold. Each owner is responsible for maintaining their own digital records and submitting their own quarterly updates.

How to prepare now

Although MTD ITSA does not start until 2026 for most taxpayers, early preparation can significantly reduce disruption. HMRC already allows voluntary sign-up, giving individuals time to adjust to quarterly reporting.

The most important step is choosing MTD-compatible software that can maintain digital records, submit quarterly updates, and complete the year-end Final Declaration. Some landlords and sole traders will manage this themselves, while others may prefer to appoint an accountant or tax agent to handle compliance on their behalf.

Making Tax Digital represents one of the biggest changes to the UK’s income tax system in decades. While the move to digital and quarterly reporting may feel daunting, those who prepare early are likely to find the transition far smoother.

For landlords and the self-employed who will fall within the new thresholds, now is the time to understand the requirements, review record-keeping practices, and ensure the right systems are in place well before April 2026.

Read more:
Making Tax Digital for landlords and the self-employed: what changes from April 2026

First-time buyers, the self-employed and older borrowers could find it easier to secure a mortgage under proposed reforms from the UK’s financial regulator, designed to make lending rules more flexible and better suited to modern working lives.

The Financial Conduct Authority (FCA) has outlined plans to simplify mortgage regulations and loosen some restrictions on lenders, allowing them to offer products that better reflect “different working patterns and income levels at different stages of life”. The regulator said the changes would help first-time buyers and other “under-served consumers” gain access to home ownership.

As part of the proposals, the FCA is also reviewing its approach to interest-only mortgages, with a view to making them more accessible for older borrowers. It said it would launch a focused market study into whether the lifetime mortgage market is equipped to meet the evolving needs of future customers.

The regulator also plans to encourage greater use of data and technology, including artificial intelligence, to help mortgage brokers provide “better and faster advice while keeping a human touch”. In addition, it will examine how to simplify mortgage advertising and disclosure rules so that consumers can more easily understand information online.

David Geale, executive director for payments and digital finance at the FCA, said the aim was to “widen access to affordable mortgages to meet the needs of consumers today”.

Public consultation on the proposed changes is expected to begin early next year, with the FCA aiming to introduce the first reforms later in the year.

The proposals follow pressure from the government on regulators to help support economic growth. The FCA has already moved this year to relax aspects of the mortgage affordability framework.

In March, the regulator told lenders there was flexibility in how they applied interest-rate stress tests, the checks used to assess whether borrowers could still afford repayments if rates rise in future. The FCA said some lenders had been overly cautious, unnecessarily restricting access to mortgages that were otherwise affordable.

Following the intervention, the regulator said lenders had widened borrowing options, enabling many borrowers to access around £30,000 more than before. It also noted that despite higher interest rates and rising living costs, 99 per cent of mortgages taken out since tighter lending standards were introduced in 2014 are not in arrears, and that first-time buyer numbers have remained resilient.

Further reforms under consideration include measures to help people with uneven or irregular incomes, such as the self-employed, as well as those who have previously experienced debt problems but have since improved their credit profiles.

For older homeowners, the FCA is exploring ways to help people unlock more of the wealth tied up in property to support later-life living standards.

“Reforming the mortgage market can help address the fact that, as a society, we’re saving too little for later life, yet people have huge wealth tied up in property,” Geale said. He added that specialised interest-only mortgages aimed at those in retirement could help people meet their financial goals as part of a broader financial plan.

In a speech last month, FCA chief executive Nikhil Rathi said the regulator had examined who was being “locked out of homeownership, why and for how long”.

He said the FCA wanted to enable a “mortgage market of the future” that adapts to changing technology, employment patterns and demographics,  particularly as consumers live and work for longer.

Rathi questioned whether some of the UK’s estimated £9 trillion of housing wealth could be “unlocked more effectively and put to more productive use”, adding that the mortgage market should help people access that wealth “at the right time, when it’s needed, offering fair value, not as a last resort”.

Read more:
Mortgage rules set to ease for self-employed buyers

HM Revenue & Customs has issued a warning to seasonal workers ahead of Christmas, urging anyone taking on temporary or short-term roles to check they are being paid at least the legal minimum wage.

HMRC said that temporary staff, students and workers on short-term contracts employed during the festive period are entitled to the same National Minimum Wage or National Living Wage rates as permanent employees.

The tax authority warned that underpayment often occurs through unpaid working time or inappropriate deductions, particularly during busy seasonal periods when staff may feel under pressure to work extra hours.

Workers are being encouraged to check their hourly pay carefully and watch out for unpaid time, such as starting early or finishing late to open and close premises, cleaning duties, or completing mandatory training outside contracted hours. HMRC also highlighted the risk of being underpaid when covering extra shifts without proper payment.

Deductions for items such as uniforms or equipment can also result in illegal underpayment if they reduce wages below the minimum level. HMRC said any such practices should be reported.

In the 2024–25 tax year so far, HMRC has identified £5.8 million in wage arrears owed to more than 25,200 underpaid workers. It has also issued around 750 penalties totalling £4.2 million to employers found to be breaching minimum wage laws.

The current National Minimum Wage and National Living Wage hourly rates are:
• £12.21 – Age 21 and over (National Living Wage)
• £10.00 – Age 18 to 20
• £7.55 – Age under 18
• £7.55 – Apprentices (under 19, or 19 and over in the first year of an apprenticeship)

Kevin Hubbard, HMRC Director for Individuals and Small Business Compliance, said workers should not assume mistakes are harmless.

“We want to make sure that workers are paid correctly this Christmas,” he said. “People should check their hourly rate and look out for any deductions or unpaid working time, which could take them below the minimum wage.

“Always make sure that you check your pay. If you think you have been short-changed, even if you no longer work for the employer, we are here to help.”

Employment experts have welcomed the warning, saying seasonal workers are particularly vulnerable to being underpaid.

Kate Underwood, founder of Southampton-based Kate Underwood HR and Training, said: “If your payroll’s playing Grinch, HMRC will play judge, jury and invoice. My advice to workers this Christmas is simple: check your age-band minimum wage rate, check your hours and check for any deductions.

“Unpaid trial shifts, so-called ‘mandatory training’, uniform costs, till shortages, travel between sites and accommodation charges can all drag you below the legal rate. Seasonal staff are exactly the people who get short-changed because they’re new, busy and often scared of being dropped. The law doesn’t do ‘it’s only temp’.”

She also warned employers to act quickly if mistakes are found.

“My message to businesses paying below minimum wage is simple: stop calling it an admin error,” Underwood said. “Wage underpayments are one of the fastest ways to end up in a tribunal. Do a wage check now and fix it before HMRC does.”

Read more:
HMRC warns seasonal workers to check their pay this Christmas

Taxpayers are being urged to stay vigilant this Christmas as scammers increasingly pose as HM Revenue & Customs, exploiting seasonal stress and financial pressures to trick people into handing over money or personal details.

According to leading audit, tax and business advisory firm Blick Rothenberg, fraudsters are already actively targeting individuals with convincing communications claiming to be from HMRC.

Fiona Fernie, a partner at Blick Rothenberg, said the festive period creates ideal conditions for scams to succeed.

“Scammers know that during the Christmas season people’s emotions and stress levels may be running high,” she said. “This makes it easier to take advantage of them, and scammers are already actively targeting people. A common scam is to pose as HMRC and offer a tax refund or threaten legal action because of an underpayment of tax.”

She explained that refund scams typically involve requests for bank details to process a supposed repayment, while threat-based scams often demand immediate payment online or over the phone to stop enforcement action.

Fernie said HMRC provides clear guidance to help taxpayers identify fraudulent communications. A message should be treated with suspicion if it:
• Rushes you to act quickly
• Uses threatening language
• Is unexpected
• Asks for personal or financial information
• Tells you to transfer money
• Offers a tax refund, rebate or grant

“One of the most powerful weapons people have against scammers is to slow down, stop and think,” she said. “If you receive a message suggesting you owe money or are due a refund, do not act on it, no matter how urgent it sounds. Verify it through genuine HMRC channels.”

She stressed that HMRC does not leave voicemails threatening arrest or immediate legal action, warning that any such message is almost certainly a scam.

While HMRC does use text messages to contact taxpayers in some circumstances, Fernie said these messages never ask for personal or financial details and do not include links requesting such information.

“Do not reply to any message or open any links that appear to be seeking personal or financial information,” she said. “Suspicious texts should be reported to 60599 or forwarded to phishing@hmrc.gov.uk.”

Fernie also warned about messages received via WhatsApp or social media. Tax-related reminders may only be sent through the official UK Government WhatsApp channel to users who have subscribed, and they will never ask for sensitive information.

“If a message contains links, allows replies, or comes through social media comments or direct messages, it is likely to be a scam,” she said. “HMRC will not use social media to discuss your tax affairs. If you receive such messages, report them and delete them immediately.”

With fraud attempts rising during the festive season, experts say a cautious approach and simple verification checks can prevent taxpayers from falling victim at an already financially demanding time of year.

Read more:
Warning issued over HMRC scams as fraudsters target taxpayers this Christmas

Small business owners shut out by high street banks say they are being pushed into the arms of high-cost online lenders, leaving many trapped in what they describe as a “punishing debt spiral” of opaque fees, aggressive marketing and crippling repayment terms.

When drone technology firm Vantage UAV needed cash for new equipment and staff, co-chief executive Jon Love turned to online lenders after being rejected for both government grants and traditional bank finance.

“As a small business, cash flow is a major headache,” said Love. “Sometimes you have to get a short-term business loan, and they charge a lot — it’s exorbitant.”

Despite trading for nearly a decade and generating £2 million in annual revenue, the company’s bank “just wasn’t interested”. The alternative lenders provided quick access to cash, but at steep cost. Love later refinanced with community development financial institution First Enterprise, saving £13,000 a month in interest.

His experience is mirrored across the UK as firms grapple with the combined fallout of Covid-19, supply chain disruption, rising labour costs and a sluggish economy. Many turned to short-term online loans to plug urgent gaps — only to find themselves burdened with unaffordable repayments.

Rise in small businesses turning to ethical CDFIs for rescue refinancing

CDFIs, which specialise in lending to underserved small businesses, say they are seeing a surge in refinancing requests from firms drowning in high-cost debt.

Theodora Hadjimichael, chief executive of Responsible Finance, said the situation has become increasingly concerning.

“Our big ask is that all banks start referring small businesses to CDFIs so they hear about fair and ethical options sooner,” she said. “Businesses need the right support at the right time.”

The government launched a review of alternative lenders in March, but its findings have yet to be published.

Business owners report opaque terms and aggressive marketing

Several small businesses told The Times they struggled to understand the true cost of borrowing, with some lenders using complex repayment structures that obscure the real APR. Others described relentless marketing.

