Freedom Accountancy Ltd

15/07/2026

Hot Topic - A Comfortable Retirement

A recent report published by Pensions UK revealed that three quarters of UK workers are not on course to save enough for a 'moderate' lifestyle when they retire. The report says a moderate lifestyle will cost £32,700 for one person and £45,400 for two - but estimated just 23% of the working population were on course to reach such a level. Here, we consider how individuals can ensure they save enough for a comfortable retirement.

Your retirement lifestyle:

According to the report, a basic retirement lifestyle costs around £13,900 annually for a one-person household and £22,500 for two people. A moderate lifestyle costs £32,700 for one person and £45,400 for two, while a comfortable lifestyle costs £45,400 and £62,700 respectively.

Pensions UK stated that the figures reflect increased everyday costs across such spending categories as food, household bills and transport. It expects 82% of the population to reach the minimum standard of living in retirement.

'Not enough':

Zoe Alexander, Executive Director of Policy and Advocacy at Pensions UK, said: 'Today's saving levels will not be enough for the retirement they expect. It is expected that around 82% of people reaching a minimum standard of living, but far fewer will go beyond that.

'That is out of step with what people expect for their future. Without action, too many risk facing a cliff-edge drop in income when they stop work. The government is right to be considering whether minimum contributions need to rise through the work of the Pensions Commission.’

Tax aspects of pension savings:

There are two broad types o pension schemes from which an individual may eventually be in receipt of a pension:

- Workplace pension schemes
- Personal Pension schemes.

A Workplace pension scheme may either be a defined benefit scheme or a money purchase scheme.

A defined benefit scheme pays a retirement income based on final salary and years of service, while a money purchase scheme instead reflects the amount invested and the underlying investment fund performance.

An individual is entitled to make contributions and receive tax relief on the higher of £3,600 or 100% of earnings in any given tax year. However, tax relief will be restricted for contributions in excess of the annual allowance.

A money purchase scheme allows the member to obtain tax relief on contributions into the scheme and tax-free growth of the fund. If an employer contributes to the scheme on behalf of an employee, there is generally no tax charge on the member and the employer will obtain a deduction from their taxable profits.

Under the current pensions regime, there are no limits on either the maximum amount which can be invested in a pension scheme or on the total value within pension funds. However, there are controls which limit the tax reliefs available. Firstly, there are limits on the amount of tax relief available to the member in making the contributions to or accruing the benefits in their pension schemes. Secondly, there are tax free limits in accessing those benefits.

Saving for a comfortable retirement:

A comfortable retirement comes from saving early, contributing consistently and using tax‑efficient accounts. The core idea is simple: build multiple income sources - State Pension, workplace or personal pensions and additional savings - so you can maintain your lifestyle when you stop working.

15/07/2026

Over 110,000 Taxpayers Yet to Register for MTD

More than 110,000 unrepresented taxpayers who must register for Making Tax Digital (MTD) from April 2026 have still not done so, according to the Low Incomes Tax Reform Group (LITRG).

LITRG's estimates are based on official HMRC statistics on the number of unrepresented taxpayers it estimates will be in scope for MTD from April 2026, alongside recent public comments from senior HMRC officials on registration and sign-up rates.

From April 2026, taxpayers with gross income of more than £50,000 from self-employment or rental income in the 2024/25 tax year are mandated to use MTD unless they are exempt.

From April 2027, the £50,000 threshold falls to £30,000 and then to £20,000 from April 2028.

LITRG believes that of the 216,000 unrepresented taxpayers HMRC expect to be in scope for this year, around 111,000 have still to register.

Sharron West, LITRG Technical Officer, said:

'While most of the taxpayers who need to use Making Tax Digital from April 2026 have the services of a professional tax adviser or accountant to help them, there are a significant number who don't, and many of them have still not signed up.

'We are concerned that there are a substantial number of people who should register but don't realise they need to.

'However, the good news is that there's still time for these taxpayers to get ready ahead of the first reporting update due on 7 August 2026.'

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LITRG’s estimates are based on official HMRC statistics on the number of unrepresented taxpayers it estimates will be in scope for MTD from April 2026, alongside recent public comments from senior HMRC officials on registration and sign-up rates1.

