On 28 April 2025, the Government shared several tax updates, including changes to upcoming rules, new consultations, and updates to existing processes. Here’s what you need to know:

Payrolling benefits in kind (BIKs) delayed to 2027

The introduction of mandatory payrolling for benefits in kind (BIKs) has been delayed by a year. Originally planned for 6 April 2026, the change will now take effect from 6 April 2027. This extension gives employers, tax agents, and software providers more time to prepare. From that date, most BIKs will need to be payrolled, although employment-related loans and accommodation benefits will be excluded. These two benefit types can still be payrolled voluntarily from April 2027.

Update to the CEST tool (check employment status for tax)

HMRC has updated its Check Employment Status for Tax (CEST) tool as of 30 April 2025. The tool, used to determine whether someone is employed or self-employed for tax purposes, has been made easier to use. HMRC has committed to supporting the outcome of the tool when it has been completed correctly. To help users navigate the revised questions, HMRC has published new guidance.

NIC refunds process under review

If you have more than one job, or if you’re both employed and self-employed, there’s a cap on how much National Insurance you need to pay in total each year. This is known as the ‘annual maxima’. If you overpay, you can claim a refund from HMRC after the end of the tax year. The Government has announced plans to review this process to make it easier and faster for taxpayers to get their money back.

Proposed changes to the VAT Capital Goods Scheme

The Government has shared proposals to update the VAT Capital Goods Scheme, which helps with VAT recovery on major capital assets is in line with how they’re used over time. The changes include removing computers from the scheme entirely and raising the VAT-exclusive threshold for land and buildings from £250,000 to £600,000. No date has yet been announced for these changes.

VAT relief on charity donations under consultation

A new consultation has been launched looking at the VAT treatment of goods donated by businesses to charities. Currently, VAT relief applies when goods are donated for the charity to sell. The new proposal suggests extending this relief to also cover goods that are used by the charity or given directly to people in need.

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