“You’re desperate, they email, and you go for it,” said Bernadette Charehwa, managing director of Woodleigh Healthcare, which employs people across Surrey and Leicester. She took loans from Iwoca, MaxCap and FlexiPay (Funding Circle), before refinancing and saving £7,000 a month.

Another business owner, David Reynolds, founder of Baillie Reynolds Maintenance in Somerset, turned to Capify and Iwoca after losing a third of a million pounds during the pandemic.

“When the banks weren’t interested, they were the only bar in town — so I drank at it,” he said.

Reynolds said lenders struggled to provide straight answers about the APR on his loan. When he calculated it himself, he found it to be “about 60 per cent”. Of every £15,000 repayment, £9,000 was interest. “The impact on the bottom line was heartbreaking.”

A representative example on Capify’s website shows a £24,000 loan repaid over one year with an effective APR of 67.89 per cent, though the company says this does not represent all products and that its APRs “start in the low 30s”.

Capify founder David Goldin said the lender conducts thorough due diligence, discloses terms clearly and must account for borrowing costs “four to five times higher than banks”, plus substantial customer acquisition costs.

Iwoca and Funding Circle defended their models, emphasising transparency and saying their products are designed to help businesses manage short-term working capital needs. Both have high Trustpilot ratings — 4.8 and 4.6 respectively — and insist they do not exploit struggling firms.

After refinancing with CDFI SWIG Finance, Reynolds saved £14,000 a month and is now targeting 25 per cent year-on-year growth, with a goal of reaching £10 million turnover by 2031.

“I’m drinking in a better club these days,” he said.

As Britain’s high-street banks continue to tighten lending criteria, small firms warn that the growing reliance on online lenders — combined with soaring repayment costs — risks creating a permanent underclass of SMEs trapped in expensive debt.

Read more:
Small firms warn high-cost online lenders are trapping them in a ‘punishing debt spiral’

A third of Britain’s sole traders are still managing their finances with pen and paper, despite major changes to self-assessment rules coming into force this April, new research from Sage has revealed.

The study shows that many self-employed workers remain unprepared for Making Tax Digital for Income Tax — HMRC’s long-delayed overhaul of the self-assessment system that will require digital submission of tax returns for sole traders earning more than £50,000 a year.

Sage found that 66 per cent of sole traders still rely on outdated methods for financial admin, including spreadsheets (66 per cent), bank statements (56 per cent) and handwritten notes (33 per cent). Almost a quarter (23 per cent) spend more than six hours completing a single end-of-year return.

Alarmingly, 70 per cent remain unaware that they will be required to file returns digitally from April. Among those who do know about the change, almost four in ten (39 per cent) have taken no steps to prepare.

TV handyman Mark Millar, presenter of Channel 5’s Dream Kitchens and Bathrooms, said he recognised the pressures facing small business owners who try to juggle manual bookkeeping with their day-to-day work.

“Many sole traders I know are still using pencils and scraps of paper to keep tabs on their profit and loss,” he said. “That used to be me. I can remember the pressure I felt quoting, invoicing and managing clients, all while trying to stay on top of my tax returns. Making Tax Digital is an opportunity to make admin less time consuming and less stressful.”

Millar said switching to digital tools transformed the way he ran his construction company, offering clarity and reducing the risk of lost paperwork.

Research from Sage and the Association of Independent Professionals and the Self-Employed (IPSE) found that those already using digital accounting tools enjoy tangible improvements. More than half reported better organisation (54 per cent) and clearer financial visibility (53 per cent), while others said digital systems reduced stress and freed up time.

Neal Watkins, executive vice-president for small business at Sage, said the shift should ultimately make life easier for sole traders.

“As initiatives like Making Tax Digital continue to roll out, self-employed people have a real opportunity to turn compliance into an advantage — saving time, reducing admin and gaining a clearer view of their finances.”

The transition to digital tax filing marks one of the most significant administrative changes for self-employed workers in decades. While the government argues it will improve accuracy and reduce errors, the latest research suggests many sole traders are at risk of being caught off guard.

With millions of returns needing to move online over the coming years, accountants warn that those still relying on manual or paper-based systems could face unnecessary stress—and potential non-compliance—if they do not prepare soon.

Read more:
One in three sole traders still using pen and paper as digital tax deadline approaches

Being your own boss has its perks – independence, flexibility, and control over your earnings – but it also means taking charge of your own financial future.

Unlike traditional employees, the self-employed don’t benefit from auto-enrolment or employer contributions. That makes setting up a private pension one of the most important financial steps you can take.

According to the Institute for Fiscal Studies, only one in five self-employed people earning over £10,000 a year are paying into a pension, leaving many facing a potential shortfall of £250,000 in retirement.

To help bridge that gap, Not Ltd’s financial experts and research firm Fairer Finance have outlined how pensions for the self-employed work — and which options offer the best value and flexibility in 2025.

Self-employed workers can access the same tax benefits as employees through personal pensions. The Government tops up contributions by 20% for basic-rate taxpayers, meaning every £80 you pay in becomes £100.

Higher-rate (40%) and additional-rate (45%) taxpayers can claim further relief via self-assessment, bringing the effective cost of saving down even further.

Even if you’re not earning, you can still contribute up to £2,880 a year, which is then topped up to £3,600 by HMRC, says Romi Savova, CEO of PensionBee.

The annual allowance for 2025–26 is the lower of £60,000 or your total income, beyond which tax relief stops.

There are three main pension types available to self-employed workers, each catering to different needs and investment styles:

Personal Pension

Also called a private pension, this is the most popular option. It’s offered by large pension providers and insurance firms and typically comes with ready-made investment portfolios. You choose a risk level — cautious, balanced, or adventurous — and the provider manages the rest.

Stakeholder Pension

A flexible option with low minimum contributions, capped charges, and the ability to stop or restart payments easily. These plans are ideal if your income varies month-to-month, though investment choice can be more limited.

Self-Invested Personal Pension (SIPP)

Best suited for confident investors who want full control over their investments. A SIPP lets you pick your own stocks, funds, and ETFs, offering maximum flexibility but often higher charges.

Helen Morrissey of Hargreaves Lansdown advises: “If you’re an engaged investor, a SIPP offers the most freedom. If you prefer simplicity, a personal pension with a ready-made portfolio is usually best. Always check fees — some platforms charge for features you may never use.”

The best pension providers for self-employed workers

Best for switching between employment and self-employment:

Nest – The Government-backed Nest pension is ideal for those moving between self-employment and PAYE roles, as contributions from both can stay in one pot. However, its 1.8% contribution charge makes it more expensive for early savers.

Best for flexibility:

Halifax, Bank of Scotland, and Freetrade – All three allow you to open a SIPP with no minimum contribution and top up when income allows. Interactive Investor offers similar flexibility, with the option to pause or vary payments.

Best for low charges:

Vanguard – One of the cheapest, charging just 0.15%, capped at £375 per year.
Interactive Investor – Flat monthly fees from £5.99 to £19.99, depending on plan size, make it excellent for larger portfolios.
Invest Engine and Prosper also offer zero platform fees, appealing to cost-conscious investors.

Best for investment choice:

Interactive Investor, Fidelity, and Hargreaves Lansdown all offer thousands of global funds and shares — ideal for those who want control and variety.

Best for low dealing costs:

Freetrade, Invest Engine, and CMC Invest offer free or ultra-low dealing charges. Interactive Investor charges just £3.99 per trade for UK and US shares.

James Daley, managing director of Fairer Finance, warns: “Fees have an enormous impact on long-term growth. Some ready-made pensions cost under 0.5% a year, while others exceed 2%. Over decades, that difference could wipe tens of thousands off your retirement pot.”

Frequently asked questions

Do self-employed people get the state pension?

Yes. You qualify under the same rules as employees — with 10 years of National Insurance (NI) for a partial pension and 35 years for the full amount. Those earning over £12,570 a year must pay NI contributions, while those earning less may need to make voluntary payments to maintain their record.

Do I have to make regular contributions?

No, you decide when and how much to save. However, consistent investing gives your pension more time to grow.

Do self-employed pensioners pay tax?

Yes, pension income is taxable, though you can stop paying NI from the April after you reach state pension age.

The self-employed have more flexibility than traditional employees — but with that freedom comes responsibility. Whether you opt for a low-cost personal pension, a flexible SIPP, or a simple stakeholder plan, starting early and saving regularly remains the most powerful way to secure a comfortable retirement.

As Morrissey puts it: “The best pension is the one you start today — not the one you plan to open next year.”

Read more:
The best pension options for the self-employed in 2025

As the UK’s tax burden hits record highs, self-employed workers and company directors are searching for legitimate ways to reduce what they owe to HMRC. One increasingly popular option, according to accountants, is to employ your spouse or partner — a move that can legally cut both income tax and corporation tax bills while boosting family finances.

Rising income tax, National Insurance, and dividend tax rates have squeezed household budgets, while businesses are feeling the pinch from higher employment costs. For entrepreneurs running their own limited companies, bringing a partner into the business — even part-time — can unlock significant savings.

If your spouse or partner is not fully using their personal tax allowance (£12,570) or is in a lower tax band than you, paying them a salary from your company can help distribute household income more efficiently.

They must have a genuine role in the business — for example, handling admin, bookkeeping, marketing, or client communications — and the salary must reflect the work they actually perform.

“You should be mindful of the salary you pay. It should reflect the right amount for their role, just as any other employee,” says Tom Minnikin, partner at specialist tax firm Forbes Dawson.

From a tax point of view, it often makes sense to pay up to the personal allowance threshold, meaning they’ll pay no income tax while still receiving National Insurance credits.

Alternatively, you could make your spouse a shareholder, allowing them to receive dividends. These are taxed more lightly than salary income, with the first £500 tax-free, and further amounts taxed at just 8.75% for basic-rate taxpayers.

Accountancy firm Forbes Dawson estimates that a business making £100,000 in profit could save around £12,000 a year by employing a spouse who hasn’t used their personal allowance.

That’s because part of the higher-earning partner’s income can be “shifted” to the spouse, using their unused allowances and keeping both within lower tax bands.

Businesses also benefit. Salaries paid to spouses are deductible expenses, which reduce corporation tax. If your business qualifies for the Employment Allowance, worth up to £10,500, you can even offset part of the employer’s National Insurance contributions.

Employing a spouse can also help with pension planning. If they earn more than £10,000 a year, they must be enrolled in a workplace pension, which can provide additional tax relief.

“As a business, you can declare pension contributions as an expense, lowering your corporation tax bill,” says Pippa Vick, financial adviser at The Private Office.

“If your spouse isn’t working elsewhere, employing them increases the amount they can contribute annually. Without qualifying income, they’re capped at £2,880 a year (topped up to £3,600 by HMRC). With employment income, that limit rises significantly.”

Employment also builds National Insurance credits, helping them qualify for a higher state pension later in life.

