The Tax Round: Summer Edition 2025
London office, St Albans office
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Welcome to our Summer edition of the Tax Round, where we bring you the latest updates and insights into key tax changes that we hope you will find both informative and valuable.
This issue covers a range of essential topics, from understanding the merged R&D tax scheme to navigating new parental leave rights coming into effect next year. We delve into the increasing significance of tax for UK businesses and explore crucial updates to off-payroll working and the self-assessment tax return.
Self-employed individuals and landlords can stay ahead of the curve with Making Tax Digital for Income Tax, and we also share the news on HMRC’s cancellation of employee hours reporting.
In this issue, we are also excited to announce the release of Rayner Essex’s first-ever carbon footprint report, showcasing our commitment to sustainability and transparency.
Additionally, we’ve included essential key diary dates for the upcoming months to keep on your radar.
Our tax articles include the following:
- The Merged R&D Scheme- All you need to know
- New entitlement for employed parents – Statutory neonatal care leave and pay from April 2025
- Tax becomes a top concern for UK businesses
- Off-payroll working: new company size thresholds effective from April 2025
- Key changes to the self-assessment tax Return from April 2025
- HMRC cancels plans to mandate employee hours reporting in PAYE submissions
- Making Tax Digital for Income Tax | What Self-Employed Individuals & Landlords Need to Know Before 2026
- Rayner Essex publishes its first carbon footprint report
Happy Reading!
If you have any questions or need further clarification on the topics discussed in this newsletter, or if you have any other tax or accounting-related inquiries, please feel free to contact Mark Moore.
The Merged R&D Scheme- All you need to know
The UK’s R&D tax relief system is always changing. From April 2024, existing tax schemes were combined into a single, merged R&D scheme. Read on to understand what the changes mean, who’s affected, and how your business can maximise your claims under the new rules.
What is the merged R&D scheme?
The merged R&D scheme, also known as the Merged R&D Expenditure Credit or New RDEC or the Combined R&D programme, is a unified UK tax relief program introduced to simplify and support innovation. Effective for accounting periods beginning on or after April 2024, it merges the previous SME and RDEC schemes. Applicable from tax periods ending December 2025, the scheme provides tax credits for companies investing in R&D to improve existing products or services in science or technology. Key features include a single rate of relief and enhanced support for loss-making firms. Contracted out R&D refers to research outsourced by one company to another for qualifying activities.
New entitlement for employed parents – Statutory neonatal care leave and pay from April 2025
From 6 April 2025, a new statutory right to neonatal care leave and pay came into effect for employed parents across England, Scotland and Wales (this change does not extend to Northern Ireland).
The legislation is expected to support approximately 60,000 parents each year, providing vital relief during an emotional and challenging time of having a baby in neonatal care. Crucially, it allows eligible parents to take time off work, and if eligible to receive statutory pay.
Tax becomes a top concern for UK businesses
Business priorities are shifting — and fast. According to the latest data from the Office for National Statistics (ONS), taxation is now the second most common concern among UK businesses, after falling demand.
In the Business Insights and Conditions Survey published by the ONS on 22 May 2025 as seen in below diagram, 11% of businesses cited tax as a major worry — overtaking inflation, which was reported by only 8%. This reflects a growing trend that’s been building steadily since summer 2024.
Why tax is climbing the list of business concerns
For a long time, economic uncertainty dominated business worries. But as new tax policies begin to bite, the focus is changing — and fast.
From 6 April 2025, key changes to employer National Insurance came into effect:
- The employer NI rate increased from 13.8% to 15%
- The secondary threshold fell from £9,100 to £5,000
The result — Employers are now facing higher staffing costs, particularly for lower-paid workers and that’s prompting a fresh look at business models, workforce planning, and profitability.
Off-payroll working: new company size thresholds effective from April 2025
From April 2025, the UK government is changing the thresholds that define company size under the Companies Act 2006. The goal is to reduce administrative burdens impacting businesses. As company size is central to compliance with the off-payroll working and IR35 rules, the revised the revised thresholds will also have a direct impact on how the off-payroll working rules (IR35) apply.
