Author: Glenn

The claimant began employment as a Contracts Coordinator on 23 January 2023, subject to a contractual 6-month probationary period, one which required 5 weeks’ notice for termination. The contract included a garden leave clause, but no clause permitting Payment in Lieu of Notice (PILON). 

Disputes soon arose over his work patterns and behaviour, and by 22 February 2023, the claimant had emailed the respondent detailing an irrevocable breakdown in trust and confidence. On 3 March 2023, HR obtained authorisation to dismiss the claimant, citing inflexibility, divergent values, negative communications, and uncooperative behaviour.

The decision to terminate his employment had in fact already been made, even though a “Formal Probation Assessment Meeting” had been scheduled for 15 March, on which date he was dismissed with immediate effect and paid 5 weeks’ notice monies. On 24 March 2023, he appealed the dismissal while seeking an assurance that he would not be reinstated, affirming that neither party wished the employment relationship to continue. The employment tribunal found that the claimant had not been wrongfully dismissed, despite accepting that the respondent had breached the contract by instituting a PILON.

The appeal tribunal found that the first tribunal had erred in law by failing to find that the claimant was wrongfully dismissed, as the employment contract did not contain a PILON clause and the employer’s action in dismissing the claimant with immediate effect and simply handing over the notice pay constituted a breach of contract. However, it upheld the earlier decision not to award compensation after applying established common law principles for assessing damages, which assume that the employer would have terminated the contract in the least burdensome way that was lawfully available. The appeal tribunal rejected the claimant’s argument that damages should be subject to the “Gunton extension” to cover the full 6-month probation period. As the issue was a fundamental breakdown of the employment relationship, the employer was entitled to rely on the simpler, contractual 5-week notice clause, rendering the lengthier procedural steps irrelevant in the calculation of damages.

This case offers a stark reminder that, if a company wishes to dismiss an employee with immediate effect and simply pay them in lieu of notice, then the contract must explicitly include a PILON clause, or any immediate dismissal (even with payment) is effectively a breach of contract. While no financial damages were awarded in this specific instance, it nonetheless positions an employer on the wrong side of the law and can complicate any prospective litigation.

The daily charge for driving within the London Congestion Charge zone will rise from £15 to £18 from 2 January 2026. This is the first increase in several years and forms part of Transport for London’s wider plan to manage traffic levels, improve air quality and support sustainable travel across the capital.

Transport for London has said that without an updated charge the central zone is likely to experience a noticeable increase in vehicle volumes during the next year. The higher charge is intended to discourage unnecessary journeys, smooth traffic flow and reduce delays that affect both businesses and individuals.

A significant change for drivers of electric vehicles is also being introduced. The current 100% discount for electric cars will end on 25 December 2025. From January 2026 electric cars registered for Auto Pay will move to a reduced rate that reflects a new tiered discount structure. Electric vans, heavy goods vehicles and quadricycles will also have revised discounted rates. This marks a shift away from the long-standing full exemption that has been used to encourage uptake of electric vehicles.

Residents who live within the congestion charging zone will continue to receive a 90% discount, although new applicants from March 2027 will only qualify for this reduction if they drive an electric vehicle. Existing residents with the discount will keep their entitlement regardless of vehicle type.

For business owners, delivery companies and anyone regularly travelling into central London, these changes will require some forward planning. Vehicle choice, travel habits and the cost of regular visits to the zone may all be affected. It may be useful to review travel arrangements ahead of the January 2026 increase in order to understand the cost impact on budgets and operations.

Many small businesses rely on a mix of overdrafts, card facilities and short term loans to maintain day to day cash flow. During the past year banks and alternative lenders have become more cautious, and several indicators suggest that credit conditions will tighten further during 2026. For business owners, a little early preparation can make a noticeable difference.

Lenders are placing greater emphasis on consistent record keeping, realistic forecasts and clear evidence that a business understands its cash cycle. This means that up to date bookkeeping is no longer just a compliance task. Regular management information can demonstrate stability, provide reassurance to lenders and highlight any seasonal pressures that may need attention.

It is also sensible to review existing credit facilities. Many overdrafts and business loan agreements include renewal terms, and these can be harder to negotiate if left until the last moment. Checking the renewal dates, interest rates and any security requirements can help avoid unexpected changes that affect cash flow.

Businesses that rely heavily on card funded working capital or revolving credit should consider whether these facilities remain suitable. Even a small increase in interest rates or a reduction in limits can put pressure on margins, particularly in sectors with tight cost structures.

Planning ahead can reduce risk and improve financial resilience. Reviewing cash flow forecasts, maintaining timely financial records and having early conversations with lenders can help small businesses enter 2026 with greater confidence and fewer surprises.

If you are unable to pay your tax bill, it's important to reach out to HMRC as soon as possible.

HMRC may offer a Time to Pay arrangement, allowing you to settle the debt in manageable instalments based on your financial situation.

Taxpayers with liabilities of up to £30,000 can use the online Time to Pay (TTP) service to set up instalment payments. This service is available without the need for direct contact with an HMRC advisor and can be accessed up to 60 days after the payment deadline.

To be eligible for the online service, the following conditions must be met:

• No outstanding tax returns
• No other unpaid tax debts
• No existing HMRC payment plans

For those who do not qualify for the online option, alternative payment plans can be arranged. These plans are typically tailored to the individual's or business's specific financial situation, allowing repayment over an agreed period.

HMRC will generally grant extended payment terms if they believe you will be able to pay the full amount in the future. However, if HMRC determines that additional time won't resolve the issue, they may require immediate payment and take enforcement actions if the debt remains unpaid.

HMRC is currently contacting certain sole traders by email to reiterate the importance of adjusting business expenses for personal use.

The email explains:

• why personal use must be adjusted on your self-assessment tax return; and
• what you need to do if your business expenses cover business and personal use.

The email also includes links to GOV.UK for more detailed information on personal use adjustments and allowable expenses. This is a genuine email that HMRC recently sent (from 20 October 2025 up to and including 7 November 2025).

This is an important reminder for sole traders. In general, if sole traders use something for both business and personal reasons, they can only claim allowable expenses for the business costs.

However, there are simplified arrangements available to sole traders for claiming a fixed rate deduction for certain expenses where there is a mix of business and private use. The simplified expenses regime is not available to limited companies or business partnerships involving a limited company.

Simplified flat rates can be used for working from home and for the business costs of vehicles. This method saves having to calculate the proportion of personal and business use.

The current monthly flat rates are based on the amount of business use of the home:

• 25 to 50 hours worked per month can claim – £10
• 51 to 100 hours worked per month can claim – £18
• 101 or more hours worked per month can claim – £26

Under simplified expenses, there are the following flat rates per mile available. These rates can be used instead of working out the actual costs of buying and running your vehicle, e.g. insurance, repairs, servicing, fuel.

• Cars and goods vehicles first 10,000 miles – 45p
• Cars and goods vehicles after 10,000 miles – 25p
• Motorcycles – 24p

Whilst using the flat rates is not compulsory, once a decision is made to use the simplification for a specific vehicle this must continue to be used for a vehicle as long as that vehicle is used for business purposes.

We would be happy to help you ascertain whether using simplified expenses or claiming based on actual costs incurred is more beneficial for your business.