HMRC Targets Errors in Marginal Relief Claims
HMRC has launched a letter campaign aimed at companies that may have miscalculated corporation tax marginal relief on their returns.
What’s happening? Businesses receiving a letter must respond within 30 days, even if they believe their return is correct. Ignoring it could trigger a compliance check and potential penalties.
Why? The campaign focuses on companies with associated companies, where ownership links reduce the profit limits for claiming marginal relief. HMRC has stated that failing to declare associated companies may mean more tax is due.
The rules:
Profits below £50,000 are taxed at 19%
Profits above £250,000 are taxed at 25%
Marginal relief applies between these limits, but thresholds must be divided where associated companies exist.
If your company may be affected, it’s essential to review your corporation tax returns for periods after 1 April 2023. Returns within the amendment window should be corrected online; older errors require a voluntary disclosure.
HMRC will continue issuing letters until October 2025, so now is the time to seek professional advice.
UK Pay Growth Slows as Hiring Weakens
The UK jobs market is showing signs of strain as employers cut back on pay rises and recruitment.
ONS data shows unemployment edged up to 4.7% – the highest in four years.
Pay growth (including bonuses) fell from 5% to 4.6%. Excluding bonuses, it stayed at 5%, showing reduced incentive payments.
Vacancies dropped by 44,000 – the 37th consecutive fall – leaving numbers well below pre-pandemic levels.
The finance and business services sector reported the weakest pay growth at just 3.1%.
Despite the Bank of England’s recent interest rate cut to 4%, hiring intentions remain subdued. According to surveys, only 57% of private sector employers plan to recruit in the coming months, compared to 65% last autumn.
UK Housebuilding Slumps Amid Economic Pressures
The construction sector has seen its sharpest decline since the early pandemic.
Housebuilding activity collapsed in July, dragging the sector’s PMI down to 44.3 (anything below 50 signals contraction).
Civil engineering also fell steeply, while commercial construction slowed more modestly.
With unemployment rising, sticky inflation, and global trade disruptions, the outlook for the housing market is uncertain. Industry leaders have raised doubts about the Government’s target of 1.5 million new homes this Parliament, citing capacity issues and rising costs.
That said, interest rate cuts may provide some relief to households and developers if financial pressures ease.
Government Outlines New Plan to Support Small Businesses
On a more positive note, the UK Government has announced a package of measures to back small businesses. Highlights include:
Tackling late payments by legislating against practices that harm cashflow.
Cutting regulation costs by 25%.
Expanding start-up loans to support 69,000 new businesses.
Extending the Growth Guarantee Scheme and boosting ENABLE programme funding from £3bn to £5bn.
Reforming business rates, with lower multipliers for high street retail, hospitality, and leisure.
Investing £1.2bn in apprenticeships and skills, particularly for SMEs adopting new technology.
Reintroducing the Business Growth Service for tailored support.
Increasing UK Export Finance lending capacity from £60bn to £80bn.
Professional bodies such as CIMA and ICAEW have welcomed the strategy as a positive step towards easing long-term challenges and stimulating growth.
Final Thoughts
It’s clear that businesses are facing both opportunities and challenges this autumn – from staying compliant with HMRC rules to navigating a tougher jobs and housing market. At the same time, new government initiatives may help small firms manage cashflow, access finance, and plan for growth.
Need Expert Advice? Let’s Talk.
If you’d like to explore any of the topics we’ve covered or discuss how current changes might affect your business, our team is here to help. We’re always happy to share insights and offer practical advice tailored to your needs.
At Abbeygate Accountancy, we stay on top of the latest trends so you can stay ahead of the curve. Whether you’re navigating new tax rules, planning ahead, or looking for proactive support—we’ve got you covered.
Book a meeting or get in touch today.
We’re ready when you are.
Get in touch today and learn how we can help your business grow!
No Suits, No Ties, No Nonsense…
☎️ Call us on: 01284 834216
📲 WhatsApp us on: 07383 182936
