Driving business-led growth in 2025

What we delivered

Between £160-240bn is sat untapped in overfunded defined benefit pension schemes. The government has announced plans to enable more schemes to return that surplus to employers so that it can be used for growth.

This is a policy recommendation the CBI has specifically pursued for more than three years, producing briefing papers and raising it routinely with officials and ministers.

What we'll do next

The details of the proposals matter. We'll continue to engage DWP, DBT, and HMT to ensure the changes deliver the refunds needed to shift the dial on growth and investment whilst safeguarding member benefits. Members wanting to be involved can join our Pensions Panel by contacting Laurence Raeburn-Smith.

What we delivered

The Pension Protection Fund (PPF) collects a £100mn levy from businesses it doesn't want or need to collect. It does so because legislation means charging a 0% would remove its ability to charge a levy in the future, should it ever need to. The government has now pledged to consider proposals to allow the Pension Protection Fund greater flexibility to reduce the levy.

The CBI held many meetings with DWP officials and government advisors. A briefing was created for HMT ahead of the 2024 Budget.

What we'll do next

We hope the government will bring forward the changes in the Pensions Bill expected later this year. In advance of that, the CBI is engaging DWP officials on the details of the proposals.

What we delivered

The decision to reduce the minimum duration of certain apprenticeships from 12 to eight months will be welcomed by many businesses - particularly those offering lower-level apprenticeships, where a 12-month requirement is often seen as unnecessarily long and a barrier to progression. This change is expected to accelerate apprentices' transition into further study or employment, though it remains unclear which specific standards the reduction will apply to.

We've been calling for a reduction in apprenticeship duration requirements since developing our policy positions as part of last year's Adult Skills Pledge.

What we'll do next

Next, we'll engage members to understand which standards they believe the change should apply to - and whether eight months is still too long in some cases - before feeding this insight back to government.

What we delivered

Allowing businesses to decide whether Level 2 English and maths 'passes' are required will help ensure capable apprentices aren't held back by arbitrary academic benchmarks. This change should support more apprentices to complete their training - and make apprenticeships a more accessible route for businesses and individuals with lower-level qualifications.

The CBI campaigned on this issue following the development of policy proposals as part of the Adult Skills Policy Pledge.

What we'll do next

We'll continue to engage government on the need to reform English and maths qualifications, so they better reflect individuals' functional literacy and numeracy skills -. This will be particularly important for 16-18-year-olds, who are currently exempt from this change. We'll also share business feedback on the announcement through the government bulletin.

What we delivered

Firms often face challenges meeting social value requirements in procurement due to unclear guidance, inconsistent criteria, and added costs - particularly SMEs with limited capacity. In response, the CBI called for clearer, more consistent criteria linking social value to government priorities.Following our consultation response and direct engagement with the Cabinet Office and the Minister, the updated National Procurement Policy Statement - published in February - now includes a priority to secure social and economic value aligned with national missions. It also sets expectations for contracting authorities to assess their capacity and skills to manage procurement effectively. These changes reflect CBI calls and represent a step forward in making procurement more accessible, transparent and mission focused.

What we'll do next

We'll continue working with the Cabinet Office and HM Treasury to secure the wider reforms outlined in the CBI's Spending Review submission.

What we delivered

The CBI's Spending Review submission called on the government to commit to a targeted audit of regulatory costs in high-growth and/or enabling sectors within the Industrial Strategy. The governments recently announced audit, alongside the Prime Ministers commitment to cut regulatory administrative burden by 25%, will address some of the regulatory challenges faced by our members- including the growing volume of new regulations, complex compliance barriers, and increased regulatory divergence. These issues, highlighted by many businesses, have led to suboptimal outcomes, including stifled investment and growth.

This ask was included in the CBI's Spending Review submission.

What we'll do

We will continue to push for our additional Spending Review asks, including through a member roundtable discussion with the Chief Secretary to the Treasury (date TBC). Furthermore, The CBI will host its inaugural Business/Regulator Forum on 1st July to discuss regulatory reform and strengthen strategic dialogue between regulatory authorities and sponsoring government departments, ensuring the voice of business is effectively integrated into decision-making processes.

