"I want to make sure that everyone who listened to that speech or reads it later online understands how serious we are about going further and faster to modernise HMRC," the XST told the ICAEW Insights podcast. The speech was made at ICAEW and CIOT’s conference 20 years of HMRC and was streamed live on LinkedIn.  

"We want to improve value for money. We want to make sure that customer service is as good as possible, and we want to make sure that we close the tax gap. But most of all, we want to make sure that the tax system supports businesses to grow. Because we know that we want businesses to spend less time on tax administration and more time growing their business, and part of that is getting the modern, digitised tax and customs system that we need." 

Relaxation of reporting criteria 

HMRC has announced that the income tax self assessment (ITSA) reporting threshold for trading income will be increased from £1,000 to £3,000 within this parliament. 

The trading income reporting threshold is one of the criteria for determining if a person is required to submit a tax return. It is different from the trading allowance of £1,000. ICAEW understands that the trading allowance will remain at £1,000. Where sales are within the trading allowance, the person may have no tax to pay; and where sales exceed the trading allowance, the person may choose to offset the trading allowance in calculating their taxable income.  

Trading income includes income received from “side hustles”, such as selling clothes online, dog-walking, gardening, driving a taxi or creating content online. HMRC recently launched a new campaign to help people with side hustles understand their tax obligations.  

The change in the reporting threshold is expected to benefit up to 300,000 taxpayers who will no longer need to file an ITSA return. Of this number, HMRC says an estimated 90,000 people will have no tax to pay and no reason to report their trading income to HMRC. Those that do have tax to pay will be able to settle what they owe through a new simple online service. 

New service for resolving queries 

HMRC will launch a new service to provide an escalation route for agents with self assessment and pay as you earn queries that are over four weeks old.   

Under the new service, “a dedicated team of experienced technicians and advisers will adopt a ‘once and done’ approach, taking end-to-end ownership of cases and maintaining regular communication with agents”. The new service is expected to be operational by the end of the month. 

Read more about the new service in a separate article published by ICAEW.   

Other announcements  

The government will: 

• Roll out a new system which will allow taxpayers calling HMRC to use their voice as their password. HMRC says that “voice biometrics strengthen security, safeguard customer data, and reduce call times” and is currently trialling the system.
• Increase efforts to tackle “phoenixism”. This is the practice of carrying on the same business successively through a series of companies where each company becomes insolvent and so cannot pay its debts. One of the measures involves HMRC and the Insolvency Service working together to increase the use of securities. This is where HMRC asks for upfront payment of tax from new companies.   
• Introduce a new reward scheme to encourage informants to come forward to tell HMRC about tax fraud. HMRC says this will look to target serious non-compliance in large corporates, wealthy individuals, offshore and avoidance schemes, and is intended to complement the existing HMRC reward scheme.
• Consult in spring 2025 on a range of measures, including widening the use of  advance clearances for research and development tax relief and for investors in major projects. 
• Simplify the government’s temporary admission customs procedure. The changes are intended to make the relief easier to use for a range of sectors, for example, the usual time limit for fine art and antiques will increase from two to four years. ICAEW called for changes to the temporary admissions customs procedure in a letter to the government in January 2024. 
• Participate in a new digital pilot with the United States (US) to test ways to speed up trade processes for US and UK businesses. HMRC says that the “pilot will look to make the communications between HMRC, the US and businesses more seamless through better use of digital credentials and secure real-time data transfers”. 

Update on HMRC staffing 

At the Autumn Budget 2024, the government announced additional funding of over £1.5bn for HMRC to recruit an additional 5,000 new compliance caseworkers and 1,800 debt collection officers. The XST has now provided an update, saying that 600 new compliance staff will start work in March 2025. 

Further information 

• Government press release
• Transcript of the speech
• Video of the speech
• An article covering the event will be published in TAXline shortly.