HMRC Scraps Tax Returns For Thousands: New Rule Changes Explained

Viktoria Ivanova

5 min read

Post on May 20, 2025

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The UK's HM Revenue and Customs (HMRC) is streamlining its tax system, announcing significant changes that will eliminate the need for self-assessment tax returns for thousands of individuals. This means simpler tax for many, reducing the administrative burden and freeing up valuable time. This article breaks down the new rules, explaining who's affected and what it means for taxpayers. We'll explore the implications of these changes and guide you on how to navigate this new landscape.

Who is Affected by the HMRC Tax Return Changes?

The HMRC tax return changes primarily affect individuals whose income sources are straightforward and already reported directly to HMRC. This simplifies the process for many, eliminating the need for them to complete and submit a self-assessment tax return.

• Individuals whose income is solely from employment (PAYE): If your only income comes from employment and your tax is handled through the PAYE system (Pay As You Earn), you may no longer need to file a self-assessment return.
• Those receiving only state benefits: Recipients of state benefits such as Universal Credit, Jobseeker's Allowance, or Employment and Support Allowance, whose income is solely from these sources, are also likely exempt.
• People with simple savings and dividend income reported directly to HMRC: If your savings and dividend income is reported directly to HMRC by your bank or investment provider, and it falls within certain thresholds, you might be exempt.
• Specific criteria relating to rental income thresholds: The changes also consider rental income. If your rental income falls below a specified threshold (currently under £10,000, but always check the official HMRC guidance for the most up-to-date information), you may not need to file. Exceeding this threshold typically requires a self-assessment.
• Link to official HMRC guidance for precise eligibility: For precise eligibility criteria and the most up-to-date information, it's crucial to refer to the official HMRC guidance. [Insert link to official HMRC guidance here]

Eligibility Criteria Summary:

Individuals whose income slightly exceeds the thresholds should carefully review the HMRC guidance to understand their obligations.

How Will the New System Work?

The new system relies heavily on automation. HMRC will automatically calculate your tax liability based on the income information they receive from your employer, banks, and other relevant sources.

• Explanation of automatic tax calculations by HMRC based on reported income: HMRC will use the data they already hold to calculate your tax. This eliminates the need for you to manually input this information into a tax return.
• Details on how individuals will receive their tax assessments: You'll receive your tax assessment directly from HMRC, usually online through your personal HMRC account.
• Process for individuals who need to correct information provided by third parties (employers, banks, etc.): If you identify any inaccuracies in the information provided by third parties, you'll need to contact HMRC to correct it. The process for doing so will be clearly outlined in your tax assessment.
• Clarification on the role of Self Assessment for those still required to file: Self Assessment will remain necessary for individuals with more complex income sources, such as those with significant rental income, business profits, or capital gains.
• Mention of the reduced administrative burden for both taxpayers and HMRC: This new system significantly reduces paperwork and administrative tasks for both taxpayers and HMRC, leading to greater efficiency for everyone involved.

The system aims for accuracy, but individuals should always review their tax assessment carefully to ensure it reflects their actual circumstances.

What are the Benefits of the New HMRC Rules?

The changes introduced by HMRC offer several key advantages for both individuals and the government:

• Reduced administrative burden for taxpayers: No more lengthy tax return forms!
• Simplified tax system leading to increased efficiency: A streamlined system saves time and effort for everyone.
• Potential for reduced tax errors: Automation reduces the risk of human error in tax calculations.
• More time and resources for taxpayers: This frees up valuable time that can be used for other important things.
• Improved accuracy in tax calculations by HMRC: The automated system aims for greater accuracy in tax assessments.

These benefits contribute to a more efficient and less stressful tax system for everyone.

What Should You Do if You're Affected?

If you believe these changes affect you, proactive steps can ensure a smooth transition:

• Review your personal tax information: Check the details HMRC holds on your income to ensure accuracy.
• Verify that your income details held by HMRC are correct: Contact HMRC immediately if you identify any discrepancies.
• Understand your tax liability and payment schedule: Familiarize yourself with your tax obligations and payment deadlines.
• Keep accurate records of income and expenses: Maintaining accurate records is always good practice, even with the automated system.
• Know where to find additional support or assistance from HMRC: The HMRC website provides a wealth of information and support resources.

Taking these steps will ensure a smooth transition to the new HMRC system.

Conclusion

HMRC's changes regarding self-assessment tax returns represent a significant simplification of the tax system for thousands of individuals. This move towards automation benefits both taxpayers and the government by reducing administrative burdens, improving accuracy, and increasing efficiency. Those whose income sources are straightforward and predominantly reported directly to HMRC will likely no longer need to file a self-assessment return. However, it's crucial to verify your eligibility and ensure the information held by HMRC is accurate.

Call to Action: Check if you're one of the thousands no longer required to file a self-assessment tax return with HMRC by visiting the official HMRC website. Understand the new rules and ensure your information is up-to-date to avoid potential issues with your tax assessment. Learn more about the HMRC's new tax return rules and how they affect you.