Compliance

Compliance Checklist: Meeting HMRC’s Digital & Self-Assessment Changes

With new threshold changes and penalties tied to digital tax filing and late payments starting April 2025, UK taxpayers must adjust their practices now to stay compliant and avoid surprise penalties.

By NomadicTax Research Team • 5-8 min read • November 22, 2025

## Recent Compliance Developments UK’s **Spring Statement 2025** announced significant adjustments to tax reporting and late payment penalties commencing from **6 April 2025**. These affect both Value Added Tax (VAT) and Income Tax Self Assessment (ITSA) taxpayers. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai)) Key compliance areas include: - New late payment penalties: reaching **3%** for liabilities overdue by 15 days, another **3%** at 30 days, and **10% per annum** where tax remains overdue beyond 31 days. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai)) - Expanding **Making Tax Digital (MTD) for ITSA**: from 6 April 2028, taxpayers with **trading, property or other taxable income** over **£20,000** must use digital reporting software and submit through a single channel. ([gov.uk](https://www.gov.uk/government/publications/supporting-documents-for-spring-statement-2025/spring-statement-2025-policy-costings?utm_source=openai)) - Changed Self Assessment thresholds: the threshold for trading, property, or “other taxable income” will align at **£3,000** gross. Those below may use a new digital reporting service or continue in Self Assessment if they wish. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-spring-2025-simplification-administration-and-reform/tax-update-spring-2025-simplification-administration-and-reform-summary?utm_source=openai)) ## Actionable Compliance Steps ### 1. Understand your thresholds and dates - From **6 April 2025**, new penalties come into force for VAT and ITSA arrears. Be scrupulous about timing payments. - From **6 April 2028**, MTD-for-ITSA becomes mandatory for those over £20,000; prepare your digital tools and record keeping now. - Check whether your trading or property income exceeds £3,000 gross—if yes, determine whether digital reporting applies or if you’ll stay in Self Assessment. ### 2. Adopt digital record-keeping early - Choose accounting/tax software compatible with MTD obligations: make sure it supports VAT, ITSA filings, and can integrate with HMRC digital services. - Keep clear, accurate records of dates when income arises or accrues, especially for property and trading income—important for assessing threshold compliance. ### 3. Monitor and pay tax liabilities promptly - Late payment penalties escalate quickly after 15 and 30 days. Set up reminders or use automated payments. - If expecting a payment soon, attempt to pay before deadlines. For VAT, it’s especially important since VAT arrears lead to persistent penalties. ### 4. Use available transitional reliefs and guidance - Where possible, consult HMRC’s transition rules for FIG regime, IHT changes, and eligibility for TRF. These can affect your ongoing liability—being eligible or missing deadlines can lead to suboptimal treatment. - For those with foreign income/gains that need rebasing elections, get these sorted before filing dates. ## Example Checklists by Profile - **Self-employed with rental income £25,000/year**: ensure software ready for MTD-for-ITSA by 2028; start tracking earnings and expenses digitally; estimate tax and pay off early. - **Non-dom individual arriving in UK 2024**: check if you’re eligible for the 4-year FIG regime; inventory your offshore trusts; consider making TRF elections for pre-April 2025 income/gains. - **Trustee with overseas property**: verify settlor’s residence history; review if previously excluded property status holds; plan for IHT exposures and possible exit charges. --- Failing to keep up with these changes can result in steep penalties and unexpected tax charges. But with timely preparation and clarity on your residence and income profile, you can stay compliant and make the most of reliefs available.