The same approach can work for sole traders, though the setup differs. You can hire your spouse as an employee through a PAYE scheme, paying them a fair salary for their work, which can be offset against your business income for tax purposes.

Alternatively, you could form a partnership or limited liability partnership (LLP), splitting profits between both partners. This allows each person to take advantage of lower tax bands and personal allowances.

Whatever the structure, accountants warn that HMRC will expect clear evidence that your spouse genuinely works for the business. That means keeping a written contract, accurate payroll records, and paying them through an official payroll system.

Employing your spouse or partner isn’t just a creative tax-saving strategy — it can make sound financial and operational sense for small business owners. By sharing the workload, distributing income efficiently, and taking advantage of tax-free allowances, a couple can save thousands of pounds a year while strengthening their household finances.

As Minnikin puts it: “Any situation where there’s a difference between the tax rates of each spouse offers scope for sensible tax planning. With the right setup, both the business and the family can win.”

Read more:
Why employing your spouse could save you thousands in tax

Officials and liquidators are pursuing businesses behind 21 movies that sought nearly £16 million in incentives from a joint HMRC and British Film Institute scheme.

Businesses controlled by prolific film producer Alan Latham — whose films have featured stars including Elizabeth Hurley, Kelsey Grammer, and Bill Nighy — are being investigated by HM Revenue & Customs (HMRC) amid questions over how taxpayer funds were used to finance dozens of little-known productions.

Liquidators are examining the collapse of Highfield Grange Production Services, one of Latham’s key holding companies, which listed £20.4 million in film investments now written down to zero. Creditors, including HMRC, have been left facing losses after Highfield fell into liquidation following a tax dispute.

The tax authority is also seeking to wind up GSP Studios International, Highfield’s main shareholder and another Latham-controlled entity.

A Times investigation found that more than 20 films linked to Latham attempted to access £16 million in creative industry tax reliefs, part of a government scheme run jointly by HMRC and the British Film Institute (BFI) to boost UK film production.

Among the titles are Christmas in Paradise, a romantic comedy starring Elizabeth Hurley (pictured) and Kelsey Grammer, shot in the Caribbean as part of a promotional deal for St Kitts and Nevis, and Miss Willoughby and the Haunted Bookshop, featuring Grammer again.

Many of the companies behind these films have not filed accounts for several years — a criminal offence — while others face being struck off the corporate register. The movies are absent from the BFI’s list of projects that received final certification, but some were granted “interim certification”, which allows funds to be released before completion.

Questions have also been raised about the accuracy of the production budgets used to claim tax relief.

For example, Solis — a 2018 sci-fi film starring Steven Ogg of The Walking Dead fame — was reported in company accounts to have cost £4.7 million, qualifying for nearly £1 million in interim tax credits. Its director, Carl Strathie, has said publicly that the film’s real budget was closer to £700,000.

Another film, Gatecrash (2020), is listed as having cost £4.5 million, yet individuals familiar with the project claim the budget was about £750,000. It received nearly £900,000 in tax credits.

Liquidators at Begbies Traynor, who are overseeing Highfield’s administration, said they have conducted “thorough investigations” into why the film investments were written off. In filings this year, they confirmed that solicitors had been instructed to pursue “connected parties” with “substantial claims” against two unnamed special purpose vehicles.

They added that “substantial amounts of money have been identified as having been paid to other connected companies” and that transactions were being investigated for “having the effect of diminishing the company’s assets.”

A statement of affairs signed by Latham listed £3.7 million owed to GSP Studios International, another of his companies, now also facing HMRC action.

The episode has raised wider questions for HMRC and the BFI, which oversee the certification and administration of the UK’s £500 million-a-year film tax credit scheme.

The BFI confirmed that it works closely with HMRC and the government to “uphold the integrity of the system,” adding: “We take any concerns about potential misuse seriously. The tax incentives have helped attract investment, create jobs across the UK and showcase British creativity worldwide.”

An HMRC spokesperson said only: “We take compliance within creative industry tax reliefs seriously.”

Latham, an accountant turned film producer, has held more than 150 directorships and remains linked to more than 60 active companies. He did not respond to multiple requests for comment.

There is no suggestion of wrongdoing by any actors or crew members involved in the productions.

In 2022, Latham told the Mail on Sunday that “inefficiency” was to blame for his companies’ repeated failure to file accounts, after investors complained about losing money in one of his earlier films, The Comedian’s Guide to Survival, which grossed just £75.

Read more:
HMRC and BFI investigate film producer Alan Latham over £16m taxpayer-funded movie projects

Britain’s booming creator economy is fuelling a surge in “side hustles”, with millions of people turning content creation into extra income — but new research suggests many could face unexpected tax bills.

According to Tide, the UK’s leading business management platform, the average social media earner now makes £1,223 a year — exceeding the HMRC £1,000 trading allowance that lets individuals earn small sums tax-free.

Yet more than half of social media users remain unaware of the rule, putting them at risk of self-assessment penalties that start at £100 and can quickly escalate.

Tide’s study found that 42% of UK adults have received either money or gifts in exchange for social media posts on platforms such as TikTok, Instagram, X (Twitter) and YouTube.

For some, this means small perks or free products. But for a growing number of creators — particularly younger users — it has evolved into a significant revenue stream.

A fifth (21%) of earners now make more than £1,000 a year from their content, while 55% of 18–24-year-olds report earning from social media — the highest of any age group. Despite this, only 36% of young creators have filed a tax return with HMRC.

The problem, says Tide’s UK Managing Director, Heather Cobb, is that many casual creators don’t realise their side hustles count as taxable income:

“It’s great that TikTok and Instagram have opened new ways for people to earn. But even if you’re paid in free products, those items have a value — and that value counts towards the £1,000 allowance. If you don’t track it, you could face unexpected penalties.”

Under HMRC’s trading allowance, individuals can earn up to £1,000 in gross income from self-employment or side hustles each tax year before needing to declare it. Once earnings exceed that amount — whether through cash payments or the value of gifted items — individuals must register for self-assessment and report their income.

Only 44% of those who earn from content creation say they have done so. With late filing fines and “failure to notify” penalties potentially running into thousands of pounds, Tide estimates that total fines across the UK could exceed £2 million annually.

Cobb urged creators to separate business income from personal finances early on: “Track your earnings from day one. Open a separate business account, keep receipts, and record the value of gifts. Tools like Tide Accounting can help manage tax and expenses easily.”

For many, social media income has become the first step towards entrepreneurship.

Megan Paul, a Tide member and founder of Gel by Megan in Warwickshire, said her business began as an Instagram hobby: “Posting photos of my nail art started as a creative outlet, but it soon grew into paid brand work and now my own training academy.

Taxes and self-assessments can feel daunting, but local business communities and modern finance tools make it much easier. I’d encourage anyone earning online to take it seriously — it could be the start of something bigger.”

The rise of the “TikTok Tax” underscores how quickly passion projects can evolve into taxable businesses. As the boundaries between personal and professional blur, experts say the UK’s tax system and financial education must keep pace.

With millions of creators earning, gifting, and collaborating online, understanding basic business management and compliance has become essential — not just to avoid penalties, but to build sustainable digital careers.

For the new generation of side hustlers, keeping on top of tax may not be glamorous — but it’s the price of turning likes and views into legitimate income.

Read more:
The TikTok tax: Millions risk HMRC fines as side hustlers surge past £1,000 earnings threshold

What began as isolated disputes over niche items is now reshaping how cakes, baked goods and sweet snacks are treated for tax purposes.

The result is that products previously considered zero-rated are increasingly being reclassified as standard-rated confectionery, subject to 20% VAT.

The change centres on a single phrase in VAT legislation, which defines confectionery as: “Chocolates, sweets and biscuits; drained, glace or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.”

HMRC and the courts are treating this final clause as decisive. If a product is sweetened and typically finger-eaten, it is now likely to be deemed confectionery.

That logic has already been applied to cases ranging from mega marshmallows to M&S’s viral Strawberry and Crème ‘sandwich’, raising industry-wide questions about how far the category could extend.

HMRC has gone beyond case-by-case challenges and is now issuing ‘One to Many’ letters to producers, wholesalers and retailers. These urge businesses to file error correction notices for potential underpayments dating back four years.

The language of the letters suggests HMRC assumes errors have already been made. Voluntary disclosure may soften penalties, but businesses risk significant retrospective liabilities if they fail to act.

What food businesses should do now

Alex Nicholson, Head of VAT at Johnston Carmichael, advises companies to take a proactive stance:

• Track case law timelines – understanding when products were ruled taxable is key to assessing backdated exposure.
• Review past HMRC correspondence – previous clearance or reliance on HMRC behaviour may provide a defence.
• Audit product ranges broadly – don’t just review the items HMRC highlights; a full audit may reduce risk.
• Explore legal challenges – not all HMRC interpretations are unassailable, and viable counterarguments remain.

For many businesses, the issue is not just future liability but historic exposure. Margins across food production and retail are already squeezed by inflation, wages and regulation. Unexpected backdated VAT bills could be devastating for smaller producers and costly even for established players.

The expansion of the confectionery definition signals a fundamental shift in HMRC’s approach. The courts’ willingness to support that shift suggests that zero-rating sweet products will become increasingly rare.

The takeaway is clear: the days of relying on historic VAT treatments are over. Businesses that move quickly to review and adapt their VAT positions will be best placed to limit financial and reputational damage.

Read more:
HMRC has stepped up its campaign to expand the scope of ‘confectionery’ under VAT law – and the courts are backing them

HSBC has warned business banking customers that personal identification documents submitted during account applications may have been compromised following unauthorised access to a third-party platform.

In an email sent to customers earlier this month, the bank confirmed that identity documents, images and contact details provided when opening a business account were exposed in the breach. HSBC stressed that its own systems remained unaffected, with passwords, PIN codes and biometric security such as Voice ID uncompromised.

The breach raises concerns about potential identity theft and fraud. HSBC said there was no evidence of fraudulent activity arising from the incident so far, but urged customers to monitor their accounts, credit reports and bank statements closely for suspicious activity.

To mitigate risks, the bank is offering affected customers a complimentary 12-month subscription to Experian’s Identity Plus service, providing monitoring of personal information and alerts for possible misuse. A dedicated helpline managed by Experian has also been set up to handle queries until 8 October 2025.

One affected customer, who declined to be named, told Business Matters: “I provided passport details in good faith to HSBC as it was necessary for identification before opening up a business account. Now I’m worried that money will be taken out of the company account by crooks, with the third-party platform having been hacked. Worse, that my passport details could be sold on the dark web.

I had reservations about providing ID proof in the first place because cyber attacks are now so prevalent but you put your trust in the banks to get online security right, including tech partners. Frankly, nowhere is safe in the online world these days and businessmen and women need to be constantly on alert for data breaches involving their details. In the wrong hands, lives and livelihoods are devastated and there is little redress.”