What we delivered

In February 2025, HMRC introduced a new online claim form for employers' PAYE repayments, responding to long-standing concerns raised by CBI members about difficulties reclaiming overpaid PAYE and National Insurance contributions. Members had reported that repayments were often delayed or lost within HMRC systems. Reclaiming funds required extensive evidence being provided to HMRC, taking up lots of members' time in extra administration, with some employers waiting months or even years - in some cases for six-figure sums - to secure repayment.

Through direct engagement with the CBI Employment Tax Working Group, we collected and submitted detailed case studies and evidence to HMRC's Large Business team and senior officials, highlighting the scale of the issue and the need for a simpler, more reliable process. Some members have now been able to get back large sums of money owed to their business, which would have otherwise been written off as a loss.

What we'll do next

As part of our 2025 Spending Review submission, the CBI urged HMRC to make it easier for employers to track how their tax payments are applied, flag misallocations, and request corrections. We're continuing to push for these changes to ensure that accounts balance at both ends, enabling repayments to be released faster and halting unfair debt collection for mistaken underpayments, to ease the administrative burden on both businesses and HMRC, and give employers greater clarity and control over their tax positions.

What we delivered

In line with CBI advocacy, the government has decided not to reduce the notice period for industrial action to seven days, as originally proposed. Instead, the notice period will be reduced from 14 to 10 days. Whilst still challenging, this is an improved outcome for businesses, as the CBI had argued that the original seven-day notice would create instability and undermine planning and operational efficiency.

The CBI has lobbied extensively on this issue, engaging with civil servants, ministers, and MPs through numerous meetings and consultations to ensure the voices of businesses were heard. Our advocacy highlighted the practical challenges businesses would face under a shorter notice period, particularly in sectors where timely decision-making and workforce planning are critical.

The 10-day notice period remains a compromise, but it represents a more manageable approach for businesses compared to the proposed seven-day limit.

What we'll do next

As the Employment Rights Bill progresses through Parliament, the CBI will continue to advocate for further changes that support a fair and flexible labour market. We will engage with key stakeholders to ensure that the final legislation reflects the needs of businesses, while still respecting workers' rights.

What we delivered

Earlier this year, the government announced that it would scrap the planned requirement for employers to report detailed working hours through RTI payroll submissions, originally set for April 2025, reaffirming the cancellation in a tax update on 28 April. In 2022, the CBI raised concerns with HMRC about the significant administrative burden of the proposed regime, which would have required employers to track and report more comprehensive data for all employees, adding costs and complexity, particularly for businesses with large, diverse workforces.

In our 2024 Autumn Budget Submission and through CBI recommendations in a report by the Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants in England and Wales (ICAEW) in December 2024, we highlighted that digitalisation should streamline tax administration processes and not lead to ever more data reporting burdens on businesses.

This policy reversal will save UK employers £58mn in one-off transitional costs and £10mn in recurring annual costs.

What we’ll do next

The CBI will continue to advocate for HMRC to focus on fixing the basics by digitalising paper-based processes and resolving legacy systems issues before introducing any new real-time reporting requirements, as part of our ongoing Spending Review engagement with HMRC and the Treasury.

What we delivered

In April, HMRC launched a significantly improved version of its Check Employment Status for Tax (CEST) tool. This follows the CBI’s initial proposals in 2022, reiterated through later Budget submissions, and reflects feedback from Employment Taxes Working Group members during engagements with HMRC’s policy team on improving the tool’s usability.

These reforms aim to make it easier for businesses to comply with the IR35 regime, which governs off-payroll working. Its complexity creates significant administrative burdens for businesses, especially when determining employment status and managing compliance risks when hiring contractors.

The new CEST tool includes several improvements advocated by the CBI, including clearer and simplified language, fewer “Unable to Determine” outcomes, a new opening question on whether there’s an ongoing obligation for the worker to be offered and accept work, optional sector-specific questions to improve relevance, and assurances that the tool reflects up-to-date case law. HMRC has also removed unnecessary or unclear questions and included links to more helpful guidance and definitions to reduce ambiguity.

