Newsletter September 2025

September 2025 Newsletter

Welcome to this month’s update from Net Accounting. Each month we share the key developments that may affect your business, along with our thoughts on what they mean for SMEs and sole traders.

The Bank of England’s latest survey shows that firms are cutting jobs at the fastest pace since 2021. Wage growth is also expected to slow, partly due to the higher employer taxes introduced back in April. For many businesses, this highlights the importance of keeping a close eye on payroll costs and planning ahead.

In the rental sector, there are new rules designed to protect tenants. The Renters’ Rights Bill and Awaab’s Law require landlords, especially social landlords, to act quickly on health and safety risks. While these changes are welcome for tenants, they’ve also created uncertainty for landlords, with some already leaving the market.

Tax compliance is once again under the spotlight. HMRC has announced that jewellers, dentists, and payroll agents owe a combined £203m in unpaid tax and penalties. At the same time, HMRC is writing to employment businesses and recruitment agencies to crack down on mini umbrella companies (MUCs), urging them to clean up their supply chains.

On the corporate side, new anti-fraud measures are now in force. Companies could face prosecution and unlimited fines if they fail to prevent fraud that benefits their business. This is a clear sign that stronger accountability is here to stay.

You’ll find more news and analysis in the rest of this newsletter.

HMRC won a case on 17 July 2025 against fraudulent mini umbrella companies, which exploit tax reliefs, particularly the VAT Flat Rate Scheme and Employment Allowance.

 If major businesses profit from fraud, they will be held accountable under the new corporate criminal offence of "failure to prevent fraud." 

 Individuals who have outstanding debts related to the Covid scheme to the public treasury are now presented with a limited-time chance to repay these funds before more stringent penalties are enforced. 

 A survey has found that 39% of landlords are preparing to quit the private rented sector as the Renters’ Rights Bill reshaping of tenant protections raises concerns about the future of letting. 

 More than half of UK adults are unaware of pension policy changes that could impact retirement plans. A survey shows 51% of people do not know about increases in state pension age and tax-free lump sums. The UK’s state pension age is currently 66, increasing to 67 between 2026 and 2028, then to 68 between 2044 and 2046. 

The HMRC program that permits direct money collection from debtors' bank accounts has been restarted. During the epidemic, the Direct Recovery of Debts (DRD) policy was put on hold. With protections for vulnerable clients and against excessive hardship, it is applicable to debts of £1,000 or more. 

Awaab's Law, which is set to be fully implemented in stages beginning October 27, 2025, is a piece of legislation established under the Social Housing (Regulation) Act 2023. This law mandates that social landlords must swiftly investigate and address significant health and safety risks, initially focusing on dampness and mould, in order to safeguard tenants' rights to live in safe and healthy housing. 

 Welcome to our August issue.

We're pleased to bring you this month's update on important financial and regulatory developments that may affect both individuals and businesses.

Bank of England Base Rate Change

The recent decision by the Bank of England to cut the base rate is expected to influence borrowing and repayment costs. For households on a standard variable rate mortgage of £250,000 over 25 years, repayments could fall by approximately £40 a month. However, the majority of borrowers remain on fixed-rate deals, where two- and five-year mortgage rates have continued to ease, now averaging 5% and 5.01% respectively. This adjustment may also affect HMRC's late payment interest rates, and we will continue to monitor any updates.

Research and Development (R&D) Tax Relief – Important Reminder

HMRC has been sending letters to companies reminding that R&D tax relief is strictly limited to activities that advance science or technology. The letter emphasises that it does not apply to routine business improvements, customer research, aesthetic enhancements, or the use of standard platforms and third-party packaging solutions. Business owners are increasingly being approached by agents claiming their activities qualify. Please exercise caution: if HMRC reviews a claim and finds it invalid, repayment, interest, and penalties will follow. You should never disclose HMRC login details to third parties.

Other Key Updates You Can Find Below

•  HMRC will pursue outstanding VAT liabilities from cosmetic surgery providers.
•  Companies House will implement identity verification from 18 November 2025.
•  Five firms have recently ceased operations after filing fraudulent financial statements.
•  Scammers are targeting Self-Assessment taxpayers; please remain vigilant.

As always, we are here to provide guidance and support on these matters. Please do not hesitate to contact us with any questions.

 Starting from 18 November 2025, company directors and individuals with significant control (PSC) will be required to authenticate their identities in order to establish a new company and to serve as a director of an existing company. Furthermore, existing directors must verify their identities when submitting their next confirmation statement, provided it occurs after 18 November. Once the compulsory ID verification is implemented, it will be considered an offense to function as a director or a person with significant control without having verified one's identity 

 HMRC has initiated several investigations into cosmetic surgery providers for failing to pay VAT – and the number of cases is expected to increase. The projected tax gap for VAT rose to £9.5 billion in the 2023-24 tax year, representing a 17 percent increase from the estimated £8.1 billion in unpaid VAT for the 2022-23 tax year. 

 The Insolvency Service has closed five companies after discovering that they were misrepresenting their financial statements, asserting a total revenue exceeding £642 million, even though there was no genuine business operation. All five companies were dissolved at the High Court in Manchester on 31 July.

 HM Revenue and Customs (HMRC) is urging Self-Assessment customers to stay alert as fraudulent tax refund scams and phishing attempts persist. Customers are also encouraged to report any suspicious emails, texts, or phone calls to assist in thwarting fraudsters. 

