The government recently announced a raft of 39 tax administration measures designed to simplify and modernise the UK tax system. While some are focused on HMRC’s internal systems, others are directly relevant to small business owners and employers — especially those dealing with payroll, VAT or employee benefits.
Here are 5 key changes you should be aware of, and how they might affect your business.
1. Mandatory Payrolling of Benefits – Delayed to 2027
If you provide benefits in kind (like company cars or private medical insurance), you may already report these via P11D forms each year.
The government plans to make it mandatory to report and tax these benefits through payroll instead – but this change has now been pushed back to April 2027 (instead of 2026).
What this means for you:
- More time to prepare for the change.
- You can still voluntarily payroll benefits now to get used to the process.
- HMRC is promising to make the system easier to use before rollout.
Tip: If you’re not already payrolling benefits, now is a good time to consider starting — it could streamline your admin and give you a head start.
2. Capital Goods Scheme Simplified
The VAT Capital Goods Scheme (CGS) affects how much VAT you can reclaim on big-ticket purchases like buildings or equipment, especially if your business moves between taxable and exempt activities.
Key updates:
- Computers will be removed from the CGS.
- The threshold for when CGS applies to land, buildings, and engineering works is increasing from £250,000 to £600,000 (excluding VAT).
What this means for you:
- Fewer businesses will need to make ongoing VAT adjustments on high-value assets.
- Simpler VAT compliance for growing businesses investing in property or infrastructure.
3. CEST Tool Getting Accessibility Updates
The Check Employment Status for Tax (CEST) tool is used to help determine whether a worker should be treated as employed or self-employed for tax purposes.
HMRC is now updating the tool to make it more accessible, though the way it works will remain the same.
What this means for you:
- If you rely on contractors or freelancers, CEST is still the official tool to assess employment status.
- However, it doesn’t always get things right, so don’t hesitate to get a second opinion.
Tip: If you’re unsure about a contractor’s tax status, speak with us — IR35 decisions can carry financial risks if handled incorrectly.
4. VAT on Charity Donations – Consultation Launched
The government is reviewing how VAT is applied when businesses donate goods to charities.
This is just a consultation for now, but it’s aimed at:
- Reducing admin burdens.
- Encouraging more charitable donations.
- Preventing potential tax abuse.
What this means for you:
- If your business donates stock or goods to charity, VAT rules could change in the future, potentially making it easier or more tax-efficient.
5. Less Paper, More Digital Communication from HMRC
HMRC is working towards sending less paper post and shifting to more digital communications, aiming to save £50 million a year by 2029.
What this means for you:
- Expect more letters to arrive via your online HMRC account or your accountant’s portal.
- Paper will still be used for critical or sensitive documents, especially if digital access is not an option.
Tip: Make sure your HMRC business account is up to date and that you’re checking it regularly or receiving notifications.
Many of these changes aim to reduce admin for employers and bring the tax system up to date — but they also mean there’s more to stay on top of.
Whether it’s planning for digital payrolling, understanding VAT changes, or making sense of employment status tools, we’re here to help.
Got questions about how these changes affect your business?
Get in touch — we’ll talk you through what you need to do and help you stay ahead of the curve. Don’t forget to follow us on LinkedIn and Instagram for daily business news and advice!
