05 November 2024
A budget from a government that promises “change” has heavily focused on the UK tax gap and their intention to tackle tax non-compliance.
Increasing the interest rate on unpaid tax
From April 2025 the late payment interest rate, that HMRC charges on unpaid tax liabilities, will increase by 1.5 percentage points to, the Bank of England Base Rate plus four percentage points.
Additional recourses
To tackle non-compliance and bring in additional tax revenue, HMRC will be supported with further funding to recruit an additional 5,000 full-time equivalent compliance staff by 2029/30. Aiming to reduce the estimated tax gap of 4.8% of 2022/23 theoretical liabilities.
The government will also provide further funding to extend the work of 1,200 existing debt management staff and to recruit 600 additional staff members from February 2025. Intending to boost HMRC’s capacity to collect outstanding tax debts.
Umbrella companies non-compliance
From April 2026 recruitment agencies will be responsible for PAYE on payments made to workers supplied through umbrella companies. Where there is no recruitment agency involved in the supply of the umbrella company worker, the end client itself will be accountable.
Mandating of payrolling benefits in kind
The government has confirmed that the plan to mandate the reporting of benefits in kind via the payroll, will go ahead from April 2026.
The latest update provides clarity that both beneficial loans and employer provided accommodation will continue to be processed via P11D and P11D(b), for time being at least. The plan is to still remove the use of P11D forms, but these benefits will not be included in the mandating process for April 2026.
Employers will be required to report and pay income tax and Class1A National Insurance contributions on all other benefits in kind (BIKs) in real-time, via their payroll software.
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