Navigating the 2025/2026 Tax Year: What UK Businesses Need to Know

The tax year is a critical period for businesses in the UK, demanding careful planning and compliance. With the 2025/2026 tax year on the horizon, it’s time for UK businesses to understand the key changes and updates that will impact their HR, payroll, and time tracking processes. Workmax is here to help you navigate these changes smoothly, ensuring your business stays compliant and efficient.

Key Updates for the 2025/2026 Tax Year

Based on the latest Employer Bulletin from HMRC, here's a breakdown of essential information you need to know:

1. End of Year Reporting: Prepare Your Final Submissions

As the current tax year approaches its end on April 5, 2025, ensure your final Full Payment Submission (FPS) or Employer Payment Summary (EPS) includes an indicator confirming it’s your last submission for the year. This helps HMRC finalize records for you and your employees. If your payroll software can't include the indicator on the FPS, submit an EPS with the indicator ticked after your last FPS.

• Deadline: Provide employees with their P60 by May 31, 2025.
• No Further Payments: If you won't be paying anyone else this tax year, send an EPS with the indicator ticked by April 19, 2025.

2. PAYE and CIS Repayments: Claiming What You're Owed

HMRC has streamlined the online claim process for Employers' PAYE and Construction Industry Scheme (CIS) repayments.

• CIS Deductions: Use the new online form to claim refunds of CIS deductions if you're a limited company or agent. You can now upload supporting evidence when requested.
• Employers' PAYE Repayments: If you've overpaid PAYE, claim a refund using the new online form. Ensure you understand the reason for the overpayment before claiming.

3. Basic PAYE Tools: Update to Version 25.0

The Basic PAYE Tools (BPT) will receive an update by the end of March 2025 to support the 2025/2026 tax year. Update to version 25.0 from April 6, 2025. Stay updated to ensure accurate payroll processing.

4. Electronic Payment Deadlines: Plan Ahead

Be aware of electronic payment deadlines, especially when they fall on weekends. In February and March 2025, the deadlines fall on Saturdays. To ensure timely payments, clear funds into HMRC’s account by the preceding Friday, or arrange a Faster Payment.

5. Payrolling Benefits and Expenses: Simplify Your Reporting

Employers can register to payroll employee benefits and expenses, taxing them directly through payroll starting April 6, 2025. Register online before April 5, 2025, to update your employee’s tax code in time.

• Benefits Included: Most benefits and expenses can be payrolled, except for employer-provided living accommodation and beneficial loans.
• P11D(b): You may still need to submit a P11D(b) for Class 1A National Insurance contributions.

6. Reporting Expenses and Benefits: P11D Deadlines

For employers not payrolling benefits, the deadline for reporting P11D(b) Class 1A National Insurance contributions and P11D expenses for the 2024/2025 tax year is July 6, 2025. File your P11Ds and P11D(b) online.

7. Employer National Insurance Changes: Prepare for Increased Costs and Allowance Changes

Significant changes to employer National Insurance will take effect on April 6, 2025.

• Increased Contribution Rate: The employer Secondary Class 1 National Insurance rate will increase to 15% from 13.8%.
• Reduced Secondary Threshold: The Secondary Threshold, where employers start paying employer National Insurance, will decrease from £9,100 to £5,000 per year.
• Employment Allowance (EA) Changes: The £100,000 threshold will be removed, and the maximum EA will increase from £5,000 to £10,500.

8. New Online iForm for PAYE Employment Expenses

Individuals can now claim tax relief on work expenses, such as professional subscription fees or mileage allowance, through an online iForm. Share this information with your employees, especially those who are not reimbursed for expenses.

9. Employee Hours Data Requirements: A Change in Plans

Employers will no longer have to provide more detailed employee hours data to HMRC from April 2026.

10. Company Cars: Classification of Double Cab Pickups

HMRC has issued new guidance on classifying double cab pickups (DCPU) for car benefit and capital allowances purposes. Starting April 6, 2025, the payload test will no longer be used. Assess vehicles to determine their primary suitability for conveying goods. Transitional arrangements are in place for DCPUs leased, purchased, or ordered before this date.

11. Expanding the Cash Basis: Easier Accounting for Businesses

From April 6, 2024, changes to the cash basis make it easier for many businesses to use. These changes apply to trading income, not property businesses.

12. Official Rate of Interest: Potential Fluctuations

The Official Rate of Interest (ORI) for employment-related loans and living accommodation may increase, decrease, or be maintained throughout the year, starting April 6, 2025. Stay informed about any changes.

13. National Insurance for Female Employees: Checking Eligibility

Double check female employees eligibility if they pay less National Insurance.

14. Statutory Neonatal Care Leave and Pay: Supporting New Parents

From April 6, 2025, employed parents whose babies are admitted to neonatal care will be entitled to up to 12 weeks of leave and statutory pay. Ensure your policies and systems are updated to accommodate this new entitlement.

Workmax: Your Partner in Tax Year Compliance

Navigating the complexities of the UK tax year can be challenging. Workmax provides comprehensive HR, payroll, and time tracking solutions to help your business stay compliant and efficient.

How Workmax Can Help:

• Automated Payroll Processing: Ensure accurate and timely payroll calculations, including the latest tax rates and deductions.
• Real-Time Information (RTI) Reporting: Streamline your submissions to HMRC with automated RTI reporting.
• Employee Benefits Management: Easily manage and report on employee benefits and expenses, including payrolling options.
• Time and Attendance Tracking: Accurately track employee hours and manage time-off requests, ensuring compliance with statutory leave entitlements.
• Compliance Updates: Stay informed about the latest tax laws and regulations with regular updates and guidance from Workmax.

Don't Wait, Prepare Today!

The 2025/2026 tax year brings significant changes that require proactive planning. By staying informed and leveraging the right tools, you can ensure your business remains compliant and efficient.

Take Action Now:

• Review the key updates outlined in this blog post.
• Assess the impact of these changes on your business operations.
• Explore how Workmax can help you streamline your HR, payroll, and time tracking processes.

By taking these steps, you can confidently navigate the 2025/2026 tax year and focus on growing your business. Contact today to learn more about our solutions and how we can help you achieve tax year compliance.