15/07/2026

Phased Rollout of Payrolling for Employee Benefits a 'Welcome Step'

The decision to phase in the mandatory payrolling of benefits in kind is a 'welcome step' to allow employers and payroll software providers more time to prepare for significant changes, says the Association of Taxation Technicians (ATT).

Benefits in kind are non-cash perks such as company cars or private medical insurance. Currently, most employers report these once a year using a Form P11D, with tax collected through adjustments to employees' tax codes. This can lead to inaccuracies and the possibility of unwelcome tax bills after the end of the tax year.

Under payrolling, the value of these benefits is added to employees' pay in real time, so the correct tax is deducted through the payroll each month. Although this improves accuracy and transparency it also requires employers to gather detailed information. They must also ensure their payroll systems can handle the changes.

HMRC had planned to introduce mandatory payrolling for all benefits and more detailed information requirements from April 2027. However, it has now confirmed a phased approach will be taken.

Jon Stride, Chair of the ATT's Technical Steering Group, said:

'This is a sensible and welcome step by HMRC. Moving to real-time taxation of benefits should ultimately improve accuracy for employees, but the original timetable based on full implementation in one go was overly ambitious.

'A phased approach gives employers, software providers and HMRC the time needed to get the systems right and avoid unnecessary disruption.'

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Benefits in kind are non-cash perks such as company cars or private medical insurance. Currently, most employers report these once a year using a Form

15/07/2026

HMRC Boosts Funding for Taxpayers Needing Extra Support

More than £11 million in funding has been made available to taxpayers struggling with their tax affairs.

The doubling of funding comes as part of HMRC's Voluntary and Community Sector Grant Funding Scheme. The funds will be available for organisations to help customers with their tax affairs.

From 8 June, organisations can submit bids for the funding, which is available for voluntary and community sector organisations to provide specialist advice and support to HMRC customers who may need extra help with their tax affairs, interacting with its digital services or claiming entitlements.

Dan Tomlinson, Exchequer Secretary to the Treasury, said:

'I'm delighted to build on our commitment to customers who need the most support and make this latest round of funding available for our partners in the voluntary sector who provide invaluable assistance to them.

'This funding means customers, who may be struggling with their tax affairs, are able to get the help they need to make a real difference to their situation.'

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£11 million in grant funding available to help customers who need extra support

15/07/2026

HMRC Mileage Rate Increased to 55p

The headline approved mileage rate has increased to 55p per business mile for the first 10,000 miles, with effect from 6 April 2026. For each business mile over 10,000 miles, the approved mileage rate remains at 25p per business mile.

This is part of a government package of measures intended to address rising fuel prices.

Approved mileage rates may provide relief from Income Tax where an employee or a self-employed individual makes business journeys in their own vehicle. Similar rules apply for the purposes of national insurance contributions (NIC).

Separate rates apply for motorcycles and bicycles, and there is also a rate for passenger payments.

No changes have been announced to these rates. However, the government has committed to a review of all rates and has indicated that this will be set out at a future Budget.

In a statement to parliament, Dan Tomlinson, the Exchequer Secretary to the Treasury, said:

'In March, the government announced a review of mileage rates for employees using their own vehicle for work and the self-employed who use the simplified expenses rates.

In recognition of the pressures facing drivers as a result of the effects of the Iran war, the government is today announcing the first uprating of mileage rates in 15 years, back dated to April, to provide immediate support to both groups.

'Mileage rates will increase for 2026/27 from 45p to 55p for the first 10,000 miles, and 25p thereafter, with effect from 6 April 2026.

'This will represent the largest ever increase to these mileage rates, benefitting around two million employees and one million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.'

Information from UK Parliament on written questions & answers, written statements and daily reports.

15/05/2026

Hot Topic - Rise of AI

The rapid adoption of AI is driving a sharp decline in entry-level jobs and worsening the long-standing UK challenge of skills shortages, the British Chambers of Commerce (BCC) recently warned. With AI now capable of performing tasks more efficiently and employment costs ever-increasing, businesses may be questioning whether many entry-level roles remain necessary, the business group said. Here, we consider how AI is impacting the UK jobs market.