What we'll do next

The CBI will continue to push for broader IR35 reform that delivers greater certainty and simplicity for businesses. This includes pushing for a brand-new tool to clarify when a service is fully outsourced and exempt from employment status checks, and calling for a new ‘Green Card’ facility to give contractors upfront certainty where they are genuinely not deemed employees, eliminating the need for status checks by hiring businesses.

What we delivered

HMRC announced on 28 April that mandatory payrolling of employee benefits will be delayed by one year, from April 2026 to April 2027. This delay will ease pressure on businesses, allowing more time to adapt systems and reduce administrative complexity from premature implementation.

The CBI has consistently made the case for this delay. HMRC’s policy team joined the CBI Employment Taxes Working Group in November, where members raised concerns about reporting benefits when there's no salary to deduct tax from, such as during unpaid leave; practical issues with taxing fuel and hire cars in real time; and practicalities around how the changes will affect employees’ tax codes. A formal delay was called for in our 2025 Spending Review submission, and the CBI reinforced the case at a tax administration simplification roundtable hosted by the Exchequer Secretary to the Treasury in February.

What we’ll do next

The CBI will continue to work closely with HMRC’s policy team to ensure detailed rules and guidance are practical and proportionate. We will push for a system that reduces compliance risk, ensures flexibility for complex benefit types, and supports efficient digital transformation for employers.

What we delivered

The government published a consultation on the VAT treatment of business donations of goods to charity on 28 April, following our call in the CBI’s 2024 Autumn Budget submission. While the consultation was delayed due to concerns about potential administrative burdens on HMRC and charities, as well as fiscal constraints, the CBI's engagement with HM Treasury immediately following the Budget and further discussions earlier this year helped to overcome these challenges. A private roundtable, facilitated by the CBI, with charity sector leads was instrumental in ensuring the consultation was published.

A new VAT relief would benefit a wide range of businesses, including those in retail, food, consumer goods, clothing, appliance manufacturing, and wholesale supply. By removing the VAT cost barrier for donations, businesses will be encouraged to donate surplus stock, reduce waste, and support charitable work more effectively.

What we’ll do next

The CBI will continue to engage with members to seek input on the consultation ahead of the 21 July deadline. We will also set up a roundtable with Treasury, HMRC, DBT, and DCMS officials, alongside interested businesses and representatives from the charity sector, to ensure all perspectives are considered.

What we delivered

In April 2025, HM Treasury announced that the VOA will become part of HMRC to increase efficiency, business experience, and ministerial accountability. This decision aligns with the CBI’s call for VOA overhaul, as made in our September 2024 report on business rates reform. We emphasised the need for a reset in the VOA–business relationship, highlighting that improved customer service should be achieved through greater transparency, more timely assessments, and increased responsiveness.

After the 2024 Autumn Budget, we organised a roundtable with HM Treasury and the CBI Business Rates Working Group, allowing our members to directly share their experiences with the VOA.

This reform, due to come into effect by April 2026, aims to deliver tangible improvements in the VOA’s operations, including better service delivery for businesses as key reforms are made to the business rates system over the course of the Parliament.

What we'll do next

The CBI will continue to engage with HM Treasury and HMRC, and push for the government to manage the VOA's integration into HMRC effectively. Doing so will secure the outcome of improved customer service through enhanced accountability, increased transparency, and breaking down silos to share knowledge and leverage synergies.

What we delivered

The government's response to the consultation "Tax Administration Framework Review: New ways to tackle non-compliance", published on 28 April, reflects key CBI recommendations, with proposals that risked adding burdens and complexity now deprioritised. Broad reform of HMRC's enquiry and assessment powers will be prioritised instead, following strong stakeholder support for a simpler, more consistent system.

The CBI responded earlier this year with input from CBI Tax Committee and specialist tax working group members. We strongly opposed new information requirements for tax reliefs claims, highlighting a lack of evidence and the risk of deterring legitimate use. Members raised particular concerns about the administrative impact of the R&D Additional Information Form, introduced in 2023, reinforcing the need for simplification over added process. The government has recognised this and confirmed it will not prioritise changes in this area.

