A recent GOV.UK news release highlights a clear shift in tone from government, with a stronger focus on helping British scaleups stay and grow in the UK, rather than being pushed overseas for funding, talent, or commercial support. The announcement, led by Business Secretary Peter Kyle, brings together a mix of finance, regulatory reform, and sector support aimed at improving the conditions for high-growth firms.

While the headlines focus on “red tape”, the detail is more practical. It is about unlocking growth capital, speeding up decisions, reducing duplicated compliance, and making it easier for innovative companies to invest and scale.

Backing scaleups with bigger and bolder funding

A standout feature of the package is the British Business Bank making its largest ever direct investment into a private company, committing £25 million into Kraken Technologies, an AI-driven platform best known for improving billing and customer service systems in the energy sector.

The press release notes that Kraken is already used internationally at major scale, reportedly serving tens of millions of customer accounts. Importantly, it also indicates the business may list in London following its demerger from Octopus Energy Group, which underlines the wider policy goal of keeping UK champions anchored in Britain.

Alongside this direct investment, the British Business Bank is also investing £50 million each into two funds supporting life sciences and deep tech, Epidarex Capital and IQ Capital.

For growing businesses outside these sectors, this still matters. It signals that government wants the British Business Bank to play a stronger role in backing higher-risk, high-potential companies, rather than leaving them to seek overseas capital by default.

Cutting the right red tape, without cutting protection

The announcement also includes regulatory reviews that aim to simplify health and safety rules and streamline farming and agri-tech regulation. The stated intention is to reduce paperwork and duplication while keeping essential protections in place.

This is a point worth watching. Businesses rarely argue against safety or good governance. What they usually object to is complexity, repeat reporting, and uncertainty. When rules are hard to interpret, firms either over-comply at cost, or under-comply and take risk.

If the promised simplification is delivered well, it could improve productivity and help scaling firms spend more time building products and customers, rather than wrestling with process.

Changes to corporate reporting and competition processes

From a practical business perspective, two other points stand out.

First, the government is scrapping the Audit Reform Bill, with the stated aim of avoiding significant new costs for large firms.

Second, there are plans to allow virtual AGMs, streamline corporate reporting, and consult on speeding up and simplifying competition investigations while preserving the Competition and Marketing Authority’s independence.

Although some of these changes sound aimed at larger organisations, smaller companies often feel the knock-on effects through group reporting requirements, supply chain administration, and the general compliance climate. Any move toward clearer, more modern reporting standards can help reduce friction across the whole business environment.

A major commitment to battery innovation

The release also includes what it describes as the government’s largest single commitment to battery research and development, £180 million via the Battery Innovation Programme, itself part of a wider £452 million programme.

Battery innovation matters well beyond the automotive sector. It links to net zero targets, energy resilience, and the UK’s ability to compete in advanced manufacturing, all of which influence investment decisions and regional job creation.

What business owners should take from this

For business owners and advisers, the message is simple. Growth is being encouraged through a mix of investment funding and targeted simplification. The practical opportunity is to watch for new funding routes, sector initiatives, and regulatory changes that reduce drag on expansion.

For any company aiming to scale in 2026 and beyond, now is a good time to review funding options, compliance bottlenecks, and strategic investment plans, and to make sure growth ambitions are supported by strong financial reporting and cash control.

If you would like help reviewing your growth plans, funding readiness, or operational constraints, speak to your adviser and map out what practical steps you can take next.

Most business owners do not set out to be reactive. It just happens. A customer needs something urgently, a staff member calls in sick, a supplier increases prices, a bank balance looks tighter than expected, and suddenly the day has gone. You have been “busy”, but you have not moved the business forward in any deliberate way.

By contrast, planning business outcomes is about deciding what you want the business to achieve, then aligning decisions, time, money, and behaviour to make that outcome more likely. It is the difference between steering a car and just hoping the road will work out.

Both planning and reacting have their place. The problem comes when reacting becomes the default setting, and planning becomes something you “will do when things calm down”.

What it means to plan business outcomes

Planning outcomes means starting with the end in mind. You decide what success looks like, in practical terms, then you work backwards.

For example, a planned outcome might be:

• Increase monthly profit by £2,000 within six months
• Reduce working hours from 60 per week to 45 per week
• Improve cash reserves to cover three months of costs
• Move from low margin clients to fewer, better fee clients
• Launch a new service line that generates recurring income

Once an outcome is clear, planning becomes an organising tool. It helps you choose priorities. It also helps you say no to distractions that feel urgent but do not contribute to the destination.