This latest breach comes after recent high-profile cases, including Harrods’ data breach affecting loyalty scheme members, which also highlighted the vulnerability of customer information in the hands of external providers.

Cybersecurity experts warn that the growing reliance on third-party platforms for data storage and verification continues to expose companies and their clients to heightened risks. The incident underscores the need for firms, particularly financial institutions, to strengthen due diligence on their technology partners.

HSBC said it had worked with external specialists to investigate the incident and had taken steps to prevent further unauthorised access. The bank reiterated that it would never request sensitive information such as PIN codes or passwords by phone or email and urged customers to remain cautious of potential phishing attempts in the wake of the breach.

Speaking about the breach, a HSBC spokesperson said: “We recently became aware of unauthorised access to a third-party platform which held personal identity information and documents provided by applicants for a new HSBC UK business banking account. We have implemented measures to prevent further unauthorised access and have contacted those potentially affected.

“HSBC’s systems are separate and have not been impacted. Customers can continue to use their account as normal.

“We take the safety of customers’ and applicants’ information very seriously and use a range of measures to keep this information safe.

“We are sorry for any concern and inconvenience this may cause.”

Read more:
HSBC warns UK business banking customers of third-party data breach

Mounting speculation that Chancellor Rachel Reeves may target retirement savings in her November Budget is already sending ripples through financial markets and prompting British expatriates across Europe to explore moving their pensions out of the UK.

Wealth manager deVere Group has reported a sharp rise in enquiries from expats in Portugal, Spain, France and the Netherlands, with savers increasingly considering cross-border pension structures to shield themselves from potential reforms.

James Green, investment director at deVere, said the concern was palpable: “Even the possibility of new or extended taxes on pensions is enough to set serious savers in motion. The conversation has shifted from curiosity to preparation.”

The backdrop is stark. Reeves faces a £20 billion hole in the public finances, with government borrowing costs now at their highest in over a decade. Ten-year gilt yields are hovering around 4.75 per cent, adding billions to the Treasury’s annual debt-servicing bill.

With income tax hikes politically explosive after Labour’s pre-election promises, pensions are seen as an obvious — and tempting — target. Analysts note that past governments have repeatedly turned to retirement savings when fiscal pressure mounts.
In 1997, Gordon Brown famously scrapped the dividend tax credit on pension funds, a move critics dubbed a “£5 billion-a-year raid”. Then in 2010, George Osborne reduced annual pension contribution allowances from £255,000 to £50,000 and cut lifetime allowances.

There has also been successive freezes to allowances since 2021 have quietly dragged more middle-class savers into higher tax brackets — a “stealth raid” by another name.

Against that history, the mere suggestion that Reeves could tighten rules on lump-sum withdrawals, extend freezes or alter inheritance tax treatment of pensions is enough to galvanise expats into action.

One destination attracting attention is Malta, whose EU-recognised pension framework offers flexibility and potential tax advantages. Savers can withdraw up to 30 per cent of their pot tax-efficiently without a lifetime cap, schedule phased income on their own terms, and in many cases keep pension assets outside UK inheritance tax for non-residents.

Portugal’s still-favourable regime, alongside options in Spain and France, also strengthens the appeal for those retiring abroad. “People recognise that Malta’s framework provides protection and efficiency that could prove vital if the UK moves the goalposts again,” Green said.

This trend is not limited to the ultra-wealthy. deVere, which manages retirement planning for 80,000 expatriate clients, is seeing middle-class savers explore transfers too. “Frozen allowances and stealth tax rises have already drawn millions into higher brackets. Even a modest extension of those freezes would hurt many middle-class pensioners,” Green warned.

For Reeves, the political challenge is acute. Any perception of a “pension raid” risks damaging Labour’s relationship with both older voters and professionals in their 40s and 50s saving aggressively for retirement.

Market confidence is also at stake. Green argues that heavy taxation on pensions discourages long-term saving and undermines capital markets: “It weakens the very economy the government aims to strengthen. Savers will naturally look to jurisdictions where the rules are clearer and more stable.”

Already, wealth managers are reporting conversations shifting from “what if” to “what next”. The fact that people are taking steps before any policy has even been announced shows how fragile trust has become in the stability of UK pension rules.

Reeves must balance fiscal necessity with political optics. Pensions offer a substantial revenue stream, but the Labour leadership is wary of reviving memories of past “raids”. Industry voices are urging restraint:
• Think tanks such as the Institute for Fiscal Studies argue that while pension tax relief is costly — worth £50bn a year — it underpins retirement saving and should not be undermined by short-term fixes.
• Business groups warn that further uncertainty could accelerate capital flight and deter inward investment, compounding the UK’s growth problem.
• Expats and financial advisers stress that any move would disproportionately affect internationally mobile professionals who already feel targeted by rising surcharges on property and restrictions on non-dom status.

With the Budget set for November 26, advisers are cautioning against waiting until Reeves makes her move. Cross-border pension transfers require time to process, and delaying until after any announcement could shut off options.

“Planning ahead is critical,” Green said. “Waiting until after the Budget could mean missing the opportunity to make compliant, efficient transfers before new measures take effect.”

For now, no changes have been confirmed. But with fiscal pressures mounting, history suggesting pensions are a perennial target, and expats already voting with their feet, the fear of a raid may prove almost as damaging as the policy itself.

Read more:
Reeves’ rumoured pension raid spurs expats to shift billions abroad

The separate tax controversies involving Premier League footballers and former deputy prime minister Angela Rayner should serve as a “wake-up call” about the importance of taking sound, professional advice, a senior tax expert has warned.

Steven Martin, senior tax manager at Hampshire-based accountancy and business advisory firm HWB, said the two cases – though very different in scope – highlight the serious financial, legal and reputational consequences of inadequate or incomplete guidance.

“While they differ, as one concerns Stamp Duty only and the other is about wider tax planning and investment strategy, they both underline why trusted, reliable guidance is more crucial than ever,” Martin said.

He added: “Missteps, even unintentional, can have serious consequences. Sound advice isn’t just about minimising tax; it’s about ensuring compliance, protecting assets and making informed, ethical decisions in an increasingly scrutinised financial environment.”

The so-called V11 case saw a group of former Premier League players lose fortunes after investing in tax-avoidance schemes dressed up as film funds and US property ventures. Many of the ventures collapsed, leaving players saddled with significant tax liabilities. Some were pushed into bankruptcy, while others faced lengthy legal battles with HMRC.

“These were persuasive, high-risk investments presented by advisors without the appropriate expertise,” Martin said. “The players relied on assurances without fully understanding the risks.”

By contrast, the Angela Rayner case involved a much narrower issue – Stamp Duty Land Tax (SDLT). Following legal review, she was found liable for the higher, second-home rate of SDLT on her Hove property, resulting in an underpayment of around £40,000. The fallout from the case ultimately led to her resignation from government last week.

“This was a case of insufficient or inappropriate guidance on a specific area of tax law, particularly around trusts,” Martin said. “It illustrates how even a seemingly straightforward transaction can carry risks if advice lacks depth or understanding of the client’s full circumstances.”

While the two controversies differ in context, Martin said they both point to the same conclusion: “unqualified or incomplete advice in areas of complex tax or investments can be perilous.”

He stressed that individuals should always work with regulated, qualified professionals – and seek multiple perspectives when dealing with complex matters.

“Trusted advisors not only save money by ensuring correct decisions upfront, they also protect reputations,” Martin said. “Misplaced trust can mean the difference between a secure retirement and financial ruin.”

Read more:
Rayner and footballers’ tax troubles are a ‘wake-up call’, adviser warns

HMRC’s use of artificial intelligence to profile people’s social media activity will increase tax compliance, according to leading audit, tax and business advisory firm Blick Rothenberg.

Fiona Fernie, a partner at the firm, said that HMRC’s CONNECT system has been deploying advanced analytics since the early 2000s to spot underpaid tax. “CONNECT uses (and has always used) advanced analytics such as pattern recognition, predictive modelling, and machine learning, which are all forms of AI. Social media is just one of the many sources CONNECT reviews,” she explained.

CONNECT, developed by BAE Systems Applied Intelligence at an estimated cost of between £45 million and £100 million, has reportedly helped recover more than £3 billion in unpaid tax.

Fernie highlighted the efficiency gains such technology offers HMRC investigators. “CONNECT can identify the patterns and anomalies in the data it reviews in seconds where human investigation would take months,” she said. “It not only enables real-time risk profiling; it also supports the work carried out by HMRC staff during the course of investigations.”

However, she stressed that AI outputs are not used in isolation. “The information gleaned and analysed by the CONNECT system is always also looked at by human investigators. As long as there is appropriate human oversight and safeguards, I do not see any problem with the use of AI to identify possible indicators that tax is not being paid at the correct levels.”

HMRC has recently confirmed it uses publicly available online data to support compliance activities, including social media posts, blogs and other internet content without privacy restrictions. This mirrors the approach of other government departments such as the Department for Work and Pensions.

Fernie suggested HMRC may be underplaying the extent of its AI usage. “It is strange for HMRC to state that AI is only used as part of criminal investigations into tax fraud, as CONNECT uses real-time risk profiling as a tool to help determine targets for investigation.”

The growing use of AI in tax enforcement comes as governments worldwide deploy technology to close compliance gaps and secure revenues — a trend that places increasing importance on digital footprints, even in everyday online activity.

Speaking about the claims, a HMRC spokesperson said: “Use of AI for social media monitoring is restricted to criminal investigations and subject to legal oversight.”

“AI supports our processes but – like all effective use of this new technology – it has robust safeguards in place and does not replace human decision-making.

“Greater use of AI will enable our staff to spend less time on admin and more time helping taxpayers, as well as better target fraud and evasion to bring in more money for public services.”

Read more:
AI profiling of social media will boost HMRC’s tax compliance, say advisers

The Lionesses’ historic Euro 2025 victory is set to deliver a significant windfall not just for the players, but also for the UK taxman, with HMRC expected to receive £788,900 from the team’s prize money, according to analysis by tax and advisory firm Blick Rothenberg.

Each player is expected to receive an average bonus of £73,000, which pushes their earnings above the £125,140 threshold where the highest effective marginal tax rate of 47% applies. That means players could be paying around £34,300 each in combined income tax and National Insurance Contributions (NIC), according to Robert Salter, Director at Blick Rothenberg.

“The Lionesses will be delighted with their win at Euro 2025 for what it represents and the hard work that went into it,” Salter said. “But they will have a hefty tax bill to pay to HMRC on their prize money.”

Salter noted that although the Lionesses still earn less than their male counterparts, their tournament bonuses are substantial enough to trigger the UK’s top tax bracket. The 47% figure comprises 45% income tax and 2% employee NIC.

