Making tax digital (MTD) for income tax

MTD for income tax will be extended to sole traders and landlords with income over £20,000. The change will be made by the end of this Parliament (2029), but the precise timing will be set out at a future fiscal event. Currently, MTD will begin from April 2026 for sole traders and landlords with income over £50,000 and April 2027 for those with income over £30,000.

Late payment interest

The interest rate charged by HMRC on unpaid tax liabilities will rise by 1.5 percentage points from 6 April 2025.

Reporting of benefits-in-kind via payroll software

The government has confirmed that the use of payroll software to report and pay tax on benefits-in-kind for income tax and NICs will become mandatory, in phases, from April 2026.

Umbrella companies

Recruitment agencies will be responsible for accounting for PAYE on payments made to workers supplied via umbrella companies from April 2026. Where there is no agency, this responsibility will fall to the end client business.

Car ownership schemes

‘Loopholes’ will be closed in certain company car ownership arrangements. In these arrangements, an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period, avoiding company car tax. The changes will take effect from 6 April 2026.

Liquidations of limited liability partnerships (LLP)

The way capital gains are taxed will be changed when an LLP is liquidated, and assets are disposed of to a contributing member or person connected to them, to close a route used to avoid tax. Changes will have effect from 30 October 2024.

Close company loans to shareholders

A change to the loans to participators regime from 30 October 2024 is aimed at ensuring shareholders cannot extract funds untaxed from close companies.

Employee trusts

Reforms to the taxation of employee ownership trusts and employee benefit trusts from 30 October 2024 will be aimed at preventing opportunities for abuse, while ensuring that the regimes remain focused on encouraging employee ownership and rewarding employees.

Corporate insolvencies

Increased collaboration between HMRC, Companies House and the Insolvency Service will aim to tackle directors using contrived corporate insolvencies and dissolutions (‘phoenixism’) to evade tax.

Offshore interest

The government is consulting on ways to address the mismatch of information on offshore interest being provided on a calendar year basis, rather than a UK tax year basis. This will include taxing individuals on non-UK interest arising in the year to 31 December that ends in the tax year.

Tax advisers

Tax advisers who interact with HMRC on behalf of clients will have to be registered from April 2026. The government will consult on options to enhance HMRC’s powers against tax advisers who facilitate noncompliance.

Charity compliance

Changes to the charity tax rules from April 2026 will aim to ensure that only the intended tax relief is given to charities.

Other tax compliance measures

The government is consulting on a range of issues including how to reform HMRC’s correction powers and processes; how HMRC acquires and uses third party data; tackling promoters of marketed tax avoidance; and offshore company tax avoidance. HMRC’s counter fraud capability will also be expanded.