November 2025 Newsletter
Chancellor should use Budget to reform tax system, IFS says
Chancellor Rachel Reeves should use the Autumn Budget to reform the UK's tax system, says the Institute for Fiscal Studies (IFS).
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The think tank says this would help Ms Reeves to raise more revenue while limiting the hit to the economy.
The IFS warns the Chancellor against raising the levels of existing taxes to bring in the estimated £30 billion she requires to stay on course for her targets to repair the public finances.
Changes to wealth-related taxes, including Capital Gains Tax, would be more effective than the introduction of an annual wealth tax, the think tank added.
Isaac Delestre, a Senior Research Economist at IFS, said:
'Revenue-raising seems likely to be a major goal of the coming Budget. But if Rachel Reeves limits her ambition to collecting more revenue, she will have fallen short.
Almost any package of tax rises is likely to weigh on growth, but by tackling some of the inefficiency and unfairness in our existing tax system, the Chancellor could limit the economic damage.
The last thing we need in November is directionless tinkering and half-baked fixes. There is an opportunity here. The Chancellor should use this Budget to take real steps down the road towards a more rational tax system that is better geared to promoting the prosperity and well-being of taxpayers.'
Source: IFS Website
HMRC to resume taking tax owed by debtors directly from their bank accounts
HMRC has resumed its programme allowing direct recovery of money from debtors' bank accounts.
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The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a 'test and learn' phase, the tax authority has confirmed.
DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said.
This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor's account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers.
Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt.
Safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC's attempts to make contact.
The safeguards also include leaving a minimum of £5,000 in the debtor's accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses.
HMRC said:
'The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.'
Source: GOV.UK Website
Countdown to Vaping Products Duty begins
There is now less than a year until the UK Government introduces Vaping Products Duty (VPD) and vaping duty stamps (VDS) on 1 October 2026.
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VPD, a new excise duty, will apply to all vaping liquids (or e-liquids) sold or supplied in the UK, at a flat rate of £2.20 per 10ml and VDS must be attached to individual vaping products.
From 1 April 2026, any business involved in the manufacture or importation of vaping products, or storage of duty-suspended vaping products, must apply for approval from HMRC. This will enable them to continue operating lawfully in the UK once VPD and the VDS Scheme come into effect.
With just six months until approval registration opens, HMRC is urging all affected businesses to prepare now to avoid disruption as approval may take up to 45 working days.
What this means for businesses:
- UK manufacturers of vaping products must apply for approval for both VPD and the VDS Scheme.
- Warehouse keepers will be able to apply for VDS Scheme approval directly.
- Overseas manufacturers must appoint a UK representative to apply for the VDS Scheme on their behalf.
- Importers will be required to pay the new duty. They must also register for VPD and the VDS Scheme if they are acting as a UK representative for an overseas manufacturer.
Rachel Nixon, HMRC's Director of Indirect Tax, said:
'We are working closely with the vaping sector ahead of these changes. Businesses are encouraged to visit GOV.UK and search prepare for vaping duty to access guidance and updates. Early preparation is essential to ensure a smooth transition and to avoid disruption to operations.'
Source: HMRC Press Release
Expert Advisory Panel to provide industry insight on R&D tax relief
HMRC has appointed six independent industry specialists to a new Research and Development (R&D) Expert Advisory Panel.
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The introduction of the panel is one of a number of practical enhancements that the tax authority says will make it easier for UK firms to understand R&D tax relief.
R&D tax reliefs are valuable incentives designed to encourage businesses to invest in innovative science and technology projects, driving economic growth across the UK.
These improvements include an expanded reporting channel for agents; and a user-friendly free online tool to help businesses check their eligibility before submitting a R&D claim.
HMRC says that together, these enhancements are designed to support business innovation, improve claim accuracy, and strive to make the system work for everyone.
The new panel brings together experts with real world experience, offering deep sectoral knowledge across manufacturing, technological development, life sciences and AI, says HMRC.
Jonathan Athow, HMRC's Director General, Customer Strategy and Tax Design, said:
'HMRC welcomes the advisory panel and their sectoral insight and expertise. Along with the new guidance tool, we are delivering on feedback from agents and businesses, making it easier for genuine innovators to access the support they deserve, while protecting the system from abuse.'
