Compliance and Planning After Budget 2025: What Individuals in the UK Should Do Now

Key compliance changes to be aware of Here are recent developments requiring attention:<br>• Making Tax Digital (MTD) threshold lowered: From 6 April 2028, self-employed individuals and landlords with trading or property income over £20,000 must comply with quarterly reporting under MTD for ITSA.(gov.uk)<br>• Stronger penalties for late payment and submission as taxpayers join MTD: e.g. for missing deadlines of 15, 30 days, with escalating penalties.(gov.uk)<br>• Overseas Workday Relief eligibility changes: Now tied to residence not domicile, with formal election requirement.(assets.publishing.service.gov.uk)<br>• Anti-avoidance and trust reforms: “Excluded property” definitions changing; trust exit and 10-year anniversary charges more tightly enforced.(gov.uk)<br>• Inheritance Tax thresholds fixed until 2030; agricultural and business property relief rate changes from 6 April 2026.(gov.uk)<br><br>## How to plan now: steps individuals should take 1. Inventory your foreign income and assets existing as of April 2025 or earlier. Understand what will be taxable, what you can designate under TRF, what may be rebased. <br>2. Tax-calendar revision: Align your plans to key dates—6 April 2025 regime start, 6 April 2026 for many relief/inheritance changes. <br>3. Engage in accurate residency tracking: days present, ties to UK, previous years abroad. Residency status is pivotal under new regime. <br>4. Prepare for digital record-keeping: MTD obligations demand timely bookkeeping; assessing whether software tool-based filing works for your situation. <br>5. Monitor penalty risks: both for late payments and late filing, especially for those newly in MTD; also for misreporting foreign income/gains. <br>6. Estate planning refreshed: with IHT residence-based rules now applying, consider wills, trusts, inter vivos gifts while conditions favourable.<br><br>## Example: Alex the investor and tutor<br>Alex tutors online from abroad but become UK tax resident in May 2025. He has foreign income from clients in Europe and own rental property overseas. Under the new rules: his FIG must be declared. He could elect OWR for foreign tutoring income if eligible, use TRF to avoid taxation on certain past income/gains, and check whether his entity holding property abroad is still “excluded property” under IHT<br><br>## Staying ahead: what’s coming and what to watch for * Draft legislation and technical notes are being released—on e.g. offshore anti-avoidance, trust rules, residence criteria. Keeping informed via HMRC publications is crucial. <br>* Public consultations especially around definitions (long-term UK resident, tail rules, residency criteria for IHT). <br>* International tax treaties—changes to UK domestic rules don’t wipe out treaty provisions like double tax relief; they may help cushion tax exposure. <br>* Operational guidance from HMRC: how to make elections, what evidence/documentation is accepted (payroll, bank statements, trust deeds). <br><br>Bottom line: Budget 2025 delivered transformative reforms; individuals need to audit their foreign income, residency, estates now—compliance is not optional, planning can deliver savings.