In other areas, the government's response closely aligns with CBI recommendations:

• It will explore aligning and standardising enquiry powers and conditions across regimes to simplify the tax system and reduce compliance complexity.
• It will improve revenue correction rules while avoiding disproportionate evidentiary burdens and preserving fair taxpayer safeguards.
• It will deprioritise the introduction of new partial enquiry powers, recognising concerns about increased uncertainty and administrative complexity.

In our 2025 Spending Review submission, the CBI called for HMRC and the government to actively incorporate feedback from businesses into tax policy design through meaningful stakeholder engagement.

What we'll do next

Careful consideration and further foundational work will be necessary to ensure that reforms are both effective and equitable. The CBI will continue to engage with HMRC to shape detailed reform proposals and ensure they remain practical, proportionate, and workable for business. We will advocate for better access to HMRC services, stronger technical support for businesses, and more efficient processes to help taxpayers get their affairs right first time.

What we delivered

Following sustained engagement by the CBI and its members, HMRC is now actively reviewing and reforming its approach to payroll tax reconciliation, recognising the unique challenges large businesses face. In its March 2025 Employment and Payroll Group update, published on 13 May, HMRC acknowledged the scale of the issue and confirmed a specialist working group is in progress.

Many CBI members had reported being unable to reconcile HMRC’s online tax accounts with their records due to system discrepancies, misallocated payments, and missing audit trails – some cases dating back years and involving millions of pounds. Through the CBI Employment Taxes Working Group, we facilitated direct engagement with HMRC’s Large Business team last year and again this year, having submitted a detailed report on systemic issues and practical fixes, spurring HMRC to launch organisation-wide collaboration to review end-to-end processes.

The CBI referred priority member case studies. Crucially, through this joint work, some of these businesses have now successfully reconciled their payroll tax accounts down to the last penny – something previously considered impossible. These 1:1 referrals have been crucial in improving HMRC’s and businesses’ understanding, as well as leading to HMRC publishing updated guidance in October 2024 to help employers avoid common pitfalls such as duplicate employee records and misallocated payments.

What we’ll do next

In our 2025 Spending Review submission, the CBI called for broader reform of HMRC’s business tax account portal, including the introduction of clearer audit trails, the ability to track and report payment misallocations, and improved visibility across taxes and periods. We will continue working with HMRC officials to ensure that fixes go beyond short-term workarounds and deliver long-term functionality improvements – helping to ensure businesses can close off tax years with confidence.

What we delivered

HMRC published a series of research reports – HMRC Mileage Rates Research (28 May), Benefits in Kind and Expenses Research (27 May) and Cycle-to-Work Scheme Evaluation (24 April) – examining how a range of employers administer expenses and offer benefits, providing valuable insights into current practices. In our 2025 Spending Review submission, the CBI called for a review to modernise the administration of employee expenses and benefits, including research to inform future reform. These reports provide a foundation as we continue making the case for change to resolve long-standing pain points raised by our members.

Through direct engagement with HM Treasury and HMRC’s Simplification and Expenses and Benefits policy teams, CBI Employment Taxes Working Group members have often raised concerns about the inequitable tax treatment of reimbursed expenses, particularly in hybrid working environments, where employees now often cover work-related costs themselves due to not having direct access to corporate credit cards. In certain cases, reimbursements are taxed simply because the employer didn’t pay the supplier directly, despite the underlying cost being for legitimate business or employee needs, and how outdated tax-free allowances such as mileage rates – unchanged since 2011 – are now creating additional administration and tax when employers top them up to reflect rising fuel and motor running costs.

Similarly, Cycle-to-Work rules remain tied to outdated commuting patterns and require bikes to be used mainly for travel to work – an impractical condition for employers to monitor in a post-COVID world where more employees are working from home. The CBI has called for the rules to be simplified in previous Budget submissions, as part of our campaign for the government to implement an ambitious expansion of non-taxable health support to make it easier for employers to invest in the health of their workforce.

