The end of business rates relief will sting hospitality with a £928 million bill in April unless the government acts in the Budget, warns UKHospitality.

Hospitality and leisure businesses face their bills quadrupling if business rates relief ends as planned on 31 March, it adds.

The trade body is calling for the Chancellor to introduce a new lower, permanent and universal rate for hospitality's business rates at the Budget on 30 October.

It says the current business rates system unfairly penalises hospitality, with the sector paying three times more than it should do. UKHospitality wants to see a lower, permanent and universal rate, or 'multiplier', for hospitality businesses.

Kate Nicholls, Chief Executive of UKHospitality, said:

'Hospitality businesses are facing a devastating cliff-edge next April, when many will see their bills quadruple.

'The scale of this almost billion-pound tax bombshell is just not viable. Many will face risk of closure, be forced to let people go to stay afloat, or shelve their investment plans.

'There has to be a solution that avoids this cliff edge, and a lower, permanent and universal multiplier for hospitality would deliver that.

'Not only would it give certainty and stability to businesses, but it would allow the government to begin delivering on its own manifesto commitment.

'At the Budget, the Chancellor can choose to act and take the brakes off the sector's growth by avoiding this cliff-edge. I hope she does just that because inaction could be fatal.'

Internet links: UKHospitality

The Resolution Foundation has suggested that reforms to inheritance tax (IHT), capital gains tax (CGT) and national insurance (NI) could raise more than £20 billion a year.

The Foundation said that the reforms could also pass a 'triple tax test' of improving tax efficiency, making sure that tax rises fall on those with the broadest shoulders.

It said that Chancellor Rachel Reeves has 'greatly limited' her revenue raising options by pledging not to raise the main rates of income tax, corporation tax, VAT or NI.

According to the Resolution Foundation, CGT is 'ripe for reform' as rates are 'unjustifiably lower' compared to those on other forms of income.

Adam Corlett, Principal Economist at the Resolution Foundation, said:

'There is widespread speculation about what might be in the first Budget of the new Parliament, but overall tax rises are a dead cert and time-honoured tradition.

'Long overdue reforms to IHT, CGT and pension contribution reliefs would fit the bill and could raise over £20 billion if needed, while also making the tax system fairer and more consistent between different taxpayers.'

Internet link: Resolution Foundation

The government has announced an overhaul of the UK's apprenticeship system.

A new growth and skills levy which will replace the existing apprenticeship levy and include new foundation apprenticeships.

The government says these new apprenticeships will give young people a route in to careers in critical sectors, enabling them to earn a wage whilst developing vital skills.

The new levy will also allow funding for shorter apprenticeships, giving learners and employers greater flexibility over their training than under the existing system – where apprenticeships must run for at least 12 months.

The training eligible for funding under the new levy will develop over time, informed by Skills England's assessment of priority skills needs, the government adds.

The Department for Education will set out further details on the scope of the offer and how it will be accessed in due course.

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

'Skills shortages continue to be a major concern for businesses and a drag on economic growth.

'The proposed new Growth and Skills Levy was a key part of the government's plans at the election. It is welcome ministers have acted early to give more details about skills reform.

'We've long argued that the current Apprenticeship Levy needs urgent reform to make it more flexible. Businesses need a simple, coherent and responsive system that properly incentivises employer investment in training.'

Internet link: GOV.UK BCC

HMRC has been urged to defuse a tax bombshell threatening online traders, by the Low Incomes Tax Reform Group (LITRG).

The LITRG, which is part of the Chartered Institute of Taxation (CIOT), says the tax authority must take action in order to make sellers aware of the fact that they may need to file a tax return and pay tax on their online trading income.

The group said that although there is no change to existing tax rules, HMRC will have more information on who is earning income via online platforms and will be more able to find out who owes tax on their earnings.

The LITRG argues that the new reporting rules could 'cause chaos' for taxpayers when the first reports are sent to HMRC and sellers in early 2025.

It has called on HMRC to strengthen its guidance for sellers using online platforms and standardise information so that users can easily understand it and report earnings by tax year.

Claire Thackaberry, Technical Officer at the LITRG, said:

'There are just over three months to go until HMRC starts getting information about the income and activities of people who use online platforms to make money. We are concerned that we will see the same chaos and confusion that arose when the rules first came into effect.

'Time is running out for HMRC to defuse this ticking time bomb. The information that HMRC will receive from platforms will be presented by calendar year, therefore covering more than one tax year. This could make it more difficult to work out when tax is due.'

Internet link: CIOT

An estimated £5.5 billion was lost due to tax evasion during 2022/23, according to a report published by the National Audit Office (NAO).

The NAO stated that 'significant weaknesses' in government systems have left the UK 'too open' to tax evasion. According to HMRC, 81% of the tax evasion came from small businesses.

HMRC said that, while the overall level of tax evasion has stabilised in recent years, it has increased amongst small businesses. Whilst HMRC has not estimated the scale of evasion by sector, it considers takeaways and sweet shops as high-risk retailers.

The NAO said that HMRC does not have a specific strategy to clamp down on tax evasion, and instead aims to stop overall levels of non-compliance increasing.

It also said that there has been too little emphasis on some widespread forms of tax evasion, such as electronic sales suppression (ESS) and abuse of the insolvency process to avoid paying tax debts, which is known as 'phoenixism'.

Gareth Davies, Head of the NAO, said:

'Although tax evasion has been growing among small businesses, HMRC has so far lacked an effective strategic response.

