While the 2025 Spending Review focused on long-term investment rather than introducing new taxes, the scale of spending suggests that future tax rises are likely.

Where have the Government recently invested funds?

The Chancellor pledged multi-year funding for health, defence and public infrastructure, setting departmental budgets until 2028–29.

Key announcements included:

• Defence spending to rise to 2.6 per cent of GDP by 2027
• £2.3 billion annual capital boost for the NHS
• £2.4 billion a year for school rebuilding
• £15.6 billion for transport in major city regions
• £500 million for digitalising HMRC

However, funding for other vital areas like local government, policing, and the environment will either remain flat or fall.

Where will the money come from?

No tax rises today does not mean no future tax rises.

Despite assurances that new spending is fully funded, rising debt interest payments, global volatility and flatlining productivity all place pressure on the Chancellor’s future fiscal decisions.

From a technical standpoint, experts believe the most likely targets include:

• Extending threshold freezes, which quietly push more people into higher tax brackets
• Cuts or caps on pension tax reliefs
• Council tax rises passed through local government

These changes have the potential to impact both business cash flow and personal wealth, which is why advanced planning is essential.

What can you do to prepare for potential tax changes in the Autumn Budget?

The absence of immediate change should not create complacency.

Now is the right time for you to:

• Stress-test cash flow and margins under potential tax scenarios
• Revisit remuneration strategies and reliefs
• Speak to your accountant about existing tax-saving opportunities

With significant investment flowing into defence, healthcare, infrastructure and technology, now might also be an ideal time to explore public sector contract opportunities and position your business to support the UK’s long-term development.

Worried about what the Autumn Budget might hold? Do not wait, speak to our team today to prepare you and your business.

The UK Government has confirmed that it will reduce green levies for energy-intensive industries.

These cuts aim to drive growth in key sectors, such as manufacturing and clean energy.

What are green levies?

A green levy is an environmental charge added to energy bills to help fund renewable energy projects and reduce carbon emissions.

For many businesses, these levies have driven up energy costs and eroded international competitiveness.

What does the change mean for business?

Under the new plan, electricity bills for energy-intensive sectors could fall by up to 25 per cent from 2027.

More than 7,000 manufacturing firms are expected to benefit, according to early Government estimates.

Steel, chemical, ceramic, and paper manufacturers are among the sectors expected to see the most immediate impact due to their higher energy consumption.

However, a further trickle-down effect could benefit many more SMEs in future.

Eligibility criteria and exemption details are due to be confirmed after a two-year consultation.

What are the benefits of slashing green levies?

Key potential benefits of cutting green levies include:

• Lower operating costs
• Improved profit margins
• Increased investment in the domestic industry
• Stronger job security in energy-intensive sectors
• Enhance international competitiveness
• Lower costs further down the supply chain

However, there are concerns from environmental groups that rolling back levies could stall the UK’s progress toward net zero.

Next steps for business owners

Firms with moderate energy use may face higher levies or pricing adjustments elsewhere in the system, as the Government looks to offset the cost of exemptions.

While reforms and closer alignment with EU carbon pricing have been suggested to cover the shortfall, the full funding model remains unclear.

To prepare, you should:

• Follow consultation developments
• Assess potential cost exposure with energy partners
• Consider efficiency upgrades or fixed-rate contracts

Consult with your accountant for personalised preparation plans.

Are you affected by green levies or other forms of green taxation? To find out how we can assess its impact on your business, get in touch.

57 per cent of small to medium-sized enterprises (SMEs) have warned of rising costs over the next quarter, according to Intuit QuickBooks’ latest Small Business Insights survey.

Given this startling figure, all businesses should take care to manage cash flow constraints caused by inflation.

Boost financial awareness across your staff

Financial awareness should not just be the preserve of your finance professionals.

Educating your whole team on spending and budgeting will equip them to handle future financial decisions.

Model different scenarios

Model different scenarios, such as supply chain issues or customer downturn, to ensure your financial forecasting is adaptable.

Although it is difficult to predict every scenario, preparing for a range of possibilities will help you to respond effectively to new challenges.

Review your numbers regularly

Schedule a regular review of your income and expenditure to help you spot problems, identify opportunities to cut costs, and assess the impact of external and internal changes.

Cloud accounting software can enhance these reviews by providing real-time data and insights into your finances.

Software can also save you valuable time and money by automating routine tasks, such as sending invoices and reminders.

Keep your credit under control

One of the single largest contributing factors to poor cash flow is outstanding payments from customers.

Improving your credit control process, including recognising outstanding payments and chasing them effectively, can help to ensure you have sufficient cash flow.

However, when it comes to persistent late payers, it may be worthwhile assessing their continued benefit as a customer and seeking redress sooner rather than later if they have a substantial amount outstanding.

Do not panic

Amidst the pressures of inflation and rising costs, it is important to stay calm.

Panicking will lead to rushed decisions that are unlikely to serve your business interests in the long run.

Instead, take a moment to step back and review the situation calmly with our expert accountants.

Protect your business against rising costs by contacting our cash flow experts today.

The way families make Child Benefit repayments to HM Revenue & Customs (HMRC) is changing.

