In the 2025 Spring Budget, Chancellor Rachel Reeves unveiled a series of initiatives aimed at strengthening HMRC’s ability to combat tax evasion and avoidance. These measures are designed to enhance compliance, modernize tax administration, and ensure a fairer tax system.
Increased Investment in HMRC Compliance
The government plans to recruit an additional 500 HMRC compliance staff, supplementing the 5,000 new positions announced in the Autumn Budget 2024. This expansion is expected to generate an extra £1 billion in tax revenue over the next four years.
Enhanced Penalties for Late Payments
Starting April 2025, penalties for late filing of self-assessment tax and VAT returns will increase. Current penalties of 2-4% will rise to 3-10%, potentially increasing fines by around 6%. This change aims to close the £40 billion gap between tax paid and owed.
Whistleblower Reward Program
A new reward scheme for informants will be launched later this year, targeting serious non-compliance in large corporations, wealthy individuals, offshore accounts, and avoidance schemes. Informants will receive compensation linked to a percentage of the tax recovered due to their information.
Crackdown on Tax Avoidance Promoters
The government is consulting on new measures to close in on promoters of tax avoidance. Proposals include granting HMRC further powers and stronger sanctions to better disrupt the business models used by tax avoidance promoters.
Modernisation of Tax Administration
The rollout of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) will continue, with sole traders and landlords with qualifying income over £20,000 joining from April 2028. This initiative aims to streamline tax processes and reduce errors.
Conclusion
The 2025 Spring Budget underscores the government’s commitment to tackling tax evasion and avoidance through increased investment in HMRC, stricter penalties, and modernisation efforts. These measures aim to create a fairer tax system and ensure compliance across all sectors.
Worried about any of the above? We’re here to help. We’ll be posting more in depth blog posts about some of these topics and more over the coming weeks, analysing and outlining the changes, so you don’t have to. If you need guidance on compliance, late payments, or how these reforms impact you, get in touch with us today.
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