WatsOn Summer 2025 Newsletter (Issue 40)

Making Tax Digital for Income Tax (MTD IT)

From April 2026, taxpayers with qualifying trading and property income of £50,000 or more on their 2024-25 tax return will be mandated to join MTD IT. The start date for incomes between £30,000 and £50,000 is April 2027. The Chancellor confirmed that MTD IT will be extended to those with income of £20,000 or more from April 2028.

Sole traders and landlords must use approved software to record income/expenditure and submit cumulative quarterly updates to HMRC.

Side-Hustle Reporting Threshold Increased

Currently, if you earn over £1,000 from a “side hustle” (such as babysitting, dog walking, or online selling), you need to report this income via Self Assessment. To reduce administrative burdens, the Government intends to increase this threshold to earnings of £3,000 a year by the end of the current Parliament (April 2029 at the latest).

Note that this only changes reporting requirements: taxpayers will still need to pay tax on income between £1,000 and £3,000 using a simpler alternative online service.

High-Income Child Benefit Charge (HICBC) via PAYE

From August 2025, employed taxpayers will no longer be required to complete a Self Assessment tax return (SATR) purely to declare and pay the high-income child benefit charge (HICBC). Instead, individuals with no other income outside their PAYE earnings will be able to opt to have the HICBC collected directly from their payslip via a new online service.