HMRC has confirmed that 864,000 self-employed workers and landlords will be pulled into the quarterly reporting rules for Making Tax Digital (MTD) for Income Tax when it comes into force.

The first phase of MTD for Income Tax will begin next April at the start of the 2026/27 tax year. It will require individuals with a qualifying income over £50,000 to file quarterly returns using software with a final year end round out.

When businesses need to start using MTD for Income Tax depends on their qualifying income within a tax year. If their qualifying income is over:

• £50,000 for the 2024/25 tax year, they will need to use it from 6 April 2026
• £30,000 for the 2025/26 tax year, they will need to use it from 6 April 2027
• £20,000 for the 2026/27 tax year, they will need to use it from 6 April 2028

According to HMRC, around 2.9 million have a qualifying income above £20,000 and will need to join MTD for Income Tax, based on self assessment figures for 2023/24.
HMRC said:

'MTD for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC. They will need to keep digital records and every quarter, submit simple summaries of their income and expenses to HMRC using compatible software. This is expected to reduce the tax gap by reducing the scope for error and failure to take reasonable care.'

Internet link: GOV.UK

Homebuyers are being warned to avoid Stamp Duty Land Tax (SDLT) scams, following a landmark Court of Appeal decision.

HMRC is warning buyers to be vigilant of tax agents offering to secure (SDLT) repayments on their behalf where repairs are needed to a property they have bought.

Some agents have suggested that, for a fee, they can reclaim SDLT the buyer has already paid by saying that the property is non-residential because it's uninhabitable.

But HMRC says that making claims of this kind often leave the homeowner liable for the full amount of SDLT, plus penalties and interest.

A recent Court of Appeal judgment in the case of Mudan & Anor v HMRC has confirmed that housing in need of repair is chargeable at the residential rates of SDLT, and that repayment claims based solely on a property's condition are not valid.

HMRC says it is taking decisive action on spurious SDLT repayment claims, using civil and criminal powers.

Anthony Burke, HMRCs Deputy Director of Compliance Assets, said:

'The Court of Appeal's decision is a major win, protecting public funds. Homebuyers should be cautious of allowing someone to make a SDLT repayment claim on their behalf. If the claim is inaccurate, you could end up paying more than the amount you were trying to recover.'

Internet link: HMRC

The government is set to tackle late payments to businesses with significant legislative reforms.

Late payments cost the UK economy £11 billion a year and shut down 38 businesses every day, according to the government.

The new laws are set to give stronger powers to the Small Business Commissioner to empower them to wield fines, worth potentially millions of pounds, against the biggest firms who persistently choose to pay their suppliers late.

Following the legislation, the UK will have the toughest late payments laws in the G7, the government added.

The legislation is part of reforms to back small businesses and unlock growth as part of the Plan for Change.

Business and Trade Secretary Jonathan Reynolds said: 

'This country is home to some of the brightest entrepreneurs and innovative businesses in the world, and we want to unleash their full potential by giving them back time and money to do what they do best - growing our local economies.

'Our Small Business plan – the first in over a decade – is slashing unnecessary admin costs, making it easier for businesses to set up shop and giving SMEs the financial backing they need.

'This is our Plan for Change in action, putting more money in people's pockets, boosting local communities and ensuring Britain is a great place to do business and thrive.'

Internet link: GOV.UK

President Trump's decision to charge import duties for low value goods entering the US is a major blow to the UK's SME exporters, says the British Chambers of Commerce (BCC).

Under an Executive Order issued by the President, duties will be payable on goods valued under $800 from 29 August 2025. These will be in line with the rates applied to other goods from each country in accordance with its tariff rates.

For most UK goods export sectors this means the tariff rate they used to have plus the additional 10% reciprocal rate applied to most UK goods since April.

Alternatively, for the first six months only, a specific rate of $80 per item would apply to low value packages from the UK entering the US. After that period, the duties described above will be enforced on all packages of UK origin in scope.

William Bain, Head of Trade Policy, said:

'This development has been coming for several months but is still a major blow to UK exporters to the US. Smaller firms and sole traders, who have invested strongly in e-commerce sales internationally, will be worst hit.

'But the UK is in a comparatively advantageous position in terms of these additional duties compared with those faced by other countries.

