PFS What's new bulletin - April II

TAXATION AND TRUSTS

 

Spring Tax Update

(AF1, AF2, JO3, RO3)

 

The Government’s announcements in its Tax Update Spring 2025

 

On 28 April the Government published, Tax update spring 2025: simplification, administration and reform summary. This appears to be the new name for the previous Tax Administration and Maintenance Day. Key measures announced include: 

 

Payrolling of benefits in kind pushed back to 2027 

The Government has announced a delay to the mandation of payrolling of income tax and Class 1A national insurance contributions (NIC) on benefits, after feedback from external stakeholders. Originally, this was set to come into effect on 6 April 2026. However, the mandating of payrolling benefits will now be introduced on 6 April 2027.  

 

For most benefits in kind and expenses, income tax and Class 1A NICs will need to be reported through Real Time Information (RTI) and paid in real time from 6 April 2027.  

 

Employers will also be able to payroll employment-related loans and accommodation on a voluntary basis from 6 April 2027. There are some less common cases, such as tax award schemes and third-party benefits, which are not covered in HMRC’s Policy Paper. HMRC says that it will provide an update on these cases later in the year. 

 

CEST  

Another one of the key measures announced was the news that HMRC is revising the Check Employment Status for Tax (CEST) digital tool. The changes, which are set to be introduced from 30 April 2025, are said to “make it easier for CEST’s users to use the tool”.  

 

"To support these changes, HMRC will also publish revised guidance that offers help on how to answer the revised questions. HMRC is committed to standing behind the outcomes of this tool where it has been used correctly." 

 

The CEST tool is intended to give the user HMRC’s view of a worker’s employment status, based on the information provided (usually for the purposes of ascertaining if the are caught by IR35/the off payroll working rules). It can also be used to check if changes to contractual terms or working arrangements may alter a worker’s employment status.  

 

Employer’s NICs 

In a measure announced as a simplification, the Government has announced that an employer can transfer an employer’s NICs liability to an employee who acquires employment related securities such as shares from the employer, in certain circumstances. 

HMRC says: "This measure will simplify the process to make a joint election to transfer the liability, by removing the requirement on the employer to submit the election form to HMRC for pre-approval, where the employer is using the election form template on GOV.UK." This measure will come into force from 1 May 2025. 

 

Reviewing NICs annual maximum refunds process 

The Government will review the process for refunding NICs under the annual maximum rules. Currently, individuals who pay more than they are liable for can make a claim for a refund from HMRC at the end of the tax year. The Government says that it will review the process to make it easier and faster for individuals to access the refunds they are entitled to. 

 

Voluntary NICs — enhancing the check State Pension forecast service  

The Government has announced it intends to further enhance the check your State Pension forecast service, which supports people who want to make payments for voluntary NICs to fill gaps in their NICs record. 

 

Income tax self-assessment criteria review 

The income tax self-assessment reporting thresholds for trading, property and ‘other taxable’ income will be aligned and changed to £3,000 (gross) each. This will remove the requirement for up to an estimated 300,000 taxpayers to submit a self-assessment return, so that taxpayers are only required to do so where necessary. 

 

People’s tax liability will not change, but people with taxable income below these new thresholds will be able to report their income through a new digital reporting service.

Taxpayers will have a choice. They can remain in self-assessment if they wish or use the new service. 

 

The changes will take place within this Parliament, with further detail set out on publication of the transformation roadmap later this year. 

 

The measures announced also include some consultations and consultation responses, including improving HMRC’s approach to dispute resolution and a consultation seeking views on aspects of the 1.5% higher rate charge. 

 

 

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT PLANNING

 

More people eligible for Help to Save accounts than ever before (AF4, FA7, LP2, RO2)

 

Help to Save accounts, which can be used to assist with the costs of living, and are now available to 550,000 more people, as working Universal Credit claimants are now eligible for the scheme

HMRC has announced that 550,000 more people are able to open a Help to Save account, as working Universal Credit claimants are now eligible for the scheme.

 

The Help to Save Scheme was launched in 2018 as part of the Government’s drive to strengthen the economy and help individuals with the cost of living. More than 500,000 people have enjoyed bonuses from the scheme to date, which, when combined, total millions of pounds, and, as a result of the scheme being extended to April 2027, many more people will now be given the opportunity to benefit.

 

Help to Save accounts can be quickly and easily opened online through gov.uk or via the HMRC app. The app allows account owners to view their account balance and bonus details and to deposit additional funds by debit card, bank transfer or standing order.

