Latest news with #MakingTaxDigital
Daily Mirror
41 minutes ago
- Business
- Daily Mirror
HMRC confirms big change to income tax system starts next April
The significant change will require these people to keep digital records and report their income to HM Revenue and Customs With less than a year to go, sole traders and landlords earning over £50,000 will be required to use Making Tax Digital (MTD) for Income Tax from April 6, 2026. This significant shift towards digital record-keeping and income reporting to HM Revenue and Customs (HMRC) is set to save time in the long run. By maintaining digital records throughout the year, sole traders and landlords can save hours previously spent collating information at tax return time. This allows them to focus more on their business activities, driving economic growth as part of the Plan for Change. HMRC estimates that around 780,000 self-employed individuals and landlords will need to use MTD for Income Tax from April 2026, with an additional 970,000 joining from April 2027. Quarterly updates will distribute the workload more evenly throughout the year, bringing the tax system closer to real-time reporting. This will help businesses stay on top of their finances and avoid the last-minute rush. HMRC is encouraging eligible customers to sign up to a testing programme on a and start preparing now. Agents can also register their clients via reports the Daily Record. James Murray MP, Exchequer Secretary to the Treasury, has championed the new 'MTD for Income Tax' as a cornerstone of the government's strategy to revamp the UK's tax system in favour of economic growth. "MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share." He hailed the initiative as a pivotal move in the government's ambitious 'Plan for Change' and its commitment to a decade of national renewal, aiming to dismantle obstacles impeding economic expansion. "This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth." Craig Ogilvie, HMRC's Director of Making Tax Digital, underscored the significance of the changes, marking them as the most substantial since Self Assessment was introduced in 1997. "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax." Ogilvie also encouraged early adoption of the system, highlighting the benefits of joining the testing programme, which includes support from the MTD Customer Support Team. "By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year." Starting April 2026, individuals with income over £50,000 will be required to maintain digital records, utilise MTD-compatible software, and submit quarterly summaries of their financial activities to HMRC. The shift towards digital record-keeping is expected to streamline business operations, minimise tax calculation errors, and offer a more transparent view of tax responsibilities throughout the fiscal year. Qualifying income includes gross income from self-employment and property before any tax allowances or expenses are deducted. Those with qualifying income above £30,000 will also be required to use MTD for Income Tax from April 2027. The threshold will then decrease to £20,000 from April 2028. The phased introduction of MTD for Income Tax follows the successful implementation of MTD for VAT, which now assists over two million businesses in reducing errors and saving time on their tax affairs. Businesses that participated in the MTD for VAT testing phase were better prepared for the transition to quarterly reporting. An independent report published in 2021 discovered that 69 per cent of mandated businesses experienced at least one benefit from MTD for VAT, while 67 per cent reported that it reduced the potential for mistakes in their record keeping.
Daily Mirror
22-07-2025
- Business
- Daily Mirror
Taxpayers told they may be free from HMRC fees and could be due a refund
A total of 46,266 penalties were withdrawn in the tax year to April 2024 after being issued to people who either owed no tax or missed deadlines due to reasons beyond their control Tens of thousands of taxpayers may have been wrongly fined by HMRC, and many Brits could be in line for refunds after a record number of penalties were cancelled last year. A significant 46,266 fines were withdrawn over the course of just 12 months, having been issued to individuals who either didn't owe any tax or missed deadlines due to circumstances beyond their control. These figures, published in HMRC's most recent statements, show a 29 per cent surge in annulled penalties compared to the previous year. Now, experts are calling on people to contest fines they reckon are unjust. Taxpayers can be served an automatic £100 fine for failing to meet the self-assessment deadline, while businesses can be penalised for tardy VAT returns. However, a wave of successful appeals has been seen following challenges made through HMRC's online system, which underwent an overhaul in early 2023 to simplify the appeal process, reports the Express. Yet Andrew Park, a tax partner at accountancy firm Price Bailey, warns that the issue is much more pervasive, with numerous fines being set off by banking delays, administrative errors within HMRC, and chronic customer service shortcomings. "Late filing penalties are disproportionately levied on people on low incomes, many of whom have no tax to pay," he disclosed to the Telegraph. It has also come to light that over the past five years, 600,000 penalties have been meted out to individuals earning below the £12,570 personal allowance, indicating they had zero tax liability to