'The EU is also likely to scrap its de minimis threshold by 2028, and the UK government is launching a review into removing the threshold here too.' 

Internet link: BCC

HMRC has split fuel advisory rates for electric cars depending on where drivers charge their company cars due to the price discrepancy between home and public chargers.

From 1 September 2025, the single rate for fully electric cars will be abolished and replaced with two different rates reflecting whether a car is charged at home or on a public charger.

The rate will be 8 pence per mile for home charging and 14 pence per mile for public charging. This will replace the current universal rate of 7 pence per mile.

These rates will be reviewed quarterly in line with petrol and diesel advisory fuel rates.

HMRC said:

'The 'Domestic electricity cost per kilowatt-hour' is the Department for Energy Security and Net Zero annually published figure, uprated with the latest estimate of electricity prices from the Office for National Statistics.

'The 'slow or fast public charge cost per kilowatt-hour' is the Zapmap public charging price index monthly published figure for slow or fast chargers (charging speed less than 50 kilowatts), uprated with the latest estimate of electricity prices from the Office for National Statistics.

'A higher amount than the advisory rates can be used as long as you can show that the fuel cost per mile is higher. Therefore, if the public charger used is higher in cost per mile than the new advisory rate introduced for public charging, a higher rate can be used as long as you can show the cost per mile is higher.'

Internet link: GOV.UK

New company car advisory fuel rates have been published and took effect from 1 September 2025.

The guidance states: 'you can use the previous rates for up to one month from the date the new rates apply'. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 September 2025 are:

HMRC guidance states that the rates only apply when you either:

• reimburse employees for business travel in their company cars
• require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is below. Electricity is not a fuel for car fuel benefit purposes.

If you would like to discuss your company car policy, please contact us.

Internet link: GOV.UK

HMRC has published the latest issue of the Employer Bulletin. The August issue has information on various topics, including:

• P11D and P11D(b) for tax year 2024/25
• PAYE Settlement Agreement - calculations and payment
• employers PAYE disputed charges
• Spotlight 69 - liquidation of a Limited Liability Partnership used to avoid Capital Gains Tax
• implementation of the Employment Rights Bill.

Internet link: GOV.UK

HMRC has launched a new online PAYE service, which it says will give 35 million workers more control over their tax affairs.

The tax authority says the new service will make it simpler and easier to check and update their income, allowances, reliefs and expenses, and will be available via their Personal Tax Account or through the HMRC app.

This service forms part of HMRC's Transformation Roadmap that sets out ambitious plans to become a digital first organisation by 2030, with 90% of customer interactions taking place digitally.

HMRC says its plans to modernise the tax and customs system, introduce new AI technologies and work with third parties and intermediaries will make it easier for taxpayers, businesses and intermediaries to interact with it.

The digital first approach will see HMRC automating tax wherever possible and offering new digital self-serve options across a number of tax regimes.

In addition, taxpayers liable for the High Income Child Benefit Charge (HICBC) will no longer have to register for self assessment.

James Murray MP, Exchequer Secretary to the Treasury, said: 'We are going further and faster to make HMRC fit for the 21st century, including delivering a simpler and easier system for all PAYE workers.

'By 2030, taxpayers can expect a modern and innovative HMRC with cutting-edge AI, industry-leading customer service practices, and a laser focus on delivering taxpayer value for money by ensuring everyone pays their fair share.'

Internet link: HMRC

Self-employed taxpayers and landlords should file their 2024/25 tax return early to find out if Making Tax Digital (MTD) will apply to them from next April, says the Low Incomes Tax Reform Group (LITRG).

Taxpayers who report more than £50,000 of gross income from self-employment and/or rental income in their 2024/25 tax return will be required to join the new Making Tax Digital for Income Tax regime from April 2026 and must have the software needed to participate.

LITRG is encouraging anyone who thinks they could be in scope of MTD from April 2026 to complete their 2024/25 tax return well in advance of the 31 January 2026 deadline to see whether their income exceeds this limit.

HMRC will use the information provided in 2024/25 self assessment tax returns to identify taxpayers who will be impacted by MTD from April 2026.

HMRC will then write to tell them they must follow the MTD rules, but this could be as late as February or March 2026.

Some people who meet the income threshold might be able to apply for an exemption from MTD if they meet certain criteria, for example if they are digitally excluded.

