April Tax Tips & News

The Institute of Economic Affairs (IEA) is urging the UK government to abolish inheritance tax (IHT), calling it 'arbitrary, complex and distortionary.' Nearly half of OECD countries do not tax inheritances passed to adult children, making the UK a relative outlier. IHT currently charges 40% on estates above £325,000, or £500,000 when a main residence is passed to children. The IEA argues the tax penalises wealth that has already been taxed through income tax, NI, and VAT. It discourages investment and entrepreneurship and creates unnecessary administrative burdens (it costs the government £66m annually just to collect). It says even a cautious government could raise the tax-free threshold, reduce the 40% rate and simplify gifting rules. The government recently faced backlash from farmers after attempting to remove tax breaks for family farms. Following protests, ministers reversed course and raised the agricultural assets threshold to £2.5m. So, it remains to be seen if further changes to the IHT system will be made.

HMRC issuing pensioners with new tax codes for winter fuel repayments

Newsletter issue – April 2026 Some state pensioners will receive updated PAYE tax codes. This is to recover winter fuel payments from those whose total income exceeded £35,000 in the 2025-26 tax year. The UK Government has introduced a new income-threshold system, replacing the old Pension Credit-linked eligibility rules. Around two million pensioners are expected to repay their winter fuel payment through the tax system. They will be notified by letter or via the HMRC app. All eligible pensioners still receive the winter fuel payment automatically. If their income is above £35,000, HMRC adjusts their tax code to reclaim £200 for those under 80 and £300 for those aged 80+. Repayments are spread across the tax year via PAYE-roughly £17 per month for a £200 repayment. Pensioners cannot repay in a lump sum; it must be done through tax code adjustments. HMRC will recover payments during the 2026-27 tax year by altering tax codes. After the tax year ends, HMRC will check whether the correct amount was collected. If not enough was recovered, a tax calculation will be issued for any remaining balance.

Gulf expats worried about tax bill after UK return

Newsletter issue – April 2026 British citizens living in Gulf states have been returning to the UK because of the conflict involving Donald Trump's war with Iran. Many left suddenly for safety reasons, not intending to change their tax residency status. Returning earlier than planned can trigger the UK's five-year temporary non-residency rule, an anti-avoidance measure. If someone becomes UK-resident again within five full tax years, capital gains made abroad may become taxable in the UK. This is catching out people who sold assets while abroad assuming they were outside the UK's tax scope. Tax advisers say families are 'troubled' by the unexpected liabilities. Many did not consider residency day-count rules during an emergency evacuation. HMRC has updated guidance to allow war as an 'exceptional circumstance,' but accountants argue the rules remain narrow and restrictive. Experts urge HMRC to take a more pragmatic and sympathetic approach given the extraordinary situation. Staying in the UK after the initial crisis often does not qualify as an exceptional circumstance under current rules.

Chancellor concedes there was a valid argument for not increasing job taxes

Newsletter issue – April 2026 The Chancellor, Rachel Reeves, admitted there was a 'valid argument' against her decision to raise employers' National Insurance contributions. She defended the increase as necessary to fund public services, especially the NHS, which received a £29 billion annual uplift. Critics argue her admission comes too late for businesses and workers already affected. The TaxPayers' Alliance said the tax rise inevitably reduced job opportunities, pointing to rising youth unemployment. Some argue that reversing the employer NI increase would help businesses and improve job prospects for young people. ONS data shows 957,000 young people (16 - 24) were classed as NEET (not in education, employment, or training) in the last quarter - an increase of 11,000 from the previous period. Ms Reeves said that the Government was expanding apprenticeships and pointed to her 'youth guarantee' which promises paid work for young people who've been out of education or employment for 18 months.

HMRC tax receipts and National Insurance contributions report

Newsletter issue – April 2026 HMRC regularly releases a bulletin to update on the amount of tax and NI receipts it receives. The latest report revealed a couple of new records and reflects the impact caused by the Chancellor's changes to various tax regimes. Total gross HMRC tax and NICs receipts for April 2025 to January 2026 equalled £784.9 billion. This was £65.6 billion higher than the same period last year. Income Tax, Capital Gains Tax & NICs Total were £460.7bn (up £52.0bn year-on-year). PAYE was £388.2bn (up £39.1bn). Self-Assessment brought in £70.3bn (up £12.8bn). January 2026 SA receipts are the highest on record. Total VAT receipts were £154.3bn (up £9.0bn) with January 2026 VAT receipts being the highest on record. The growth was influenced by inflation and shifts in consumer spending. Business Taxes, which include Corporation Tax, the Bank Levy, Digital Services Tax, and the Energy Profits Levy totalled £81.8bn (up £1.8bn). There were record-high December 2025 receipts due to strong onshore Corporation Tax receipts. Stamp Taxes and Annual Tax Enveloped Dwellings (ATED) were £17.0bn (up £1.9bn). Receipts were influenced by Stamp Duty Land Tax (SDLT) rate changes, increased transaction volumes around Budget periods and the threshold changes effective from April 2025. Inheritance Tax (IHT) totalled £7.1bn (up £0.1bn). The slightly higher receipts were linked to increased asset values and frozen thresholds (to 2030/31).

Chancellor concedes there was a valid argument for not increasing job taxes

Newsletter issue – April 2026 The Chancellor, Rachel Reeves, admitted there was a 'valid argument' against her decision to raise employers' National Insurance contributions. She defended the increase as necessary to fund public services, especially the NHS, which received a £29 billion annual uplift. Critics argue her admission comes too late for businesses and workers already affected. The TaxPayers' Alliance said the tax rise inevitably reduced job opportunities, pointing to rising youth unemployment. Some argue that reversing the employer NI increase would help businesses and improve job prospects for young people. ONS data shows 957,000 young people (16 - 24) were classed as NEET (not in education, employment, or training) in the last quarter - an increase of 11,000 from the previous period. Ms Reeves said that the Government was expanding apprenticeships and pointed to her 'youth guarantee' which promises paid work for young people who've been out of education or employment for 18 months.

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