Crucially, planning outcomes is not about writing a glossy business plan and putting it in a drawer. It is about forming a simple strategy and reviewing it regularly.

What it means to react to business outcomes

Reacting is what happens when the business is driven mainly by events, not intent.

That can look like:

• Cutting prices because a competitor undercuts you
• Working late because deadlines keep piling up
• Chasing overdue invoices only when the bank balance looks worrying
• Hiring in a rush because workload has become unmanageable
• Taking on “just one more client” even though capacity is already stretched

In a reactive business, management decisions are often short-term fixes. They solve today’s pain, but they rarely improve the underlying structure of the business.

This is why reactive businesses often feel exhausting. The work never ends, and the same problems keep returning in new forms.

The impact on performance, cash, and stress

Planning outcomes tends to improve performance because it creates focus. Resources are limited, so a business needs to be selective about where time and effort goes. Planning also improves consistency because you are not reinventing priorities every week.

Reactive management tends to create volatility. Cash flow swings are more common, workloads become lumpy, and decisions are made under pressure. That pressure often leads to “good enough” choices rather than good choices.

This also affects stress levels. A planned business is not stress free, but it is calmer. There is usually a sense of direction. A reactive business often feels like firefighting, even when sales are strong.

Why reacting becomes a habit

Many owners react because it feels productive. It provides quick wins and instant reassurance, and it is often linked to customer service and professionalism.

The issue is that reacting consumes the best thinking time. If you only ever respond, you never build the systems that reduce problems in the first place.

Another reason is that planning can feel uncomfortable. Planning forces you to choose. It forces you to face what is not working, and to stop pretending that everything can be done at once.

How to move from reactive to planned

A simple way to shift gears is to create a short “outcomes dashboard” and review it weekly. Pick three to five measures that matter, such as revenue, profit, cash in bank, pipeline value, and debtor days.

Then build one small planning habit into the week, such as:

• 30 minutes on Monday to plan the week’s priorities
• A mid-month cash review and invoice chase routine
• A monthly review of which clients are profitable and which are not
• A quarterly decision on what to stop doing

Small routines reduce the need for big rescue missions later.

The best businesses do both

Good planning does not eliminate reaction. It reduces unnecessary reaction.

The strongest businesses plan their outcomes but stay flexible when reality changes. They react to surprises, but they do not let surprises run the business.

If you want a business that grows, supports your lifestyle, and feels sustainable, planning outcomes is not a luxury. It is the work that makes everything else easier.

Running a business is a steady stream of decisions, but some choices carry far more weight than others. The most difficult business decisions are usually the ones where there is no perfect answer, just trade-offs. They often involve risk, uncertainty, and a fear of getting it wrong.

For many business owners, the hardest decisions are not about day to day operations, they are about direction, priorities, people, and timing.

Deciding When To Say No

One of the most difficult decisions in business is deciding what work not to take on. Turning down an opportunity can feel uncomfortable, especially if cash flow is tight. However, saying yes to the wrong project, client, or partnership can drain time, energy, and profitability.

Saying no is often the decision that protects the long term health of the business, even if it feels difficult in the moment.

Hiring And Letting People Go

Hiring is one of the biggest growth decisions a business can make. It increases capacity and creates momentum, but it also brings higher fixed costs and greater responsibility.

Letting someone go is even harder. It affects livelihoods and relationships, and it can feel personal. However, keeping the wrong person in the wrong role can cause wider damage, including lower standards, reduced morale, and lost customers.

Good business owners learn to deal with people decisions early, clearly, and fairly.

Pricing Your Work Properly

Many businesses struggle to price confidently. It is tempting to set fees based on what competitors charge or what clients say they can afford. The problem is that under-pricing creates long term pressure. It leaves no room for investment, improvement, or resilience.

Putting prices up is a difficult decision because it risks losing customers. However, not putting prices up can lead to burnout, declining quality, and a business that never feels secure.

A healthy business needs pricing that reflects the true value delivered and the real cost of delivering it.

Investing Without Certainty

Almost every business reaches a stage where growth requires investment, such as new equipment, better software, marketing, training, or staff. The difficulty is that investment usually happens before the results appear.