'Its assessment of risks has given too little emphasis to widely used methods of evasion such as sales suppression and phoenixism. It has also failed to use new powers to tackle tax evasion.'

Internet link: NAO

Over half a million young people are yet to lay claim to Child Trust Funds worth an average of £2,212, HMRC has said.

Child Trust Funds are long term, tax-free savings accounts which were set up, with the government depositing £250, for every child born between 1 September 2002 and 2 January 2011.

Young people can take control of their Child Trust Fund at 16 and withdraw funds when they turn 18 and the account matures.

The savings are not held by the government but are held in banks, building societies or other saving providers. The money stays in the account until it's withdrawn or re-invested.

If teenagers or their parents and guardians already know who their Child Trust Fund provider is, they can contact them directly. If they do not know where their account is, they can use the online tool on GOV.UK to find out their Child Trust Fund provider.

Angela MacDonald, HMRC's Second Permanent Secretary and Deputy Chief Executive, said:

'Thousands of Child Trust Fund accounts are sitting unclaimed – we want to reunite young people with their money and we're making the process as simple as possible.

'You don't need to pay anyone to find your Child Trust Fund for you, locate yours today by searching 'find your Child Trust Fund' on GOV.UK.'

Internet link: GOV.UK

The government has announced a crackdown on late payments to small businesses and the self-employed.

Late payments cost SMEs £22,000 a year on average, according to Smart Data Foundry, while the Federation of Small Businesses says it leads to 50,000 business closures a year.

The government will consult on new laws that will hold larger firms to account and aim to get cash flowing back into businesses.

In addition, new legislation being brought in the coming weeks will require all large businesses to include payment reporting in their annual reports - putting the onus on them to provide clarity in their annual reports about how they treat small firms. This will mean company boards and international investors will be able to see how firms are operating.

Anna Leach, Chief Economist at the Institute of Directors (IoD), said:

'For small businesses in particular, the time taken to pay an invoice matters. Companies that are paid swiftly can raise their productivity by spending more time on projects of economic value and less time chasing invoices.

'We know from our research that there is a significant lack of awareness amongst businesses of the ability to check on the payment practices of large employers, and even fewer feel able to take enforcement action against their customers.

'By ensuring that there is increased visibility of payment practices, reputational pressure will spur change in poorly performing firms, rather than smaller suppliers needing to try and negotiate in isolation.'

Internet link: GOV.UK IoD

HMRC is failing on the key metrics of responsiveness, ease and accuracy, according to the annual HMRC Charter report.

The report reviewed HMRC's performance against its Charter from April 2023 to March 2024.

The survey received over 1,600 responses, with complaints about service levels a recurring theme.

• 'Being responsive' scored the lowest of the Charter standards, with an average score of just 2.4 out of 10.
• 'Making things easy' and 'getting things right' also scored poorly, at 2.8 and 3.5 respectively.
• The remaining standards – 'being aware of your personal situation', 'treating you fairly', “recognising that someone can represent you', 'mutual respect' and 'keeping your data secure' – scored higher at 4.1, 5.0, 5.7, 5.6 and 6.8 respectively.

Richard Wild, the Chartered Institute of Taxation's (CIOT) Head of Tax Technical, said:

'Significant time is lost every day for members, their clients, and indeed HMRC themselves, due to delays and inefficiencies in dealing with HMRC.

'The three standards on responsiveness, ease and accuracy were by far the lowest scoring, which is disappointing as between them they represent the health of the tax system.

'Businesses are prevented from operating effectively due to the inability to obtain timely registrations or responses. Taxpayers' legitimate refunds are withheld or delayed. Guidance and correspondence from HMRC is misleading or incorrect. All these things are inhibitors on growth and investment.'

Internet link: GOV.UK CIOT

HMRC has 'sent nudge' letters to crypto investors who it suspects have failed to pay the correct tax on their gains, according to the Chartered Institute of Taxation (CIOT).

Many crypto investors are unaware of their tax obligations due to uncertainty over tax rules and limited understanding of the nature of crypto assets.

A chargeable disposal occurs when individual:

• Sells crypto assets for fiat currency.
• Exchanges one crypto asset for another.
• Uses crypto assets to buy goods or services.
• Gives away crypto assets to someone other than spouse or civil partner (in this instance, the individual is deemed to receive the value of the asset even if they do not actually receive anything).

Gary Ashford, Chair of the CIOT's Crypto Assets Working Group, said:

'Many investors may be unaware that profits from crypto assets are subject to income tax or Capital Gains Tax (CGT) like any other asset, depending on how they're held.

'If you receive a 'nudge letter' from HMRC, it's important to take it seriously. Even those who don't receive a letter should review their crypto activity and file a tax return or use the capital gains real time transaction service if necessary.

'Sometimes tax can be due even where the investor does not think his or her investments have been profitable. Selling, lending or 'staking' crypto assets – or potentially even just transferring assets between crypto sites and portfolios – will usually trigger a disposal in the tax year in question.'

Internet links: CIOT

HMRC has reduced late payment and repayment interest rates following the cut to the base rate.

The Bank of England cut the base rate to 5.0% on 1 August, the first reduction for over four years.

This has triggered a cut in HMRC interest rates which are pegged to the base rate.

From 20 August, the late payment interest rate was cut to 7.5% from 7.75%, where it had been for 12 months. The repayment interest rate was also reduced to 4.0% from 4.25% from 20 August.

HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or 'minimum floor' - of 0.5%.

Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 6.0% from 6.25% from 12 August.

The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments is down by 0.25% to 4.75% from 5% from 12 August.

Internet link: GOV.UK