Spring Statement
Tax changes announced today are proposed to simplify tax administration to drive growth.
The government has committed to announcing a package of measures to further simplify and reform the tax and customs administration
systems later in spring.
The government announced details of investment into HMRC’s capability to collect tax debts where taxpayers agree they have a liability but are unable or unwilling to pay. HMRC will better support those who are temporarily unable to pay and need tailored support, while collecting debt from those who are able to pay but choose not to.
Further commitments were made to increasing HMRC compliance workforce, with £100m over the next five years going to fund an additional 500 staff. This means that by 2029/30, HMRC will have increased the number of compliance officers by 5,500 since July 2024.
Administrative changes
High Income Child Benefit Charge (HICBC) changes
From summer 2025, eligible employed individuals who become liable to the HICBC will be able to report their family’s Child Benefit payments through a new digital service and pay
HICBC directly through PAYE. The HICBC charge itself is not changing.
Taxpayers will be able to check their eligibility for the new service in summer 2025, and some may no longer need to register for Income Tax Self Assessment (ITSA) or file a return.
Increasing late payment penalties percentage rate
From 1 April 2025, HMRC will increase the late payment penalties as part of wider penalty reform.
Penalties will increase from 2% at 15 days, 2% at 30 days and 4% per annum from day 31 to 3% at 15 days, 3% at 30 days and 10% per annum from day 31.
These changes will affect taxpayers who submit VAT returns, and those in ITSA who part of the trial/voluntary cohort for are Making Tax Digital (MTD).
Consultations
Several have opened from today, and you can keep track of ongoing and closed consultations by using our consultation tool at Check the status of tax policy consultations – GOV.UK
Third Party Data (TPD)
HMRC has launched a consultation on modernising their approach to collecting and using TPD. HMRC aim to improve the use of data from outside organisations – such as banks and building societies – to help customers get their tax right first time. The consultation focuses on bank and building society interest rates and Merchant Acquirer data, which HMRC already collects and is looking for more efficient ways to do so. The consultation is open for feedback until 21 May 2025 at Check the status of tax policy consultations – GOV.UK.Behavioural penalty reform
HMRC has published a consultation on options to simplify and strengthen inaccuracy and failure to notify penalties, while also reducing administrative costs for taxpayers and HMRC. The consultation explores options to:- simplify the ways in which penalties are calculated and applied, to make them easier for HMRC to administer and for taxpayers to understand;
- strengthen penalties for individuals and businesses who deliberately (and repeatedly) underreport their income or sales; and
- provide simpler, fairer outcomes for those who make genuine, one-off mistakes.
Research and Development (R&D)
HMRC is publishing a consultation on widening the use of advance clearances in R&D tax reliefs. This consultation will explore options that aim to reduce error and fraud in the reliefs, provide certainty to businesses, and improve the experience. The consultation is open for feedback until 26 May 2025 at Research and Development tax relief advance clearances – GOV.UK.Promoters of Marketed Tax Avoidance
HMRC has published a consultation on a package of measures to tackle promoters of marketed tax avoidance – whose contrived schemes deprive vital public services of funding and leave their clients with unexpected tax bills. The consultation is open for feedback until 18 June 2025. Closing in on promoters of tax avoidance – GOV.UK.Tackling advisers facilitating non-compliance
HMRC has published a consultation on enhancing existing rules, which include reforming information powers, enhancing penalties and broadening the scope of disclosing tax adviser misconduct. These powers would enable swifter and more effective action against the small minority of tax advisers whose poor practices can harm both taxpayers and the wider tax system. It is part of HMRC’s broader work to strengthen the tax system and ensure it works fairly for everyone. The consultation is open for feedback until 7 May 2025. Enhancing HMRC’s ability to tackle tax advisers facilitating non-compliance – GOV.UK.Closing the tax gap
Offshore tax non-compliance
From April 2025, HMRC will set up a new team to deliver a more coordinated approach to wealthy offshore non-compliance, which will include targeting those who deliberately seek to evade paying tax due in the UK and in turn will increase its capacity and capability to tackle the most challenging examples of serious non-compliance.Rewards for informants
To strengthen HMRC’s approach to encouraging the reporting of high value tax fraud and tax avoidance, a new scheme will launch later this year to target serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes. The scheme will take inspiration from the successful US and Canadian models and will complement the existing HMRC rewards scheme, with informants rewarded with a percentage of any tax taken thanks to their actions.Direct recovery of debts (DRD)
Since 2016, HMRC has had the power to recover established debts directly from customers’ bank accounts, if certain conditions are met. HMRC paused using these powers during the COVID-19 pandemic but is now going to restart DRD. This approach is only used on customers who have the money to pay but refuse to engage with HMRC.Making Tax Digital (MTD)
- Streamlined end of year process: MTD for Income Tax users will be required to submit their end of year information and Final Declaration (The Tax Return) through software. This provides the opportunity to deliver an improved filing experience for all customers, through a single channel.
- Lowering the mandation threshold to £20,000: the government is extending MTD for Income Tax to sole traders and landlords with income from trading and/or property over £20,000 from April 2028. These customers will need to maintain records digitally and use MTD compatible software to submit in-year updates of their business income and expenditure and their tax returns.
- Personal tax policy changes: several taxpayer groups will be deferred from MTD until at least April 2029. These include Ministers of Religion, Lloyd’s Underwriters, Married Couples’ Allowance recipients, and Blind Persons’ Allowance recipients. The government will also bring forward further exemptions for the small number of taxpayers who would face disproportionate barriers in operating MTD.