From the summer, many families will have the option to report their Child Benefit payments and pay the High Income Child Benefit Charge (HICBC) directly through their PAYE tax code instead of filing a Self-Assessment tax return.

How will it work?

For eligible employed parents, the option to pay directly through PAYE will be simpler compared to Self-Assessment.

However, those who wish to continue paying the HICBC through Self-Assessment may continue to do so.

Taxpayers who are required to file Self-Assessment tax returns for other reasons, such as self-employment, will still need to report the HICBC on these returns.

What is the HICBC?

The HICBC is a charge on families where one person earns £60,000 or more.

For every £200 over this amount, their Child Benefit is paid back at one per cent.

This means that families must pay back all their Child Benefit where either parent has income in excess of £80,000.

Families who effectively receive no Child Benefit because of the HICBC still receive the other perks of Child Benefit, such as National Insurance credits and a National Insurance number for each child when they turn 16.

This is why many parents continue to register for Child Benefit, despite not receiving a payment each month.

What should I do now?

To pay the HICBC via PAYE, you will need to register through HMRC’s online service.

HMRC will contact you when the service goes live.

If you have previously opted out of Child Benefit payments and would like to opt back in, you can restart your payments online or via the HMRC app.

HM Revenue and Customs (HMRC) is working to enhance compliance and improve efficiency with tax filings by implementing Making Tax Digital (MTD) for Income Tax.

However, taxpayers still need to get ready for MTD before it becomes mandatory in April 2026 for sole traders and landlords with gross income of £50,000 or more.

With the first major deadline looming, now is the time to get MTD ready.

• Verify your digital record-keeping

All business records must be digitised, ideally using HMRC-compliant software.

It is finally time to retire the paper ledgers and the disparate collection of documents stored on various devices.

The time has come to collate important information in a secure, centralised platform so that anyone filing their tax return can do so.

You will need to verify that this is the case by doing one last sweep of all your records to make sure nothing is going to slip through the cracks.

• Confirm your software compatibility

MTD requires the use of compatible software for both record-keeping and submissions.

Be sure you do your research on any software that you are considering using to make sure it will satisfy the requirement for MTD.

If you are unable to invest in new software, then you can continue to use Excel spreadsheets, provided you can link them to HMRC’s systems using a bridging solution.

However, many other benefits come with using established cloud-accounting platforms that are worth your consideration.

• Ensure workflow integration

Every part of your operations is going to need to be checked to ensure that the necessary information is being gathered correctly to make your quarterly MTD filings.

Fragmented workflows introduce the risk of missed invoices, unrecorded expenses, or other surprises that could lead to non-compliance.

• Train your team and assign responsibility

Your team, if you have one, need to know how to effectively use the MTD-compliant software so that they do not hinder the filing process.

They should be aware of the responsibilities that are placed upon them in terms of gathering and recording information.

Conducting regular training is important to ensure that staff are equipped to meet the requirements of MTD.

• Test the reporting process

There is still some time before MTD comes into force, so there is no harm in running a few tests and trials now.

As MTD brings with it quarterly filings, practising collating your data every three months instead of leaving it until your annual Self-Assessment tax return.

This will help to expose any issues before you are subject to HMRC’s scrutiny.

Taking action now reduces the risk of late submissions and penalties when the MTD deadline hits next year.

For advice and guidance on preparing for Making Tax Digital for Income Tax, speak to our team today.

The tax gap, the difference between the amount of tax owed and collected, has long been a thorn in HM Revenue and Customs’ (HMRC’s) side.

HMRC believe that last year, a total of £46.8 billion of tax was left uncollected, which equates to just over five per cent of the overall tax owed in the country.

Once again, SMEs have been identified as the largest contributors to the tax gap and inevitably are once again in the sights of the tax authority.

Why are SMEs being targeted by HMRC?

In the 2023/24 fiscal year, SMEs failed to pay 40 per cent of the Corporation Tax they owed, which meant that only £22 billion of the £36.7 billion owed was collected.

As the Government is currently trying to find the funds needed to make the June 2025 Spending Review possible, it is no wonder that the potential £14.7 billion of unclaimed tax has piqued its interest.

While it is unlikely to be able to recoup every penny, the Government plans to raise an extra £7.5 billion by closing the tax gap.

To achieve this, HMRC have been awarded £1.7 billion to fund an additional 5,500 compliance and 2,400 debt management staff.

Why don’t SMEs pay their taxes?

Plenty of SMEs do pay their taxes, but there is a valid concern over why so many seem not to.

Many of those responsible for operations in SMEs find the tax system confusing, or they may not have the resources or support to achieve accurate financial record-keeping.

A slow adoption of digital reporting can also be blamed in part for this, with some SMEs seeing digital solutions as expensive or complicated.

The enforcement of Making Tax Digital (MTD) for Income Tax may go some way to address the tax gap for micro businesses, sole traders and landlords, as it is going to be significantly harder for finances to slip through the cracks.

However, with MTD for Corporation Tax being scrapped, there will be no forced digitisation of records relating to Corporation Tax, which is why HMRC is expanding its operations.

With SMEs now firmly on the radar for tax compliance, we can expect further scrutiny to prevent the tax gap from growing any larger.

Do not get caught out by HMRC’s tax gap crackdown, speak to our team of tax specialists today to stay compliant!