On 21 July 2025, the government published draft legislation for the Finance Bill 2025–26, designed to close the tax gap and modernise administration. This month’s HMRC Employer Bulletin builds on that agenda, with a strong focus on payroll compliance, anti-avoidance enforcement, and the upcoming Employment Rights Bill.
For small and medium-sized enterprises (SMEs), the bulletin is more than just regulatory noise, it’s a roadmap of upcoming risks and opportunities. Whether it’s PAYE deadlines, tax changes, or compliance with new employment rights, staying ahead now can save costs, reduce admin headaches, and even open new funding channels (such as HMRC funding and VAT loans to ease cashflow) that can help you accelerate your growth whilst staying compliant.
PAYE: Deadlines, P11D Filing, and Settlement Agreements
P11D and P11D(b): Avoiding Penalties
The deadline to file P11D and P11D(b) returns for the 2024–25 tax year was 6 July 2025.
Class 1A NIC payments were due 22 July 2025.
Late filers should act immediately to avoid escalating penalties.
What SMEs can do:
Use HMRC’s Company Car Tax Calculator to simplify reporting.
Register for payrolling benefits and expenses before the 2026–27 tax year to cut down on P11D admin.
File all P11Ds and P11D(b) together to avoid delays.
PAYE Settlement Agreements (PSA)
PSA calculations must be submitted online.
Payment deadlines: 19 October 2025 (post) or 22 October 2025 (electronic).
Employers must include all benefits in one submission, splitting them causes delays.
Opportunity for SMEs: Using payroll software or outsourcing PAYE compliance can free up internal resources, allowing you to focus on growth.
Tackling PAYE Disputes and Fraud
From 31 July 2025, employers can raise PAYE disputes online. HMRC has streamlined this process, but from 31 August 2025, disputes will no longer be accepted via helplines or webchat.
Meanwhile, HMRC’s landmark tribunal win against mini umbrella company fraud reinforces their crackdown on abusive tax structures. From April 2026, recruitment agencies (or end clients where no agency is involved) will bear responsibility for ensuring tax compliance on workers’ income.
What SMEs should note:
Avoid schemes that look “too good to be true”, HMRC is actively deregistering fraudulent models.
Staying compliant avoids reputational risk and costly backdated liabilities.
Contractors and SMEs should review umbrella company arrangements now.
Tax Updates and Guidance Changes
Spotlight 69: Property and LLP Tax Avoidance
HMRC has warned against schemes using LLP liquidations to avoid Capital Gains Tax (CGT) and Stamp Duty. SMEs in property or real estate must exercise caution, as these schemes could leave participants facing higher tax bills, penalties, and promoter fees.
Employment Rights Bill
The Employment Rights Bill Implementation Roadmap sets a clear timeline for reforms, including:
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Day one protection from unfair dismissal
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Stronger Statutory Sick Pay
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Ending exploitative zero-hour contracts (from 2027)
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Tackling fire and rehire practices
For SMEs, this means planning workforce policies early; contracts, HR handbooks, and payroll processes will need updates well before enforcement dates.
Vaping Products Duty and Stamps Scheme
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From 1 October 2026, a new duty of £2.20 per 10ml of liquid will apply.
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Businesses importing, storing, or manufacturing vaping products must register by 1 April 2026.
For SMEs in retail and wholesale, this is an extra compliance burden, but also an opportunity to differentiate through early compliance and consumer trust.
General Information and Support for SMEs
Overseas Workday Relief
Changes from 6 April 2025 mean non-domicile rules have ended, with a residence-based system replacing them. SMEs employing internationally mobile staff should review payroll records and attend HMRC’s live 16 September 2025 webinar.
Protecting Contractors from Bad Tax Advice
HMRC’s ‘don’t get caught out’ campaign highlights how contractors can fall victim to disguised remuneration or umbrella company fraud. SMEs engaging contractors should share HMRC resources and encourage workers to check payslips and arrangements.
Child Benefit Deadlines
Employers should remind staff with teenagers aged 16–19 to extend Child Benefit claims by 31 August 2025. With thresholds now increased to £60,000–£80,000, more parents may benefit without triggering the High Income Child Benefit Charge.
Opportunities for SMEs
While the bulletin is packed with compliance details, SMEs can find real opportunities:
Cashflow Planning: HMRC tax liabilities can be smoothed with HMRC funding or VAT loans, which are often cheaper and more manageable than other forms of credit.
Digital Payroll: Moving early to payroll benefits and online submissions reduces errors and admin burden.
Workforce Security: Preparing for the Employment Rights Bill positions SMEs as fair employers, strengthening recruitment and retention.
Reputation & Trust: Avoiding fraudulent umbrella schemes and complying with new duties helps SMEs stand out as credible, compliant partners to clients and suppliers.
Action Plan for SMEs Today
Check PAYE compliance: Ensure P11D and PSA filings are up to date.
Review umbrella arrangements: Avoid high-risk or “too good to be true” schemes.
Prepare HR policies: Factor in Employment Rights Bill timelines now.
Plan cashflow: Consider revolving VAT facilities or HMRC funding to ease seasonal strain (especially ahead of Halloween and Christmas trading).
Engage staff: Share updates on Child Benefit, tax avoidance risks, and workplace rights.
To Wrap Everything Up
The HMRC Employer Bulletin August 2025 signals a stronger compliance environment but also highlights clear opportunities for SMEs. By embracing digital payroll tools, planning ahead for employment reforms, and leveraging smart finance solutions like HMRC funding, SMEs can stay ahead of regulation while unlocking growth.
