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      James Murray sets out the Government’s vision for the future of HMRC

      Exchequer Secretary to the Treasury announces a number of changes intended to “transform HMRC into a quicker, fairer and more modern body”

      event 20 Mar, 2025

      On 11 March 2025, the Exchequer Secretary to the Treasury, James Murray, delivered a speechopens in a new tab to mark the 20th anniversary of HMRC during which he announced a series of tax administration reforms aimed at simplifying the tax system and easing the compliance burden for taxpayers as well as closing the tax gap.

      The ‘headline’ announcementopens in a new tab was a plan to increase the Income Tax Self Assessment (ITSA) reporting threshold for trading income, from £1,000 to £3,000 gross within this Parliament, and align it with new reporting thresholds for property and other taxable income, at £3,000 gross each. The ‘trading allowance’ (the tax exemption for certain individuals with trading income) will remain at £1,000 so individuals with trading income between £1,000 and £3,000 will still be subject to tax on that income but they may no longer need to file an ITSA return. Instead, they will “be able to use a new, simple online service”. This change is mainly targeted at individuals with so called ‘side-hustles’ such as trading clothes online, dog-walking, gardening, driving a taxi, or creating content online and is expected to benefit around 300,000 taxpayers.

      The speech also mentioned a number of initiatives that have been previously announced, but the other new measures fell into two main areas as follows.

      Photo of Sharon Baynham
      Sharon Baynham

      Director, Tax Policy

      KPMG in the UK

      Closing the Tax Gap

       

      There were two new announcements on efforts to secure tax revenue:

      • HMRC and the Insolvency Service have agreed a joint plan to tackle ‘phoenixism’ (where directors avoid payment of company tax by going insolvent). This will include HMRC asking for upfront payment of tax from new companies and making more directors personally liable for the taxes of their company; and
      • A new reward scheme for informants will be launched later this year where informants will be rewarded with a percentage of any tax taken as a result of their actions.

        Modernisation and reform

         

        The updates in this area were mainly in the area of digitisation and Murray confirmed that an HMRC Transformation Roadmap will be published “later this year, following confirmation of Phase 2 of the Spending Review”. Specific measures announced included:

        • The use of ‘voice biometrics’, where individuals can use their voice as their password, is currently being trialed and “is expected to be rolled out across HMRC over the rest of this year”;
        • From April a new PAYE portal will be launched for taxpayers to “check the data that HMRC holds on their employments and pensions, to notify us of any changes, and to find simple explanations to understand the impact of changes on their tax codes”;
        • Simplifications will be made to the Government’s Temporary Admission customs procedure aimed at making this relief for temporary imports easier for a range of sectors to use, including art and antiques; and
        • A technical customs pilot with the US Customs and Border Protection Agency will test digital solutions to speed up processes for US and UK businesses trading goods with each other.

         

         

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