 

The minimum contribution is £1 per month, on which an extra 50p can be earned. The maximum monthly contribution is £50, which the Government will top-up by £25. As an example, for an individual who saves the maximum each month over four years, this will equate to total savings of £2,400, on which a total bonus of £1,200 will be earned, with the bonus payments being payable on the second and fourth anniversaries of the account being opened. Account holders can withdraw their funds whenever they wish. However, this may impact the bonus payments. More details on how the scheme works can be found here.

 

Comment

The Help to Save Scheme offers an attractive Government bonus and it is hoped that this will incentivise those eligible to start saving for a rainy day, reducing financial pressures and increasing financial stability for low-income households.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gilts issuance in 2025/26 - take two

(AF4, FA4, FA7, LP2, RO2)

 

Gilts issuance in 2025/26. After the release of the provisional borrowing figures for 2024/25, the Treasury has rethought its 2025/26 financing

 

 

Source: Investing.com

 

Among the documents that accompanied the Spring Statement was the DMO Financing Remit Announcement for 2025/26, which set out how the Debt Management Office (DMO) planned to raise the cash that will be required by HM Treasury in the new financial year.

 

Just four weeks after the Spring Statement, the remit has been revised. That may sound surprising, but the record shows that, in recent years, March remits are generally followed by April revisions.

 

In this year’s instance, the new remit requires the DMO to raise £4.9bn more than it was told last month, which is hardly a surprise given the the first estimate of 2024/25 borrowing came in at £14.6bn more than the Office for Budget Responsibility’s March 2025 projection. The DMO says it will deal with this by:

 

·         Doubling the amount of Treasury Bills (short-term paper, typically three months) it sells to £10.0bn.

·         Increasing by £5.6bn the amount of short dated conventional gilt sales.

·         Decreasing by £10.4bn sales of long-dated conventional gilts.

·         Adding £4.7bn to the unallocated portion (i.e. to be decided later) portion of gilt sales

 

Deciding to bridge the entire gap with Treasury Bills rather than gilts allows the Treasury to keep the headline 2025/26 gilt issuance below (by £0.9bn) the psychological £300bn. The reshaping of the borrowing mix has further increased the bias towards short-dated bonds, which now account for 43.9% (cf 40.8%) of allocated gilt sales. Long-dated bonds have fallen to 11.1% (cf 14.8%) of the total.

 

A look at the yield curve above explains why the shortening is happening: it carries a lower interest rate.

 

Comment

With an interest bill in 2024/25 of over £85bn, opting for cheaper, shorter-term, debt has obvious appeal for the Treasury. However, the more short-term debt on the Government ledger, the more debt refinancing needs to take place each year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PENSIONS

 

HMRC Pension Scheme Newsletter 169 – April 2025

(AF8, FA2, JO5, RO4)

 

Pension Scheme Newsletter 169 covers the following:

 

• pension scheme return (PSR)
• migrating your pension schemes
• relief at source
• lifetime allowance protections and enhancements
• qualifying recognised overseas pension schemes (QROPS)
• pension flexibility statistics
• registration statistics
• user research

 

Areas of particular interest:

 

Lifetime allowance protections and enhancements

 

Fixed protection 2016 and individual protection 2016

 

HMRC note that deadline for applying both fixed protection 2016 and individual protection 2016 has now passed. 

 

An individual can still report a change to their pension. To do so they’ll need to:

• sign in to their Government Gateway with the details they used when they applied
• select the ‘pensions’ option

 

If they did not apply to protect their pension savings online, they should tell HMRC in writing.

 

International and pension credit enhancements

 

The application deadline for both international and pension credit enhancements has now passed.

 

Where an individual needs to amend their enhancement, they can use these forms:

• APSS201 for an amendment to a pension credit enhancement
• APSS202 for an amendment to an international enhancement

 

Check your pension protections service

 

Individuals can check whether their protection is valid through their personal tax account.  This service has been renamed to ‘Check your pension protections’.

 

In late 2025, HMRC plan to introduce enhancements to this service, and they will provide further details on this in future newsletters.

 

Qualifying recognised overseas pension schemes (QROPS)

 

Aligning the treatment of transfers to overseas pension schemes (OPS) and recognised overseas pension schemes (ROPS) established in the European Economic Area (EEA)

 

On 6 April 2025, the conditions that schemes established in the EEA need to meet to be an OPS and ROPS, were brought in line with the conditions that must be met by schemes established in the rest of the world.

 

HMRC have written to scheme managers of QROPS in the EEA asking them to confirm that they meet these conditions.

 

The deadline to confirm that they meet these conditions is 7 May 2025. If HMRC do not receive replies by this date, those schemes will no longer be a QROPS. 

 

Pension flexibility statistics

 

HMRC have provided the latest quarterly figures on the number of tax repayment claim forms processed for pension flexibility payments.