What we’ll do next

The CBI will continue to push for tax equity on reimbursed expenses and the removal of the impractical Cycle-to-Work journey rule, as well as the uprating of long-frozen tax-free employee travel and subsistence allowances, and greater flexibility of PAYE Settlement Agreements, to ensure the employee expenses and benefits regime is practical, fair, and fit for purpose. We’ll continue to work closely with policymakers to co-design reforms that reflect modern working practices and reduce administrative burdens for businesses.

What we delivered

Public R&D spending supports business innovation through funding, partnerships, and facilities; powers the UK's research base; and builds our pipeline of innovators. Every £1 of public R&D spending delivers £7 of long-term economic benefit. An uplift to this pot in challenging conditions sends a strong signal that the government is prioritising innovation-driven growth and is committed to ensuring that the UK is a destination for business innovation.

What we'll do next

With the overall amounts to be invested in R&D confirmed, the government must now work closely with businesses to ensure it is invested effectively to drive sustainable long-term growth, including backing Industrial Strategy priorities. The CBI will engage with DSIT and UKRI officials over the coming months to raise businesses' priorities for R&D spending. Members can get involved in this work by joining the CBI's R&D Working Group. For further information contact Josh Male.

What we delivered

CBI members were positive about the AI Opportunities Action Plan but have been waiting to see significant progress on delivery. The £2bn funding boost is a welcome step, including funding to expand computer capacity, support UK AI firms to scale, and investment in AI skills. However, there is little detail on support for wider adoption across the economy with more detail expected in line with the Industrial Strategy and Tech Adoption Review due later this month.

What we'll do next

More detail on the progress we have made on kickstarting growth is expected over the next couple of weeks, with the government to publish key strategies and reviews including the Industrial Strategy, ten-year Infrastructure Strategy, Trade Strategy, and the Technology Adoption Review. With the Spending Review setting out each government department's budget for the next three years, the strategies to come will provide further detail on how funding allocated will be used and where further CBI wins have been secured.

As an example, we will be looking for the government to make further commitments to the Made Smarter programme over the coming weeks, ensuring this is expanded to further sectors to help drive tech adoption required to kickstart growth.

What we delivered

The Spending Review confirmed multi-year, integrated funding settlements for the North East, Liverpool City Region, West Yorkshire, South Yorkshire, and London to join West Midlands and Greater Manchester.

Across England, mayors are emerging as powerful engines of regional growth - attracting investment, unlocking business potential, and driving prosperity at home and abroad. To fully harness this potential, mayors need greater long-term certainty, empowering them to plan boldly and deliver lasting impact with confidence.

No reference was made to delivering much needed flexibility through the Growth and Skills Levy to ensure funds are better utilised for a wider range of training needs beyond recent announcements of Foundation Apprenticeships and Shorter Duration apprenticeships. These are urgently needed to enable businesses to effectively train their workforce and support economic growth. It is understood that further levy reform may appear as part of the Autumn Budget.

What we'll do next

Accelerating technology adoption has extraordinary potential to drive productivity and growth. However, businesses face challenges in adopting new tech, including access to finance, infrastructure challenges, and skills. Positively, the Spending Review has trailed the establishment of an AI adoption fund. Looking ahead to the Industrial Strategy and Technology Adoption Review, businesses will value more information on this programme, and more broadly how the government can support businesses to accelerate their innovation journeys. To stay updated on this topic, members can join our new Technology Adoption Working Group. Contact Melissa McLaughlin to find out more.

The CBI will continue to campaign to unlock the levy to allow businesses to flexibly invest their contributions on both apprenticeship and non-apprenticeship training options.

What we delivered

Significant backing was given to the UK's nuclear industry with a record-level £14.2bn funding for Sizewell C, £2.5bn to progress the UK's first Small Modular Reactor, and a further £2.5bn commitment to fusion technology. Great British Energy maintained its budget of £8.3bn to deliver clean power projects, despite rumours that it could be cut, including £300m already announced to support offshore wind supply chains over the next five years.