begin with. After obtaining this data through a Freedom of Information request, the thinktank Tax Policy Associates has called for the abolition of such penalties. HMRC's helpline has also been criticised. In the first half of 2024-25, the tax authority left 35% of calls unanswered, falling short of its 85% target. Despite drafting in more call handlers to improve the situation, scores of taxpayers are still struggling to get assistance prior to the filing deadline. HMRC issued a staggering nine million penalties on taxpayers last year, a jump from just over eight million the previous year. Park says millions could be paying penalties needlessly: "When two-thirds of appealed penalties are overturned, yet only a small fraction of the nine million issued are challenged, it suggests a significant number of taxpayers may be paying penalties they could successfully contest." A revised points-based penalty system introduced under the Making Tax Digital initiative is set to give self-employed individuals using digital system relief from the automatic £100 fine. Instead, self-employed taxpayers will accrue penalty points with a maximum £200 cap per return. Those not covered by Making Tax Digital – including numerous low-income earners – remain subject to the more unforgiving legacy system. An HMRC spokesperson defended their position: "Our penalty reforms enable customers to appeal easily and quickly online against both penalties and penalty points. Our new points-based system means only those who persistently miss deadlines will incur a financial penalty." Taxpayers who reckon they've been unjustly fined have a 30-day window from the date on the penalty notice to lodge an appeal. Those who no longer need to file a return must inform HMRC prior to January 31 to dodge a fine. What to do if you've been fined Check if you actually owed tax – if not, your fine may be challengeable. Appeal online via your HMRC account within 30 days. If you're self-employed and not in Making Tax Digital, be aware you're still under the old regime. Contact HMRC if you believe you were wrongly issued a return request.
Daily Mirror
10-07-2025
- Business
- Daily Mirror
HMRC to make new changes to income tax from April next year
Making Tax Digital for Income Tax will be introduced in April 2026 - with sole traders and landlords with an income over £50,000 required to keep digital records With less than a year to go, sole traders and landlords earning over £50,000 will be required to use the new Making Tax Digital (MTD) for Income Tax from April 6, 2026. This significant change towards digital record-keeping and income reporting to HM Revenue and Customs (HMRC) is set to save these people considerable time. By maintaining digital records throughout the year, sole traders and landlords can save precious hours previously spent collating information at tax return time, the Government claims. This allows them to dedicate more time to their business activities, thereby driving economic growth as part of the 'Plan for Change'. HMRC estimates that approximately 780,000 self-employed people and landlords will be required to use MTD for Income Tax from April 2026, with an additional 970,000 joining from April 2027. The introduction of quarterly updates will distribute the workload more evenly throughout the year, bringing the tax system closer to real-time reporting. This will assist businesses in managing their finances more effectively and avoid the last-minute rush. HMRC is encouraging eligible customers to sign up for a testing programme on and start preparing now. Agents can also register their clients via James Murray MP, the Exchequer Secretary to the Treasury, said: "MTD for Income Tax is an essential part of our plan to transform the UK's tax system into one that supports economic growth. By modernising how people manage their tax, we're helping businesses work more efficiently and productively while ensuring everyone pays their fair share. "This is a crucial step in this government's decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth." Craig Ogilvie, HMRC's Director of Making Tax Digital, said: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax. "By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year." Come April 2026, individuals whose qualifying income exceeds £50,000 will need to maintain digital records, employ MTD-compatible software, and submit quarterly financial summaries to HMRC, reports the Daily Record. The Government says these digital requirements will help businesses save time through more efficient record-keeping, reduce errors in tax calculations, and provide a clearer picture of their tax obligations throughout the year. Qualifying income includes gross income from self-employment and property before any tax allowances or expenses are deducted. Those with qualifying income above £30,000 will also be required to use MTD for Income Tax from April 2027. The threshold will then decrease to £20,000 from April 2028. The phased introduction of MTD for Income Tax follows the successful implementation of MTD for VAT, which now helps more than two million businesses reduce errors and save time on their tax affairs. Businesses which joined the MTD for VAT testing phase were better prepared for the move to quarterly reporting. An independent report published in 2021 found that 69 per cent of mandated businesses experienced at least one benefit from MTD for VAT, while 67 per cent reported that it reduced the potential for mistakes in their record keeping.