Sharron West, Technical Officer at LITRG, said: 'There are still more than six months to go until the self assessment deadline for 2024/25 tax returns, but if you think you may meet the MTD threshold, you should act now.'

Internet link: Chartered Institute of Taxation

HMRC is warning those earning extra income through a side hustle to check if they need to register for self assessment and file a tax return.

Side hustles can be any additional income stream, from online selling to content creation, from dog walking to property rental. It also includes gains or income received from cryptoassets.

Anyone who earns over the £1,000 threshold may need to register for self assessment and complete a tax return.

There is a checker tool on GOV.UK for those who aren't sure if they meet the criteria. If they do and are new to self assessment they will need to register to receive their Unique Taxpayer Reference.

Guides for side hustlers can also be found at taxhelpforhustles.campaign.gov.uk.

Myrtle Lloyd, HMRC's Director General for Customer Services, said:

'Whether you are selling handmade crafts online, creating digital content, or renting out property, understanding your tax obligations is essential. If you earn more than £1,000 from these activities, you may need to complete a self assessment tax return.

'Filing early puts you in control – you will know exactly what you owe, can plan your payments, and avoid the stress of the January rush. You don't need to pay immediately when you file – you have until 31 January to settle your tax bill.'

Internet link: HMRC

UK-based holders of cryptoassets will have to provide personal details to crypto service providers or face penalties of up to £300 from HMRC.

The regulations will be introduced in the UK on 1 January 2026 and are part of the OECD Cryptoasset Reporting Framework (CARF). This requires crypto platforms to share detailed information with tax authorities of clients' crypto transactions.

In addition, HMRC is already requiring full disclosure on self assessment forms for the 2024/25 tax year, so taxpayers who own crypto – like Bitcoin, Ethereum or Dogecoin –will have to include any crypto gains or income in their tax returns.

HMRC said the 'new rules will help unmask anyone evading tax due on their crypto profits. Those who don't comply risk a £300 fine from HMRC'.

Once data is received from service providers, HMRC will be able to identify those who haven't been correctly paying tax on their crypto profits.

The Treasury estimates the measure will raise up to £315 million in tax revenue by April 2030, the same amount needed to fund more than 10,000 newly qualified nurses for a year.

Jonathan Athow, HMRC's Director General for Customer Strategy and Tax Design, said:

'Importantly, this isn't a new tax – if you make a profit when you sell, swap or transfer your crypto, tax may already be due.

'These new reporting requirements will give us the information to help people get their tax affairs right.

'I urge all cryptoasset users to check the details you will need to give your provider. Taking action now and having this information to hand will help you avoid penalties in the future'

Internet link: HMRC

HMRC plans to introduce a tax avoidance criminal offence risks overreach, the Chartered Institute of Taxation (CIOT) has warned.

HMRC plans to create a new strict liability criminal offence for failing to disclose notifiable arrangements under the Disclosure of Tax Avoidance Schemes (DOTAS) regime without a reasonable excuse.

The CIOT argues that DOTAS is much too wide in its current formulation to be suitable for a criminal offence. Applying the proposed offence to all the DOTAS hallmarks seems excessive, it adds.

This is especially true, since the proposal is intended to be a response to specific issues with disguised remuneration mass-marketed tax avoidance schemes, the CIOT warns.

John Barnett, CIOT's Vice President, said:

'The government is right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

'However, every proposal to increase HMRC's powers like this needs to be tested against a hypothetical test of what would happen if an HMRC officer decides to use or target the legislation inappropriately.

'The present proposal places too high a level of reliance on HMRC's unpublished (and as such, not transparent) internal governance process to provide appropriate, independent safeguards and work effectively, so that such an outcome could never happen in practice.

'It is essential for building and maintaining trust in the tax system that the way HMRC use their powers and operate safeguards can be effectively monitored and subjected to appropriate oversight.'

Internet link: CIOT

HMRC has issued a warning to be on high alert for scams linked to Winter Fuel Payments after receiving 15,100 reports of bogus activity in June.

Fraudsters have been targeting vulnerable individuals using SMS messages and phishing websites. During June, HMRC took action to remove 4,600 fake websites linked to Winter Fuel Payments.

