As we move into June and the early days of summer, it’s an ideal time to take stock of the latest tax developments and deadlines. With longer days and a new quarter approaching, now is the moment for businesses and individuals alike to stay ahead of upcoming obligations and opportunities.

In the June 2025 edition of the Mercian Accountants newsletter, we cover the key announcements from HMRC’s recent Spring Update, important reminders for P11D season, and changes affecting employment benefits, double-cab pickups, VAT, and more. From advisory fuel rates to employment-related securities returns, there’s plenty to keep on your radar.

As always, we’re here to guide you through the complexities. If you’d like to discuss how any of these updates might apply to you or your business, please get in touch – we’d be happy to help.

HMRC Spring Tax Update

On 28 April 2025, the Government made several tax policy announcements, launched consultations and confirmed previously announced developments. Key points included:

• Mandatory payrolling of benefits in kind (BIKs) will be delayed until 6 April 2027. This is to give software providers, employers and tax agents more time to prepare for the change.  The mandate was previously intended to take effect from 6 April 2026. From 6 April 2027, mandatory payrolling will apply to most BIKs, except for employment-related loans and accommodation benefits. These may be payrolled voluntarily from April 2027. 
• HMRC revised its Check Employment Status for Tax (CEST) digital tool on 30 April 2025 to make it easier to use. HMRC is committed to standing behind the tool’s outcomes where it has been used correctly and has published guidance on how to answer the revised questions. Workers use the tool to help them determine whether their work on a specific engagement should be classed as employed or self-employed for tax purposes.
• If you have multiple employments or are both employed and self-employed, a cap (the ‘annual maxima’) limits the total National Insurance Contributions (NICs) you need to pay. If you pay more than you need to, you can make a claim for a refund from HMRC at the end of the tax year. The Government have said that the process for refunding NICs under the annual maximum rules will be reviewed to make it easier and faster for taxpayers to access refunds.
• The VAT Capital Goods Scheme (CGS) is a mandatory scheme that ensures the VAT reclaimed on certain capital assets reflects the extent to which the asset is used for taxable business purposes over a prescribed time period. The Government has announced proposals to remove computers from the list of capital assets within the scheme and to increase the VAT-exclusive value of land and buildings that are caught by the scheme from £250,000 to £600,000. No date for these changes has been announced.
• A consultation has been published on the VAT treatment of business donations of goods to charity. Views are sought on a new VAT relief aligning the treatment of goods donated for distribution to those in need or use by the charity with the existing relief for goods donated for onward sale.

It’s P11D Season!

P11D forms for reporting expenses and benefits in kind provided to employees and directors in 2024/25 need to be submitted by 6 July 2025. Note that paper forms are no longer acceptable; the return must be made online using PAYE Online for employers or commercial software.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee’s duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place to ensure that the expenses qualify.

Note also that trivial benefits provided to employees that do not exceed £50 do not need to be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays, and can include gifts of food and alcohol. Again, the employer needs to keep a record of the benefit provided and the justification. It should not be provided as a reward for past or future service.

Official Rate of Interest

For employers reporting beneficial loans and some employment-related living accommodation on form P11D for 2024/25, the official rate of interest (ORI) to be used is 2.25%.  The charge applies where the amount of the loan exceeds £10,000.

The ORI increased to 3.75% on 6 April 2025. From 2025/26 onwards, the rate will be reviewed quarterly, with any changes occurring following a quarterly review, where appropriate. If there are any in-year changes to the rate, these will take effect on 6 July, 6 October, and 6 January.

Double-Cab Pickups – Rule Changes for Benefit-in-Kind Purposes

Following a recent Court of Appeal ruling, from 6 April 2025, the classification of double-cab pickups (DCPUs) will need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability. If the vehicle is primarily suited to carrying goods or burden, it can be treated as a van for direct tax purposes. Most DCPUs are suited to both passenger transport and carrying goods, so they do not have a primary suitability. Therefore, when calculating the benefit-in-kind charge, most DCPUs are expected to be classified as cars.

Transitional arrangements apply for employers that have purchased, leased, or ordered a double-cab pickup before 6 April 2025, whereby they will be able to rely upon the previous treatment until the earlier of:

• disposal,
• lease expiry, or
• 5 April 2029.