In addition to the tax paid by players, the Football Association (FA) is also expected to face a £255,000 liability in employer NIC on the prize bonuses, further increasing HMRC’s overall take from the team’s success.

And the revenue doesn’t stop there. Many of the Lionesses are expected to earn significantly more in the coming months from sponsorship deals, marketing campaigns, and media appearances, all of which are subject to income tax. Salter said these post-tournament earnings, especially image rights and appearance fees, will continue to drive up the players’ taxable income — and with it, HMRC’s share.

“Their earnings are likely to increase significantly over the coming months, given their success and the ongoing growth in the profile of the Women’s game,” Salter added. “HMRC will be getting even more tax ‘wins’ in the future.”

While the Lionesses’ on-pitch victory has been widely celebrated across the country, their financial success off the pitch is proving to be a win for the Treasury as well — a reminder that even sporting triumphs come with a tax bill.

Read more:
HMRC scores tax windfall from Lionesses’ Euro 2025 prize money

Taxpayers have been warned to settle their tax bills by 31st July or risk incurring late payment interest at 8.25%, as HMRC intensifies its crackdown on unpaid liabilities.

The alert comes from Blick Rothenberg, a leading audit, tax and business advisory firm, which says taxpayers who have yet to pay their second payment on account for the 2024/25 tax year must act quickly to avoid financial penalties.

“From May 2022, HMRC increased late payment interest from 3.5% to 8.25% as part of their agenda to crack down on people that owe tax,” said Tom Goddard, Senior Associate at Blick Rothenberg. “People who owe money for the 2024/25 tax year must pay their bill as soon as possible.”

What are payments on account?

Payments on account are advance payments made towards the next year’s income tax bill, calculated based on a taxpayer’s previous year’s liability. They are paid in two instalments — one by 31st January, and the second by 31st July.

For example, someone with a £10,000 second payment on account who delays payment until 31st December 2025 would face nearly £350 in interest charges, Goddard explained.

“This is also an incentive to get your tax return submitted early,” he added. “By doing so, you ensure your July payment is accurate — rather than risk overpaying and waiting for a refund.”

Can payments be reduced?

Yes — if a taxpayer reasonably expects that their income for 2024/25 will be lower than in 2023/24, they may reduce their payments on account. However, Goddard warned that over-reducing the figure could lead to interest charges and potential penalties if the estimate proves too low.

“Now that the 2024/25 tax year has ended, those who have already made a claim to reduce their payments on account should check whether this was appropriate based on their final income levels and, if necessary, adjust their payments,” he said.

Who needs to pay?

Payments on account generally apply to those with self-employment income, rental profits, or investment income, where tax isn’t deducted at source.

Taxpayers do not need to make payments on account if:
• Their 2023/24 tax liability was under £1,000, or
• More than 80% of their tax was collected through PAYE.

Capital Gains Tax (CGT) is also excluded from payments on account.

What if you can’t pay?

Goddard urged those struggling financially to contact HMRC directly as soon as possible.

“HMRC may offer a payment plan to help alleviate some of the financial burden, allowing payments to take place over a more manageable timeframe,” he said.

With just days left before the 31st July deadline, taxpayers are advised to check their status, file their returns if possible, and take action — or risk costly charges and escalating interest in the months ahead.

Read more:
Taxpayers who haven’t settled their bill with HMRC must pay by 31st July or face fines and interest

Bereaved families will face increased financial and administrative pressure following the government’s decision to include pensions in inheritance tax (IHT) calculations from April 2027, despite widespread opposition from both the public and the pensions industry.

Under the new rules, pension pots will be treated as part of an individual’s estate when calculating inheritance tax liabilities. The Treasury expects the policy to raise £1.46 billion per year by 2029–30, with 10,500 estates set to pay inheritance tax as a result, and a further 38,500 estates facing higher tax bills, according to HM Revenue & Customs (HMRC).

The move has been described by critics as the Labour government’s most unpopular tax change to date. A recent AJ Bell poll of 2,050 adults found that 44 per cent opposed the change, with just 21 per cent in support.

Renny Biggins, head of retirement at The Investing and Savings Alliance, which represents over 270 financial services firms, said the decision was deeply disappointing.

“Despite significant pushback from the industry, pensions will now form part of inheritance tax calculations,” he said.

Initially, the government had proposed that pension scheme administrators would be responsible for calculating and paying any tax owed on pension pots. However, following intense lobbying from the pensions industry, the Treasury has shifted the burden to personal representatives, typically either solicitors or bereaved family members.

They will now be required to identify and report all pension assets and pay any IHT due within six months of death to avoid interest charges—placing yet another burden on grieving families.

The government’s summary of responses to the HMRC consultation published this week noted that although some supported the principle of taxing pension wealth, “the majority strongly opposed the proposal to make pension scheme administrators liable”.

Former pensions minister Sir Steve Webb warned that the changes risk overwhelming grieving families with complex bureaucracy at an already difficult time.

“Life is tough enough when you have just lost a loved one without having extra layers of bureaucracy on top,” said Webb, who is now a partner at consultancy Lane Clark & Peacock.

He explained that family members would now have to track down all pensions held by the deceased, obtain statements from each scheme, collate the data, and use HMRC’s online calculator to determine the IHT liability—then pay the tax within six months.

“Complications will no doubt arise when families cannot locate all pensions or when providers are slow to supply the necessary information,” Webb added.

He urged the government to rethink its penalty rules, warning that families could be unfairly fined for late payments caused by delays beyond their control.

“While the changes HMRC has made are undoubtedly good news for pension schemes and those who administer them, it is hard to see that they are good news for bereaved families.”

Critics say the inclusion of pensions in IHT calculations represents a major shift in how retirement savings are treated—reversing previous assurances that pensions would remain outside the tax net and could be passed on tax-free in most circumstances.

Industry experts have questioned the practical feasibility of the policy, warning that many individuals have multiple pension pots, often spread across different providers, with some dormant or difficult to trace.

With inheritance tax already considered one of the most complex areas of the tax system, the addition of pensions is expected to create a significant administrative burden, particularly for families with modest estates.

The Treasury insists the change is a matter of tax fairness, ensuring that pension wealth is treated in line with other assets like property and investments. However, the debate is likely to intensify as the April 2027 implementation date approaches—and as more families become aware of the additional red tape they may soon face during an already difficult period of loss.

Read more:
Families face red tape nightmare with inheritance tax on pensions from 2027

HM Revenue and Customs (HMRC) collected a staggering £2.2 billion in inheritance tax (IHT) in the first three months of the current tax year, new data released this morning reveals—£100 million more than the same period last year.

The increase highlights a worrying trend: more families are being drawn into the IHT trap due to frozen thresholds, rising property prices, and soaring inflation. The government’s take from IHT has now been steadily climbing for two decades, adding to what experts call the highest overall tax burden in 70 years.

Nicholas Hyett, Investment Manager at Wealth Club, called IHT “a meal ticket for HMRC” and criticised the long-standing freeze on the nil-rate band, which has remained at £325,000 since 2009 and is set to stay fixed until at least 2030. The £175,000 residence nil-rate band, introduced in 2017 to protect the family home, also hasn’t budged since 2020.

“These freezes are a form of stealth tax,” Hyett said, “designed to quietly increase the government’s take without the political backlash of a headline-grabbing hike.”

As property values and inflation continue to rise, many families who would not consider themselves wealthy are now being caught by a tax once associated only with the very rich.

Hyett also pointed to the Chancellor’s recent U-turn on IHT rules for non-doms, citing the exodus of wealthy individuals from the UK, while other sectors—such as farmers and AIM investors—face continued uncertainty.

With inheritance tax taking centre stage ahead of the Autumn Budget, financial planners are encouraging families to review their estate strategies.

“In this environment, lifetime gifts are probably more attractive than ever,” said Hyett, especially regular gifts from surplus income, which are immediately IHT-free and popular for paying grandchildren’s school fees.

Alongside inheritance tax, Insurance Premium Tax (IPT) receipts also rose sharply, hitting £2.17 billion in Q1. Emily Jones, Client Consulting Director at Broadstone, said the surge was being fuelled by rising demand for private health insurance, as NHS delays push more people toward employer-backed or self-funded care.

“Employers are stepping up, but rising IPT costs risk pricing out smaller businesses,” said Jones. “If the government wants a healthier workforce and a more resilient NHS, a targeted IPT exemption for health insurance should be on the table.”

With a £20 billion fiscal black hole to fill and tax revenues climbing quietly through frozen thresholds and stealth levies, the Autumn Budget is shaping up to be one of the most politically sensitive in recent memory. Both IHT and IPT may stay untouched in headline terms—but beneath the surface, the Treasury’s quiet tax grip is tightening.

Read more:
Inheritance tax haul hits £2.2bn in just three months amid rising property prices and frozen thresholds

The Financial Conduct Authority (FCA) has unveiled long-awaited plans to regulate the booming £13 billion ‘buy now, pay later’ (BNPL) sector — with proposals that could require affordability checks on even the smallest of loans.

Under the new rules, which form part of a formal consultation launched on Friday, BNPL lenders would need to conduct creditworthiness assessments on loans under £50 — a measure the regulator says is necessary to protect consumers from spiralling debt and financial harm.

The FCA said BNPL has evolved from a fringe product into a mainstream payment method, used by 10.9 million UK adults in the 12 months to May 2024. Around 1.1 million of these individuals had BNPL debts of £500 or more, while more than 5 million owed at least £50. Over half of all BNPL agreements currently involve loans under £50, which the FCA argues must be included in the scope of new rules to prevent widespread harm and “loan stacking” across multiple providers.

The proposals mark a significant shift in how short-term credit is treated, with firms like Klarna, Clearpay and Laybuy among the major lenders expected to come under the new regime.

Sarah Pritchard, the FCA’s deputy chief executive, said the regulator had been seeking oversight of the sector for some time amid concerns about its explosive growth.

“BNPL can offer flexibility, but our job is to ensure consumers are properly protected. People can benefit from BNPL while being protected,” she said.

The market has expanded rapidly from £60 million in 2017 to over £13 billion in 2024, often promoted at online checkouts to help customers spread the cost of purchases without interest. But critics have warned the ease of access can mask potential dangers for younger or financially vulnerable consumers.

BNPL is particularly popular among 25–34 year-olds, many of whom live in some of the UK’s most economically deprived areas. The FCA’s move is designed to ensure that those at greatest risk are not exposed to excessive borrowing without proper safeguards.

The new regime, due to take effect from 15 July 2026, will require BNPL lenders to become FCA-authorised. Once live, firms will have six months to register for authorisation or face losing the ability to lend.

Consumer groups have welcomed the proposals. Vikki Brownridge, chief executive of debt charity StepChange, said the regulation was long overdue.

“BNPL is now as common as using an overdraft. While it can be useful, it can also deepen financial difficulties. Struggling consumers must have the same protections as with any other form of credit,” she said.

