In this week’s Enews, there is news on how the digitally excluded can apply for a Making tax Digital exemption. There is also news on HMRC’s ability to recover debts from bank accounts and a warning about the damage long-term sickness is doing to the economy to update you on.
Digitally excluded can apply for MTD for Income Tax exemption now
HMRC has opened up a service for landlords and self-employed to apply for exemption from Making Tax Digital (MTD) for Income Tax phase one.
From next April, people who are self-employed and landlords, and declare more than £50,000 of gross income in their 2024/25 self assessment tax return, will be legally required to follow the new MTD for Income Tax rules from April 2026 onwards.
Anyone who thinks they may be eligible for exemption must phone or write to HMRC. Third parties such as relatives and agents can do this on behalf of taxpayers if they are authorised. It will take up to 28 days for HMRC to respond with a decision.
Sharron West, Technical Officer at the Low Incomes Tax Reform Group (LITRG), said:
‘Because HMRC will deal with applications on a case-by-case basis, we don’t yet know how generous their interpretation of the rules will be, but we know that HMRC are keen to see as many people as possible manage their taxes online.
‘If you are already exempt from MTD for VAT, HMRC say you should contact them when the exemption application process opens so they can check your circumstances and confirm if you’ll also be exempt from MTD for Income Tax.
‘The clock is ticking and it’s time to get ready.’
Internet link: GOV.UK Chartered Institute of Taxation website
HMRC to resume taking tax owed by debtors directly from their bank accounts
HMRC has resumed its programme allowing direct recovery of money from debtors’ bank accounts.
The Direct Recovery of Debts (DRD) policy, which was paused during the Covid-19 pandemic, has restarted in a ‘test and learn’ phase’, the tax authority has confirmed.
DRD targets individuals and businesses who can afford to pay their debts but deliberately choose not to, HMRC said.
This power enables HMRC to compel banks and building societies to transfer funds directly from a debtor’s account. It applies to debts of £1,000 or more, with safeguards against undue hardship and for vulnerable customers.
Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt.
Safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact.
The safeguards also include leaving a minimum of £5,000 in the debtor’s accounts to ensure that sufficient money is available to pay wages, mortgages or essential business or household expenses.
HMRC said:
‘The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.’
Internet link: GOV.UK
Long-term sickness blighting UK economy
The UK must tackle its status as the sick man of the G7 if it wants to grow the economy, warns the British Chambers of Commerce (BCC).
Businesses want to see a major shake-up of the UK’s approach to ill-health which is excluding people from work and hobbling the economy, says the BCC.
It says around 7% of the UK workforce, almost 2.8 million people, is currently out of work due to long-term sickness, whereas the equivalent figure in Japan is just 3.5%.
The government’s own calculations put the lost economic output from this inactivity at a minimum of £130 billion, a figure which does not include welfare payments.
The BCC is calling for joint action by government and businesses to halt the rising tide of sickness and help people suffering ill-health to get back into work or stay there.
Shevaun Haviland, Director General of the BCC, said:
‘Sickness absenteeism is a growing concern. The UK has more than nine million people who aren’t working with one third of them suffering from long-term health conditions.
‘This is a devastating loss of potential – for these individuals, the businesses that need them and our local economies.
‘If the government is serious about growth, then we must turn the tide on this loss of talent. The evidence is also clear that being in work is good for health.
‘Employers recognise the problem and want to do more, but the increasing cost and complexity of the landscape means many lack the resources to respond quickly and effectively.’
Internet link: BCC website
