February Bulletin 2025
Welcome to our February Bulletin
February is off to a notable start with the Bank of England cutting the base rate to 4.5%, a move widely anticipated. The big question now is how much further rates could fall, with forecasts ranging between 3.5% and 4.25% by year-end. These shifts will have important implications for businesses, borrowers, and savers alike.
In this edition, we break down key financial updates and tax planning insights to help you stay ahead. As always, we’re here to help; don’t hesitate to get in touch.
In this month's ABMV tax bulletin, we will be covering:
HMRC late payment interest rates to be cut
Employer National Insurance Changes
Rises to national minimum wage confirmed
There’s still time for some Year-End Tax Planning
HMRC Tightens Scrutiny on Work Expense Claims
Stamp Duty holiday comes to an end
Making Tax Digital (MTD)
Extra Income: Trade or Hobby? HMRC’s New Online Checker
Did you miss the Tax Deadline?
Reminder of the ABMV standard credit terms
Meet us at the Kent Expo in March
HMRC late payment interest rates to be cut
With the recent reduction in the Bank of England base rate, HM Revenue & Customs (HMRC) has confirmed corresponding cuts to its interest rates. Late payment interest will decrease from 7.25% to 7%, while repayment interest on tax refunds will drop to 3.5%.
These changes will take effect from:
17 February 2025 for quarterly instalment payments.
25 February 2025 for non-quarterly instalment payments.
Employer National Insurance Changes from 6th April 2025
NIC Rate Increase: Class 1, 1A, and 1B rates rise from 13.8% to 15%.
Lower NIC Threshold: Employers pay NICs from £5,000 (down from £9,100) annually. (Fixed until April 2028, then CPI-adjusted)
Higher Employment Allowance: Increased from £5,000 to £10,500, with the £100,000 eligibility cap removed.
Impact on Businesses: ~865,000 employers expected to pay no NICs due to the allowance increase.
National Minimum Wage Increases from April 2025
Legislation confirming the new National Living Wage and Minimum Wage rates has now been laid before Parliament and is set to take effect from 1 April 2025. Despite concerns from businesses, no changes to the planned increases are expected.
Key updates:
National Living Wage rises to £12.21 per hour (a 6.7% increase), worth an extra £1,400 per year for a full-time worker.
National Minimum Wage (18-20 year olds) increases to £10.00 per hour, adding up to £2,500 per year for eligible full-time workers.
An impact assessment suggests these changes will put £1.8 billion into workers’ pockets over the next six years. While this benefits employees, businesses may face rising costs.
If you need help assessing the impact on your payroll and planning for these changes, get in touch with the payroll team.
There’s still time for some Year-End Tax Planning
With the tax/financial year end approaching, now is a good time to check that you’re making the most of the available reliefs and allowances. Please talk to us if you think any of the issues affect you.
HMRC Tightens Scrutiny on Work Expense Claims
From 23 December 2024, employees claiming tax relief on job-related expenses will face increased scrutiny from HMRC. A new online form must now be used to submit claims and provide supporting evidence. This replaces the previous process of downloading and posting form P87, though postal claims remain an option.
Key points to note:
Increased verification – HMRC will now check eligibility before processing claims.
Flat Rate Expenses – Claims for uniform, work clothing, and tools do not require evidence but will still be closely monitored.
Higher value claims – Expenses exceeding £2,500 must continue to be claimed via self-assessment, with HMRC increasing compliance checks in this area.
Employees should ensure they retain full documentation for any expense claims to avoid delays or potential challenges.
Stamp Duty Changes from April 2025 – What You Need to Know
The current extra stamp duty relief for first-time buyers and home movers in England and Northern Ireland will end on 31 March 2025. From 1 April 2025:
First-time buyers will see the stamp duty threshold drop from £425,000 to £300,000.
Home movers will start paying stamp duty on purchases over £125,000, down from the current £250,000.
For example, a home mover buying a £500,000 property after the change would pay £15,000 in stamp duty, compared to £12,500 under the current rules.
If you’re planning a property purchase, it may be worth considering the timing. Get in touch if you’d like advice on the potential impact.
Making Tax Digital (MTD)
HMRC's Making Tax Digital (MTD) initiative is now being implemented, transforming the way businesses and individuals manage their tax affairs. Starting with MTD VAT which has applied to all VAT-registered businesses since April 2022.
MTD for income tax is now due to be introduced in phases, beginning April 2026. These changes aim to make tax reporting more efficient, accurate, and easier through digital record-keeping and submissions.
ABMV is fully prepared for this transition and is ready to guide our clients every step of the way. We will support you and take you through the navigation of MTD.
Extra Income: Trade or Hobby? HMRC’s New Online Checker
HMRC has introduced a new online tool to help individuals determine whether income earned outside of PAYE needs to be declared for self-assessment. Whether it’s renting out property via an online platform, selling goods or services, or generating income through social media sponsorships and advertising, it’s crucial to establish whether the income is classed as trading—and therefore taxable.
The tool guides users through a series of yes/no questions, linking to relevant HMRC guidance and providing an indication of whether self-assessment registration is required. This is part of HMRC’s wider effort to ensure that taxable income is properly reported.
Missed the Tax Deadline?
We get it, life happens, and missing the deadline wasn’t intentional. But the longer you wait, the more it could cost you.
After 3 months: HMRC adds £10 per day to your bill.
After 6 months: You’ll owe an extra £300 or 5% of your tax bill, whichever is higher.
The good news? It’s not too late to take control! We can help you file now and stop those penalties from stacking up. Don’t wait, get in touch today!
Payment Terms
Just a friendly reminder that our credit terms are 14 days unless we have agreed differently with you. Please ensure that invoices are settled promptly to help us continue providing seamless service. If you have any questions regarding payments, feel free to get in touch as we always endeavour to be flexible. ABMV is owner-managed, so we can empathise with the highs and lows of cash flow....Thank you for your cooperation - it is appreciated.
West Kent Expo
We will be exhibiting at the West Kent Expo on 12th March and very much look forward to saying hello. Please don’t hesitate in coming along to support the businesses of West Kent.
Introducing the ABMV Customer Portal: secure access anytime, anywhere
At ABMV, we are committed to delivering added value to our customers. As part of this commitment, we are excited to introduce our new customer portal.
This powerful resource gives you 24/7 online access, allowing us to securely store, manage, and share confidential documents with you. With the portal, you can access your files anytime, from anywhere, with complete peace of mind.
You will hear more on this from us shortly.
If you have any questions or would like to learn more about how we can help you with your accounting and business advisory needs, please don’t hesitate to contact us. Our team of experts is always ready to assist you with any queries you may have.