 

 From 1 January 2025 to 31 March 2025, HMRC processed:

 

• P55 — 9,694 forms
• P53Z — 4,409 forms
• P50Z — 1,171 forms
•  

The total value of the repaid tax was £44,003,977.

 

Registration statistics

 

For 2024 to 2025, HMRC received 1,917 applications to register new pension schemes.

Of these schemes, 60% have been registered and 26%. No decision has been made on the remainder yet.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government plans to bring together small pensions pots

(AF8, FA2, JO5, RO4, AF7)

 

The reforms unveiled by the Pensions Minister, Torsten Bell intend to make it easier for people to track their pension savings. Under the reforms, which will be introduced by the Government as part of the Pension Schemes Bill, set to be introduced in Parliament later this Spring, each individual’s small pots will be brought together into one pension scheme that is certified as delivering good value to savers. Individuals will retain the right to opt out. 

 

The Government says that this new initiative will tackle the growing problem of small, forgotten pension pots that many people accumulate as they move between employers over their working lives.  

 

According to the DWP, there are now 13 million of these small pots, holding £1,000 or less, with the number increasing by around one million a year. This can stop individuals getting a good return on their savings if they have to pay multiple flat rate charges. And, says the DWP, overseeing all these small pots costs the pensions industry around £225 million in unnecessary admin costs.   

 

The DWP Press Release says that this announcement will, in time, increase the pension pot of an average earner by around £1,000.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State Pension underpayments, latest progress on cases reviewed

(AF8, FA2, JO5, RO4)

 

People who reached State Pension Age (SPA) before April 2016 can claim basic State Pension. To get the full basic State Pension an individual needs a total of 30 qualifying years of National Insurance (NI) contributions or credits. When someone has fewer than 30 qualifying years, their basic State Pension will be less than this amount. There were different rules in place for those who reached SPA before 6 April 2010. 

 

If an individual, who reached State Pension age before 6 April 2016, has insufficient NI contributions themselves to qualify for a basic State Pension, they may be able to derive entitlement from their spouse or civil partner (an uplift based on their partner’s NI contributions called a Category BL State Pension).  

 

Those who are widowed, and are getting a basic State Pension of less than £176.45 a week (in 2025/26), can also derive basic State Pension from their late spouse or civil partner. This may give them a basic State Pension of up to £176.45 a week. They can also inherit between 50% and 100% of any additional State Pension and 50% of any Graduated Retirement Benefit. The category of people whose State Pension was not increased to include any amounts they are entitled to inherit from their late husband, wife or civil partner is described as ‘Missed conversions’.  

 

People who reach age 80 and are getting no basic State Pension or a basic State Pension amount of less than £105.70 a week (in 2025/26), may, subject to satisfying the appropriate residency conditions, qualify for a Category D State Pension of £105.70 a week. 

In 2020, the Department for Work and Pensions (DWP) became aware of a number of individuals who had not had their State Pension increased, in accordance with the law, automatically when this should have occurred. This prompted the department to take action to investigate the extent of the problem.  

 

This publication includes information on the progress of the LEAP exercise to check and correct individual cases, and the amount of arrears repaid to 30 September 2024. It updates the previous release of 7 November 2024 on the number of cases checked as part of a State Pensions correction exercise which began in January 2021. It represents the final instalment of the publication series: State Pension underpayments: progress on cases, with the department declaring the LEAP exercise complete.  

 

Between 11 January 2021 and 31 March 2025, the checking process has identified 130,948 underpayments, owed a total of £804.7 million.  

 

Category	Cases reviewed (please see note 1)	Underpayments identified (please see note 2)	Average arrears payment (please see note 3)	Total amount repaid
Married (Cat BL)	321,439	47,004	£5,553	£252.8m
Widowed	465,316	50,261	£11,725	£483.4m
Over 80 (Cat D)	90,753	33,683	£2,203	£68.5m

Notes: 

1.      Cases may be checked for more than one potential cause of error; therefore, an individual State Pension claim may be counted in more than one category. 
 

2.      These are cases for which a current or historical underpayment of State Pension has been identified. This may include cases for which a corresponding overpayment of another benefit (for example, Pension Credit) has occurred as a result, meaning that there was no net underpayment to the individual as well as some cases where the individual is deceased and the department has so far been unable to identify an estate to which to pay the arrears due. 
 

3.      This average includes cases where the arrears amount owed is £0 due to offset of overpaid benefit. 
 

4.      The department completed the LEAP exercise for Categories BL and D in December 2023. Despite this, the numbers have changed for Categories BL and D since the Spring 2024 and Autumn 2024 publications; this is due to customers having up to two years to provide further information for their case to be reviewed and actioned.