Businesses will need to change the information they provide to HMRC from April 2025.
HMRC will be given extra powers to collect information regarding three key areas:
- Employers will be required to provide more detailed information on employee hours worked via Real Time Information PAYE reporting.
- Shareholders in owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies via their Self Assessment return.
- Self-employed individuals will be required to provide information on start and end dates of self-employment via their Self Assessment return.
Whilst this may seem like a lot of additional work for those involved, the government explains: ‘The additional data HMRC will collect is in areas where taxpayers already hold the data or provide it on a voluntary basis through the tax system.’
HMRC intends to build a more comprehensive understanding of employee occupations and working arrangements, as well as the self-employment sector’s dynamics. Ultimately, the goal is to help HMRC’s tax compliance and address tax evasion. (Investigation activity levels are still recovering from delays created by the pandemic.)
HMRC has attempted to balance its need for more relevant data with concerns about data privacy and additional administration. The new powers are reduced from the requirements put forward during consultation in 2022. However, they still contribute to strengthening HMRC’s tax system.
Failure to comply with the legislation will involve a £60 penalty.
‘It’s important to comply with HMRC’s requirements accurately and on time,’ says Felicity Reader, Accounts Senior at re:accounts chartered accountants in Stevenage. ‘We work hard to stay up-to-date and ensure our clients meet reporting requirements, while minimising their tax liabilities.’
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