New Tax Compliance Measures, HMRC Modernisation, Key Changes for Taxpayers

Ensuring fair taxation and enhancing economic stability

The Autumn Budget 2024 introduces a comprehensive suite of measures aimed at enhancing tax compliance, closing loopholes, and modernising HMRC’s operations. From bolstering HMRC staff and updating IT systems to reforming tax rules on pensions, capital gains, and offshore interests, these initiatives reflect a strategic push towards a fairer, more transparent tax system.

Here’s an overview of the key changes and their implications for taxpayers.

Investing in additional HMRC compliance and debt management staff

As announced in July, £1.4 billion will be invested over the next five years to recruit an additional 5,000 HMRC compliance staff, aiming to raise £2.7 billion annually by 2029/30. An additional £262 million will fund 1,800 HMRC debt management staff, projected to generate £2 billion per year in revenue by 2029/30.

Upgrading HMRC’s digital and data capabilities

Significant investment is also planned for modernising HMRC’s debt management case system (£154 million) and acquiring additional credit reference agency data (£12 million) to better target debt collection activities. Furthermore, £16 million will enhance HMRC’s app, allowing Income Tax Self Assessment taxpayers to make voluntary advance payments in installments.

Simplifying inheritance and Individual Savings Account reporting

To make Inheritance Tax easier and quicker, £52 million will fund digitisation of the service from 2027/28. Additionally, digital reporting for Individual Savings Account (ISA) managers will become mandatory from 6 April 2027, with draft legislation available for consultation in 2025.

New approaches to tax reporting and compliance

Self-Assessment tax returns will soon be pre-populated with Child Benefit data to ensure accuracy in the High-Income Child Benefit Charge (HIBC). Plans to require payroll software for reporting benefits in kind by 2026 will improve efficiency in tax collection on income tax and Class 1A National Insurance contributions (NICs).

Continued rollout of Making Tax Digital (MTD)

The Making Tax Digital (MTD) initiative will continue to expand, initially targeting individuals with incomes over £20,000 by the end of this Parliament, with additional timelines to be confirmed at future fiscal events.

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Addressing non-compliance in umbrella companies

To tackle tax avoidance and fraud within umbrella companies, recruitment agencies will be responsible for accounting for PAYE on payments to workers supplied via these companies starting in April 2026. This reform aims to protect workers from large tax bills caused by non-compliant umbrella companies.

Adjusting late payment interest and closing loopholes in car ownership

The late payment interest rate on unpaid tax liabilities will increase by 1.5 percentage points from 6 April 2025. Additionally, new legislation will address tax avoidance in contrived car ownership schemes, levelling the playing field for all employees.

Charity and partnership compliance measures

Charity tax rules will be tightened to prevent abuse, effective from April 2026, while reforms to capital gains tax on liquidated Limited Liability Partnerships (LLPs) will close a tax avoidance route, effective 30 October 2024.

Tackling offshore non-compliance and modernising taxation of overseas pensions

Efforts to reduce offshore tax non-compliance will be strengthened, with additional resources dedicated to high-value offshore fraud investigations. A consultation on offshore interest reporting aims to simplify rules for easier compliance with UK tax requirements.

New crypto asset reporting and employee trust taxation

The Crypto asset Reporting Framework (CARF) will be extended to UK users, and the government will implement reforms to Employee Ownership and Benefit Trust taxation to prevent abuse, ensuring these structures reward employees fairly.

Strengthening informant rewards and compliance measures

To increase reporting of high-value tax fraud, HMRC will strengthen its rewards scheme for informants. New consultations on tackling marketed tax avoidance and improving HMRC’s correction powers will support efforts to reduce tax fraud.

Streamlining and simplifying tax administration

The government will engage with stakeholders to develop measures for a more user-friendly tax administration system, which will be detailed in the spring.

Harmonising overseas pension scheme requirements

New rules will bring European Economic Area (EEA) Overseas Pension Schemes (OPS) and Recognized Overseas Pension Schemes (ROPS) in line with those established elsewhere from 6 April 2025.

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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.