This article, "Threshold rise means no returns for 300k taxpayers," originally appeared on AccountingWeb.com.
The government has revealed plans today to raise the trading income reporting threshold from £1,000 to £3,000 within this Parliament, which it claims will remove the need for 300,000 taxpayers to file a tax return – instead they will have to use an alternative online service.
The government has aimed the announcement at so-called “side-hustlers”, such as dog walkers and those selling clothes online.
Exchequer Secretary to the Treasury, James Murray announced the reporting threshold increase at the “20 years of HMRC” event hosted by the Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants in England and Wales (ICAEW), where he also confirmed a new dedicated escalation route for agents with self assessment and PAYE queries.
He also revealed simplifications to the government’s temporary admission customs procedure. The goal of this is to make the relief for temporary imports easier for a range of sectors to use, including art and antiques.
Raising income tax reporting threshold
At the event hosted at ICAEW’s headquarters in London on 11 March, Murray outlined plans to increase the income tax self assessment reporting threshold for trading income from £1,000 to £3,000 gross within this Parliament.
Murray said the change to the trading income reporting threshold “could lift 300,000 customers out of the need to file a self assessment tax return”. He added that around 90,000 of these taxpayers would not need to report their trading income to HMRC at all because they have no tax to pay.
Those who do owe tax but are under the reporting threshold will be able to use a new online service.
“This change will avoid wasting customers’ time, wasting HMRC time, and it will help those people who are currently required to submit a tax return and potentially face late-filing penalties even though they do not owe any tax,” Murray said at the event.
New dedicated escalation route
Murray also announced that from the end of this month HMRC will launch a new dedicated escalation route for agents with self assessment and PAYE queries that are over four weeks old.
“A new dedicated team of experienced technicians and advisers will adopt a ‘once and done’ approach, taking an end-to-end ownership of cases and maintaining regular communication with agents,” said Murray.
This new service comes after changes that came into effect last October where HMRC combined PAYE and self assessment queries, introduced an option on the Agent Dedicated Line (ADL) for repayment progress chasing and rolled out an agent web chat service.
At the event, Frank Haskew, head of taxation strategy at ICAEW, welcomed the news of the escalation route for agents with self assessment and PAYE queries.
“This new service is a step in the right direction towards the recommendation in our joint report with the CIOT that called for appropriate routes to escalate complex cases to help resolve problems more effectively without the need for prolonged and repeated interaction with HMRC customer services. If successful, we would like to see this rolled out to other taxes,” he said.
On the subject of phone lines, Murray highlighted that calls to the ADL were being answered 30% more quickly during the first quarter of the last calendar year. “I am determined that we will see increasingly consistent performance over the next financial year, and I’ve been asked today to follow consultation with professional bodies and practicing agents,” he said.
Elsewhere, he confirmed that following the Chancellor’s announcement of 5,000 new HMRC compliance case workers and funding for 1,800 debt collection officers over the course of this Parliament, around 600 new compliance staff will start at the tax department this month.
Speed trade processes
Meanwhile, a digital pilot with the United States designed to test ways to speed up trade processes was announced.
The scheme is set to look at making communications between HMRC, the US and businesses “more seamless through better use of digital credentials and secure real-time data transfers”, as well as making it easier and quicker to request trade benefits from each country.
Finally, Murray updated the attendees on the work HMRC is doing to tackle phoenixism – where company directors go insolvent to avoid tax – and announced a new reward scheme to encourage informants to come forward to HMRC about tax fraud.
Entrepreneurial spirit
Murray said the way HMRC works is changing in a bid to “make it easier for Brits to make the very most of their entrepreneurial spirit”.
“Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle,” he added. “We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.”
During his time in office, Murray has been taking teams of senior HMRC officials to meet the likes of NatWest, Octopus Energy, Barclays and John Lewis to “learn best practice and innovative approaches” to modernising and digitising customer service from the private sector.
Password trials
Also announced, HMRC has begun trialling a system where customers can use their voice as their password in a bid to pass security checks faster and more securely.
Following an evaluation of the trial, it is expected to be rolled out across HMRC throughout 2025 as the department looks to reduce call times – a particular gripe of many over recent years.
This comes on the back of HMRC meeting its target of 85% of calls handled between October and December 2024.
Significant amount of compensation
On phoenixism, Murray outlined how HMRC and the Insolvency Service have agreed a joint proposal, which includes an increase to the use of securities, where HMRC asks for upfront payment of tax from new companies, making more rogue directors personally liable for the taxes of their company.
Coinciding with this, a reward scheme for informants will be launched later in the year, which is designed to target serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes.
It will take inspiration from the US and Canadian whistleblower models, and complement the existing HMRC rewards scheme, with informants able to take home a “significant amount of compensation” equal to a proportion of the tax take so the scheme raises more money than it costs.
Work is ongoing within the government regarding what percentage this could be.
Staff boost and international progress
At the Budget, a £1.5bn HMRC boost was announced as part of plans to recruit and fund an additional 5,000 new compliance caseworkers and 1,800 debt collection officers. Now, Murray announced that a further 600 new compliance staff will start work this month.
Investment in artificial intelligence (AI), modernising HMRC systems and legislation to tackle non-compliant tax avoidance and prevent non-compliance is expected to raise £6.5bn per year by 2029/30.
As for the digital pilot with US Customs and Border Protection to test ways to speed up trade processes for businesses, the aim is to make supply chains more efficient.
The scheme will look to make the communications between HMRC, the US and businesses more seamless through better use of digital credentials and real-time data. It will also include testing the ability to issue and share digital trusted trader credentials between UK and US systems
Editor – This article was updated to clarify that the announcement was a change in the reporting threshold and to include further commentary from the ICAEW and CIOT event.