December 2025
Technical and Client Update
In this issue
Autumn Budget 2025
Staff entertaining & trivial benefits
Tax Investigation Service
Christmas opening hours
Autumn Budget 2025
On 26 November 2025, Chancellor Rachel Reeves presented her second Budget to Parliament. After the tax-raising budget of 2024, it had been hoped by the government that widely applicable tax increases would not be required again in 2025. However, with economic pressures continuing to apply, tax increases have been announced and these will affect the vast majority of households.
The Budget contained measures that will affect both individual taxpayers and businesses. We have summarised the key changes in the pdf linked below. Please contact us if you wish to discuss any matters in more detail.
Headlines included:
- National Insurance (NI) and income tax thresholds were frozen for an extra three years beyond 2028. This will bring more people into higher rates of tax over time.
- Dividend income will see a 2 percentage point rise to the ordinary and upper tax rates from April 2026.
- Savings and property income tax rates will be increased by 2 percentage points from April 2027.
- From April 2027, the cash Individual Savings Accounts (ISA) savings limit will be capped at £12,000 a year for those aged under 65.
- A council tax surcharge is being introduced for properties worth more than £2 million.
- Any unused portion of the £1 million agricultural property relief and business property relief allowance will be transferable to spouses and civil partners from April 2026.
- A new excise duty will become payable on electric cars at 3p a mile for electric cars and 1.5p a mile for hybrid cars.
Staff entertaining & trivial benefits
With the Christmas season suddenly on the horizon, principals will be looking at ways to thank their staff for their contributions and hard work during the year. Whatever your plans are, you do need to be aware of the tax implications of entertaining and making such gifts.
STAFF ENTERTAINMENT
As an employer providing social functions and parties for your employees, you have certain National Insurance and reporting obligations.
What you need to report and pay depends on:
- if it’s an annual event
- if it’s open to all of your employees
- if it costs more than £150 per head
- how many events you provide during the tax year
- whether the employee is a director, and how much they earn
You might not have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance. To be exempt, the party or similar social function must be all the following:
- £150 or less per head per year
- annual, such as a Christmas party or summer barbecue
- open to all your employees
TRIVIAL BENEFITS
You do not have to report a benefit for your employee if all of the following apply:
- it costs you £50 or less to provide (per employee)
- it is not cash or a voucher that can be exchanged for cash
- it is not a reward for their work or performance
- it is not in the terms of their contract
This is known as a ‘trivial benefit’. You do not need to pay tax or National Insurance or let HMRC know.
The employee will have to pay tax on any benefits that do not meet all of the above criteria.
If a business provides a bottle of wine in a nice gift bag as a Christmas gift, for example, the value of the gift bag should be included in the value of the gift when deciding whether the total value exceeds the trivial benefits limit.
STAFF CHRISTMAS BONUSES
Staff bonuses issued must be reported through payroll as these are subject to Income Tax and National Insurance.
Bonuses paid to staff must be included in payroll as additional earnings. If you do have plans to pay a bonus, you will need to speak to your payroll provider in advance of the payment to ensure that this is reported to HMRC at the time of payment.
As always, do feel free to contact us if should you require advice.
Tax Investigation Service
With a national debt of over £2.72 trillion, as of March 2024, we fully expect HMRC to raise more tax investigations to reduce this deficit. Some are launched at random, whilst others are targeted towards specific business sectors. All taxpayers are at risk.
Representation costs for a tax investigation can often escalate even in cases where no mistake has been made and it is eventually agreed that there is no further tax to pay. The average cost of an HMRC investigation is in excess of £3,200. Unfortunately, we cannot stop you from being selected for an investigation, but we can ensure you are able to afford a full defence if it happens.
Humphrey & Co has offered a Tax Investigation Service (TIS) to our clients for several years now, and we invite all our clients to share in the protection offered. During an investigation, the questions can be detailed and time consuming to answer. Whether or not HMRC finds extra tax to pay, the costs to defend you can be substantial. Indeed, it has been known for clients to agree to HMRCs demands simply because of the costs involved in continuing to fight the case. For our subscribers, there is no cost whatsoever (subject to policy limits).
Please remember that businesses are also entitled to unlimited free access to the business helplines. Qualified experienced specialists are available in the fields of employment, health & safety and commercial law to assist in these increasingly litigious areas. Your business could potentially save considerable amounts of time, expense and disruption from this add-on service.
We believe that we know you and your business best and we want to be there for you when you need us most. We will manage your case from start to finish, reducing stress and providing peace of mind.
For a reminder of the benefits of the service, exclusions and extent of cover provided, please refer to the TIS leaflet and/or browse our dedicated website at www.humph.co.uk/tis.
Christmas opening hours
The office will be closed from 11.30am on Tuesday 23 December 2025 reopening on Friday 2 January 2026.
Our Opening Times during the Christmas Period will be:-
| Monday | 22 December | Open |
| Tuesday | 23 December | Closed from 11.30am |
| Wednesday | 24 December | Closed |
| Thursday | 25 December | Closed |
| Friday | 26 December | Closed |
| Monday | 29 December | Closed |
| Tuesday | 30 December | Closed |
| Wednesday | 31 January | Closed |
| Thursday | 1 January | Closed |
| Friday | 2 January | Open |
On behalf of everyone at Humphrey & Co we would like to wish you a very Merry Christmas and a happy, healthy and prosperous 2026.
The information provided within our E-Newsletters are general in nature to raise awareness of certain issues that may affect our clients. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from a professional advisor before you take any action or refrain from action.
Whilst we endeavour to use reasonable efforts to furnish accurate, complete, reliable, error free and up-to-date information, we do not warrant that it is such. We disclaim all warranties.
The information can only provide an overview of the regulations and matters for consideration in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.