28 April 2025
If you are covering HMRC’s tax update on simplification, administration and reform, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
“The government’s decision to raise and align the Income Tax Self Assessment reporting thresholds for trading, property and other taxable income to £3,000 is a positive step towards reducing unnecessary bureaucracy. Up to 300,000 taxpayers could be removed from the requirement to complete a Self Assessment return, with a new digital reporting service introduced for those with modest additional income.
“However, this simplification comes against a backdrop of wider tax changes that are pushing many more people into Self Assessment in the first place. The significant cuts to the Capital Gains Tax annual exempt amount and the dividend allowance mean that individuals who may have previously fallen below reporting thresholds are now much more likely to generate taxable income that must be declared. While today’s announcement will ease the process for some, the reality is that far more people will still need to grapple with Self Assessment than just a few years ago. As allowances continue to shrink and thresholds are frozen, good advice is becoming increasingly essential to avoid unexpected tax bills and ensure compliance.
“Separately, the government has announced it will enhance the ‘Check your State Pension forecast’ service, making it easier for individuals to understand any gaps in their National Insurance record and make voluntary contributions where appropriate. This is a sensible move, particularly as people face greater complexity in securing their full State Pension entitlement, but again it highlights the growing need for individuals to engage actively with their financial planning rather than assuming everything will fall neatly into place.”
