The ongoing conflict in Iran and the wider Middle East is beginning to have economic consequences that are likely to be felt by UK businesses over the coming months. While the situation remains uncertain, press commentary and early government signals provide a useful indication of how the impact may unfold and how policymakers may respond.

Energy costs are expected to be the most immediate pressure point. Disruption to oil and gas supplies has already led to rising prices, and this feeds directly into business costs, particularly for transport, manufacturing and energy intensive sectors. The government has already taken initial steps to secure fuel supplies, and further measures such as fuel duty freezes or targeted support for certain industries may follow if prices continue to rise.

For households, the knock on effect is likely to be higher living costs. Rising fuel and energy prices typically feed into food and retail prices, increasing inflationary pressure. In response, there is growing expectation that the government may reintroduce targeted cost of living support, particularly for lower income households. While this may help sustain consumer demand to some extent, it is unlikely to fully offset the impact of higher prices.

Businesses themselves may also see more direct support. If cost pressures intensify, there could be measures such as tax deferrals, extended payment arrangements, or targeted grants for the most affected sectors. However, unlike the pandemic period, any support is likely to be more limited and focused, reflecting pressure on public finances.

A key challenge for policymakers is balancing support with fiscal discipline. Rising borrowing costs and slower economic growth mean that there is less room for large scale intervention. As a result, any government response is likely to be selective rather than broad based.

Supply chain disruption is another area to watch. Increased shipping costs and delays may affect the availability and pricing of goods, particularly those sourced from or routed through the region. In response, there is likely to be a greater focus on supply chain resilience, including alternative sourcing and stock management.

From a business perspective, the practical implications are clear. Many businesses are likely to face increased input costs, which may need to be passed on through pricing. Cash flow management will become increasingly important, particularly where costs rise ahead of revenues. At the same time, maintaining flexibility and reviewing supplier arrangements may help to mitigate disruption.

While it is too early to predict the full economic impact, the direction of travel is becoming clearer. Rising costs, tighter margins and ongoing uncertainty are likely to define the near term environment.

If you would like to discuss how these developments may affect your business, or explore practical steps to manage the impact, please get in touch, and if you feel this alert could help a business colleague or family member, please feel free to share it with them.

Pensioners are being urged to stay vigilant for any Winter Fuel Payment scams. HMRC is starting to recover Winter Fuel Payments issued for winter 2025 from those earning over £35,000 a year. While the process will affect nearly two million people, most will see the repayment handled automatically through adjustments to their PAYE tax code from April 2026, meaning there is no need to contact HMRC directly.

However, the scale of the recovery operation has created an opportunity for scammers. Over the past year, HMRC recorded more than 25,000 scam reports linked to Winter Fuel Payments. Officials are warning that fraudsters may now exploit confusion around the repayment process. Fake texts, emails, and phone calls are expected to increase, often impersonating HMRC and individuals may feel pressured to hand over personal or financial details.

For those submitting self-assessment tax returns online, the payment should appear automatically in their 2025-2026 return which is due to be submitted by the 31 January 2027. Taxpayers are also advised to check carefully and add the payment manually if they are liable. Paper filers will need to include it themselves.

HMRC stresses that it will never request repayment or bank details via text or email. As HMRC’s Chief Customer Officer, said: 

‘Criminals are great pretenders and often use fake letters, emails, calls and texts to impersonate HMRC and trick people into giving them money.

I’d encourage anyone who’s unsure to use our online tool at GOV.UK to check whether and how their payment will be recovered – there’s no need to call us.’

The recent announcement from Rachel Reeves highlights a clear shift in the government’s economic approach, placing retail banks at the centre of efforts to stimulate growth and support households and businesses.

In a meeting held on 22 April 2026, senior leaders from major UK banks, including Barclays, Lloyds, Santander, NatWest, Nationwide and HSBC, were brought together to align their activities with the government’s wider economic plan. The message was straightforward. Retail banks are expected to play a more active role in supporting lending, investment and financial resilience across the economy.

