The world of UK tax and finance is in constant motion, and staying on top of the latest HM Revenue & Customs news is crucial for individuals, businesses, and tax professionals alike. From new legislation and policy updates to digital transformation initiatives and shifts in enforcement, the announcements from HMRC have a direct and significant impact on how we manage our finances, file our returns, and operate our businesses.
Understanding the Landscape: HMRC’s Core Mission and Recent Performance
HM Revenue & Customs (HMRC) is the UK’s tax, payments, and customs authority. Its primary purpose is to collect the money that pays for the UK’s public services, such as the National Health Service (NHS), schools, and police. Beyond revenue collection, HMRC is also responsible for administering a range of social and financial support policies, including tax credits and Child Benefit.
In its recent performance updates, HMRC has highlighted its ongoing efforts to modernize and improve its services. For the 2024-2025 financial year, HMRC announced a record tax revenue of £875.9 billion, a 3.9% increase from the previous year.
A significant portion of this revenue, £48 billion, was attributed to compliance yield—the amount of tax that would have gone unpaid had HMRC not intervened through its compliance activities.
This figure is a testament to the department’s focus on closing the “tax gap,” which stood at 5.3% for the 2023-2024 period. Looking ahead, HMRC has a target of £50.4 billion in compliance yield for the 2025-2026 tax year, signaling a continued and robust approach to tackling tax evasion and avoidance.
Key HMRC News and Policy Changes for 2025
The start of the 2025-2026 tax year brings with it several important changes and developments. These are a result of government budgets, consultations, and HMRC’s own strategic transformation roadmap.
The Making Tax Digital (MTD) Evolution
Making Tax Digital (MTD) remains a cornerstone of HMRC’s long-term strategy. While the full rollout for Income Tax Self Assessment (ITSA) has seen several delays, 2025 is a critical year for preparation and voluntary participation.
No New Mandates in 2025: There are no new mandatory MTD for Income Tax deadlines in 2025. The requirement for sole traders and landlords with an annual income of over £50,000 to comply with MTD for ITSA will take effect from April 2026.
The Pilot Program Expands: To help taxpayers prepare, HMRC has significantly expanded its MTD for ITSA pilot program from April 2025. This allows more sole traders and landlords to voluntarily test MTD-compatible software and processes without the risk of penalties.
A Shift for Corporation Tax: In a major policy shift, HMRC has confirmed it will not be proceeding with Making Tax Digital for Corporation Tax. This decision was made in response to the complexity and diversity of the corporate tax landscape. Instead, HMRC will explore more targeted digital improvements for businesses.
Stricter Penalties: As part of the MTD rollout, new, tougher penalties for late filing and late payment are being introduced. For VAT and future MTD for ITSA users, a points-based system for late filing will be implemented, and a more proportionate system for late payment will be in effect. For example, a 3% charge will apply if tax is 15 days late, rising to 6% after 30 days.
How-To Guide: Preparing for MTD in 2025
Even if MTD for ITSA isn’t mandatory for you yet, taking steps now can ensure a smooth transition.
Assess Your Income: Review your income from self-employment and property for the 2024-2025 tax year. If the combined gross income is over £50,000, you will be in scope for the April 2026 deadline.
Choose MTD-Compatible Software: Ditch paper records. Find HMRC-approved software that is MTD-compatible. Popular options include FreeAgent, Xero, and QuickBooks. Many of these offer free trials or affordable packages.
Go Digital with Your Records: Start keeping all your records—invoices, receipts, and bank statements—digitally. Most software can automatically link to your bank account, which significantly reduces manual data entry.
Consider the Pilot: If you meet the criteria, consider joining the MTD for ITSA pilot program. This provides a low-risk environment to familiarize yourself with quarterly reporting and the new software, with direct support from HMRC.
Tax Rates and Personal Allowances
Staying up-to-date with tax rates and allowances is fundamental to effective financial planning. While the personal allowance has been frozen, there are other important figures to note.
