The government has revealed significant changes to the tax system. One of the most noteworthy announcements is the increase in the income tax self-assessment (ITSA) reporting threshold from £1,000 to £3,000 ...
This is distinct from the trading allowance of £1,000, which remains unchanged. The trading allowance permits individuals to offset this amount against their taxable income, meaning those whose sales fall below this level do not need to pay tax on their earnings from casual undertakings or 'side hustles'.
With the new reporting threshold, an estimated 300,000 taxpayers will benefit, as many will no longer be required to submit a tax return. Out of this number, around 90,000 individuals will have no taxes owed, leaving them free from any reporting obligations.
HMRC also aims to facilitate a smoother process for those who do owe taxes, introducing a simple online service to assist individuals in settling their dues. By reducing the administrative burden, HMRC anticipates fostering a more business-friendly environment where entrepreneurs can invest more time into growth rather than tax compliance.
Further enhancing the taxpayer experience, HMRC announced a new service designed to provide an escalation route for agents dealing with self-assessment and pay-as-you-earn queries extending beyond four weeks. This new service, expected to go live by the end of the month, will feature a dedicated team of experienced technicians and advisers who will take an end-to-end approach to case management.
Notably, HMRC plans to trial a voice biometrics system that allows taxpayers to use their voices as passwords when calling for assistance. This cutting-edge technology aims to bolster security and protect sensitive customer data, as well as streamline call times, making interactions with HMRC more efficient.
In addition, HMRC is stepping up its efforts to combat various forms of tax non-compliance, including the practice known as 'phoenixism.' This practice occurs when companies repeatedly become insolvent, but continue trading, effectively leaving creditors, including HMRC, unpaid.
To address this, a cooperative initiative with the Insolvency Service will increase the use of security measures, allowing HMRC to request upfront tax payments from new companies, thereby safeguarding the revenue.
HMRC is also set to launch a new reward scheme aimed at encouraging whistleblowers to report tax fraud. This initiative will concentrate on serious non-compliance scenarios involving large corporates, affluent individuals, and offshore avoidance schemes, thereby complementing the existing reward schemes in place.
A further ambitious plan will see HMRC consulting in spring 2025 on multiple measures, including broadening advance clearances for research and development tax relief and its applicability for significant investment projects. There's also a commitment to simplify the temporary admission customs procedure - changes that should enhance ease of use for several sectors, particularly in art and antiques; the time limit for such items will expand from two to four years.
To bolster its capabilities and service provision, HMRC has received over £1.5 billion in funding from the government, enabling the recruitment of an additional 5,000 compliance caseworkers and 1,800 debt collection officers. According to recent updates, 600 new compliance staff members are set to commence their roles in March 2025, reinforcing HMRC's human resources and responsiveness capabilities!
As HMRC embarks on this journey of reform, the implications for taxpayers and businesses alike are profound. By simplifying tax responsibilities and introducing innovative solutions, HMRC is not just modernising its systems, but is also strategically positioning itself to better serve the needs of the businesses and individuals it governs.
With these changes set to unfold, tax compliance is about to witness a significant shift, reflecting HMRC's dedication to making the tax system more accessible for all.
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