Owners often have to commit money while still feeling unsure about future sales, future demand, or future costs. The challenge is to invest enough to move forward, while still protecting cash flow and avoiding overreach.

Knowing When To Change Direction

Some decisions feel hard because they challenge identity. A business owner may need to drop a service line, move into a new market, or stop serving a type of customer they have worked with for years.

This can feel like failure, but it is often a sign of maturity. Markets change, customer needs shift, and what worked five years ago may not work now.

Final Thought

The most difficult business decisions usually come down to one question, what is best for the long term, even if it feels uncomfortable today? The businesses that thrive are not the ones that avoid difficult decisions, they are the ones that face them early and act with purpose.

The Spring Statement on 3 March 2026 is best thought of as an official “state of the economy” update, rather than a full Budget. It is the point in the tax year when the Chancellor reports on how the UK economy and public finances are performing and confirms whether the government is still on track with its spending and borrowing plans.

In practice, the Spring Statement usually matters for two main reasons. First, it provides fresh economic forecasts and updated borrowing projections. Second, it allows the Chancellor to set the tone for the year ahead, particularly if the economy is under pressure or if public spending is running ahead of expectations.

For business owners, landlords, and higher income taxpayers, the Spring Statement can offer useful clues about whether tax policy is likely to tighten, loosen, or remain broadly unchanged over the coming year.

What The Spring Statement Is Designed To Achieve

The Spring Statement is primarily a financial and economic checkpoint. It gives the government an opportunity to update Parliament and the public on:

• The strength of the economy and the outlook for growth
• The inflation picture and the cost of living backdrop
• Employment trends and wage growth
• Government borrowing levels and debt interest costs
• Whether public finances remain within the government’s fiscal rules

This kind of update is not just political theatre. It can directly affect business confidence, interest rate expectations, and future tax planning decisions.

Even if there are no immediate policy changes announced, the Spring Statement can still influence decisions such as whether businesses invest, recruit, or hold back until conditions look more stable.

What We Can Expect To Hear On 3 March 2026

Most Spring Statements follow a familiar structure. The Chancellor will typically focus on three broad areas.

1. The Economic Outlook

We can expect commentary on whether the UK economy is stabilising, growing, or slowing. This may include references to:

• Inflation and whether it is moving back towards target
• Business investment levels
• Consumer spending trends
• International economic risks
• Pressures on energy and commodity prices

For small businesses, the key takeaway is often whether the Chancellor sounds confident about growth and stability, or cautious and concerned.

2. The Public Finances And Borrowing Position

A major part of the Spring Statement is the updated outlook for government finances. This includes:

• Whether tax revenues are rising or falling
• Whether borrowing is increasing or under control
• Whether debt is forecast to fall in the medium term
• Whether spending commitments are still considered affordable

This matters because if the government sees its forecast “headroom” shrinking, it may need to respond later in the year with spending restraint, tax rises, or both.

3. A Signal Of Policy Direction

Even where there are no major announcements, the Spring Statement often provides hints about what might come next. If the Chancellor repeatedly references fairness, enforcement, or closing gaps in the system, that can be a strong clue that more compliance-focused measures may be on the way.

If the focus is on growth and business confidence that may point towards future investment incentives or simplification.

Will There Be Any More Tax Changes?

The honest answer is yes; it is possible. However, any changes announced at a Spring Statement tend to be smaller and more targeted than those delivered in a full Budget.

That said, businesses should not assume it will be completely quiet. Governments have often used fiscal updates to introduce measures that raise revenue without changing headline tax rates.

The most likely types of tax change, if any are announced, include:

Technical And Administrative Updates

These might involve:

• Closing loopholes and tightening compliance rules
• Adjusting penalties or reporting obligations
• Expanding HMRC enforcement powers
• Launching consultations on future reforms

These changes may not be dramatic, but they can create extra work for businesses and their advisers.

Targeted Reliefs Or Incentives

If the government wants to encourage investment or growth, it may introduce or extend measures such as:

• Investment incentives
• Sector-specific support
• Employment or training related reliefs

These are usually positioned as pro-growth measures, but they often come with conditions that need careful review.

“Stealth” Tax Changes

It is also possible the Chancellor could hint at, or confirm, measures that increase tax burdens indirectly, for example:

• Continuing to freeze tax thresholds
• Tightening access to reliefs or allowances
• Restricting certain deductions
• Reducing the generosity of selected regimes

These measures can have a bigger long-term impact than many people realise, because they gradually pull more income into higher tax bands over time.