Personal Allowance Freeze: For the 2025-2026 tax year, the personal allowance remains frozen at £12,570. This means that as wages rise with inflation, more people will be pushed into higher tax brackets, a phenomenon known as “fiscal drag.”
National Insurance Rates: The main rates of National Insurance have been adjusted. The Class 1A and Class 1B National Insurance rates on expenses and benefits for the 2025-2026 tax year are 15%.
Statutory Payments: Statutory payments for maternity, paternity, and sick pay have also seen an increase for the new tax year, reflecting the need to keep pace with the cost of living. For instance, the weekly rate for Statutory Maternity Pay for the remaining weeks of leave is £187.18.
Simplification and Digital Transformation
HMRC’s Spring 2025 announcements focused heavily on simplifying the tax and customs system. This is a clear response to ongoing feedback from businesses and individuals about the complexity of tax administration.
Revised CEST Tool: The Check Employment Status for Tax (CEST) tool, used to determine employment status for tax purposes, is being revised from April 30, 2025. The goal is to make the tool easier to use and more intuitive.
Payrolling of Benefits in Kind (BiK) Delayed: A significant and welcome announcement for employers is the delay to the mandatory payrolling of Benefits in Kind. This will now not be introduced until April 2027, giving businesses more time to prepare for the change.
Removal of Non-Essential Letters: In a move to reduce administrative burden and promote digital communication, HMRC will stop issuing six types of non-essential letters related to Corporation Tax from June 2025.
Agent Registration and Standards: From April 2026, tax advisers will be required to register with HMRC and meet minimum standards. This is part of a broader effort to raise standards in the tax advice market and combat non-compliance.
Real-Life Example: The Self-Employed Artist
Let’s consider the case of Sarah, a self-employed graphic designer whose gross income from her creative business was £65,000 in the 2024-2025 tax year.
Before the Changes: Sarah would traditionally complete her Self Assessment tax return once a year, gathering all her invoices, expenses, and bank statements from a spreadsheet she maintains. She would then use commercial software to submit her return.
After the Changes: With the MTD for ITSA deadline looming in April 2026, Sarah is proactive. In 2025, she joins the pilot program. She moves from her manual spreadsheet to an MTD-compatible accounting software. Now, her income and expenses are recorded digitally as they happen. Every three months, the software generates a summary, which she checks and submits to HMRC as a quarterly update. This new process helps her to:
See Her Tax Position in Real-Time: Instead of a yearly surprise, Sarah can see an estimated tax bill throughout the year, allowing her to budget and save accordingly.
Reduce the Year-End Rush: The pressure of gathering a full year’s worth of paperwork is gone. The annual “End of Period Statement” is now a simple reconciliation and final declaration.
Improve Record-Keeping: The software prompts her to upload digital receipts, ensuring a clear and organized audit trail, which would be invaluable in case of an HMRC query.
Sarah’s experience illustrates how HMRC’s digital push, while initially daunting, can lead to more efficient and less stressful tax management for small business owners.
Practical Tips for Individuals and Businesses in 2025
Navigating the changes announced in hm revenue & customs news requires a proactive approach. Here are some actionable tips to help you stay compliant and efficient.
For Individuals:
Check Your Tax Code: Your PAYE tax code can change for many reasons. Always check it at the start of the new tax year and if you change jobs. An incorrect code could mean you’re paying too much or too little tax.
Understand High Income Child Benefit Charge (HICBC): If you or your partner have an adjusted net income over £50,000, you are liable for the HICBC. A new measure from Summer 2025 will allow individuals to opt to pay this directly through PAYE, removing the need to register for Self Assessment solely for this charge.
Update Your Personal Tax Account: Make sure your Personal Tax Account on the GOV.UK website is up-to-date. This is becoming the central hub for your tax affairs, and you can use it to check your State Pension forecast and voluntary National Insurance contribution records.
For Businesses and Employers:
Review Your Payroll and Expenses Software: Ensure your systems are up-to-date with the new tax codes, National Insurance thresholds, and statutory payment rates for 2025-2026.
