If you pay taxes in the UK, you need to know about HMRC’s big changes starting 1st November 2025. These changes aim to make tax administration easier, close compliance gaps, and modernize the system. But what does this mean for you?
What Is HMRC’s Major Policy Change
HMRC is rolling out a Transformation Roadmap with more than 50 projects. These changes are designed to automate processes, improve self-service, and increase accuracy. Key updates include:
- A new online PAYE service to check and update your tax information
- Use of AI to detect hidden income and offshore assets
- Expansion of Making Tax Digital (MTD) to include traders and landlords earning over £20,000 by 2028
When Do These Changes Start
The main changes begin on 1st November 2025. Some parts, like MTD, will start later:
- April 2026: MTD applies to self-employed or landlords earning £50,000+
- April 2028: MTD applies to anyone earning £20,000+ from trading or property
Why Are These Changes Happening
The goals are:
- Reduce the £4.8 billion tax gap
- Make the tax system faster and easier to use
- Ensure fairness for all taxpayers
How These Changes Affect You
Employees
- New PAYE service lets you update income, allowances, and expenses
- HMRC may adjust tax codes to recover winter fuel payments for incomes above £35,000
Self-Employed and Landlords
- MTD requires digital record-keeping and quarterly updates if earnings are above £50,000
- Late payment penalties increase: 3% after 15 days and 30 days, 10% per year thereafter
Businesses
- Employers can recover VAT on investment services for occupational pension funds if they paid for the service
Best Steps to Prepare
- Stay updated through your Personal Tax Account
- Learn the new online PAYE system and use accounting software
- Start keeping digital records for MTD
- Check your tax code to avoid mistakes
- Get professional tax advice if needed
Latest Updates in HMRC Policy
- Recruiting 1,100 new compliance and debt management staff
- Using AI and analytics to identify hidden income and offshore tax evasion
Key Dates and Actions Table
| Date | Who Is Affected | Change | Action to Take |
|---|---|---|---|
| 1 Nov 2025 | All taxpayers | Major HMRC policy changes begin | Review your Personal Tax Account and stay informed |
| April 2026 | Self-employed & landlords earning £50,000+ | Making Tax Digital (MTD) starts | Start keeping digital records and prepare for quarterly submissions |
| April 2028 | Self-employed & landlords earning £20,000+ | MTD expands | Ensure digital record-keeping is ready and compliant |
| From 1 Nov 2025 | Employees | New online PAYE service | Check and update income, tax codes, allowances, and expenses |
| From 1 Nov 2025 | Employees earning £35,000+ | Winter fuel payment recovery via tax code | Monitor tax code adjustments |
| From 1 Nov 2025 | Self-employed, landlords, and businesses | Late payment penalties increase | Pay on time or prepare for higher charges |
| From 1 Nov 2025 | Employers managing pension fund investments | VAT recovery allowed on investment costs | Keep proof of payment for services to claim VAT |
Conclusion
HMRC’s 2025 changes are about modernizing taxes, improving compliance, and making life easier for taxpayers. Staying informed and preparing early will keep your tax strategy safe and efficient.
FAQ
When do the HMRC changes start?
1st November 2025, with some parts phased in later.
What is Making Tax Digital (MTD)?
A system for digital record-keeping and quarterly tax updates. Applies to self-employed and landlords earning above £50,000 from April 2026.
Why are late payment penalties increasing?
To encourage on-time payments and reduce the tax gap.
How can I prepare for the changes?
Use digital tools, check your tax code, and consider professional advice.
Can I recover VAT on investment costs?
Yes, if you paid for the investment service and can prove it.