What we delivered

Despite rumours of a reduction in spending, the government maintained its manifesto commitment to spend £13.2bn on the Warm Homes Plan over the next four years, in a boost for the low-carbon heating market. Funding will support the rollout of heat pumps, energy efficiency measures, and technologies like solar and batteries to millions of homes. More details of how this will be delivered are expected in October, including how additional funding will support the devolved nations.

What we delivered

Transitioning the North Sea and decarbonising industry was supported with £9.4bn investment in carbon capture storage. These include funding for the East Coast and HyNet Clusters. It is unclear whether funding will back a commitment to support development of the Acorn and Viking clusters. Funding timelines also remain unclear, with final investment decisions still due later this year.

What we'll do next

Despite rumoured sector support, no allocations were given to address industrial energy costs, which remain among the highest in the world. This also means no further support for high-intensive industrial energy users through the Industrial Energy Transformation Fund.

While the Advanced Fuel Fund has been extended over the next five years to support the production of sustainable aviation fuel, allocations to deliver an expected revenue certainty mechanism – which would guarantee stable returns for suppliers – were not confirmed.

The CBI's priority is ensuring that energy costs do not undermine the UK's competitiveness, with lobbying focused on removing policy costs from industrial electricity bills. Please share how energy costs are affecting your organisation and contact your account manager to get involved in our policymaking.

The delivery of today's spending allocations will be determined by policy frameworks set out in key forthcoming strategies: the industrial decarbonisation strategy and renewables (AR7) auction round expected in July, and the Carbon Budget Delivery Plan expected in October. Please get in touch with your account manager to support our efforts to create a regulatory environment that maximises investment in the UK's energy transition.

What we delivered

The government confirmed £500m to make HMRC digital-first by 2029, with 90% of interactions self-serve, and £1.6bn to modernise IT and phase out outbound post – reducing manual processes and boosting responsiveness. This backs our call for HMRC to fix the basics before adding new reporting burdens.

What we delivered

HMRC's Departmental Efficiency Plan includes a focus on upstream compliance including in automation, case management tools, self-serve channels, and preventing non-compliance early. We urged HMRC to use its new compliance resource not just for enforcement, but to clear long-standing enquiries, improve access to technical advice, and support businesses in getting tax right, from the outset.

The plan also highlights that the merger of the Valuation Office Agency (VOA) into HMRC will result in 5-10% administrative cost savings for the agency – supported by the CBI to improve customer service, responsiveness, and transparency.

What we'll do next

There was limited detail on how regulatory reform will be implemented across sectors beyond life sciences and defence. Businesses need a clear, cross-sector roadmap to reduce compliance burdens.

We'll have a clearer picture of how the ground lies when the Transformation Roadmap is unveiled later this summer. While the Spending Review settlement signals intent, it must now translate into tangible improvements in customer service. Businesses – large and small – will judge HMRC's strategy by whether it reduces delays, eases compliance burdens, and makes things easier for taxpayers to pay the correct tax.

The CBI will work closely with HMRC to ensure the Transformation Roadmap delivers real improvements for business – including digitalising paper forms, introducing a customer progress tracking tool, and improving audit trails in online tax accounts to cut reconciliation errors. These changes will be key to reducing admin burdens and ensuring the 2,400 new debt management officers avoid pursuing incorrect debts.

What we delivered

The government’s industrial strategy has confirmed that, from early next year, new non-apprenticeship courses will be funded through the Growth and Skills Levy. This much-needed flexibility will allow funds to be used more effectively across a broader range of training needs—not just apprenticeships.

This significant change is a direct result of long-standing calls from CBI members to expand the levy’s scope. It marks a major step towards addressing urgent workforce skills gaps and driving economic growth.

The CBI has consistently lobbied for this reform, advocating both publicly and behind the scenes to ensure the levy supports a wider spectrum of training opportunities.

What we'll do next

We will continue working closely with Skills England, bringing the voice of our members to the forefront as they determine which courses will be prioritised in the initial rollout and future phases. We will also help inform how these new options complement apprenticeships and other training pathways.