Implications of the cut in interest rates, speculation over tax rises this Autumn, plus HMRC warns homebuyers about rogue tax agents offering to claim SDLT refunds
We start the week covering a wide range of business news. From how a cut in interest rates may impact your business, potential tax rises in this Autumn’s budget, and a warning from HMRC to homebuyers about being aware of rogue tax agents offering to claim SDLT refunds, we’ve got it all covered in today’s blog post from MLS Accountancy.
Interest Rate Cut to 4%: 4 Things to Think About
The Monetary Policy Committee (MPC) of the Bank of England have reduced the Bank Rate to 4% (previously 4.25%).
The decision was made by a narrow 5-4 majority and required 2 votes. This perhaps highlights the uncertainty that continues in the economy.
What Factors Led to the Reduction?
The MPC’s report shows that they are predicting that inflation will peak at 4.0% in September and then fall back towards their 2% target. Because of the progress made in controlling inflation, the MPC felt that a further reduction was appropriate.
While UK GDP shrank by 0.3% in April and 0.1% in May, the MPC felt that this was because some of the stronger growth earlier in the year may have been boosted by businesses rushing to act before new tariffs or tax changes came into effect. As this timing effect washes out, Bank staff are predicting that growth will pick up to 0.3% in the autumn. Recent trade agreements may also provide more certainty to global trade.
However, despite these positive indications, the wider picture remains unclear. When interviewed, the Bank of England Governor, Andrew Bailey, commented that he believes interest rates will continue to reduce, but there is “genuine uncertainty about the course of the direction of rates and the path has become more uncertain.”
What Should Your Business Be Thinking About Now?
- Cheaper borrowing, better investment opportunities: With the cost of borrowing now lower, you may have a fresh opportunity to finance growth at a reduced cost. Even previously marginal projects might now become financially viable.
- Impact on cash reserves: On the flip side, if you’re holding large cash reserves, you’re likely to see lower returns on bank deposits. Could some of that capital be better deployed into higher-yield investments or strategic projects?
- Potential boost in consumer spending: Lower interest rates often lead to increased consumer confidence and spending. If your business is in retail, hospitality or services, this could translate into a short-term lift in demand. Now could be a good time to consider whether a new promotional plan might help you capitalise.
- Exchange rates: A rate cut can put downward pressure on the pound. If you export goods or services, that may make you more competitive abroad. However, it can also increase the cost of imports, which may mean revisiting where you source goods and materials from.
If you’d like to chat about what the interest rate cut means for your business, please call us anytime. Whether you’re planning to grow, manage risk, or adapt to everchanging market conditions, we’re here to provide you with clear, practical advice when you need it.
See: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/august-2025
Will Taxes Rise in the Autumn?
As the UK heads into the Budget this autumn, speculation is mounting over whether Chancellor Rachel Reeves will be forced to raise taxes to plug a growing gap in the nation’s finances.
According to the National Institute of Economic and Social Research (Niesr), the government is on course to miss its own borrowing targets by £41.2 billion, unless action is taken. Niesr warns that a “moderate but sustained increase in taxes” may be the only realistic route for the government, particularly under the borrowing rules the chancellor has described as “non-negotiable.”
A “Trilemma” for Reeves
When Reeves became Chancellor, she set out two strict fiscal rules:
- Day-to-day government spending must be funded by tax revenues, not borrowing.
- Public debt must fall as a share of national income within five years.
These rules were intended to reassure investors and signal economic credibility. However, meeting them is becoming increasingly difficult as weaker-than-expected economic growth and the reversal of welfare cuts are expected to deliver less than previously forecast. The ongoing effect of US trade tariff policies on global trade is also a challenge.
Niesr says the chancellor faces a “trilemma” between:
- Fulfilling Labour’s spending commitments.
- Sticking to the manifesto promise not to raise taxes on working people.
- Meeting the self-imposed borrowing rules.
The deputy director for macroeconomics at Niesr, Stephen Millard, said that if the chancellor is going to be able to raise £40 billion, “I think one of the big taxes is going to have to be raised.”
Where Might Tax Increases Come From?
NIESR has suggested the government could raise revenue by:
- Extending the freeze on income tax thresholds beyond 2028 (a stealth tax that raises more as wages rise).
- Reforming council tax, or even replacing it with a land value tax.
- Changing the scope of VAT.
- Reforming pensions allowances.
