Author: Glenn

An Employment Tribunal confirmed that using an employer's preferred method of communicating with employees to send offensive messages can serve as a ground for dismissal. A claimant was employed from September 2017 as a graduate trainee and then as a software developer until April 2021, at which juncture he was dismissed for gross misconduct. He subsequently brought three grievances during his employment, all of which were dismissed. The issue surrounded ‘Slack’ messages between the claimant and two colleagues sent during working hours using the respondent's systems. The claimant was suspended on 8 January 2021 while still on sick leave, pending a disciplinary investigation.

In a letter dated 15 January 2021, the claimant was invited to a disciplinary hearing. Attached to the letter was a five-page summary of comments alleging inappropriate and offensive language. Despite not attending the disciplinary hearing, the claimant shared his mitigating circumstances on 24 February 2021 and refused to disclose a copy of the Occupational Psychologist's report outlining his disabilities.  The Tribunal concurred that Risby had been correctly applied and that the dismissal was a proportionate response to certain of the respondent's legitimate aims under Section 15(1)(b) of the Equality Act 2010, given the foul and abusive nature of the language directed towards colleagues. The claimant’s medical arguments had, however, not been originally submitted and could not then be produced on appeal to substantiate a direct link between the language itself and the disability.

This judgement is a clear warning that any abuse directed towards colleagues made during working hours using the employer’s preferred communication system can be considered misconduct and result in dismissal. All employees should be cautioned that any miscommunications on work messaging systems are thus potential grounds for dismissal and, while extreme disabilities or mental health conditions might serve as mitigating factors, any claimant will need robust medical evidence to support such a defence.

Tax perks for Furnished Holiday Lets have ended. From April 2025, lettings fall under standard rental rules. Check the transition rules to avoid surprises.

The tax advantages that were previously available to property owners letting their properties as short-term holiday lets, known as Furnished Holiday Lets (FHL), has now ended. The changes took effect on 6 April 2025 for Income Tax and Capital Gains Tax, and on 1 April 2025 for Corporation Tax and Corporation Tax on chargeable gains.

The following is a summary of the key transitional rules that apply as FHL status is phased out and properties are brought under the standard property rental business regime:

• FHLs will no longer qualify for capital allowances but can claim "replacement of domestic items relief." Existing capital allowance pools can still use writing-down allowances, but new any expenditure will follow standard property business rules.
• FHL losses, which could only be offset against future FHL profits, will now be absorbed into the wider UK or overseas property business and offset accordingly.
• Carried-forward FHL losses can still be set against future profits of either the UK or overseas property business as appropriate.
• Eligibility for reliefs like roll-over relief, business asset disposal relief, and gift relief have now ended, however, where criteria for relief includes conditions that apply in a future year these specific rules will not be disturbed where the FHL conditions were satisfied before repeal.
• Business asset disposal relief may still apply if the FHL business ceased before the changes and disposal occurs within the normal three-year period following cessation.
• An anti-forestalling rule, effective from 6 March 2024, blocked the use of unconditional contracts to secure capital gains relief under old FHL rules.

Employers must pay Class 1A NICs on 2024–25 benefits by 19 July (22 July if paying electronically). Avoid penalties by meeting deadlines and using correct references.

Employers are reminded of the upcoming Class 1A National Insurance contributions (NICs) deadline, which applies to most benefits in kind provided to employees during the 2024–25 tax year. These contributions must be paid by 19 July 2025 (or 22 July 2025 if paying electronically) to avoid penalties.

Class 1A NICs are payable by employers on the value of most taxable benefits provided to employees and directors, such as company cars and private medical insurance. They are also due on the portion of termination payments exceeding £30,000, where Class 1 NICs haven’t already been applied.

To ensure payment is correctly allocated, employers must use their Accounts Office reference number as the payment reference and indicate clearly which tax year and month the payment relates to. Note that Class 1A NICs paid in July will always relate to the previous tax year.

There are three key dates to keep in mind for 2024–25 Class 1A NICs:

• 6 July 2025 – Submission deadline for forms P11D and P11D(b) (‘Return of Class 1A National Insurance contributions due’)
• 19 July 2025 – Deadline for postal cheque payments to be received by HMRC
• 22 July 2025 – Deadline for electronic payments to clear into HMRC’s bank account

These contributions are typically due on benefits provided to:

• Company directors and those in controlling positions
• Employees
• Family members or household members of the above

Following a Bank Rate cut to 4.25%, HMRC late payment and repayment interest rates will drop from 19 and 28 May 2025. Check which taxes this affects.

The Bank of England’s Monetary Policy Committee (MPC) met on 8 May and, in a narrow 5–4 vote, decided to reduce the interest rate by 25 basis points, bringing it down to 4.25%. Of the four dissenting members, two supported a larger cut to 4%, while the other two preferred to keep the rate at 4.5%. This marks the fourth interest rate reduction since August 2024.

This means that the late payment interest rate applied to the main taxes and duties on which HMRC charges interest will decrease from 8.5% to 8.25%. This change takes effect on 19 May 2025 for quarterly instalment payments, and on 28 May 2025 for non-quarterly instalment payments.

Additionally, the repayment interest rate HMRC pays on main taxes and duties will also drop by 0.25%, from 3.5% to 3.25%, from 28 May 2025. The repayment rate is calculated as the Bank Rate minus 1%, subject to a minimum of 0.5%.

MTD for Income Tax starts 6 April 2026 for the self-employed and landlords with £50k+ income. Plan early to stay compliant and avoid disruption.

MTD represents one of the most significant overhauls to the self-assessment regime since its introduction in 1997. This includes new requirements to keep digital records, using MTD-compatible software, and submitting quarterly updates of income and expenses to HMRC.

From April 2026, self-employed individuals and landlords with annual qualifying business or property income over £50,000 will be required to comply with the MTD for Income Tax rules. Qualifying income includes gross income from self-employment and property before any tax allowances or expenses are deducted.

This first rollout of MTD for Income Tax will affect approximately 780,000 taxpayers, with the next stage following in April 2027, extending the rules to those earning between £30,000 and £50,000. A further expansion, announced during the Spring Statement 2025, will apply MTD obligations to those with income over £20,000 from April 2028. The government is still considering the best approach for individuals earning below this lower threshold.

HMRC is asking some eligible taxpayers to sign up to its MTD testing programme on GOV.UK. This provides an opportunity to get comfortable with the new process before it becomes mandatory. Importantly, penalties for late submissions will not apply during the testing phase.

This move follows the rollout of MTD for VAT, which according to an independent report prepared for HMRC has helped over two million businesses improve accuracy and reduce errors.

As the deadline approaches, it is important to start planning in order to ensure a smooth transition to the new way of reporting Income Tax.