In this week’s miscellaneous updates, the February 2025 Employer Bulletin has been published and HMRC has now published its revised interest rates for late and early payments. In a tongue in cheek Press Release ahead of Valentine’s Day, HMRC is encouraging anyone in love with their side hustle to check if you need to tell HMRC about your income from online platforms. The Public Accounts Committee has published a report on HMRC services and the National Audit Office reports on the cost of the tax system. The Charter for Budget Responsibility has been approved by Parliament and finally, the Institute of Fiscal Studies has published an article looking at how changes in UK Government revenues compare with other advanced economies.
February 2025 Employer Bulletin
The latest Employer Bulletin is highlighting a range of issues relevant to employers including the following which HMRC has asked us to specifically highlight:
“Statutory Neonatal Care Leave and Pay
The government intends to introduce a new statutory entitlement to Neonatal Care Leave and Pay from 6 April 2025. This will provide employed parents whose babies are admitted to neonatal care with a day-one employment right to take up to 12 weeks off work, depending on the length of time their baby is in neonatal care. Eligible parents will also be entitled to up to 12 weeks of statutory pay.
The Department for Business and Trade laid the regulations to implement this right in January 2025. Subject to Parliamentary agreement, the new entitlement will apply to babies born on or after 6 April 2025.
A summary of the entitlement is provided in the following sections. Full guidance will be available soon.
Eligibility
This will be available to a broad range of ‘parents’, including adoptive parents, parents who are fostering to adopt and the intended parents in surrogacy arrangements.
Employed parents whose babies are admitted into neonatal care up to the age of 28 days, and who have a continuous stay of seven full days or more, will be entitled to leave as a new day-one employment right. Eligible parents will be able to take a minimum of one week, and a maximum of 12 weeks, depending on how long their baby is in neonatal care. This is on top of their other parental entitlements such as maternity, paternity and shared parental leave.
For eligible parents to also qualify for Statutory Neonatal Care Pay, they must also meet continuity of service and minimum earnings tests. This means the eligible employee must have worked for their employer for at least 26 weeks ending with the relevant week and earn on average at least £125 per week before tax from April 2025.
Notice and information requirements
Leave and pay can be taken in 2 Tiers, Tier 1 and Tier 2. The notice and evidence requirements for each Tier are:
- Tier 1 - is a period when the child is still receiving neonatal care, and including one week after the care has ended.
- Tier 2 - is the period outside the Tier 1 period and before the end of 68 weeks from the date of the child’s birth.
Neonatal Care Leave notice periods
An employee will need to give notice to take Neonatal Care Leave (NCL). The length and format of notice for leave will vary depending on whether the employee intends to take leave in Tier 1 or Tier 2.
For leave taken in Tier 1, the employee will need to notify their employer before they would be due to start work on the first day of absence, or as soon as possible thereafter. The notice does not need to be in written form.
For leave taken in Tier 2, the employee will need to provide notice at least 15 days before the start of a period of one week leave. For a period of 2 or more weeks of leave, the employee will need to provide notice at least 28 days before the start of the leave. The notice must be in written form.
Neonatal Care Pay notice periods
An employee must provide written notice for Tier 1 Neonatal Care Pay (NCP) within 28 days beginning with the first day of the week in which NCP is being claimed.
For Tier 2 NCP, an employee must give a notice at least 15 days in advance in order to claim pay for one week’s leave. Notice must be given at least 28 days in advance to claim pay for 2 or more weeks of leave.
Neonatal Care Leave and Neonatal Care Pay information requirements
At the same time, to receive leave and or pay for leave taken in either Tier 1 or Tier 2, an employee must provide the following information to the employer:
- the employee’s name
- the date of the child’s birth
- if applicable, the date of the child’s placement with the adopter or prospective adopter
- if applicable, the date of the child’s entry into Great Britain to live with the overseas adopter
- the date the child started to receive neonatal care, or each date if the child received neonatal care on 2 or more separate occasions
- if the child is no longer receiving neonatal care, the date that the care ended
- if it is the first time a notice is being given, a declaration that the employee meets the parental relationship criteria
- that they, the employee, has cared for or intend to care for the child during the week or weeks to which the notice relates
The Neonatal Care (Leave and Pay) Act 2023 applies only to Great Britain. At the current time, no legislation to introduce Neonatal Care Leave and Pay has been introduced in Northern Ireland, therefore, the measure will not apply in Northern Ireland.
Further information is available at:
Public Accounts Committee report on HMRC services
Last month the House of Commons Public Accounts Committee published its report ‘HMRC Customer Service and Accounts 2023-24’. The reports outlines HMRC’s performance in delivering customer service and draws six conclusions from its findings whilst also making six accompanying recommendations for improvement. A response is expected from the Government within two months.
National Audit Office report on the cost of the tax system
The National Audit Office has published its report ‘The administrative cost of the tax system’. The report concludes, not surprisingly, that the cost to HMRC of running the tax system is increasing. In part this is due to rising complexity in the different tax regimes and taxpayer numbers, but it is also due to the additional cost of introducing and remediating digital systems and moving to a more highly-skilled workforce.
HMRC does not measure the overall efficiency of its administration of the tax system, but there is evidence from different parts of the system that there is scope for increased efficiency and productivity. Although enhanced digitalisation has increased revenue, it does not seem to be reducing running costs. Customer service performance has also declined and efficiency targets have proved difficult to achieve without compromising services.
Charter for Budget Responsibility
Last month the House of Commons voted to approve the Charter for Budget Responsibility, the Government’s new fiscal and debt management policy. The accompanying press release sets outs that “through the Charter, fiscal and economic stability will be enhanced by confirming the Government’s intention to move to one major fiscal event per year”
This seems to confirm that there will only be one major fiscal event every year in the autumn therefore major tax changes are unlikely to be announced at the Spring Statement on Wednesday 26 March 2025.
Institute for Fiscal Studies article on Government revenues
The Institute for Fiscal Studies recently published an article entitled ‘The UK’s near-record Government revenues are not uncommon internationally’. This considers how changes in UK Government revenues compare with that of other advanced economies, including the G7 and EU27.
The article notes that although these are at record high levels, the UK has only recently begun to catch up with its peers in terms of average revenue as a percentage of Gross Domestic Product.
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