Key takeaways from the Spring Tax Update

In the Spring Tax Update on 28 April, the Government announced a package of measures aimed to simplify the tax and customs system.

Aiming to modernise and improve the experience of HM Revenue & Customs (HMRC) processes for individuals and traders, the policy paper contains a total of 39 measures for simplifying and reforming the tax and customs system.

These include changes for immediate effect as well as long-term reforms and consultation launches.

Here are the key takeaways from the Spring Tax Update.

Reducing burdens on businesses

Perhaps disappointment over the lack of fresh support for businesses in the Spring Statement has led to the announcement of new measures to reduce burdens on businesses, for the purpose of supporting economic growth.

The new measures include:

• Capital Goods Scheme simplification: This measure removes computers from the assets covered by the scheme and increases the capital expenditure value of land, buildings and civil engineering work from £250,000 to £600,000 (exclusive of VAT). This aims to reduce the number of capital assets that would fall within the Capital Goods Scheme, therefore reducing the administrative burden on small businesses.
• Reform of UK law in relation to transfer pricing, permanent establishment and Diverted Profits Tax: The Government has published a consultation on draft legislation for the reform of the UK’s international tax rules. The consultation includes proposed change to UK tax legislation in transfer pricing, permanent establishment, and Diverted Profits Tax.

Payrolling benefits in kind

Mandatory reporting and paying of Income Tax and Class 1A National Insurance contributions on benefits in kind via payroll software has been delayed a year.

While HMRC initially announced that payrolling of benefits would become mandatory from 6 April 2026, the Spring Update reveals that it will now be introduced on 6 April 2027.

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 removes the requirement for an estimated 300,000 taxpayers to submit a Self-Assessment return.

Employment related securities

Business owners can now transfer their employer’s National Insurance contributions liability to an employee who acquires employment-related securities such as shares from the employer, in certain circumstances. 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.

The Spring Tax Update also confirmed that the Government will not be taking forward the draft Income Tax (Pay As You Earn) (Amendment) Regulations 2025.

This means that employers will not have to provide more detailed employee hours data to HMRC from 6 April 2026.

Other key updates

Other key highlights from the Spring Tax Update include:

• Cultural Gift Scheme: The Government will reform the Cultural Gift Scheme by removing the restriction on jointly owned objects and allowing tax credits to be used more flexibly. This will simplify the scheme by making it more accessible and improve take up.
• State pension forecast service: The check your state pension forecast service will be enhanced further for those making voluntary payments to fill gaps in their National Insurance record.
• Ceasing Corporation Tax letters: While there will be no change to the overall Corporation Tax process, HMRC will stop issuing six types of non-essential Corporation Tax letters from June 2025. The measure is designed to reduce the costs of paper communication.

At Butterworth Barlow, we’re proud to be your trusted partners in success, ensuring you stay ahead of the game with proactive tax advice.

We keep up to date with legislative requirements to help you optimise your tax position and relieve you of the burden of compliance.

Contact our tax team today for guidance on what the Spring Tax Update means for you.