Digital Record-Keeping is Not Optional: For VAT-registered businesses, MTD is already a reality. For others, the trend is clear. Start moving away from paper and towards digital systems to simplify your processes and prepare for future changes.
Stay Informed on Consultations: HMRC regularly consults with the public and stakeholders on future policy changes. For example, a consultation on the VAT treatment of business donations to charity and the Soft Drinks Industry Levy are both open in 2025. Engaging with these can help shape future policy.
Recent Trends and the Future of HMRC
Beyond the specific policy changes, several overarching trends are shaping the future of HMRC and UK tax administration.
AI and Data-Driven Compliance
HMRC is investing heavily in its IT infrastructure, particularly in artificial intelligence (AI) and the use of third-party data. The goal is to close the tax gap by using data to pre-populate tax returns, deliver targeted “nudges” to taxpayers, and empower caseworkers with more efficient tools. This means a more automated, proactive approach to compliance and a reduced need for manual, reactive investigations.
A Digital-First Strategy
HMRC’s Transformation Roadmap outlines a vision to become a “digital-first” organization, with a target of 90% of customer interactions taking place online by 2030. This will be facilitated by the expansion of the HMRC app and online accounts, offering services like digital tracking for Child Benefit claims and secure three-way communication between HMRC, taxpayers, and their agents.
Focus on Simplification
The numerous simplification measures announced in 2025—from the revised CEST tool to the delay in mandatory BiK payrolling—show that HMRC is responding to feedback from the business community. The focus is on making the system more straightforward, reducing administrative burdens, and helping taxpayers “get it right first time.”
FAQs
What is the most significant hm revenue & customs news for small businesses in 2025?
The most significant news is the expansion of the Making Tax Digital (MTD) for Income Tax pilot program and the confirmation that MTD for Corporation Tax has been scrapped. This provides a clear, if still delayed, roadmap for sole traders and landlords, while offering relief to limited companies. The delay to mandatory payrolling of Benefits in Kind until 2027 is also a major piece of good news for employers.
How do the new penalties for late tax payments work?
Under the new regime, penalties are more proportionate. If a payment is 15 days late, a 3% charge is applied. This rises to 6% after 30 days. For any amount still unpaid after 31 days, an additional annual 10% charge will be applied. This system is designed to encourage prompt payment and will apply to VAT and MTD for ITSA users.
What is the Personal Tax Account, and why should I use it?
The Personal Tax Account is an online portal on the GOV.UK website where you can manage your tax affairs. You can use it to check your tax code, view your State Pension forecast, track a refund, and update personal details. As HMRC moves to a “digital-first” model, this account will become increasingly important for all taxpayers.
Are there any changes to mileage rates for business travel?
As of the current tax year, the approved mileage allowance payment (AMAP) rates remain frozen. The approved rates are 45p per mile for the first 10,000 business miles, and 25p per mile thereafter. While these rates have not been updated to reflect recent inflation, businesses should continue to use them for tax-free reimbursement.
What is the HMRC “tax gap,” and how is HMRC trying to close it?
The “tax gap” is the difference between the amount of tax that should, in theory, be paid to HMRC and the amount of tax that is actually collected. For 2023-2024, it was estimated to be 5.3% of the total tax due. HMRC is trying to close this gap through a combination of enhanced data analytics, AI-powered compliance systems, targeted investigations, and a move towards mandatory digital record-keeping and reporting via MTD.
Final Thoughts
The constant stream of hm revenue & customs news highlights a tax system in a state of deliberate and significant transition. The key themes for 2025 are simplification, digitization, and a stronger focus on compliance. For individuals and businesses, the message is clear: the future is digital.
By proactively embracing the new tools and platforms, staying informed about policy changes, and keeping your records up to date, you can not only remain compliant but also make your tax affairs more efficient and less stressful. The journey to a fully modernized tax system is well underway, and a little preparation now will pay significant dividends in the years to come.
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