UK Business Update: Key Changes in Interest Rates, Trade, Immigration, and More – May 2025

Naseems Accountants – Supporting Businesses Across the UK

Welcome to our latest round-up of business news relevant to our clients. If you would like to discuss how any of these updates could impact your business, please don’t hesitate to get in touch. We are here to help.

Interest Rates Cut, Trade Talks Shift – What It Means for Your Business

In recent weeks, the Bank of England has reduced the base interest rate from 4.5% to 4.25%, and a new UK-US ‘trade deal’ has been announced. Here’s what these developments might mean for your business.

Split opinions within the Bank

The Monetary Policy Committee (MPC) voted 5–4 in favour of cutting the base rate to 4.25%. Two members argued for a larger cut to 4.0%, while the remaining two preferred holding steady at 4.5%.

This close vote highlights the level of uncertainty in the current economic climate – both within the UK and globally – and underlines how unpredictable the coming months may be for businesses and consumers alike.

Inflation and economic growth

Inflation stood at 2.6% in March, still above the Bank’s 2% target but down from 2.8% in February. This slight drop aligns with the Bank’s earlier forecasts and suggests growing confidence in their economic projections.

However, the Bank expects inflation to rise to 3.5% between July and September due to energy costs before falling again later in the year.

The UK economy grew by 0.7% between January and March – a stronger figure than the 0.6% forecasted. Some analysts have noted, however, that this does not reflect the full impact of the Chancellor’s recent rise in employers’ National Insurance contributions, suggesting that growth may slow later in 2025.

In short, further substantial rate cuts this year may not be on the horizon.

Trade News: Progress, but no breakthrough

At the same time as the interest rate cut, the UK government announced a limited tariff deal with the United States. Although this has been touted as a new ‘trade deal’, it is not a comprehensive agreement. The deal eases access to the US market for certain goods, such as cars, steel, and aluminium.

While this is a positive step, particularly for UK manufacturers, many businesses will not see immediate changes. Details about quotas and specific product regulations have yet to be finalised.

So, what does this mean for your business?

• Borrowing costs: If your business has loans or overdrafts linked to the base rate, you may benefit from slightly lower interest charges. However, not all lenders pass on rate cuts immediately.
• Exporters: Businesses involved in manufacturing and exporting to the US could benefit from improved trade conditions – but will need to wait for clarity on the fine print.
• Consumer confidence: Lower borrowing costs and stable inflation may encourage spending, which could help drive demand.
• Planning: The overall economic outlook remains uncertain. It’s wise to continue budgeting carefully, especially with energy prices and trade policy still in flux.

A cautious outlook

This interest rate reduction signals the Bank’s view that inflation is beginning to stabilise. Nevertheless, their cautious tone suggests that businesses should remain vigilant and flexible in the face of ongoing economic challenges.

Need tailored advice on how these changes affect your business? Get in touch with our team today.

Don’t Miss Out: Parents of Teenagers Need to Extend Child Benefit by 31 August

Parents of children aged 16 to 19 who are staying in full-time education or training are being urged by HMRC to extend their Child Benefit claim before 31 August to avoid payments stopping.

Why this matters

Child Benefit is currently worth up to £1,354.60 per year for the first child and £897 for each additional child. However, once your child turns 16, these payments do not continue automatically unless you confirm their continued education or training status.

With many teenagers finishing GCSEs this summer, now is the time to act.

How to extend your claim

You can update your Child Benefit status online or via the HMRC app. There’s no need to wait for a letter – although reminder letters (with QR codes for quick access) are being sent out between May and July.

What counts as approved education or training?

Approved courses include:

• Full-time non-advanced education (A-levels, NVQs up to Level 3, home education)
• Approved unpaid training programmes

Courses that form part of a job contract do not qualify.

Important note for employers

If you employ parents of teenagers, consider sharing this reminder. It’s also important to be aware of upcoming changes to the High-Income Child Benefit Charge.

From summer 2025, families will have the option to pay this charge through their PAYE tax code, avoiding the need for a Self-assessment return. Payroll teams should look out for any code changes.

What if a family previously opted out?

Families who opted out of Child Benefit due to the High-Income Charge can now opt back in easily via the HMRC app or website if their circumstances have changed.

Child Trust Funds – a reminder

Teenagers who have turned 16 can now take control of their Child Trust Fund. The money becomes accessible at age 18. Suppose they are unsure where the fund is held, GOV. The UK offers a free tool to help locate it.

Next steps

• Parents: Log in to the HMRC app or GOV.UK to extend your Child Benefit claim before 31 August.
• Employers: Share this information internally with relevant staff.
• High-income families: Consider switching to the PAYE option to manage the Child Benefit Charge more easily.

As always, if you would like guidance specific to your situation, our team is here to assist.

See: here

New Immigration Changes: What Businesses Need to Know

Last week, the UK government introduced significant immigration changes aimed at reducing net migration and encouraging skills development within the domestic workforce. Even if your business does not currently recruit from abroad, it’s worth noting the implications of these new rules.

Hiring from overseas is becoming more difficult.

Employers who sponsor skilled workers expect increased complexity and cost. Key changes include:

• A narrower definition of ‘skilled worker’ now requires roles at the graduate level or above.
• Higher minimum salary thresholds for eligible roles.
• The removal of the ‘shortage occupation list’ which allowed some roles to be filled at lower salaries.

In essence, unless the role is highly skilled and in short supply, filling it via overseas recruitment will be more challenging.

