Weekly Tax News Brief 6 August 2025

Written By Katherine Thorburn

ai news

1. Late Payment Interest Hits 7.75%

HMRC’s late payment interest rate has increased again — now sitting at 7.75% from 13 August 2025.
That’s the highest it’s been in over 15 years.

Who this affects:

  • Anyone paying tax late — including Self Assessment, Corporation Tax, VAT

  • Sole traders and directors with overdue liabilities

Our Tip:
Even if you can’t pay in full, contact HMRC and set up a Time to Pay agreement — it may reduce further penalties.

2. New Penalties for Late VAT Returns Now in Force

From 1 August, HMRC has fully implemented its new VAT penalty regime:

  • Points-based system for late returns

  • After a threshold is hit, you get a £200 fixed penalty

  • Points reset after 12 months of compliance

Our Tip:
Even if you have no VAT to pay, submit the return anyway to avoid points racking up.

3. Self-Employed Income Support Scheme (SEISS) Enquiries

HMRC is now actively reviewing SEISS claims made during COVID.

  • They’re sending “nudge letters” asking for evidence

  • If you claimed while employed or your income didn’t drop enough, you could be at risk

Our Tip:
Double-check your 2020–2022 records. If you receive a letter, don’t ignore it. Seek advice.

4. Dividend Allowance Continues to be £500

As of April 2025, the annual dividend allowance continues to be to just £500.

Implications for you:

  • Directors of limited companies will face higher personal tax bills

  • Planning dividend timing and salary structure is now essential

Our Tip:
Use your basic rate band wisely and speak to your accountant about the most tax-efficient mix.

5. Important Deadlines This Month

  • 7 August – VAT return and payment due (quarter ending 30 June)

  • 19 August – PAYE and NIC due

  • 31 August – Deadline to notify HMRC if you started self-employment in the last quarter

Worth Watching

  • IR35 Reforms – Rumours continue about further changes. A consultation may be launched this autumn.

  • MTD for ITSA – Still planned for April 2026. Start digitising now to avoid a mad scramble.

  • HMRC App Updates – A more user-friendly interface is rolling out, but not yet fully released.

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Katherine Thorburn