Changes to the Tax System in 2025

02 January 2025

In 2025, significant changes are set to transform the UK's Self Assessment tax system, impacting a wide range of taxpayers, including the self-employed, landlords, and online sellers. Understanding these developments is crucial for ensuring compliance and optimizing your tax affairs.

Digital Platform Reporting

Starting January 2025, online platforms such as Amazon, Airbnb, Deliveroo, and Uber are required to report sellers' income directly to HM Revenue & Customs (HMRC). This initiative aims to enhance transparency and ensure accurate tax reporting. Individuals earning income through these platforms must meticulously record their earnings, as HMRC will cross-reference personal declarations with platform-reported data. Notably, this reporting excludes individuals with fewer than 30 sales or annual earnings under €2,000.

Making Tax Digital (MTD) for Income Tax

The implementation of Making Tax Digital (MTD) for Income Tax has been deferred to April 2026. This initiative will require self-employed individuals and landlords earning above £50,000 annually to maintain digital records and submit quarterly updates to HMRC. While not immediate, it's prudent to begin transitioning to digital record-keeping to ensure a seamless adaptation when the mandate takes effect. SAGE

Self Assessment Filing Deadlines

The Self Assessment tax return deadline for the 2023-2024 tax year is January 31, 2025. Missing this deadline can result in penalties, so it's essential to prepare and submit your return promptly. Key dates to remember include:

• October 5, 2024: Deadline to register for Self Assessment if you're a new taxpayer.
• October 31, 2024: Deadline for submitting paper tax returns.
• January 31, 2025: Deadline for online tax returns and payment of any tax owed.

Implications for High Earners

For the 2024/25 tax year, the requirement for PAYE-only taxpayers earning between £100,000 and £150,000 to file a Self Assessment tax return has been removed. This change simplifies the tax process for high earners whose income is solely taxed through PAYE. However, those with additional income sources must continue to file returns as necessary.

Preparation Tips

To navigate these changes effectively:

• Maintain Accurate Records: Ensure all income and expenses are documented, especially if earning through digital platforms.
• Embrace Digital Tools: Consider adopting digital accounting software to streamline record-keeping in anticipation of MTD requirements.
• Seek Professional Advice: Consult with us to understand how these changes affect your specific circumstances and to ensure compliance.