Budget 2025 and Tax Administration

Against a backdrop of mounting fiscal pressure and a renewed focus on closing the tax gap, the Government has set out a wide-ranging programme of reforms aimed at strengthening tax administration, accelerating collection and improving compliance. Through increased investment in HM Revenue & Customs, greater use of digital technology, earlier payment of tax liabilities and tougher enforcement tools, the measures signal a decisive shift towards real-time taxation and more robust scrutiny of unpaid and under-reported tax. Together, these changes reflect a clear policy intention: to modernise the tax system, recover more revenue, and ensure that taxpayers meet their obligations promptly and accurately.

Enforcement and tax collection

The government has announced a variety of compliance initiatives, which include the following:

• Investing further in HMRC’s debt management work and publishing a new tax debt strategy, which outlines plans to deliver year-on-year reductions to the overall tax debt balance as a percentage of tax receipts
• Requiring Income Tax Self Assessment taxpayers with Pay As You Earn (PAYE) income to pay more of their Self-Assessment tax liabilities in-year via PAYE from April 2029
• Investing in HMRC to modernise the tax system and help taxpayers get their taxes right first time through greater digitalisation. This investment will improve how HMRC uses information from third parties, and build new technology to increase the use of data-driven prompts to help taxpayers avoid errors when submitting tax returns
• Investing £64 million over the next five years in HMRC’s existing partnerships with private sector debt collection agencies to collect more tax debt.

In addition, from April 2029, businesses will be required to issue all VAT invoices as e-invoices, with a roadmap on implementation to be published next year.

The government is attempting to close the tax gap by pursuing those who try to bend or break the rules, collecting more unpaid taxes and modernising the tax system. This is designed to take the total additional revenue raised by closing the tax gap this Parliament to £10 billion in 2029/30.

Tax payment dates

There are early indications that tax payment dates are going to be brought forward.

For example, taxpayers with Pay As You Earn (PAYE) income and who are also within the Self-Assessment tax return system will have to pay some of their non-employment tax liabilities via PAYE.

It is clear that the Government are seeking to bring forward tax payments beyond the current Self Assessment deadlines for payments at 31 January and 31 July, with a view to collecting ‘real time’ payments. 

Informants reward scheme

HMRC have launched a strengthened reward scheme for informants, targeting serious non-compliance involving large companies, wealthy individuals, offshore activities, and avoidance schemes.

The reward scheme will offer informants 15% to 30% of tax recovered for cases over £1.5 million, aiming to attract high-quality intelligence on serious tax non-compliance by large companies and wealthy individuals. 

Rewards are uncapped, taxable, and only paid after successful recovery, with the scheme expected to significantly boost tax compliance and close the tax gap.

Making Tax Digital for Income Tax Self-Assessment

The government is committed to delivering Making Tax Digital for Income Tax Self Assessment, which starts in April 2026 for those with qualifying income over £50,000. The government will expand the rollout of the programme to those with incomes over £30,000 in April 2027 and £20,000 in April 2028. However, the government will not proceed with Making Tax Digital for Corporation Tax.

£30,000 in April 2027 and £20,000 in April 2028. However, the government will not proceed with Making Tax Digital for Corporation Tax.

Download our guide to Making Tax Digital for Income Tax 

Next steps

As always, these articles provide an overview of the various measures available, and no action should be taken without seeking professional advice.  At Ritchie Phillips, we pride ourselves on providing clear, pragmatic advice to help businesses, individuals and families. If you’d like to discuss any of the above, please get in touch.   

You can find more of our Budget 2025 Insights here: 

 https://www.ritchiephillips.co.uk/insights/how-did-the-budget-affect-you-your-finances