What Should Business Owners Do Now?

For most people, the best approach is to treat the Spring Statement as a planning prompt. Even if there are no major tax changes announced, it is a useful opportunity to review your position.

Practical steps to consider include:

• Reviewing cash flow and building a buffer for tax payments
• Checking whether profits, dividends, or rental income are pushing you into a higher tax band
• Reviewing remuneration strategy for directors and owners
• Considering whether planned investment should be brought forward or delayed
• Making sure record keeping and reporting processes are strong, especially if compliance rules tighten

The UK government has confirmed the revised terms of its wide-ranging workers’ rights reform programme, now enacted through the Employment Rights Act 2025. Although some of the original proposals have been softened, the legislation still represents the most significant change to UK employment law in many years.

For business owners and employers, the key issue is not whether these changes will affect them, but when and how. The reforms are being introduced in phases across 2026 and 2027, creating both a window to prepare and a period of ongoing uncertainty for those planning recruitment, restructures or cost control.

This article outlines the main changes and explains why early awareness and planning are important.

A major shift in employment rights

The Act brings together reforms covering unfair dismissal, statutory payments, family leave, trade union engagement and sector-level pay setting. The stated aim is to modernise workplace protections while maintaining flexibility for employers.

While the final legislation reflects compromises reached after consultation, the overall direction is clear. Employment rights will apply earlier, cover more people, and in some cases expose employers to higher financial risk.

Reduced qualifying period for unfair dismissal

One of the most important changes concerns unfair dismissal protection.

Previously, most employees needed two years’ service before they could bring an unfair dismissal claim. Early proposals would have made this a day-one right, but this has been revised.

Under the new rules, employees will qualify for unfair dismissal protection after six months’ service. This is still a substantial reduction from the previous position and will have a practical impact on probationary periods and early employment decisions.

In addition, the statutory cap on unfair dismissal compensation is being removed. This means awards will no longer be subject to a fixed maximum, increasing potential exposure where disputes arise.

Day-one rights for family and bereavement leave

Several forms of leave will now be available from the first day of employment.

These include statutory paternity leave, unpaid parental leave and new bereavement leave provisions. Minimum service requirements are being removed to reflect modern family arrangements and expectations.

For employers, this means entitlement arises immediately, which may affect workforce planning, particularly for smaller teams where short-term absences can have a noticeable operational impact.

Changes to statutory sick pay

Statutory Sick Pay is also being reformed.

Eligibility will no longer depend on meeting a minimum earnings threshold. This extends entitlement to lower-paid workers, part-time staff and those with irregular hours who were previously excluded.

Although the rate of Statutory Sick Pay itself is not significantly changed, the widening of eligibility is expected to increase employer costs and administrative demands. Payroll systems and sickness policies will need to be reviewed to ensure compliance.

Trade union rights and industrial relations

The legislation strengthens trade union rights and revises the framework for industrial relations.

Changes include simplified procedures for union recognition and industrial action, increased protections for workers participating in lawful strike action, and the repeal of earlier requirements for minimum service levels during strikes in certain sectors.

Employers will also be required to inform workers of their right to join a trade union and engage more actively with recognised unions where they exist. For some businesses, this represents a material shift in how employee relations are managed.

Consultation on tips and service charges

Employers operating tipping, gratuity or service charge arrangements will face new consultation obligations.

The rules require consultation with recognised trade unions or, where none exist, directly with workers on how tips are distributed. Employers must also publish the outcome of these consultations.

This is particularly relevant to hospitality and service businesses, where transparency around tips has become an increasingly sensitive issue.

Sector-level pay agreements

The Act introduces the framework for Fair Pay Agreements in specific sectors, starting with adult social care.

These arrangements allow sector-level bodies to set minimum pay and employment terms. While initially limited in scope, this marks a potential shift away from pay being determined solely at individual employer level.

Businesses operating in affected sectors will need to monitor developments closely, as future expansion of this model could have cost and compliance implications.

Further reforms still under development

Not all elements of the reform package are finalised. Several measures remain subject to further consultation and secondary legislation.

These include proposals to restrict fire and rehire practices, new duties to prevent sexual harassment, enhanced protections during and after pregnancy, and potential extensions to flexible working rights.