Task automation:
AI helps to automate jobs by taking over routine, repetitive and increasingly cognitive tasks, reshaping how work is done across industries. It no longer simply handles manual or mechanical tasks – it can now undertake analysis, writing, coding and support decision-making.

Businesses may choose to automate repetitive, cognitive tasks; creative and analytical duties; customer service tasks; and hiring and recruitment processes.

Additionally, AI can assist in the management of invoices, CRM data and compliance tasks.

Capability growth:
AI capability growth is accelerating, driven by rapid technical improvements, expanding real‑world deployment and significant enterprise investment. Skills are being transformed, with AI and big-data skillsets topping job requirement lists and helping to shape the UK jobs market.

Filling training gaps:
AI is filling training gaps by providing scalable, hands‑on and personalised learning that helps workers build practical AI literacy. AI-driven learning platforms allow employees to gain the AI skills they require to succeed. From the construction industry to creative sectors, businesses are actively adopting AI to help upskill their workforce.

Shifts in hiring patterns:
AI is reshaping hiring by automating early‑stage recruitment, slowing demand for some professional roles and simultaneously creating new AI‑driven jobs. The UK jobs market is contracting, and businesses report caution in traditional hiring.

Job adverts have fallen most sharply in occupations that are highly exposed to AI. Companies are reducing junior roles, with one in six employers expecting AI to shrink headcount within a year.

Occupations affected by AI have experienced a lag in wage growth compared to those less exposed to AI.

AI adoption among UK SMEs is accelerating rapidly. A new study by the BCC shows that 54% of SMEs are now using AI tools, more than double the 25% reported in 2024. According to the BCC, many UK businesses continue to struggle to find workers with the right skills, with labour costs remaining their top cost pressure.

The BCC said: 'Taken together, rising costs and AI adoption could fundamentally reshape the entry-level job market. Fewer entry-level opportunities mean that young people may have less chance to gain work experience and develop essential skills. This could lead to structurally higher youth unemployment and intensified skills shortages across industries.

'Supporting entry level workers to develop the right skills in an AI-driven world is not just about individual career progression - it is an investment in the long-term health of the economy. In a world of rapid technological change and rising costs, developing the next generation of workers today remains essential to prevent widening skills gaps tomorrow.'

AI is now a defining force in the UK labour market, reshaping everything from entry‑level opportunities to the skills employers value most. While automation and rising costs are prompting businesses to streamline roles, particularly at the junior end, AI is simultaneously creating new demands for digital capability and accelerating the need for widespread upskilling.

15/05/2026

Government Unveils Crackdown on Late Payments

Small businesses to be backed by new, stronger measures to tackle late payments, the government has announced.

The Small Business Commissioner will be given sweeping new powers to investigate poor payment practices, adjudicate payment disputes, and fine the worst offenders – with fines worth tens of millions for firms that persistently pay late or fail to comply with the new laws.

The government says the measures will tackle a problem costing the UK economy £11 billion every year.

The changes will include a new 60-day cap on payment terms on all large firms when paying smaller suppliers. New mandatory interest on late payments will also be introduced, with a requirement for all commercial contracts to include statutory interest set at 8% above the Bank of England base rate.

15/05/2026

Countdown to taxation of Benefits-In-Kind via the Payroll Underway

There is less than a year to go before all employers must tax benefits-in-kind via the payroll, the Chartered Institute of Taxation has warned.

Benefits-in-kind are non-cash benefits provided by employers to employees or directors. Common benefits include company cars, private medical insurance and gym membership.

While the benefit is paid for by the employer the recipient is required to pay Income Tax and potentially National Insurance contributions (NICs) on the value of the benefit, as if this value had been added to their salary.

Additionally, the employer must pay employer NICs on the value of the benefit. According to HMRC more than 3.5 million employees receive a taxable benefit-in-kind.

Currently, most employers compute the value of a taxable benefit after the end of the tax year and report it on a P11D form to HMRC and the employee. This means the employer potentially has up to 15 months to calculate, verify and report the value of a benefit.

From 6 April 2027 it will be a legal requirement to report and pay Income Tax and NICs on most benefits-in-kind and taxable expenses payments via payroll rather than waiting until the end of the tax year.