Scottish Sun
08-07-2025
- Business
- Scottish Sun
HMRC slaps huge £1,600 fines on 600,000 struggling families who don't even owe tax
We've explained how to avoid it in the first place TAXING TIMES HMRC slaps huge £1,600 fines on 600,000 struggling families who don't even owe tax Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) HUNDREDS of thousands of low earners have been slapped with hefty HMRC fines, even though they don't owe any tax. Currently, individuals earning less than £12,570 a year do not pay income tax. Sign up for Scottish Sun newsletter Sign up 1 Those who are self-employed must complete a self-assessment tax return each year Credit: Getty Similarly, you are not liable to pay National Insurance contributions if your income or profits (for the self-employed) are below this threshold. However, those who are self-employed must complete a self-assessment tax return each year, even if they don't reach these earning thresholds. Failure to file this before the paper deadline on October 31 or the online deadline on January 31 results in an automatic fine. New data from a Freedom of Information request by think tank Tax Policy Associates (TPA) shows that over 600,000 people earning below the tax threshold were fined £100 by HMRC between 2018 and 2023. These fines start at £100 but can quickly spiral into thousands. If the fine isn't paid, penalties keep increasing, reaching over £1,600 within months. For those who miss deadlines year after year, the fines pile up, along with interest. One taxpayer, interviewed by TPA, was hit with over £10,000 in penalties, despite not owing a single penny in tax. The rules were changed in 2011, so penalties now stick even if no tax is due. At the time, campaigners warned this would create hardship for vulnerable people, but their concerns were ignored. Easy Income Boosters Money Making Tips You Need to Know Dan Neidle, from the TPA, said he had heard from "hundreds" of people affected, many struggling with serious physical and mental health issues. He said: "The Government should act, and stop the most vulnerable in society having their lives made harder by HMRC." The Government has promised to reform the system, capping penalties at £200 and removing the automatic £100 fine. However, these changes will only apply to high earners under the Making Tax Digital scheme, starting in 2026 for those earning over £50,000. There is still no timeline for low-income earners, leaving them stuck with harsher penalties under the current rules. The Low Income Tax Reform Group (LITRG) said this will create a "two-tier" system. Antonia Stokes, of the group, said: "LITRG would like to see HMRC speed up its roll-out, so that all taxpayers can benefit from the new penalty regime." Do I need to file a tax return? Self assessment is the system HMRC uses to collect income tax for some workers. For most employees, tax is automatically taken out of their wages, pensions, or savings through PAYE. But if you've got other types of income or are self-employed, you'll need to report it by filing a tax return. You'll need to send in a self assessment tax return if any of the following apply: You made over £1,000 from self-employment. You earned more than £2,500 from renting out property. You or your partner got High Income Child Benefit, and one of you had an annual income of over £50,000. You received more than £2,500 in untaxed income, like tips or commission. You're a director of a limited company. You're a shareholder. You're an employee claiming expenses over £2,500. You have an annual income of more than £100,000. How do I submit a tax return? Before you can complete and submit your tax return, you must have a so-called unique taxpayer reference (UTR) and activation code from HMRC. This can take a while to receive, so if it's the first time you're completing a self-assessment, register online immediately and ask HMRC for advice. To sign in or register, visit If you've already signed up for self-assessment, you can find your UTR in relevant letters and emails from HMRC. HMRC accepts your payment on the date you make it, not when it reaches its account - including on weekends. The deadline for filing your self-assessment tax return by post is October 31. If you miss the deadline by up to three months, you will be charged a £100 penalty. If you miss the deadline by over three months, you will be charged more. But don't worry. You can complete your tax return online if you don't send your paper form on time. The deadline for this was January 31, 2024. If you need to change your tax return after filing it, you can do so within 12 months of the original deadline. Filling in your tax return can seem daunting, but with our step-by-step guide, you'll have it sorted quickly.
Business News Wales
25-06-2025
- Business
- Business News Wales
Side Hustlers Urged to get Tax Returns Sorted
Anyone earning extra income through a side hustle is being urged to check if they need to register for Self Assessment – and if so, file their tax return now. HM Revenue and Customs (HMRC) is encouraging those with additional income streams to understand their tax obligations and get ahead of the January deadline rush. Anyone who earns more than £1,000 from their side hustle in a tax year may need to register for Self Assessment and complete a tax return. This includes gains or income received from cryptoassets. Anyone who thinks they may need to complete a tax return for the 2024 to 2025 tax year can use the checker tool on to find out. New entrants to Self Assessment must register to receive their Unique Taxpayer Reference. 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.' The deadline to submit a Self Assessment tax return online and pay any tax owed for the 2024 to 2025 tax year is 31 January 2026. Early preparation is particularly important for sole traders or landlords with a qualifying income over £50,000, as they will also need to get ready to start using Making Tax Digital (MTD) for Income Tax from April 2026. This will require digital record-keeping and quarterly updates using compatible software. Visit to find out more about Self Assessment and how to file a tax return.