Source: HMRC Press Release
Digitally excluded can apply for MTD for Income Tax exemption now
HMRC has opened up a service for landlords and self-employed to apply for exemption from Making Tax Digital (MTD) for Income Tax phase one.
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From next April, people who are self-employed and landlords, and declare more than £50,000 of gross income in their 2024/25 self assessment tax return, will be legally required to follow the new MTD for Income Tax rules from April 2026 onwards.
Anyone who thinks they may be eligible for exemption must phone or write to HMRC. Third parties such as relatives and agents can do this on behalf of taxpayers if they are authorised. It will take up to 28 days for HMRC to respond with a decision.
Sharron West, Technical Officer at the Low Incomes Tax Reform Group (LITRG), said:
'Because HMRC will deal with applications on a case-by-case basis, we don't yet know how generous their interpretation of the rules will be, but we know that HMRC are keen to see as many people as possible manage their taxes online.
If you are already exempt from MTD for VAT, HMRC say you should contact them when the exemption application process opens so they can check your circumstances and confirm if you'll also be exempt from MTD for Income Tax.
The clock is ticking and it's time to get ready.'
Source: GOV.UK Website, Chartered Institute of Taxation Website
New tax avoidance law risks missing target, warns CIOT
New legislation aimed at tackling rogue tax agents and those pushing tax avoidance schemes won't catch all of those it is aimed at, warns the Chartered Institute of Taxation (CIOT).
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Instead the measures could make it harder for some taxpayers to get the advice they need to comply with tax laws, the Institute added.
The CIOT argues that the current proposals are not well targeted, imposing potentially unworkable conditions on tax agents. Meanwhile, many of the 'bad actors' who are the real target of these measures will be out of scope and able to continue their abuse of the system, it adds.
The Institute says it is concerned that, without changes, the proposals will lead many reputable advisers to withdraw from giving advice where the meaning of complex tax legislation is unclear, or where the potential tax liability is high.
Ellen Milner, CIOT Director of Public Policy, said:
'The government are right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.
'However, the current proposals are set to miss their target. According to HMRC, the market for tax avoidance schemes is now dominated by about 20 operators. These people are not mainstream tax and accountancy professionals and are largely based overseas. The legislation as drafted will struggle to capture these people.'
Source: CIOT Website
Over 750,000 young people yet to claim savings
Over 750,000 18-to-23-year-olds have yet to claim their matured Child Trust Funds, according to HMRC.
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The tax authority says that the accounts are worth £2,242 each on average.
Child Trust Funds are long term, tax-free savings accounts which were set up for children born between 1 September 2002 and 2 January 2011 with an initial government deposit of at least £250.
Young people can take control of their account at 16, but once the account holder turns 18 it matures, and they can decide whether they want to withdraw the money or re-invest it.
Young people can use the GOV.UK locator tool to find their Child Trust Fund quickly and for free. It requires the young person's National Insurance number and date of birth.
More than 563,000 young people went online to find their Child Trust Fund in the 12 months to the end of August 2025, says HMRC.
It takes about five minutes to submit a request to find a Child Trust Fund using the online tool and, for most, less than three weeks to hear back.
Angela MacDonald, HMRC's Second Permanent Secretary and Deputy Chief Executive, said:
'If you're between 18 and 23, you could be sat on a savings payout and not even realise it. Just search 'find my Child Trust Fund' on GOV.UK to find your savings account today.'
Source: HMRC Press Release
Latest guidance for employers
HMRC has published the latest issue of the Employer Bulletin.
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The October issue has information on various topics, including:
- Making your PAYE Settlement Agreement payment.
- Guidance for labour supply chains featuring umbrella companies.
- New Advisory Electric Rate for fully electric company cars.
- Spotlight 71 - Warning for agency workers and contractors who are moved between umbrella companies.
- 'Tax Help for Hustles' campaign - new resources for employees.
- Update on Winter Fuel Payments recovery through the tax system.
Source: GOV.UK Website
