According to the latest report from Begbies Traynor, the number of UK businesses in critical financial distress has surged by 50% from September to December 2024, reaching 46,583. The number of UK businesses considered to be in significant financial distress also rose, climbing by 3.5% on the prior quarter to 654,765. The report highlights that sectors such as hospitality and retail are particularly vulnerable due to their typically low profit margins. Ric Traynor, executive chairman of Begbies Traynor, commented: “After a historic rise in critical financial distress… it’s clear that many distressed UK businesses are finding it almost impossible to navigate the challenges they face.” He added for many firms “already dealing with weak consumer confidence and higher borrowing costs,” the increase in National Insurance contributions and the national minimum wage set out in the Budget “could be the last straw.”

The Financial Conduct Authority (FCA) says wholesale brokers must upgrade their systems and controls, with a review having found deficiencies in safeguards against money laundering. The City watchdog warned that firms are underestimating their exposure to money-laundering risks and flagged issues around inconsistent suspicious activity reporting, limited information sharing between firms, and an over-reliance on due diligence by other parties. Steve Smart, joint executive director of enforcement and market oversight at FCA, said: “For the UK financial services industry to grow, investors and institutions need to have trust in it. Integrity is vital for that, and firms play a key role in helping to detect criminal activity.”

The Government has decided to allow the hiring of new diversity staff in the Civil Service, reversing previous restrictions imposed by the Tories. Roles focused on equality, diversity, and inclusion were to be phased out, with departments instructed not to recruit for these positions. However, Cabinet Office sources have indicated that while existing guidance remains, departments now have the discretion to determine their HR policies.

Unpaid and low-paid internships are increasingly disadvantaging working-class graduates, according to a study by the Sutton Trust. The research highlights a growing gap, with only 36% of working-class graduates completing internships compared to 55% of their middle-class counterparts. The study reveals that around three-fifths of internships are unpaid or underpaid, and many opportunities are found through personal connections rather than advertisements, further entrenching social inequality. Labour’s ‘Make Work Pay’ plan aims to ban unpaid internships, but details remain unclear.

Chancellor Rachel Reeves has announced that reforms around the non-dom tax status will be amended, telling the World Economic Forum in Davos that upcoming legislation will be altered to help non-doms repatriate their funds to the UK at a discounted tax rate. This, she said, stems from “listening to the concerns” of non-domiciled residents. Recent research by analytics firm New World Wealth found that the UK lost a net 10,800 millionaires in 2024 – a 157% increase on 2023. The Adam Smith Institute calculates that this would have cost the Treasury income tax equivalent to that of over half a million average taxpayers. James Quarmby, a partner at law firm Stephenson Harwood, said the amendment was the first public signal that the Government was listening to the concerns of non-doms and their advisors. Rachel de Souza, tax partner at RSM UK, said: “Whilst an increase to the temporary repatriation facility must be a good move, it is woefully inadequate to prevent wealthy non-dom and British entrepreneurs from leaving the UK.”

In a speech at the World Economic Forum in Davos, President Donald Trump condemned the European Union for its “very unfair” treatment of the US, particularly regarding regulations on American technology firms. He said: “The EU treats us very badly,” highlighting a substantial tax burden. Mr Trump has passed an executive order threatening retaliation against countries – including the UK – that have agreed to impose a minimum corporate tax rate of 15% on multinational companies.

Treasury Minister James Murray says a review of the controversial loan charge aims to resolve outstanding tax debts related to avoidance schemes.

A poll for the TaxPayers’ Alliance has found that 55% of Britons support abolishing or reducing inheritance tax, which is viewed as the most unfair tax by the public. John O’Connell, chief executive of the TaxPayers’ Alliance, said: “The British public clearly recognise that inheritance tax is an almost uniquely bad tax.” Despite this, Chancellor Rachel Reeves has announced changes that will nearly double the number of estates subject to this tax, increasing from 5.2% to 9.5% by 2029/30. This is expected to generate an additional £2.5bn for the Treasury, bringing total receipts to £13.9bn.

The Financial Ombudsman Service (FOS) anticipates that fraud and scams will constitute 35% of its banking and loan cases in the 2025/26 financial year, translating to over 37,000 complaints. This marks an increase from the projected 33,000 cases by the end of the current financial year. Abby Thomas, chief executive and chief ombudsman at the FOS, expressed concern over the ongoing high levels of fraud, saying: “People can feel embarrassed to have fallen victim to a fraud or scam, but these crimes can be complex and incredibly convincing, and nobody should be afraid to come forward.” The FOS also expects to handle around 240,000 new complaints overall, noting that it will resolve around 270,000 cases next year, with this made up of both new complaints and older disputes.

Amid concerns over Britain’s public finances, Rachel Reeves says she will “make changes” if needed. While the Chancellor has vowed to stick to her fiscal rules on spending and reducing the nation’s debt, economists have warned that her fiscal headroom has fallen from almost £10bn to about £2bn. This, they say, could mean Ms Reeves has to pull back on her spending plans or deliver further tax hikes. Speaking at the World Economic Forum in Davos, Ms Reeves highlighted that the independent Office of Budget Responsibility is set to publish a forecast on March 26, saying: “At that point, I’ll be setting out any changes that are necessary.” With the Government having ruled out major tax rises, it is believed that the Chancellor is more likely to reduce spending.

Analysts at Capital Economics predict that consumer spending will rise by 1.4% in 2025 and 2% in 2026 as the household savings rate falls. Ashley Webb, the firm’s UK economist, said consumer spending will be “a key driver” of economic growth, with the report suggesting that GDP will increase by 1.3% this year and 1.6% next year.

There has been an 84% increase in scams impersonating HMRC as the self-assessment tax return deadline approaches, with fake calls threatening legal action or financial penalties for immediate payment. Official figures reveal that 144,298 scam referrals were reported to HMRC between November 2023 and October 2024, marking a 16.7% increase from the previous year.