HMRC is urging individuals to be alert to suspicious communications and to report any suspect phone calls, emails or texts via GOV.UK. HMRC will never contact people by text to claim Winter Fuel Payments or request personal information.

Anyone who is eligible for Winter Fuel Payments will receive the payments automatically without having to make a claim. Any recovery of the payment for pensioners whose total income is over £35,000 will be collected via Pay As You Earn (PAYE) or self assessment, dependent on how the individual pays tax on their income.

Kelly Paterson, HMRC's Chief Security Officer, said:

'Don't be fooled by these attempts by scammers to take your money or access your personal information.

'Never let yourself be rushed. If someone contacts you saying they're HMRC, wanting you to urgently transfer money or give personal information, be on your guard. If a phone call, text or email is suspicious or unexpected, don't give out private information or reply, and don't download attachments or click on links.

'I'm urging people to be alert to scams relating to Winter Fuel Payments and to report any suspicious texts, phone calls or emails to HMRC.'

Internet link: HMRC

Inheritance Tax (IHT) on pensions is the most unpopular of the tax raising measures introduced by the Labour government during its first year, according to a survey.

The survey conducted by investment platform AJ Bell found that 44% of respondents were opposed to the pension IHT proposals while only 21% supported them.

Other measures were also strongly opposed, including the decision to raise employer National Insurance contributions (NICs), with 41% against the tax rise and just 24% in support. Raising rates of Capital Gains Tax (CGT) and restricting IHT relief available to farmers were also unpopular.

However, some tax raising policies attracted net support with 48% in favour of raising the rates of stamp duty on second homes.

Tom Selby, AJ Bell's Director of Public Policy, said:

'This data shows tax rises of every shade are divisive. While some tax increases attract a balance of support, they still divide the room.

'Nothing that emerged from Rachel Reeves' red box over the last year enjoys support from a majority of voters, illustrating that even less controversial tax changes are still politically fraught.

'IHT is often described as the most hated tax and this data backs that up. Proposals to subject unused pensions funds to IHT on death are the most widely opposed of all the tax raising measures announced so far.

'We're urging the chancellor to instead consider alternative proposals which would be fairer and simpler, without undermining her plan to tax unused pensions on death.'

Internet link: AJ Bell

Personal guarantees risk holding back the growth the economy needs, the Federation of Small Businesses (FSB) has warned.

Research by the FSB shows that 60% of limited company directors would borrow to grow their business – if they did not have to put hard-earned assets like savings or their houses on the line.

By contrast, only 13% would go ahead if a personal guarantee is required.

The FSB says the practice is now widespread, with 78% of directors who applied for finance being asked for a personal guarantee. Faced with this, a quarter decided not to take up finance at all.

The FSB is now calling on the government to close the Financial Conduct Authority (FCA) loophole that leaves these loans unregulated and unsupervised by banks.

It says that without action, would-be entrepreneurs could be deterred from starting up, with personal risk outweighing ambition and ideas left unrealised.

Tina McKenzie, Policy Chair of the FSB, said:

'Personal guarantees should never be the default setting – they must be a last resort, used with care and absolutely necessary. If we are serious about building a climate where small firms can thrive and new ideas can take root, we need to rein in their overuse.

'Otherwise, the speed of small business growth will slow to a snail's pace at a time we need it the most, and we risk turning away a wealth of entrepreneurial talent.'

Internet link: FSB

Taxpayers are being urged to check their online HMRC account after scammers attempted to defraud the tax authority using individuals' data and login details.

The Low Incomes Tax Reform Group (LITRG) is also reminding people of the importance of being vigilant and taking care of personal data.

HMRC recently announced that criminals had targeted the online tax accounts of nearly 100,000 taxpayers to try to make false tax refund claims.

In some cases, HMRC have said that criminals gained people's login credentials and made use of existing online tax accounts. But, in others, they gained personal data that enabled them to set up new online tax accounts via the Government Gateway.

HMRC have locked down the compromised accounts as a precaution. They are writing to those affected with details on how they can regain access to their accounts. 

Joanne Walker, Technical Officer at LITRG, said:

'HMRC have confirmed that they were the victim of online scammers who tried to defraud them of money using the details of individual taxpayers.

'While HMRC say this attack has not resulted in any tax-related financial loss for individual taxpayers, it is a timely reminder that fraud is an ongoing threat.'