The focus of the discussions appears to be twofold. Firstly, ensuring that credit continues to flow to individuals and businesses, particularly in a period where economic uncertainty remains a concern. Secondly, encouraging banks to support long term growth by helping customers invest, whether through savings products, mortgages or business finance. This reflects a broader policy direction that sees private sector investment as a key driver of economic recovery and stability.

From a practical perspective, this development signals that banks may increasingly be encouraged, or expected, to adopt a more proactive stance in their customer relationships. This could include offering more tailored financial products, improving access to borrowing for viable businesses, and supporting households in managing financial pressures such as rising costs or interest rates.

For business owners, this creates both opportunity and responsibility. Greater engagement from banks could improve access to funding for expansion, working capital or investment in productivity. However, it is also likely that lending decisions will remain closely tied to financial performance and risk management. Businesses will still need to present strong financial information, credible forecasts and clear evidence of repayment capacity.

For individual clients, the emphasis on savings and investment may lead to a renewed focus on personal financial planning. Banks may promote savings vehicles or investment options more actively, particularly as part of the government’s wider ambition to increase participation in financial markets and improve long term financial security.

There is also a wider point to consider. The government’s approach underlines the importance of collaboration between the public and private sectors in driving economic outcomes. While policy can set direction, delivery often depends on how effectively financial institutions respond.

In summary, the Chancellor’s engagement with retail banks reflects a coordinated attempt to support economic growth through increased lending, improved financial access and stronger customer engagement. For accountants and their clients, it reinforces the importance of maintaining robust financial foundations and being ready to take advantage of opportunities as they arise.

Bonuses are treated as taxable earnings, so both employers and employees need to understand how they are taxed and reported.

For cash bonuses (including vouchers that can be exchanged for cash), the rules are straightforward. The payment is added to an employee’s normal salary and taxed through the Pay As You Earn (PAYE). This means employers must deduct Income Tax and National Insurance (Class 1) in the usual way through payroll.

Bonuses can sometimes push employees into a higher tax band for that pay period, so the net amount received may be lower than expected.

For non-cash bonuses, such as gifts or rewards, the treatment depends on what is provided. If the item is considered as something that can easily be turned into cash then it is taxed in the same way as cash through PAYE. Other benefits may instead be treated as benefits in kind. A list of typical expenses and benefits and their tax treatment can be found at https://www.gov.uk/expenses-and-benefits-a-to-z

It is important for employers to ensure they apply the correct treatment and reporting method for bonuses, as errors can lead to underpaid tax or penalties.

A recent initiative led by the Lucy Rigby is shining a light on a surprising issue, many young adults in the UK may be sitting on savings they do not even realise they have. The focus is on Child Trust Funds, long term, tax free savings accounts set up for children born between September 2002 and January 2011.

These accounts were originally introduced to encourage saving from an early age and to give young people a financial head start when they reached adulthood. In many cases, the government contributed at least £250 at birth, with additional amounts for lower income families. Over time, these funds have often grown, and some are now worth a few thousand pounds.

However, a significant number of these accounts remain unclaimed. According to recent government commentary, hundreds of thousands of young people are unaware that they even have a Child Trust Fund, let alone how to access it. Lucy Rigby highlighted that this money could provide meaningful support as individuals begin adult life, whether that means funding education, covering living costs, or helping with a first major purchase. 

To address this, HM Revenue and Customs has stepped up its efforts to reconnect individuals with their savings. One of the key measures is a targeted campaign aimed at 21 year olds, a group considered more likely to have up to date contact details through employment or student finance records. Letters are being issued directly to encourage individuals to check whether they have an account and to take steps to access it. 

In addition, HMRC continues to promote its free online tracing service, which allows individuals to locate their Child Trust Fund provider quickly and without cost. This is an important point, as some third party services charge fees for what is essentially a straight–forward process when completed through official channels.

Clients reading this update, with children in the relevant age group, or young adult clients themselves, may be advised to check whether funds are available.

In many ways, this initiative highlights a broader theme. Even well intentioned government schemes can lose visibility over time, leaving valuable resources unused. A small amount of awareness can make a significant difference, particularly when it helps individuals access funds that are already rightfully theirs.