Let’s Break It Down, Shall We?
Tax rules are constantly evolving, and recent changes could impact millions of people across the UK. Whether you're earning interest on your savings, running a side hustle, or filing self-assessment returns, it's crucial to stay informed.
One of the biggest updates is the increase in the number of taxpayers required to declare bank interest, as well as stricter regulations on income from platforms like eBay and Etsy. At the same time, HMRC is rolling out new digital tax filing requirements, meaning taxpayers will need to adapt to a more technology-driven approach.
Understanding these changes will help you avoid unexpected penalties and ensure you're making the most of available allowances. The Pie Tax App and the expert tax assistants available on the Pie app are here to make this process seamless.
More Taxpayers Must Declare Bank Interest
A key change is the number of people required to declare tax on bank interest. Due to rising interest rates, an extra 1 million people have been pulled into the tax net, bringing the total to 2 million taxpayers who must declare savings interest.
If you earn more than £500 in interest as a higher-rate taxpayer or £1,000 as a basic-rate taxpayer, you must report it to HMRC. Banks, finance apps, and other savings platforms are now legally required to share your interest earnings with HMRC, meaning non-compliance could result in penalties.
Side Hustles Now Face Stricter Tax Rules
If you earn money from selling items online, freelancing, or any other form of self-employment, new rules mean HMRC is cracking down. Any income over £3,000 from side hustles must now be declared, including sales on eBay, Etsy, and Vinted.
Previously, casual selling of unwanted items wasn’t closely monitored, but as more people turn to online marketplaces for extra income, HMRC has tightened regulations. Whether you’re flipping second-hand clothes or offering digital services, make sure you track your earnings and report them correctly.
HMRC's Late Penalty Cancellations
HMRC has recently cancelled over 30,000 late self-assessment penalties, citing overwhelming delays and administrative errors. This decision follows a surge in complaints and long customer service wait times.
The tax office admitted that they struggled to keep up with taxpayer appeals, leading to a decision to waive penalties rather than battle ongoing disputes. While this is good news for some, it highlights HMRC’s internal struggles in processing tax returns efficiently.
HMRC Owed £43 Billion in Unpaid Taxes
A staggering £43 billion is currently owed to HMRC in unpaid taxes, with £19 billion classified as "unrecoverable". This tax gap is prompting a more aggressive approach to tax collection, especially in high-value sectors like football.
Investigations into 20 football clubs and 84 players have revealed unpaid taxes amounting to £384 million, with many cases involving disputes over agent fees and player benefits. With HMRC under pressure to recover funds, taxpayers should expect increased scrutiny in multiple industries.
The Digital Future of Self-Assessment
The self-assessment process is undergoing major changes, with HMRC planning to shut down its legacy online tax return system by April 2026. This means taxpayers will soon be required to use third-party apps to file their returns.
This shift is part of HMRC’s Making Tax Digital (MTD) initiative, which aims to modernise tax filing. However, a lack of approved digital solutions has led to multiple delays in MTD’s rollout. The Pie Tax App is leading the way in creating an accessible, free platform for self-assessment, ensuring taxpayers can navigate this transition smoothly.
Common Tax Mistakes and How to Avoid Them
Many taxpayers unintentionally make errors that could cost them money or lead to penalties. Here are the top three tax mistakes to avoid:
- Missing tax relief opportunities – Many people don’t realise they can claim tax relief on uniforms, tools, and even home office expenses.
- Ignoring HMRC notices – If you receive a letter about unpaid tax, don’t ignore it. Address the issue promptly to avoid escalating fines.
- Forgetting to declare all income – If you have multiple income sources, such as self-employment and savings, make sure to report everything correctly.
Expert Advice: How to Stay Compliant
If you’re unsure about your tax situation, here are three key steps to stay on the right side of HMRC:
- Keep clear records – Track all income and expenses to ensure accuracy in your tax return.
- Use a trusted tax app – A platform like the Pie Tax App simplifies tax filing and helps avoid mistakes.
- Consult a tax expert – If in doubt, the expert tax assistants available on the Pie app can review your return and provide tailored advice.