This revision may shift compliance obligations from client companies to contractors themselves, highlighting the importance for businesses and intermediaries to understand the forthcoming impact.
New thresholds: a shift in who qualifies as “small”
The new rules amend the company size thresholds as set out in the Companies Act 2006 —anticipated to benefit up to 132,000 companies, through lighter accounting and reporting requirements as of 6 April 2025.
Key changes to the self-assessment tax Return from April 2025
What you need to know
Starting from 6 April 2025, significant changes to the Self-Assessment tax return process have come into effect. These updates primarily impact taxpayers who start or stop self-employment during the year, as well as directors of close companies, and will impact the tax returns for the 2025/26 tax year and beyond.
What is a close company and how does it impact directors?
A “close company” is defined as a company that is controlled by its directors or by five or fewer individuals, often referred to as ‘participators’. This could include shareholders, for instance. Many family-owned and private companies are typically classified under this category.
HMRC cancels plans to mandate employee hours reporting in PAYE submissions
What was originally proposed?
As part of wider HMRC RTI reporting changes, the government had planned to introduce a new requirement for employers to report more detailed information on hours worked by individual employees through their Real Time Information (RTI) PAYE submissions. Initially scheduled for April 2025, the implementation was deferred to April 2026 in response to concerns raised by employers.
Why has the proposal been withdrawn?
In a welcome move for businesses, HMRC has now formally cancelled the proposed reporting obligation. The decision was confirmed in the February 2025 edition of the Employer Bulletin, where HMRC stated:
“The government has listened to businesses and acted on their feedback about the administrative burden the PAYE data requirements would bring.”
Making Tax Digital for Income Tax | What self-employed individuals & landlords need to know before 2026
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) is now firmly on the horizon, and this time, the timeline looks set in stone. HMRC has been in active contact with high-level accountancy professional bodies, reinforcing the message that the rollout is going ahead as planned. The aim of this reform is clear: to reduce reporting errors, improve efficiency, and close the tax gap through real-time digital reporting.
The Making Tax Digital programme for self-employed and landlords will be one of the most significant shifts in UK tax compliance in recent years. The journey began with VAT in 2019, but MTD for Income Tax will have a much broader impact. The countdown has begun, with HMRC already contacting self-employed individuals and landlords it believes fall within the scope of the new rules. If you’re one of them, this reform will fundamentally change how you report income and manage your tax affairs.
Here’s what you need to know — and how we can help you get ready.
Rayner Essex publishes its first carbon footprint report
Demonstrating our commitment to responsible business and a sustainable future
At Rayner Essex, we believe success in business comes with responsibility — to our clients, our people, our communities, and the planet. Our approach to sustainability reflects the values at the heart of our firm: a commitment to act responsibly, support our stakeholders, and contribute to a future where people and businesses can thrive without compromising the world around us.
Our first carbon footprint & impact report
We are proud to release our 2025 Carbon Footprint & Impact Report, developed in partnership with carbon reporting specialists Ecologi. This report marks a key milestone in our sustainability journey and forms the baseline from which we will measure and improve our environmental performance.
Key Dates 2025/2026
31 July 2025 – Deadline for the second payment towards the 2024/25 tax year
5 October 2025 – Deadline to register for Self Assessment for the 2024/25 tax year.
31 October 2025 – Last day for submitting paper Self Assessment tax returns for the 2024/25 tax year.
30 December 2025 – Last day to submit your online tax return if you wish to pay your outstanding tax through your PAYE tax code (eligibility criteria apply).
31st January 2026: Digital self assessment tax return deadline, and deadline to pay the tax you owe.
Get in Touch
If you require further guidance or information on any of the topics covered in this newsletter, or have any other tax or accounting-related enquiries, please don’t hesitate to reach out to Mark Moore where we will be happy to help. We look forward to hearing from you.
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