New legislation is expected to be shortly introduced that will change the information business owners and self-employed currently provide to HMRC.
It is the latest move by HMRC to identify those businesses and individuals which it believes are not providing the correct information and paying the taxes due.
We are currently waiting on the full details of the legislation, but businesses and the self-employed should prepare for the changes based on what is already known from the government’s proposals and its consultation that closed earlier this year.
Business owners who receive dividends will need to provide details of their shareholding as well as dividends on their self-assessment tax returns.
Self-employed individuals will need to declare both the start and end dates of self-employment on self-assessment tax returns.
Businesses with employees will also need to provide details of the hours worked by all employees via real-time information (RTI) payroll submissions. Here, employers will need to provide:
- For hourly paid staff – the number of hours worked.
- For salaried staff – contracted hours plus overtime hours paid.
- Hours worked will not be needed for statutory payments, benefits in kind or termination payments.
These new reporting rules will take effect from 6 April 2025 tax year with fines of £60 applied should information be missed.
We do know that business owners will be required to submit information via their self-assessment tax returns. However, it is currently unclear how self-employed individuals will need to report, although it is likely to be via the self-employment pages in their self-assessment tax returns.
These changes will greatly increase the amount of information HMRC holds on business owners and the self-employed, adding further compliance obligations. We should not therefore be surprised if this additional reporting results in HMRC challenging the tax position of more self-employed individuals based on the hours they work.
Businesses and self-employed individuals are encouraged to take advice early on the impact these changes will have.
Contact expert below for more information.