No more overseas recruitment for social care

This is particularly relevant for care providers. New applications for care visas will be phased out by 2028. Those already in the UK on care-related visas may remain, but employers in this sector must now plan for homegrown recruitment strategies.

Increased emphasis on local training

The government has also outlined new requirements to boost domestic training, with the aim of reducing reliance on immigration in the long term.

Fewer international graduates stay post-study

The government is looking to shorten the post-study work period for international graduates to 18 months and is tightening the rules for student sponsorship. Businesses that have historically hired graduates from overseas may be impacted.

Support for high-skill, high-growth sectors

There is a silver lining: firms in science, technology, and design fields may benefit from plans aimed at attracting top-tier global talent more easily.

What should your business be doing now?

Regardless of whether you currently hire internationally, consider the following:

• Focus on internal development: Invest in the training and development of your existing workforce.
• Reassess your recruitment strategy: If you’re looking to grow your team, be prepared for a more competitive domestic labour market.
• Stay informed: These changes will unfold gradually – staying up to date will help you adapt effectively.

Need help reviewing your workforce strategy or understanding how immigration changes may affect your sector? Speak to one of our advisers today.

For tailored advice on any of the topics covered in this update – whether it’s managing costs, dealing with employment issues, or planning for tax efficiency – our team at Naseems Accountants is here to support you.

Let’s talk about how we can help your business thrive in 2025

see: here

New Free HSE Tool Helps Employers Tackle Work-Related Stress

Last week marked Mental Health Awareness Week, and to support the occasion, the Health and Safety Executive (HSE) launched a free online learning module aimed at helping employers better understand and manage work-related stress within their teams.

This new resource is part of HSE’s Working Minds campaign, which encourages employers to take practical steps to support workplace mental health and comply with their legal responsibilities.

Why does this matter to your business?

According to HSE, approximately 50% of all work-related ill health is caused by stress, depression, or anxiety. That’s a striking statistic – and one that many business owners may already recognise, whether through increased sickness absence, lower productivity, or a noticeable dip in team morale.

It’s important to note that tackling stress in the workplace is not only beneficial for employee wellbeing – it is also a legal obligation. As Kayleigh Roberts of HSE explains:

“Preventing work-related stress isn’t just the right thing to do for your workers – it’s also a legal requirement.”

The newly released module offers employers guidance on the following:

• Conducting effective stress risk assessments
• Identifying underlying causes
• Taking meaningful action to improve employee wellbeing

Six key areas to watch

HSE highlights six primary factors that, if poorly managed, may contribute to stress in the workplace:

• Demands – workload and working environment
• Control – how much say individuals have in the way they do their work
• Support – from colleagues and management
• Relationships – including workplace conflict and bullying
• Role – clarity around job expectations
• Change – how organisational changes are communicated and managed

A simple framework: The 5Rs

The online module builds on HSE’s “Working Minds” campaign and is structured around the 5Rs – a straightforward model to support mental wellbeing at work:

1. Reach out – Have regular conversations with your team
2. Recognise – Spot signs of stress and its root causes
3. Respond – Agree on actions to address the issues
4. Reflect – Review what’s working and what isn’t
5. Routine – Make check-ins and support part of regular business practice

Next steps

If you’re an employer – particularly in a small business where everyone has multiple responsibilities – this free tool could make a real difference in how you manage your team’s mental health.

Access the online learning module here

Thinking About Your Tax Return?

HM Revenue and Customs (HMRC) have reported a record number of early submissions for the 2024–25 tax year – nearly 300,000 individuals have already filed their returns.

Although the official deadline is 31 January 2026, there are good reasons to consider filing early:

• Plan your payments – Knowing how much you owe gives you more time to budget or arrange payments
• Quicker refunds – If you’re due money back, you’ll receive it sooner
• Peace of mind – Avoid the stress of the January rush

Not sure whether you need to file a return? book a free consultation now.

Contact Naseems Accountants today – we can confirm your filing obligations or begin working on your return straight away.

ICO Consulting on Updated Guidance on Encryption

The Information Commissioner’s Office (ICO) has launched a public consultation on its draft updated guidance relating to encryption – a vital topic for organisations managing personal or sensitive data.

The consultation is divided into four sections:

1. About you and your organisation
2. Your views on encryption and data protection law
3. Feedback on real-world encryption scenarios in the guidance
4. Any additional comments

The consultation will remain open until Tuesday, 24 June 2025.

Access the draft guidance here

Respond to the consultation here

What’s Making Employees Angry at Work – and What Employers Can Do About It

A recent ACAS survey has shed light on the key frustrations affecting employees – and the findings may be all too familiar for many business owners.

Here’s what’s causing the most anger at work:

• 49% are frustrated by colleagues not doing their job properly
• 44% resent when others take credit for their work
• 39% cite an over-demanding boss
• 37% mentioned rude behaviour from customers or co-workers

These aren’t just minor gripes – they represent a growing challenge for businesses. In fact, workplace conflict is estimated to cost UK employers £30 billion a year.

So, what can businesses do?

According to Stewart Gee of ACAS:

“Anger over a lack of recognition, rudeness, their boss or a colleague seen as not pulling their weight can impact productivity and escalate to conflict if left unresolved at work.”

Early intervention is key. A quiet word or informal conversation can often resolve tensions before they become more serious.

Here are some practical steps employers can take:

• Encourage early, open conversations
• Lead by example – be clear, fair, and approachable
• Offer proper training and induction
• Check-in regularly – especially during busy periods

Creating a culture of honest dialogue and mutual respect helps build stronger teams and boosts productivity.

Read the full ACAS report here