As a result, employment law will continue to evolve over the next two years.

What employers should do next

Taken together, these reforms increase both the scope and complexity of employment obligations.

Key implications include earlier legal exposure, increased administrative requirements, higher potential compensation risks and a stronger emphasis on consultation and engagement.

For many businesses, particularly small and medium-sized employers, early review of employment contracts, staff handbooks, probation procedures and dismissal processes will help reduce risk. Budgeting for potential increases in absence-related costs is also advisable.

Professional advice can help employers understand the financial and operational impact of these changes and plan accordingly. Reviewing your position now may prove far less costly than reacting once the new rules are fully in force.

For many taxpayers, an increase in income feels like a straightforward positive. Higher earnings should mean more disposable income, even after paying a bit more tax. In practice, the UK tax and benefits system does not always work that way.

There are a number of income thresholds built into the system where allowances and state benefits are reduced or withdrawn altogether once income exceeds a certain level. These losses are often not obvious at the time income increases. Instead of appearing as a new tax charge, they show up as missing allowances or benefits that simply stop.

Understanding how these thresholds work is important, particularly for people whose income fluctuates from year to year or who are close to key limits. Without planning, a relatively modest increase in income can result in a much larger increase in the overall tax burden, or a loss of benefits.

Income thresholds and hidden tax costs

Unlike headline tax rates, these thresholds are rarely discussed in simple terms. They sit in the background of the tax system and can be triggered by events such as bonuses, pay rises, dividends, pension withdrawals or investment income.

What makes them particularly challenging is that the loss of relief or benefit is often sudden. In many cases there is no gradual taper, and even where a taper applies, the effective marginal tax rate can become surprisingly high.

Below are some of the most common examples where rising income can have unintended consequences.

Marriage allowance and moving into higher rate tax

The marriage allowance allows one spouse or civil partner to transfer a portion of their unused personal allowance to the other. This can reduce the recipient’s tax bill, but only where the recipient remains a basic rate taxpayer.

If the recipient’s income increases so that they become a higher rate taxpayer, the marriage allowance is lost entirely for that tax year. There is no partial reduction or taper.

This means that a small increase in taxable income, perhaps due to overtime, a bonus or additional investment income, can result in the full loss of the allowance. Many couples only become aware of this after the tax year has ended, when the tax calculation is prepared and the allowance has already been removed.

Winter fuel allowance and income limits

Recent changes mean that entitlement to the winter fuel allowance is now linked to income. Where an individual’s income exceeds £35,000, the allowance is withdrawn.

This change particularly affects pensioners with mixed sources of income, such as occupational pensions, part-time work or savings income. Because total taxable income can vary from year to year, some individuals may move in and out of entitlement without realising why.

As the allowance is not claimed through the tax return in the same way as many reliefs, the connection between income levels and entitlement is not always clear. The result is often confusion when the payment does not arrive.

Child benefit and higher income households

Child benefit remains one of the most valuable forms of state support for families, but it is also one of the most misunderstood when it comes to income thresholds.

Where one parent has income above £60,000, a high income child benefit charge applies. As income increases above this level, child benefit is gradually clawed back through the tax system. Once income reaches £80,000, the benefit is fully withdrawn.

Importantly, the test applies to the income of the highest earning parent, not to combined household income. This can produce outcomes that feel unfair, particularly where one household has two moderate earners and another has a single higher earner.

The charge is often triggered by one-off income events rather than permanent changes in earnings. Bonuses, dividend payments or the sale of investments can all push income over the threshold for a single tax year, resulting in an unexpected tax bill.

Personal allowance withdrawal above £100,000

One of the most significant thresholds in the UK tax system applies once income exceeds £100,000.

For every £2 of income above this level, £1 of the personal allowance is withdrawn. This continues until the allowance is reduced to nil once income reaches £125,140.

The effect is a high effective tax rate on income within this band. Taxpayers are paying higher rate tax while also losing the benefit of tax-free income at the same time. In practical terms, the marginal tax rate can exceed 60 percent.

This issue commonly affects senior employees, professionals and business owners whose income varies year by year. It is particularly easy to cross the threshold unexpectedly when income comes from multiple sources.

Pension tax relief and higher earners

Pension contributions are often used as a way to manage taxable income, but the interaction between income levels and pension tax relief can be complex.