2024/25 Employment-Related Securities Returns Due by 6 July

The deadline for reporting shares and securities and share options issued to employees for 2024/25 is 6 July 2025. This is the same as the deadline for reporting expenses and benefits provided to employees on form P11D for 2024/25.

Employers must submit their employment-related securities annual returns online and attach the appropriate spreadsheet template if they have something to report. HMRC provides templates on their website that may be downloaded so that the information can be entered and uploaded. Note that there are different templates for each of the four tax-advantaged employee share schemes – Company Share Option Plan (CSOP), Enterprise Management Incentives (EMI), Save As You Earn (SAYE) share options and Share Incentive Plans (SIP). In addition, employers need to report any other employment-related securities (non-tax-advantaged) issued to employees and directors.

Of course, we can assist you with completing the reporting obligations and with valuing the securities concerned.

VAT Groups and Anti-Avoidance

HMRC have published Tax Avoidance Spotlight 70 ‘VAT grouping structure arrangements used by care providers’, highlighting tax avoidance arrangements used by state-regulated care providers to reclaim VAT.

VAT legislation exempts supplies of welfare services made by either a charity or a state-regulated care provider. The impact for the charity or state-regulated care provider is that they are unable to recover any VAT relating to these supplies.

The arrangement identified in Spotlight 70 is intended to work as follows:

• An unregulated entity forms a VAT group with a state-regulated care provider or charity. 
• Existing contracts for welfare services between the regulated body and the local authority or NHS are transferred to the unregulated provider, and new contracts are drawn up with the unregulated care provider.
• The unregulated care provider then subcontracts the physical provision of welfare services back to the regulated care provider. A facilitation measure in the VAT grouping legislation means that services supplied between members of the same VAT group are disregarded for VAT purposes. 
• As an unregulated care provider supplies welfare services, they are taxable at the standard rate of VAT.
• The VAT group can reclaim input tax on those taxable supplies. Without this arrangement, the reclaim would be blocked.

HMRC considers these specific VAT grouping arrangements a form of tax avoidance. They say that, where necessary, they will refuse VAT group registration applications designed to implement or facilitate these avoidance structures. They are also reviewing existing group arrangements where it is known or suspected that this avoidance arrangement is in operation. During this review, HMRC may request additional information and assess each case individually.

If Spotlight 70 affects you, please talk to us – we are here to help.

Advisory Fuel Rates

The table below shows the HMRC advisory fuel rates from 1 June 2025. These are the suggested reimbursement rates for employees’ private mileage using their company car.

Where the employer does not pay for fuel for the company car, these are the amounts that can be reimbursed for business journeys without the amount being taxable to the employee.

The previous rate is shown in brackets.

You can continue to use the previous rates for up to 1 month from the date the new rates apply.

Note that you must use the petrol or diesel rate for hybrid cars. For fully electric vehicles, the rate is 7p (7p) per mile.

Employees using their own cars

For employees using their own cars for business purposes, the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate continues to be 45 pence per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25 pence per mile thereafter. Note that for National Insurance contribution purposes, the employer can continue to reimburse at the 45p rate as the 10,000-mile threshold does not apply.

Input VAT

The amounts in the above table represent the fuel element within the 45p/25p payments. The employer can reclaim 20/120 of the amount as input VAT, provided the claim is supported by a VAT invoice from the filling station. For a 2500cc petrol-engine car, 3.83 pence per mile can be reclaimed as input VAT (23p x 1/6).

Diary of Main Tax Events

June / July 2025

Looking Ahead: Staying Proactive This Summer

As we head deeper into summer, staying informed and proactive amid evolving tax rules and reporting requirements is essential. The coming months offer challenges and opportunities, from the upcoming P11D deadline to VAT developments and benefit-in-kind changes. Whether navigating employment-related obligations or reassessing your business structure, we’re here to help you plan ahead confidently. If you have any questions or would like tailored advice on any topics covered in this edition, please don’t hesitate to get in touch. We’re here to support you every step of the way.

Related posts:

October 2023 Tax Newsletter November 2023 Tax Newsletter December 2023 Tax Newsletter January 2024 Tax Newsletter