The £3,000 reporting threshold for trading, property, and other income will simplify tax returns—300,000 people could be freed from filing. A digital alternative is also coming.

As part of the Spring 2025 Tax Update: Simplification, Administration and Reform, the government confirmed changes to the Income Tax Self Assessment (ITSA) reporting thresholds for trading, property, and other taxable income. From a future date within this Parliament, these thresholds will all be aligned and increased to £3,000 (gross) each.

This reform is designed to streamline the tax system and reduce unnecessary reporting. As a result, up to 300,000 taxpayers will no longer be required to submit a self-assessment return if their taxable income falls below the new threshold. Of those affected, an estimated 90,000 individuals will have no tax to pay at all and will not need to report their trading income to HMRC in the future.

For those with income below the threshold who do have tax to pay, a new digital reporting service will be introduced, offering a simpler alternative to self-assessment Taxpayers will also retain the option to remain in self-assessment if they prefer.

The government has said that they will release further details in a transformation roadmap set to be published later this year.

Not every money-making hobby counts as a business for tax purposes. Knowing when a hobby crosses into trading territory is vital to avoid unexpected tax bills. If your side project is growing, it might be time to check your tax position and stay compliant.

For instance, HMRC manuals provide the example of someone who enjoys repairing cars or selling stamps in their spare time. Whilst this might lead to making what’s known as taxable supplies, that alone does not mean the person is operating a business. It all depends on whether the activity passes the "business test". This is a set of measures that HMRC uses to determine whether there’s a business intention.

Generally, small-scale or infrequent sales from hobbies aren’t considered a business. But in some cases, hobbies can evolve. What starts off as a hobby or side interest might grow over time into something more substantial, and that’s when it could begin to attract tax obligations. In fact, many well-known businesses have started out as hobbies before scaling into full operations.

When deciding whether a hobby has crossed into business territory, it’s also helpful to consider how income tax would apply. The Income Tax Act makes it clear that tax is charged on the profits of any trade, profession, or vocation and there are similar VAT rules.

It is also important to look at any costs that have been incurred and whether these might genuinely relate to a business activity.

MTD for Income Tax kicks off in April 2026 for those earning over £50k. Digital records, quarterly updates, and tougher penalties are on the way. If this affects you, it’s time to get ready.

Designed to modernise the tax system and improve accuracy, MTD will significantly change how Income Tax is reported and paid. With less than a year until the first group of taxpayers must comply, now is the time to prepare.

MTD for Income Tax will become mandatory for self-employed individuals and landlords with annual business or property income exceeding £50,000 from April 2026,. This will require taxpayers to submit quarterly updates to HMRC, maintain digital records, and comply with a new penalty regime for late submissions and payments.

The second phase of implementation will begin in April 2027, extending the requirements to those earning between £30,000 and £50,000. In a further expansion announced during the Spring Statement 2025, MTD obligations will apply to sole traders and landlords with income over £20,000 starting April 2028. The government has also indicated that it is considering the best approach for individuals earning below this threshold.

HMRC is currently contacting taxpayers whose 2023–24 self-assessment returns indicate income near or above the £50,000 threshold. These letters are intended to provide advance notice of upcoming obligations under MTD.

Swapped an old fridge or carpet in your rental property? Landlords can claim tax relief on replacing domestic items – but not if it's an upgrade! Know the rules and save money by claiming what you are entitled.

The replacement of domestic items relief allows landlords to claim tax relief when they replace movable furniture, household appliances, and other domestic items in a rental property. This relief is available for various items, including free-standing wardrobes, carpets, curtains, televisions, fridges, and crockery.

The amount of the deduction depends on several factors:

• The cost of the new replacement item, which is limited to the cost of an equivalent item if it represents an improvement over the old one (i.e., beyond the reasonable modern equivalent); plus
• the incidental costs associated with disposing of the old item or acquiring the replacement; minus
• any amounts received from disposing of the old item must be deducted from the total claimable amount.

A key aspect of this relief is distinguishing between a "replacement" and an "improvement." If the new item is deemed an improvement over the old one, the allowable deduction is limited to the cost of purchasing an equivalent item of similar type and function.

HMRC’s internal guidance provides an example highlighting the fact that a brand-new budget washing machine costing circa £200 is not an improvement over a 5-year-old washing machine that cost around £200 at the time of purchase (or slightly less, considering inflation).

If the replacement item is a reasonable modern equivalent, such as replacing an old fridge with a new energy-efficient model, this would not be considered an improvement, and the landlord can claim the full cost of the new item under the relief.

This relief helps landlords offset the costs of maintaining and upgrading rental properties, provided the replacement is for an equivalent item rather than an enhanced or more expensive upgrade.

Child Benefit has risen for 2025–26: £26.05 for eldest, £17.25 for others. Claim continues to age 20 in approved education. HICBC still applies for incomes over £60K – but PAYE option coming this summer!

The child benefit rates for the only or eldest child in a family increased to £26.05 (from £25.60) for the 2025-26 tax year and the weekly rate for all other children to £17.25 (from £16.95). Child Benefit is usually paid every 4 weeks and will automatically be paid into a bank account. There is no limit to how many children parents can claim for.

Taxpayers entitled to the child benefit should be aware that HMRC usually stop paying child benefit on the 31 August following a child’s 16th Birthday. Under qualifying circumstances, the child benefit payment can continue until a child reaches their 20th birthday if they stay in approved education or training. A qualifying young person is someone aged 16,17, 18 or 19 in full time non-advanced education or in approved training.

Any parents with children that remain in approved education or training should contact the child benefit office to ensure they continue receiving the child benefit payments to which they are entitled. No child benefit is payable after a young person reaches the age of 20 years.

Child benefit is usually payable for children who come to the UK. However, there are a number of rules which must be met in order to claim. HMRC must be notified without delay if a child receiving child benefit moves permanently abroad.

The High Income Child Benefit Charge (HICBC) currently applies to taxpayers whose income exceeds £60,000 in a tax year and who are in receipt of child benefit. The HICBC is charged at the rate of 1% of the full child benefit award for each £200 of income between £60,000 and £80,000. For taxpayers with income above £80,000 the amount of the charge will equal the amount of child benefit received.

The HICBC therefore either reduces or removes the financial benefit of receiving child benefit. It was announced as part of the Spring Statement measures that from this summer, families will have the option to report their Child Benefit payments and pay the HICBC directly through their PAYE tax code instead of filing a self-assessment tax return.