In this edition of eNews, we cover a range of business and tax-related updates, including the impact of the upcoming increase in employers’ National Insurance contributions (NICs), government consultations on mandatory electronic invoicing, changes to HMRC’s late and repayment interest rates, and the latest advisory fuel rates for company cars.
- Government consults on mandatory e-invoicing
- HMRC cuts late and repayment interest rates
- Higher than expected inflation underlines business challenges
- Businesses warn of National Insurance ‘powder keg’
- Latest guidance for employers
- Advisory fuel rates for company cars
Government consults on mandatory e-invoicing
The government has launched a consultation on plans for the rollout of electronic invoicing (e-invoicing) in the UK.
The 12-week consultation is being jointly conducted by HMRC and the Department of Business and Trade (DBT) and will consider whether to make e-invoicing mandatory for businesses in the UK.
E-invoicing is the digital exchange of invoice information directly between buyers and suppliers.
The government says this could help businesses get their tax right first time, reduce invoicing and data errors, improve the accuracy of VAT returns, help close the tax gap and save time and money.
It usually results in faster business to business payments, leading to improved cash flow and less paperwork, the government adds.
The 34-question consultation can be completed online and once the 12-week feedback session closes.
James Murray, Exchequer Secretary to the Treasury said:
‘As part of the Prime Minister’s Plan for Change, we have begun our work to transform the UK’s tax system into one that is focused on helping businesses and the economy to grow.
‘E-invoicing simplifies processes, reduces errors and helps businesses to get paid faster. By cutting paperwork and freeing up valuable time and money, it will help improve firms’ productivity and their ability to grow and succeed.’
Internet link: HMRC press release
HMRC cuts late and repayment interest rates
HMRC will reduce late payment and repayment interest rates from 25 February following the cut in the base rate.
The Bank of England cut the base rate to 4.5% on 6 February, triggering a 0.25% cut in HMRC interest rates which are pegged to the base rate.
From 25 February, the late payment interest rate will be cut to 7.0% from 7.25%.
The repayment interest rate will be cut to 3.5% from 3.75% from 25 February.
HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 5.5% from 5.75% from 17 February, a week earlier than the main late payment rate change.
Internet link: GOV.UK
Higher than expected inflation underlines business challenges
The higher-than-expected rise in the rate of inflation underlines the real challenges businesses face, according to the British Chambers of Commerce (BCC).
The consumer prices index (CPI) measure of inflation rose to 3% in January, up from 2.5% in December, according to the Office for National Statistics (ONS).
Economists had expected inflation to rise to 2.8% in January.
The increase was driven by rises in the prices of air fares, food and non-alcoholic drinks and private school fees, added the ONS.
The data underlines the inflationary pressures in the economy right now and the ‘real challenges businesses are facing’, said Stuart Morrison, Research Manager at the British Chambers of Commerce.
He continued: ‘Firms are having to deal with significant cost burdens which threaten to fuel inflation further. Within weeks they’ll be facing the hikes in national insurance contributions and the minimum wage.
‘The inflation landscape, coupled with ongoing global risks and the looming threat of US tariffs, is likely to give the Bank of England more food for thought, as it charts a cautionary path to further interest rate cuts.
‘Businesses are crying out for cost-pressures to be eased so that they can invest, recruit and trade – driving forward the economic growth we all want to see.’
Internet link: ONS website BCC website
Businesses warn of National Insurance ‘powder keg’
The overwhelming majority of businesses say the rise in employers’ NICs will force them to change their plans, according to research by the British Chambers of Commerce (BCC).
With under six weeks until the NICs rise comes in, 82% of firms say the tax hike will cause them to rethink. In addition, 58% of surveyed businesses say it will impact recruitment plans, and 54% that it will affect their prices.
Meanwhile, more than a third of firms suggest investment and day-to-day operations will be impacted.
Alex Veitch, Director of Policy at the British Chambers of Commerce said:
‘The clock is ticking down to the NICs rise, and firms are already telling us they are sitting on a powder keg of costs.
‘The government has pledged to retain the NICs tax position through the life of this parliament, but our new evidence should give pause for thought. We need the government to publish a wider tax roadmap for business, setting out the direction of travel for costs like NICs and business rates.
‘Business rate reform must be an urgent priority, creating a system that incentives investment. Getting on with planning and skills reforms will also remove blockers to growth.’
Internet link: BCC website
Latest guidance for employers
HMRC has published the latest issue of the Employer Bulletin. The February issue has information on various topics, including:
- end of year reporting
- payrolling employees’ benefits and expenses
- get ready for changes to National Insurance
- new online iForm for PAYE employment expenses
- expanding the cash basis
- relevant motoring expenditure – National Insurance contributions.
Please contact us for help with tax matters.
Internet link: Employer Bulletin
Advisory fuel rates for company cars
New company car advisory fuel rates have been published and took effect from 1 March 2025.
The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 March 2025 are:
| Engine size | Petrol |
| 1400cc or less | 12p |
| 1401cc – 2000cc | 15p |
| Over 2000cc | 23p |
| Engine size | Diesel |
| 1600cc or less | 12p |
| 1601cc – 2000cc | 13p |
| Over 2000cc | 17p |
| Engine size | LPG |
| 1400cc or less | 11p |
| 1401cc – 2000cc | 13p |
| Over 2000cc | 21p |
HMRC guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
The Advisory Electricity Rate for fully electric cars is 7p per mile.
If you would like to discuss your company car policy, please contact us.
Internet link: GOV.UK AFR
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.