The proposals also include mandatory support for customers experiencing financial hardship, along with the right to refer complaints to the Financial Ombudsman Service.

The FCA’s consultation is open until 26 September 2025, giving BNPL providers, consumer advocacy groups and industry stakeholders time to respond. The regulator is expected to publish its final rules early next year.

With the BNPL sector now firmly entrenched in the UK’s consumer finance landscape, the FCA’s intervention could mark a turning point — transforming a once lightly regulated payment method into a core part of the UK’s credit framework.

Read more:
New ‘buy now, pay later’ affordability checks may cover even smallest loans under FCA proposals

Tennis champions Jannik Sinner and Iga Swiatek may have lifted Wimbledon trophies this summer—but their victories come with a costly UK tax bill of more than £1 million each, according to leading tax experts.

Audit, tax and business advisory firm Blick Rothenberg has warned that despite not being UK tax residents, both the Italian men’s singles champion and the Polish women’s winner will face substantial tax liabilities on their UK earnings.

Robert Salter, Director at Blick Rothenberg, explained that while the players may not live in the UK, their £3 million Wimbledon prize money is still taxable under HMRC rules, alongside elements of their commercial income.

“Wimbledon will be obliged to operate withholding tax, at a flat rate of 20%, on the prize money that they pay to these stars,” said Salter. “However, Jannik Sinner and Iga Swiatek will ultimately be taxed in the UK at the top rate of 45% on their winnings—less any allowable business expenses they can deduct.”

In addition to their prize earnings, a portion of each player’s image rights income may also fall under the UK tax net, as HMRC considers this to be partly sourced from their presence and publicity during the tournament.

Salter added that while international tax law gives HMRC a clear legal basis to tax non-resident athletes on UK-sourced earnings, the UK’s system remains one of the least favourable for global sports stars.

“Many countries—including Germany—offer far more generous tax treatment to travelling athletes,” he said. “The UK’s relatively punitive regime has previously deterred stars like Usain Bolt and Rafael Nadal from participating in certain UK events, due to the financial impact.”

That said, Wimbledon remains one of the most prestigious events in the global sporting calendar, and its profile continues to attract top-tier athletes despite the associated tax burden.

While the organisers benefit from unparalleled visibility and global recognition, the players are left to weigh the cost of glory against their HMRC bill. For champions like Sinner and Swiatek, a Grand Slam title may be priceless—but the taxman still takes a significant share.

Read more:
Wimbledon winners face £1m UK tax bills despite non-resident status

Chancellor Rachel Reeves is preparing to unveil a reduction in the tax-free allowance for cash ISAs, as part of a broader move to channel household savings into London-listed firms and reinvigorate the UK’s capital markets.

According to the Financial Times, Reeves will use her Mansion House speech to announce a cut to the current £20,000 tax-free cash savings limit available under the Individual Savings Account (ISA) wrapper. While the total ISA limit is expected to remain unchanged, the shift will likely reduce how much savers can shelter in cash ISAs specifically.

The controversial reform is aimed at steering more of the UK’s estimated £300 billion in cash ISA holdings toward long-term investment in equities—particularly those listed in London. The Treasury hopes this will unlock fresh capital for UK businesses while potentially delivering better returns for savers over time.

Advocates of the move argue that cash ISAs, while popular, offer limited returns compared to stocks and shares ISAs, especially over the long term. Charles Hall, a longtime supporter of ISA reform, told City AM: “It makes sense for the Chancellor to address the limits on Cash ISAs to encourage savers to invest in products with higher returns. We should also ensure that taxpayers’ money is focused on encouraging investment in UK companies.”

The proposed change comes just a week after trading platform IG Group launched a “Save our Stock Market” campaign, which included a proposal to abolish cash ISAs altogether.

However, the policy is already facing stiff opposition from major investment and savings institutions. AJ Bell’s CEO Michael Summergill said he was “fundamentally opposed” to the cut and warned it would “negatively impact savers without achieving the desired effect of getting people investing.” AJ Bell’s research found that only 25% of savers would redirect extra funds into UK equities if the cash ISA limit were cut.

Sarah Coles, head of personal finance at Hargreaves Lansdown, echoed the concern, noting that cash ISAs often serve as a gateway product for new savers. “This is an issue which requires a carrot, not a stick, approach. We know through extensive research that the barriers to investing are behavioural, so it’s through encouragement and increased confidence that we will increase the number of retail investors.”

She warned that limiting how much can be moved from cash into stocks and shares ISAs could have the unintended consequence of reducing overall investment uptake.

The exact size of the reduction has not yet been confirmed. Reeves has previously said she would not lower the overall £20,000 ISA cap but has stopped short of ruling out changes to the cash component specifically.

If implemented, this would mark the biggest shake-up to the UK’s flagship tax-free savings product since its creation by Gordon Brown in 1999. The Treasury declined to comment.

Read more:
Reeves to cut cash ISA allowance in push to revive UK capital markets

Millions of consumers will be offered free, tailored financial support from banks and pension providers under sweeping new proposals from the City regulator, in a bid to steer people away from risky online advice and poor money decisions.

The Financial Conduct Authority (FCA) has unveiling plans to overhaul long-standing restrictions that prevent firms from offering personalised financial suggestions unless they conduct full individual assessments — a costly and time-consuming process that leaves most consumers unable to access formal advice.

Under the new “targeted support” regime, firms would be permitted to send “ready-made suggestions” to customers to help them navigate complex financial decisions — from investing cash savings in the stock market to avoiding early depletion of pension pots.

The FCA estimates that only 9 per cent of UK adults currently access conventional financial advice, leaving the vast majority to manage investments and savings without expert guidance. Regulators hope the reforms, which are open for consultation until August, will plug this growing advice gap and stop savers turning to unregulated sources, including social media influencers and AI chatbots.

Sarah Pritchard, executive director at the FCA, described the changes as “once-in-a-generation reforms that will help people navigate their financial lives and give them greater confidence to invest”. She said the proposals represent a “win-win for consumers and firms alike”.

The move comes amid growing concern over the seven million people who hold over £10,000 in cash savings but have not moved into investment markets, potentially missing out on higher returns. Under the new rules, banks and insurers could send prompts encouraging such customers to consider stocks and funds, providing clickable routes to take action.

Financial firms could also give guidance on major retirement decisions, such as whether to choose an annuity or drawdown option. While these are currently considered areas of regulated advice, the new framework would allow companies to offer nudges and suggestions, stopping short of full personalised recommendations.

The cost of full financial advice has long excluded all but the wealthiest. With advisers typically charging 1 to 3 per cent upfront and annual fees of around 2 per cent, access is generally limited to those with more than £200,000 in liquid assets.

Consumer groups have cautiously welcomed the move but warned of potential risks. Holly Mackay, chief executive of financial data platform Boring Money, described the proposals as “highly positive”, estimating that 5.9 million people could benefit. However, she added: “There is a danger that banks see targeted support as meaning targeted sales.”

James Carter, head of platform policy at Fidelity International, said that many savers are already turning to unregulated sources like TikTok influencers or generative AI for advice. “That could result in poor financial decisions. I’m beginning to hear more stories of people using ChatGPT to make conclusive decisions about their financial futures,” he said.

The Association of British Insurers also welcomed the move. Yvonne Braun, its director of long-term savings policy, said: “We know facing complex financial decisions can feel overwhelming, especially in retirement. The FCA’s decision to press ahead with this crucial proposal is very welcome and should be a relief to millions of savers.”

The FCA’s consultation will close on August 29, with a final policy statement due by December. Subject to approval, the first targeted support messages could start reaching consumers as early as April next year.

Read more:
FCA to allow millions free financial support in major policy shift

Marks & Spencer’s new strawberry and cream sandwich has captured attention on social media — but now it’s caught the eye of tax experts, too.

Marketed as a sweet take on the viral Japanese strawberry sando, M&S’s half-sandwich — part of its meal deal range — is prompting questions over whether it should be classified as a standard sandwich (zero-rated for VAT) or as a confectionery item (subject to 20 per cent VAT).

Wrapped in typical savoury packaging, the new snack consists of sweetened bread and a generous helping of strawberries and cream, mimicking the Japanese original made with soft milk bread. While shoppers are debating the flavour, accountants and barristers are debating its tax status.

“If the bread is sweetened and designed to be eaten with fingers, the case for classifying it as confectionery is surprisingly strong,” said Simon Knivett, VAT manager at HW Fisher. That would make the item subject to VAT under a 1988 change aimed at catching cereal bars and other “sweetened prepared foods”.

The legal uncertainty echoes the now-legendary VAT ruling on Jaffa Cakes, which saw McVitie’s successfully argue the treat was a cake — and therefore zero-rated — not a biscuit. Another similar case is currently unfolding over whether “mega marshmallows” should be taxed as confectionery, with London-based wholesaler Innovative Bites challenging HMRC’s decision to apply the full VAT rate.

Max Schofield, a barrister at Devereux Chambers, said the outcome of that case could have broader implications: “If giant marshmallows, because they’re eaten with fingers and are sweet, fall under confectionery rules, so could sweet sandwiches.”

Adam Craggs, a partner at law firm RPC, added: “The M&S strawberry sandwich may soon join the curious canon of VAT case law. The legislation is notoriously complex and often leads to outcomes that can feel arbitrary or absurd.”

M&S has not commented on whether the item is being sold with or without VAT applied, but with increased popularity — and online debate from VAT professionals — HMRC may soon have a decision to make.

As one tax commentator wryly observed on LinkedIn: “Anyone buying this monstrosity should be charged 100% VAT — just on principle.”

Read more:
Sweet or taxable? M&S strawberry sandwich sparks new VAT debate

Inheritance‑tax receipts reached £1.5 billion in April and May, the first two months of the 2025‑26 tax year, HM Revenue & Customs revealed on Thursday.

The figure is £98 million higher than in the same period last year and keeps the levy on its long‑running upward trajectory.

Yet the latest surge comes just as ministers weigh a rethink of one of their most controversial reforms: extending inheritance tax to the worldwide estates of non‑domiciled residents. The measure, announced earlier this year and expected to raise about £430 million annually, is now under review amid reports of an exodus of wealthy non‑doms.

“If rumours are correct, the Chancellor is contemplating a U‑turn,” said Nicholas Hyett, investment manager at Wealth Club. “Not only would that reduce the extra revenue HMRC was banking on, it also highlights the broader economic cost of driving affluent international residents away—lost spending, investment and philanthropy.”

Hyett argued that imposing the UK’s 40 per cent inheritance‑tax charge on global assets was always the easiest change for the super‑rich to sidestep: “City high‑flyers need to be in London; the mega‑wealthy can live anywhere. The UK is attractive, but not attractive enough to surrender 40 per cent of the family fortune.”

