Last month, the government revealed their plans to recover an additional £7.5 billion in unpaid tax, as part of a renewed push to close the tax gap – the difference between what HMRC expects to collect and what’s actually paid.
Figures show that £46.8 billion in tax went unpaid in 2023-24. And small businesses are firmly in the spotlight, accounting for 60% of the total tax gap, often due to:
- Failure to take reasonable care
- Errors
- Tax evasion
To tackle this, HMRC is investing £1.7 billion over four years, funding thousands of compliance and debt management roles.
Alongside this, Making Tax Digital (MTD) continues to expand. It’s expected to generate £4 billion in additional VAT over the next four years by reducing errors. MTD for Income Tax comes into effect April 2026, starting with self-employed individuals and landlords earning over £50,000, the threshold is then reducing over the following two years.
Under MTD, you’ll need to:
- Keep digital records of income and expenses
- Submit quarterly updates using approved software
- File an annual declaration
It’s a significant shift and HMRC expects it to raise nearly £2 billion in additional tax revenue by 2030.
The message is clear: compliance expectations are rising, and smaller businesses will see increased scrutiny over the coming years.
If you’re unsure whether your systems are fit for purpose – or simply want peace of mind that you’re ready for the changes ahead – let’s talk.