As income increases, the structure and value of pension relief can change. Higher earners may be affected by the tapered annual allowance, which reduces the amount that can be contributed to pensions with full tax relief.

In some cases, making pension contributions without careful planning can result in reduced relief or even unexpected tax charges. Understanding how income levels affect pension allowances is essential, particularly for those with variable or rising earnings.

Why these issues are often missed

What these examples have in common is that the impact is rarely obvious from payslips alone. Many allowances and benefits are assessed separately from day-to-day payroll, and the consequences may only become clear when a tax return is prepared or when a benefit is withdrawn.

It is also common for individuals to be affected by more than one threshold at the same time. A single increase in income can trigger multiple losses, compounding the overall effect.

Because the rules are complex and spread across different parts of the tax and benefits system, the true cost of higher income is often underestimated.

The value of forward planning

The good news is that many of these outcomes can be managed with advance planning. Timing of income, pension contributions, charitable donations and the way income is shared between spouses can all influence whether key thresholds are crossed.

Regular reviews are particularly important for anyone approaching one of the income limits discussed above or whose income varies from year to year. Understanding where income is likely to fall before the end of the tax year creates opportunities to make informed decisions while there is still time to act.

If you are unsure how close your income is to any of these thresholds, or if a recent increase in earnings may have unintended consequences, professional advice can help you understand your position and avoid unnecessary loss of allowances and benefits.

If you feel this alert could help a business colleague or family member, please feel free to share it with them.

In December 2025, HM Revenue and Customs announced the finalists in a competition aimed at helping close the UK tax gap. The initiative forms part of HMRC’s wider effort to modernise tax administration and improve its ability to identify and address deliberate tax evasion. The announcement signals a growing reliance on external innovation and data driven solutions to support compliance activity.

Purpose of the competition
The competition was launched earlier in 2025 with the aim of encouraging private sector organisations to develop practical tools that could strengthen HMRC’s compliance capabilities. Rather than focusing on theoretical ideas, the emphasis has been on solutions that can be tested in live environments and potentially embedded into HMRC’s existing systems.

The tax gap, which represents the difference between tax theoretically due and tax actually collected, remains a central concern for government. Reducing it is seen as a way of supporting public finances without increasing headline tax rates, while also reinforcing confidence in the fairness of the tax system.

The shortlisted finalists
Two organisations were selected as finalists and will now work alongside HMRC during a twelve month pilot phase. This next stage is intended to test how effectively their proposed technologies perform in practice and whether they can deliver measurable improvements in identifying non-compliance and tax evasion.

During the pilot period, HMRC will assess how well the solutions integrate with existing processes and whether they provide actionable insights that compliance teams can use. The focus is on outcomes rather than experimentation for its own sake, with a clear expectation that successful tools could be adopted more widely.

Government and HMRC perspective
Ministers have framed the competition as a practical way of harnessing specialist expertise from outside government. By partnering with private sector innovators, HMRC can access advanced analytical techniques and technological approaches that may be difficult to develop internally at pace.

Senior HMRC officials have also highlighted the value of collaboration. Closing the tax gap is described as a complex challenge that requires new ways of thinking, particularly as economic activity becomes more digital and sophisticated. External partnerships are seen as one way of keeping HMRC’s compliance approach aligned with modern risks.

Role of small and medium sized businesses
One notable aspect of the competition has been the level of engagement from small and medium sized enterprises. More than half of the submissions reportedly came from SMEs, demonstrating that innovation in tax technology is not limited to large multinational firms.

This reflects a broader trend in public sector procurement, where agility and specialist knowledge are increasingly valued alongside scale. Smaller firms often bring focused expertise and innovative approaches that can complement the resources of larger organisations.

What this means going forward
The pilot phase will be critical in determining whether the finalists’ solutions deliver real benefits. If successful, the technologies could form part of HMRC’s longer term strategy for improving compliance and reducing tax losses from evasion and error.

For taxpayers and advisers, this initiative underlines HMRC’s continued investment in data analysis and technology. While the stated aim is to target deliberate non-compliance, it also reinforces the importance of accurate reporting and robust record keeping across all sectors.

Conclusion
HMRC’s competition to help close the tax gap highlights a clear direction of travel. The department is increasingly looking beyond traditional methods and drawing on private sector innovation to strengthen compliance activity. The outcome of the pilot phase will be closely watched, as it may shape how HMRC approaches tax enforcement and risk assessment in the years ahead.