Internet link: LITRG

The government should take a more strategic approach to tax policy, consulting earlier and giving greater thought to the design of the tax system, says Nichola Ross Martin, President of the Chartered Institute of Taxation (CIOT).

In her inaugural speech as CIOT President, Ross Martin said that making a success of MTD will need HMRC and tax professionals to continue to work closely together.

She also promised to continue to press for improvements to HMRC service levels over the year ahead.

The CIOT President also encouraged the government to consider introducing a statutory employment test

In addition, she urged Institute members and employers to feed into a review of the Chartered Tax Adviser (CTA) qualification.

Ms Ross Martin said:

'While there is plenty of argument about rates and burdens in parliament, there is very little about reform and design.

'Take employment taxes. The PAYE system is the government's main breadwinner. Successive governments have tweaked the rates and thresholds for national insurance but paid rather less attention to the fundamental issues as to how tax policy might adapt to cope with the changing world of work.

To pose these questions is not to argue for an 'everything everywhere all at once' approach to tax. But it is to point out that there is more to tax policy than rates and thresholds. Strategy is crucial.'

Internet link: CIOT

HMRC has named and shamed over 500 UK employers for failing to pay the National Living Wage (NLW) or the National Minimum Wage (NMW).

The employers will now be forced to repay over £7.4 million to nearly 60,000 workers who had been left out of pocket.

The rates for NLW increased to £12.21 an hour on 1 April and the government says this put £1,400 into the pockets of full-time workers on NLW.

Justin Madders, Minister for Employment Rights, said:

'There is no excuse for employers to undercut their workers, and we will continue to name companies who break the law and don't pay their employees what they are owed.

'Ensuring workers have the support they need and making sure they receive a fair day's pay for a fair day's work is a key commitment in our Plan for Change. This will put more money in working people's pockets, helping to boost productivity and ending low pay.'

Internet link: GOV.UK

The government has introduced the Pension Schemes Bill, which it says will make pensions easier to understand and manage as well as drive better value over the long term.

The bill will work to ensure savers get good returns and drive economic investment by requiring defined contribution (DC) schemes to prove they are value for money to avoid underperforming schemes.

It also aims to simplify retirement choices by all pension schemes offering default routes to a retirement income and consolidate and professionalise the Local Government Pension Scheme (LGPS).

In addition, it will bring together small pension pots worth £1,000 or less into one scheme certified as delivering good value and create new rules for multi-employer DC scheme 'megafunds' of at least £25 billion.

This is so that bigger pension schemes can drive down costs and invest in a wider range of assets and increase flexibility for defined benefit (DB) pension schemes to safely release surplus worth £160 billion, the government said.

Liz Kendall, Work and Pensions Secretary, said:

'Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners.

'The bill is about securing better value for savers' pensions and driving long-term investment in British businesses to boost economic growth in our country.'

Internet link: GOV.UK

The tax gap estimate was 5.3% for the 2023/24 tax year, according to the latest data from HMRC.

The tax gap is the difference between what tax is expected to be paid and actually paid.

HMRC collected £829.2 billion in the 2023/24 tax year representing 94.7% of all tax due, leaving £46.8 billion unpaid.

However, HMRC revised the figures upwards for 2022/23, from 4.8% (£39.8 billion) to 5.6% (£46.4 billion). It also warned that the latest figures may be revised as more data becomes available.

Some of the key findings from this year's calculations show:

• Small businesses represent the largest proportion of the tax gap (60%).
• Corporation Tax accounts for 40% of the total tax gap.
• Failure to take reasonable care (31%), error (15%) and evasion (14%) are among the main behavioural reasons for the overall tax gap.

Ellen Milner, Director of Public Policy, said:

'These figures show the stubbornness of the tax gap and how optimistic the government's target of a £7.5 billion reduction by 2029/30 is.

'While large businesses and wealthy individuals are often accused of not paying enough tax these figures suggest that their total share of the tax gap is not much more than a quarter of that of small businesses.

'The small business figures reflect big upward revisions from HMRC a year ago as a result of a random enquiry programme carried out in 2020/21, which identified greater inaccuracy and non-compliance than previously forecast.'

Internet link: HMRC press release CIOT