 HMRC will adjust its interest rates for late payments in response to the Bank of England's reduction of the interest rate to 4.00%. 

 Upcoming Deadlines in September

We would like to highlight the following key deadlines occurring in September:

• 7 September
  VAT returns and payments due for month or quarter ended 31 July 2025.
• 19 September

         PAYE, NICs, student loan deductions and CIS deductions due for month ended 5 September 2025 paid non  electronically

• 30 September
  Corporation tax return due for accounting periods ended 31 December 2024.

 Welcome to our July issue.

There have been some important developments in this month. Initially let us look at the recent measures taken by the governments regarding economic crimes, before moving on the rest of the news..

In recent months, many of our clients have received compulsory identity verification notices from Companies House. Most were unsure why this requirement had suddenly appeared. In fact, it stems from the Economic Crime and Corporate Transparency Act (ECCTA), which came into effect in March 2025.

As it seems this Act is significantly reshaping the role of Companies House, with a strong emphasis on improving data quality, enhancing identity verification, and increasing corporate transparency. Key changes include:

• Greater powers to challenge inaccurate information
• Stricter rules on company names
• New requirements for registered office addresses
• Mandatory identity verification for individuals associated with companies

It is important to remind, from autumn 2025, identity verification will become compulsory for new directors and shareholders. It is also anticipated that, by spring 2026, Companies House will require identity verification for document filings and will begin rejecting submissions from disqualified directors.

By the end of 2026, limited partnerships will be required to provide additional information, complete the identity verification transition, and support cross-checking of data between Companies House and other public and private sector bodies.

As these changes continue to unfold over the coming months, we will keep our clients informed of all important developments, as usual. 

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Let us look at the rest of the news of this month.  As we move into the second half of 2025, several regulatory and economic updates are set to impact the way you run your business. From expanded digital tax obligations and new data laws to upcoming changes in company reporting and a volatile retail environment, staying ahead is more critical than ever. Here’s what you need to know this month and how each development could affect your business decisions:

• The Information Commissioner’s Office now has enhanced powers under the new Data Use and Access Act 2025. If you store or process client data, we would urge you to expect tighter compliance requirements especially in marketing and communications. SMEs must review their data handling policies to avoid penalties.
• From April 2026, sole traders and landlords earning over £50,000 must comply with Making Tax Digital for Income Tax. This means you should prepare now by adopting compatible digital bookkeeping tools and understanding reporting obligations.
• New rules will require individuals and crypto platforms to report crypto holdings and user data to HMRC. Among our clients whoever invest or trade in crypto money must ensure accurate records and be ready for new compliance demands or face potential fines.
• Another news is the new FCA rules aiming to simplify funding access for SMEs. While this opens funding opportunities, SMEs planning to seek investment should prepare for possible increases in compliance and disclosure.
• Next news is rather depressing. According to this, company bankruptcies up by 8% recently as a result of cost pressures across multiple sectors. We would expect our clients should revisit cash flow forecasts and plan for potential economic headwinds.
• A different bad news is about planned reforms to increase business rates. Those with physical premises, particularly in retail and hospitality, may see rising costs. Strategic planning around location, pricing, and margins seems to be crucial.
• Finally, HMRC rolled out a new PAYE digital service. It makes sense if employers should inform staff about the service. Directors and employees may find it easier to track tax codes and benefits, potentially reducing PAYE errors.

 Crypto holders must provide personal details to all crypto service providers they use. Service providers, in turn,  must collect and report this data to HMRC. Non-compliance will result in fines for both users and service providers. 

 The chancellor Rachel Reeves is warned that this plan to hike business rates for retailers could drive up food prices, fuel inflation, and weaken the UK’s already fragile high streets.

 The government has overhauled data protection giving ICO more powers under The Data Use and Access Act 2025 (DUAA). These powers include the ability to compel witnesses to attend interviews, request technical reports, and issue fines of up to £17.5m or 4% of global turnover under the Privacy and Electronic Communications Regulations (PECR).   

 HMRC has announced that a new income tax modification will take effect in April of next year, affecting sole traders and landlords whose income exceeds £50,000. Individuals impacted by this change will be obligated to utilize Making Tax Digital (MTD) for their Income Tax when it is implemented on April 6, 2026. 

 The Financial Conduct Authority (FCA) introduced new rules in July 2025 to boost UK capital markets, following a major overhaul of listing rules. These changes aim to make it easier for SMEs to access funding but may increase reporting requirements for those seeking investment. 

 The number of businesses failing in England and Wales rose last month as companies absorbed higher expenses, accordıng to the data. This represented an 8% increase compared to April and was 15% greater than the same month in the previous year. 

 Employees are poised to manage their tax responsibilities as the government has introduced a new online Pay As You Earn (PAYE) service for approximately 35 million taxpayers in the UK, while HM Revenue and Customs (HMRC) outlines over 50 initiatives aimed at reforming the tax and customs framework in the UK. 

 We would like to highlight the following key deadlines occurring in August:

• 2 August
  P46 (car) forms due for the quarter ended 5 July 2025 (where benefits not payrolled).
• 7 August

VAT returns and payments due for month or quarter ended 30 June 2025.

• 19 Augustos
  CIS returns due for month ended 5 August 2025.
• 31 August
  Inheritance tax due for deaths and chargeable lifetime transfers (other than on death) in February 2025.