Advisers to non‑doms report that as many as 30 per cent of clients are actively relocating or considering relocation to more favourable tax regimes. Even if the Treasury rows back, Hyett warned, “the horse has bolted—plans are made and confidence in Britain’s stability has been dented.”

The debate has been inflamed by fresh speculation that ministers might scrap inheritance‑tax relief on shares listed on London’s junior AIM market, just months after relief was cut in half. “That would be terrible news for AIM,” Hyett said. “The constant tinkering creates exactly the kind of uncertainty that deters long‑term investment in smaller UK companies.”

With receipts climbing but high‑net‑worth taxpayers heading for the exit, the government faces a dilemma: press ahead with reforms in pursuit of extra revenue, or recalibrate to keep globally mobile wealth—and the broader economic benefits it brings—on British soil.

Read more:
Inheritance‑tax take hits £1.5bn in two months as flight of non‑doms casts doubt on future revenues

Chancellor Rachel Reeves is considering softening Labour’s flagship plans to scrap the non-domiciled tax regime, amid rising concern over the growing exodus of wealthy individuals and business leaders from the UK.

The Treasury is reportedly reassessing proposals to apply inheritance tax to the global estates of non-doms—UK residents who consider their permanent home to be abroad—after warnings that the measure could drive significant capital and talent out of the country. The changes, part of a wider overhaul of the centuries-old regime, are due to take effect in April 2025, but concerns are mounting that the new system is triggering a level of flight far beyond what had been forecast.

At the heart of the reconsideration is the government’s plan to charge inheritance tax at 40% on worldwide assets held by wealthy non-doms once they have lived in the UK long enough to become deemed domiciled under the new rules. The Treasury is now thought to be exploring revisions or exemptions to this aspect of the policy, in an effort to stem the tide of departures.

“There will most likely be some tweaks to inheritance tax to stop the non-dom exodus,” a senior City figure told the Financial Times.

The exodus of wealthy individuals is already visible in the data. Companies House filings analysed by Bloomberg show that more than 4,400 company directors have left the UK in the past year, with a particularly sharp rise over the past few months. In April alone, departures were 75% higher than the same month in 2023, with the greatest concentration in the finance, insurance and property sectors—fields long favoured by non-doms.

The exodus includes a growing list of high-profile names. Bloomberg has reported that figures such as billionaire heiress Anne Beaufour, investor Max Gottschalk, Magna Capital CEO Alexander Ginzburg, JC Flowers co-president Tim Hanford, and boxing promoter Eddie Hearn have recently left the UK. The steel magnate Lakshmi Mittal, whose family is worth nearly £15 billion and who has lived in Britain since 1995, is also reported to be considering relocation due to the new tax regime.

The Treasury has acknowledged the concerns, issuing a statement saying: “The government will continue to work with stakeholders to ensure the new regime is internationally competitive and continues to focus on attracting the best talent and investment to the UK.”

The original non-dom regime, in place for decades, allowed wealthy foreigners living in the UK to shield foreign income and assets from British taxation for an annual fee starting at £30,000. It was scrapped by Jeremy Hunt during his tenure as chancellor in March 2024, pre-empting Labour’s own pledge to end non-dom status.

Under the new residence-based tax regime, individuals who have been in the UK for more than four years will be taxed on worldwide income and capital gains, and after a longer period, on global estates for inheritance tax purposes. While the Office for Budget Responsibility (OBR) originally forecast that between 12% and 25% of non-doms would leave, a more recent Oxford Economics survey of tax advisers found that 60% expected over 40% of their non-dom clients to relocate within two years of the change.

Critics have argued that while Labour’s reform was intended to ensure fairness in the tax system, the loss of non-doms—and the high levels of capital, spending and business investment they bring—could ultimately result in lower tax receipts and damage to the UK’s competitiveness.

Non-doms often support a wide ecosystem of private employment, investment, and philanthropic activity. Their departure, some fear, may create a ripple effect, weakening everything from real estate investment to venture funding.

Rachel Reeves, who has pitched herself as a pro-business chancellor focused on growth, now faces a delicate political and economic balancing act. On the one hand, Labour’s plans to scrap the non-dom regime were central to its pre-election narrative of building a fairer tax system. On the other, the government is now under pressure to reassure international investors and avoid scaring away entrepreneurs, executives, and wealth creators.

Sources close to the Treasury have indicated that any softening of the policy would be focused specifically on mitigating the impact of inheritance tax—widely regarded as the most punitive element of the changes—while keeping the broader reform intact.

With Mittal, Beaufour, and others already exploring exit strategies, the government is expected to signal its intentions in the coming months, ahead of the policy’s implementation in April. Until then, advisers say the uncertainty alone is fuelling further departures, adding urgency to the debate over how far Labour is prepared to go to keep Britain attractive to global wealth.

Read more:
Rachel Reeves reconsiders non-dom tax changes to halt exodus of wealthy individuals

Small and medium-sized enterprises (SMEs) are the lifeblood of the UK economy, accounting for over 99% of all businesses and employing more than 16 million people. Yet for years, access to finance has remained one of the sector’s biggest obstacles—especially in a post-pandemic, high-interest rate environment.

Now, one community lender based in Wolverhampton is demonstrating how the tide may be turning. BCRS Business Loans, a not-for-profit finance provider, has cut SME loan processing times by an astonishing 80% after embracing a new wave of back-office technology.

The transformation comes at a crucial moment. Many SMEs are still grappling with cash flow issues, delayed payments, and rising operating costs. Traditional banks have tightened their lending criteria, with thousands of smaller businesses reporting difficulty accessing credit. In this context, the speed and efficiency of alternative lenders like BCRS are more vital than ever.

A radical rethink of the lending process

BCRS Business Loans is no stranger to innovation. The lender was established to serve underserved businesses that fall outside the risk appetite of mainstream banks. Historically, BCRS has provided loans of up to £150,000 to businesses across the West Midlands and surrounding regions.

However, like many legacy lenders, BCRS found itself constrained by slow internal systems and manual processes that added unnecessary friction to the borrower experience. A typical business loan could take several weeks to process—a time delay that could spell trouble for a company needing urgent funding.

That changed when BCRS partnered with fintech platform Kennek, which provides an end-to-end lending operating system. With Kennek’s technology, BCRS streamlined and automated much of its back-office function, from initial borrower onboarding and risk profiling to documentation and compliance checks.

The result? Loan turnaround times have dropped by four-fifths. What once took weeks can now be achieved in days, with borrowers receiving decisions and disbursements faster and with fewer headaches.

Speed matters: why efficiency is now a competitive edge

In today’s business landscape, speed is not a luxury—it’s a competitive necessity. SMEs frequently need funding to capitalise on growth opportunities, manage short-term cash crunches, or invest in equipment and talent. When access to that capital is delayed by weeks, it can mean missed opportunities or even business failure.

Faster processing also improves the lender’s performance. By accelerating loan decisions, BCRS can turn over capital more efficiently, serve more clients, and enhance overall portfolio performance.

“Every day counts for our borrowers,” said Stephen Deakin, CEO of BCRS Business Loans. “By removing bottlenecks and automating key parts of our process, we’re not only providing a better customer experience—we’re making our entire operation more robust and responsive.”

The wider implications for SME finance in the UK

While BCRS may be a regional lender, the implications of its back-office transformation are national. The UK currently faces a persistent SME funding gap estimated at over £22 billion, as noted by the British Business Bank. Many of these unmet financing needs are not due to creditworthiness, but rather inefficiencies and risk aversion in the lending system.

Digital transformation—particularly in the back office—offers a credible path forward. By using platforms like Kennek, lenders of all sizes can move faster, reduce operating costs, and scale without compromising on due diligence or regulatory compliance.

Moreover, fintech innovation in this space isn’t limited to faster processing times. It also includes better risk modelling, data-driven decision making, and integration with Open Banking data to improve financial insights—all of which help ensure responsible lending.

What this means for borrowers

For the small business owner, this shift is hugely welcome. Many SMEs report feeling marginalised or frustrated when seeking finance from high street banks, especially for loans under £250,000. Decision-making can feel opaque, impersonal, and out of sync with the needs of fast-moving firms.

Community lenders and regional growth finance bodies like BCRS play an essential role in bridging that gap. But to do so effectively and at scale, they must adopt the same level of digital sophistication as the fintech giants—while maintaining the local knowledge and hands-on support that make them valuable in the first place.

As BCRS has shown, marrying community ethos with cutting-edge tech isn’t just possible—it’s transformational.

The next chapter for SME finance

The success of BCRS’s back-office reform sends a strong signal to other lenders across the UK. Streamlining internal systems isn’t a “nice to have”—it’s mission critical. As the government pushes forward with its SME finance review in 2025 and prepares a new industrial strategy, modernising the infrastructure behind business lending must remain front and centre.

Whether through partnerships with fintechs, internal digital overhauls, or new market entrants, the goal is clear: UK SMEs deserve faster, fairer, and more accessible finance.

Read more:
SME lending delays slashed by 80% thanks to fintech-driven back-office reform

The number of inheritance tax (IHT) investigations launched by HM Revenue & Customs has soared by more than a third over the past year, as the government intensifies efforts to crack down on underpayment and boost Treasury revenues.

New figures obtained through a Freedom of Information request by accountancy firm Price Bailey reveal that HMRC opened 4,171 formal IHT investigations in the year to April 2025, up from 3,028 the previous year—a 37% jump.

The surge underscores a renewed focus from the tax authority as it seeks to recover what it believes are significant sums lost through misreporting or under-valuation of estates. HMRC recovered a record £8.2 billion in inheritance tax in the past year alone, driven in part by frozen tax thresholds, rising property prices, and growing asset values.

Executors responsible for managing estates are required to file an IHT return within 12 months of death, though any tax owed must be paid within six months to avoid accruing interest—currently charged at 8.25%. Where HMRC suspects an estate has been undervalued—whether through innocent oversight or deliberate evasion—it can trigger an investigation.

Experts say the investigations are often prompted by undervaluations of property, omitted assets, or complex gifts that fall under the “seven-year rule”, which allows gifts to escape IHT if the donor lives for at least seven years after giving them.

“The tax office has significant powers at its disposal,” said Nikita Cooper, tax partner at Price Bailey. “We’ve seen a notable rise in the number of cases where HMRC is using detailed data—including bank statements, investment histories and even foreign currency transactions—to scrutinise IHT returns more closely.”

Damian Bloom, partner at law firm Taylor Wessing, said the rise in investigations was being driven in part by greater access to data and increasingly sophisticated analytics. “As HMRC adopts more artificial intelligence tools, we expect this trend to accelerate,” he added.