As part of the Budget measures, the government confirmed plans to make some changes to the Construction Industry Scheme (CIS).

From 6 April 2026, HMRC will be able to take immediate action where a business makes or receives a payment that it knew, or should have known, was connected to fraud. In these circumstances, HMRC will have the power to remove Gross Payment Status (GPS) with immediate effect, assess the business for the associated tax loss, and impose a penalty of up to 30%. This penalty may be applied to the business itself or to its officers. Where GPS is withdrawn due to fraud or serious non-compliance, the business will also be barred from reapplying for GPS for a period of five years (an increase from the current one-year limit).

Alongside these measures, the government also plans to simplify the CIS by exempting payments to local authorities and certain public bodies. As part of this change the requirement for construction contractors to submit nil returns will be required. These changes are due to take effect from 6 April 2026 and will first be subject to technical consultation.

The CIS is a set of special tax and National Insurance rules for businesses operating in the construction industry. Under the scheme, businesses are classed as either contractors or subcontractors, and both must understand their tax obligations.

Qualifying contractors are required to deduct tax from payments made to subcontractors and pass these deductions to HMRC. The amounts deducted count as advance payments towards the subcontractor’s tax and National Insurance liabilities.

Subcontractors are not required to register for the CIS, but where they are not registered, contractors must deduct tax at a higher rate of 30%. Registered subcontractors are subject to a 20% deduction unless they qualify for GPS. Where GPS applies, no deductions are made by the contractor, and the subcontractor is responsible for paying all tax and National Insurance at the end of the tax year.

To qualify for GPS, a subcontractor must meet specific criteria, including a strong compliance history of paying tax and National Insurance on time, and carrying on a business that undertakes construction work or supplies construction labour in the UK.

If you live abroad and sell your UK home, you may have to pay Capital Gains Tax (CGT) on any gain made since 5 April 2015. Only the portion of the gain made after 5 April 2015 is liable for tax. One of the most commonly used and valuable exemptions from CGT is Private Residence Relief (PRR), which applies when a property has been used as your main family home. Investment properties that have never been your main residence do not qualify for any CGT relief.

For non-UK residents, PRR can still apply, but there are additional conditions. You may not have to pay CGT for any tax year in which you, your spouse, or civil partner spent at least 90 days in the UK home, provided you meet the necessary conditions and nominate it as your only or main home when reporting the sale to HMRC.

Certain parts of the property, such as areas let out, used exclusively for business, or grounds larger than 5,000 square metres, may reduce the relief. You also automatically receive relief for the last nine months of ownership (or 36 months if you are disabled or in long-term care). 

Regardless of whether any tax is due, you must submit a Non-Resident CGT (NRCGT) return and pay any CGT within 60 days of the sale. Penalties apply if the return is late or tax is unpaid by the deadline. Even if there is no CGT to pay the return must still be submitted by the deadline.

The new rules will allow companies to raise more capital under the following schemes although investors will need to factor in reduced VCT Income Tax relief when assessing opportunities.

The Venture Capital Trusts (VCT) and Enterprise Investment Scheme (EIS) are designed to encourage private investment into trading companies. Both schemes help support business growth while at the same time encouraging individuals to fund these companies.

A number of changes to the schemes were announced at Budget 2025 and will apply from 6 April 2026.

The main changes are as follows:

• Gross assets limits: Companies’ gross assets will increase for EIS and VCT eligibility to £30 million immediately before the share issue (from £15 million) and £35 million immediately after the issue (from £16 million).
• Annual investment limits: Companies will be able to raise up to £10 million annually (from £5 million) and £20 million for knowledge-intensive companies (from £10 million).
• Lifetime investment limits: Companies’ lifetime limit will increase to £24 million (from £12 million), and £40 million for knowledge-intensive companies (from £20 million).
• VCT Income Tax relief: The rate of Income Tax relief for individuals investing in VCTs will reduce from 30% to 20%.

These increases in annual, lifetime and gross assets apply only to qualifying companies that are not registered in Northern Ireland and are not engaged in trading goods, or in the generation, transmission, distribution, supply, wholesale trade, or cross-border exchange of electricity.

These companies remain eligible under the current scheme limits.

These changes are designed to encourage larger investments into qualifying companies. 

Investors should be aware of the reduced VCT Income Tax relief available and ensure that investments still remain worthwhile.