A Difficult Autumn Ahead
With all these pressures converging, the upcoming Autumn Budget could be a significant one. However, whether it will include tax rises, stealth tax extensions, or reforms to the tax system, remains to be seen.
As always, we’ll be keeping a close eye on the Autumn Budget and any announcements that could affect you or your business. Once the details are confirmed, we’ll provide a clear summary highlighting what matters most – whether that’s changes to tax rates, allowances, or other measures.
If you have any questions about the effect of tax on your business or personal situation, please give us a call, we’ll be happy to help you.
See: https://www.bbc.co.uk/news/articles/cn85vyd1epzo
SDLT Repayment Scams: Court Ruling Confirms Properties Needing Repair Still Count as Residential
If you’ve bought a property that needed work doing before you could move in, you may have seen ads claiming you could reclaim some of the Stamp Duty Land Tax (SDLT) you paid if the property was in a poor state of repair.
These offers often sound appealing especially when made on a “no win, no fee” basis. However, a recent Court of Appeal decision has confirmed that homes needing repair still attract residential rates of SDLT.
As a result of the court decision, HM Revenue and Customs is warning homebuyers about rogue tax agents offering to claim SDLT refunds on the basis that a property was “uninhabitable” or “non-residential” at the time of purchase. But in most cases, renovations such as needing a new boiler, rewiring, or even having damp problems does not mean the property counts as non-residential.
What does this mean in practice?
The question to consider is whether the defects to the property have resulted in the building no longer having the characteristics of a dwelling.
That means:
- Claims based purely on a property needing repair are unlikely to succeed.
- If the property has previously been used as a dwelling, this will be an important factor.
- A property doesn’t need to be ready for immediate occupation to be “suitable for use as a dwelling” for SDLT purposes.
What can go wrong?
If a claim is made for repayment for SDLT paid and HMRC later decide that the claim is invalid, it can get expensive.
Interest and penalties will be added to the SDLT due but also, unscrupulous agents may not return the fee that was deducted from the refund.
Now that the Court’s decision has been confirmed, HMRC are actively cracking down on spurious claims and are using both civil and criminal powers to target agents making misleading submissions.
What should you do?
- Be sceptical of unsolicited offers promising SDLT refunds based on property condition
- Don’t be rushed into letting a third party file a claim for you – especially if they charge high fees
- Understand the risk – you, not the agent, are liable if HMRC later challenges the claim
This case serves as a firm reminder that if it looks too good to be true, it probably is. While repairs and renovations are part and parcel of buying older properties, they don’t change the fundamental tax treatment of the home.
If you’re ever unsure about SDLT rules, or whether a refund might apply, please don’t hesitate to give us a call. We would be happy to help you.
See: https://www.gov.uk/government/news/homebuyers-warning-as-hmrc-gets-tough-on-bogus-stamp-duty-claims
Lessons From a Director Ban: Getting Help Before It’s Too Late
If your business ever runs into financial difficulties, how you handle the situation can have serious and lasting consequences. That’s the message behind a recent case involving a Staffordshire director who’s just been banned from running a company until 2031.
Kulbarg Singh, director of Aldridge Construction Engineering Ltd, has been disqualified for six years after selling off over £1.5 million worth of company assets to another company he also controlled – for under £500,000.
In one part of the sale, Singh transferred seven historic vehicles – including two Jaguars and three Rolls Royces – for just £1. The cars alone were worth more than £100,000. In total, the company was left more than £1 million worse off from the under-priced sales.
The company went into liquidation the following year, owing over £1.5 million to HM Revenue and Customs and other creditors. The Insolvency Service described Singh’s actions as deliberately putting the company’s assets out of reach of those creditors – and they’re now looking at ways to recover what they can.
What to do if your company is struggling
The case serves as a strong reminder that there’s a need to take care if your company is in difficulty.
If your business starts to show signs of insolvency (such as struggling to pay debts, or liabilities outweighing assets), it’s crucial to get advice early. The sooner you act, the more options you’re likely to have.
While the temptation may be to protect shareholders, it’s important to remember that if the company becomes insolvent, your responsibilities as director will apply towards those the company owes money to, instead of the company.
If you’re concerned about your company’s financial position or unsure about how to handle a specific situation, don’t leave it too late. A quick chat with us can save a world of stress later on – and help keep your business (and your reputation) intact. See: https://www.gov.uk/government/news/six-year-directorship-ban-for-construction-boss-who-sold-100000-of-classic-cars-for-just-1