IHT is charged at 40% on the value of an estate above the nil-rate band of £325,000. For estates that include a home passed on to a child or grandchild, a further £175,000 residence nil-rate band may apply, subject to the estate being worth less than £2 million. Together, a married couple or civil partners can pass on up to £1 million tax-free. These thresholds have been frozen until at least 2030.

More families are now finding themselves caught in the IHT net, particularly as property and pension values have soared over the past decade. From April 2027, the rules will tighten further, with unused defined contribution pension pots included in the taxable estate—likely adding to both liabilities and compliance risk.

Fiona Fernie, partner at Blick Rothenberg, said: “As families and advisers adapt to these new rules, we’re likely to see more mistakes—or perceived mistakes—leading to further scrutiny from HMRC.”

She added that while many people believe the system is unfair, especially amid rising asset inflation, attempts to reduce tax liabilities—however legal—can often trigger closer inspection.

HMRC insists that the “vast majority” of estates pay the correct tax and that investigations are only opened where there is evidence of underpayment. “Cases can range from genuine errors to deliberate attempts to evade tax,” a spokesperson said, adding that those who disagree with an HMRC assessment can appeal.

For families navigating bereavement and estate administration, the message is clear: careful and transparent valuation of assets—and early expert advice—can reduce the risk of being caught up in an IHT probe.

Read more:
HMRC inheritance tax investigations surge 37% as treasury seeks to plug revenue gap

Millions of UK cryptocurrency holders will soon be required to disclose their personal details to digital asset platforms, as HM Revenue & Customs (HMRC) rolls out a sweeping new crackdown on tax avoidance in the sector.

From 1 January 2026, crypto exchanges and marketplaces will be obliged to collect and report information on users and transactions to HMRC as part of a coordinated global effort to improve tax transparency and combat non-compliance in the digital economy.

The rules will apply to both individuals and businesses engaged in buying and selling cryptoassets, and mark the latest expansion of HMRC’s digital surveillance powers following the introduction of the so-called “side hustle tax” on online sellers using platforms such as Airbnb, Vinted and Etsy.

Recent data from the Financial Conduct Authority suggests that around 12 per cent of UK adults – more than six million people – now hold some form of cryptocurrency.

Under the new regime, individuals will need to supply their name, date of birth, home address, country of residence, and – if based in the UK – their National Insurance number or Unique Taxpayer Reference (UTR). Overseas investors will need to provide their tax identification number and the issuing country.

Businesses trading in crypto must submit their legal name, registered address, and relevant company registration or tax identification details depending on their location.

Platforms will also be required to report the value, type, and nature of each transaction, along with the number of crypto units involved. Exchanges that fail to comply face fines of up to £300 per user for submitting inaccurate or incomplete reports.

Seb Maley, CEO of tax insurance specialist Qdos, said the move signals a new phase in HMRC’s pursuit of tax revenue from digital sectors.

“HMRC is casting its net far and wide as it looks to crack down on suspected tax avoidance and non-compliance among cryptocurrency holders,” Maley said. “By collecting the personal information of those buying and selling crypto – along with the values being exchanged – HMRC will know how much tax should be paid on these assets.”

He added that the data-sharing requirement will significantly bolster HMRC’s ability to cross-reference taxpayer records with third-party information. “In simple terms, if the income a taxpayer declares on their self-assessment doesn’t match what these platforms report, HMRC has the data it needs to open a tax investigation.”

The new measures reflect HMRC’s participation in a broader global initiative led by the OECD, known as the Crypto-Asset Reporting Framework (CARF), which aims to close tax loopholes in fast-growing digital markets by ensuring consistent reporting standards across borders.

“These rules are another sign of how HMRC is working with tax authorities globally to align on how to police compliance – particularly in fast-growing, digital industries, such as crypto and the gig economy,” Maley said.

The clampdown comes amid a wider shift in regulatory attitudes toward cryptocurrencies, with both the UK and EU progressing legislation to bring digital assets under stricter financial oversight. In the UK, the government has pledged to make the country a “global crypto hub,” while also ensuring proper tax and consumer protections are in place.

Industry observers say the rules could impose an additional administrative burden on platforms but will ultimately bring more legitimacy to the crypto sector by aligning it with traditional financial compliance expectations.

Read more:
HMRC launches crypto crackdown with new data-sharing rules for platforms and traders

Millions of savers could see their retirement pots put at risk under sweeping new pension reforms unveiled by the government, leading experts and campaigners have warned.

A series of proposed changes, confirmed on Thursday as part of the new Pension Schemes Bill, would loosen rules on how surplus funds can be extracted from defined benefit (DB) pension schemes — allowing employers to reclaim billions of pounds that are currently locked within retirement funds.

The Department for Work and Pensions (DWP) said it intended to “remove barriers to extraction” and revise the threshold at which pension trustees can share scheme surpluses with sponsoring employers. Ministers claim the proposals could help boost economic growth by enabling companies to reinvest the funds into business expansion, wage increases or further pension contributions.

But pensions industry leaders have voiced serious concerns about the potential fallout for more than ten million people who are members of DB schemes, warning that loosening the rules could undermine long-term security and destabilise well-funded schemes.

The newly formed Pension Security Alliance — comprising pension insurers Just Group and Pension Insurance Corporation, consultant John Ralfe, and organisations representing pensioners — said the reforms threatened to turn pension schemes into “piggybanks for others to dip into.”

In a statement, the Alliance warned: “Extraction before members’ benefits have been secured runs the risk of those schemes running short of money if financial conditions change. In that case, some schemes could collapse.”

They urged ministers to “think again” and stressed that the government itself had previously cautioned that relaxing surplus rules could reduce protection for members.

The DWP has insisted the measures would only take effect with “stringent safeguards” and the full discretion of scheme trustees. A formal consultation is due to be launched in the coming weeks.

“The goal is to deliver benefits for both employers and members,” a government spokesperson said. “Employers could use this funding to invest in their business, increase productivity, boost wages or utilise it for enhanced contributions.”

But fears about erosion of protections have been compounded by a separate “reserve power” in the legislation that would allow ministers to impose binding asset allocation targets on pension funds — effectively compelling schemes to invest in UK assets such as infrastructure and private companies if they do not do so voluntarily.

James Alexander, chief executive of the UK Sustainable Investment and Finance Association — which represents over 300 financial services firms with a combined £19 trillion under management — said the prospect of mandatory investment posed major risks.

“Mandation risks distorting markets, creating asset bubbles and potentially lowering returns for pension savers. It could also push some schemes into riskier assets than appropriate,” Alexander said.

The Investing and Saving Alliance also expressed concern, warning that schemes must not be forced “down a path which could jeopardise member outcomes”.

The government’s push to unlock pension capital to stimulate economic growth follows July’s Mansion House Accord, where 17 of the UK’s largest pension providers pledged to voluntarily invest £25 billion in UK private assets by 2030. Ministers now appear ready to wield legislative levers to ensure that commitment is met.

Torsten Bell (Pictured), the newly appointed pensions minister, said the reforms were not about prescribing specific investment strategies, but about unlocking the full potential of Britain’s £3.5 trillion pensions industry. “We’re making pensions work for Britain,” Bell said, describing the reforms as a means to “boost returns for workers and invest in Britain’s future”.

The government estimates that around three-quarters of DB schemes are in surplus and collectively hold approximately £160 billion in surplus assets, though some analysts put the figure closer to £360 billion. These figures, however, can fluctuate rapidly with changes in interest rates, inflation expectations and life expectancy forecasts.

John Ralfe, a veteran pensions consultant and member of the Pension Security Alliance, said the legislation must be tightly drafted to define surpluses “on a tough basis”, and any employer who draws from a surplus must remain liable to top up the scheme if deficits later emerge.

Some observers, including Daniela Silcock, formally of the Pensions Policy Institute, acknowledged the proposals could bring certain benefits if properly managed — particularly by encouraging more schemes to continue operating independently, rather than offloading liabilities to insurers.

“A change that encourages more schemes to continue running and to pay benefits directly, rather than transferring to an insurer, could help members by maintaining flexibility, avoiding transaction costs, and potentially preserving higher benefit value,” Silcock said.

Nevertheless, the central question remains: will the reforms genuinely enhance retirement security — or simply shift risk from company balance sheets to individual pensioners?

With the Autumn Budget on the horizon and scrutiny intensifying over government plans to reshape Britain’s pension system, this debate is far from over.

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‘Not pension piggybanks’: experts warn millions of savers at risk under government reform plans

Pensions tax relief may be in the firing line in the upcoming Autumn Budget, with growing concern among financial experts that HMRC is targeting popular salary sacrifice schemes as a way to raise revenue.

According to Blick Rothenberg, a leading audit and tax advisory firm, a new HMRC report points to the Treasury’s increasing focus on pension perks — including suggestions that salary sacrifice schemes could be significantly curtailed or even abolished.

Tomm Adams, a partner at the firm, said: “HMRC has just published a report suggesting that the Treasury has pensions in its crosshairs this Autumn. It explores ways to butcher salary sacrifice arrangements, or go even further by abolishing pension tax relief altogether.”

He added that the pensions industry was alarmed by what he described as a short-sighted approach that prioritises short-term tax receipts over long-term financial stability. “Those of us who care about the general population’s retirement prospects are appalled. This would sacrifice tomorrow’s security for today’s gain.”

Salary sacrifice arrangements have long been used by both employers and employees to boost pension contributions in a tax-efficient way. Under the scheme, an employee agrees to reduce their salary, with the equivalent amount instead being paid into their pension — which reduces both income tax and National Insurance contributions (NICs).

“There’s a misconception that this is a personal income tax loophole,” Adams said. “In reality, it offers no more of a break than other methods of making pension contributions. The key difference lies in National Insurance — there’s a 15% employer NIC break, and up to 8% for employees.”

He suggested that in an ideal world, all pension contributions — not just those via salary sacrifice — should receive the same level of NIC relief. “But that would cost the Treasury significantly more, and it’s not on the table under this government,” he added.

Any move to reduce or remove salary sacrifice would have wide-reaching consequences, not just for workers, but also for employers who use the scheme to support staff retention and wellbeing. “Companies often share part of their NIC savings with employees by topping up pension contributions,” Adams said. “That’s particularly important for higher earners, who already receive reduced pension tax relief.”

He also warned that abolishing or weakening salary sacrifice would likely reduce pension contributions across the board — particularly from higher earners — at a time when the UK already falls short on retirement provision. “The state pension provides just 21.7% of the average final salary. Even with auto-enrolment, that only rises to 41.9% — well below the global average.”

Adams argued that the government should look elsewhere for more immediate sources of revenue, such as unfreezing fuel duties, which could add £3 billion annually to Treasury coffers. “Hopefully, this is just the poorly timed publication of an outdated internal report,” he said. “But if not, it would represent a dangerous move against long-term financial planning for millions of workers.”

Read more:
Pensions at risk as HMRC eyes salary sacrifice schemes in Autumn Budget