In this week’s Enews, we look at a government consultation on mandatory electronic invoicing for businesses. There is also news on HMRC’s late and repayment interest rates and the business response to the jump in the rate of inflation to update you on.
News - 21 February 2025
Government consults on mandatory e-invoicing
The government has launched a consultation on plans for the rollout of electronic invoicing (e-invoicing) in the UK.
The 12-week consultation is being jointly conducted by HMRC and the Department of Business and Trade (DBT) and will consider whether to make e-invoicing mandatory for businesses in the UK.
E-invoicing is the digital exchange of invoice information directly between buyers and suppliers.
The government says this could help businesses get their tax right first time, reduce invoicing and data errors, improve the accuracy of VAT returns, help close the tax gap and save time and money.
It usually results in faster business to business payments, leading to improved cash flow and less paperwork, the government adds.
The 34-question consultation can be completed online and once the 12-week feedback session closes.
James Murray, Exchequer Secretary to the Treasury said:
‘As part of the Prime Minister’s Plan for Change, we have begun our work to transform the UK’s tax system into one that is focused on helping businesses and the economy to grow.
‘E-invoicing simplifies processes, reduces errors and helps businesses to get paid faster. By cutting paperwork and freeing up valuable time and money, it will help improve firms’ productivity and their ability to grow and succeed.’
Internet link: HMRC press release
HMRC cuts late and repayment interest rates
HMRC will reduce late payment and repayment interest rates from 25 February following the cut in the base rate.
The Bank of England cut the base rate to 4.5% on 6 February, triggering a 0.25% cut in HMRC interest rates which are pegged to the base rate.
From 25 February, the late payment interest rate will be cut to 7.0% from 7.25%.
The repayment interest rate will be cut to 3.5% from 3.75% from 25 February.
HMRC late payment interest is set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit - or ‘minimum floor’ - of 0.5%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments dropped to 5.5% from 5.75% from 17 February, a week earlier than the main late payment rate change.
Internet link: GOV.UK
Higher than expected inflation underlines business challenges
The higher-than-expected rise in the rate of inflation underlines the real challenges businesses face, according to the British Chambers of Commerce (BCC).
The consumer prices index (CPI) measure of inflation rose to 3% in January, up from 2.5% in December, according to the Office for National Statistics (ONS).
Economists had expected inflation to rise to 2.8% in January.
The increase was driven by rises in the prices of air fares, food and non-alcoholic drinks and private school fees, added the ONS.
The data underlines the inflationary pressures in the economy right now and the ‘real challenges businesses are facing’, said Stuart Morrison, Research Manager at the British Chambers of Commerce.
He continued: ‘Firms are having to deal with significant cost burdens which threaten to fuel inflation further. Within weeks they’ll be facing the hikes in national insurance contributions and the minimum wage.
‘The inflation landscape, coupled with ongoing global risks and the looming threat of US tariffs, is likely to give the Bank of England more food for thought, as it charts a cautionary path to further interest rate cuts.
‘Businesses are crying out for cost-pressures to be eased so that they can invest, recruit and trade – driving forward the economic growth we all want to see.’
Internet link: ONS website | BCC website
