The annual state pension is likely to rise by 4.7% next year under triple lock rules bringing pensioners within £35 of basic rate tax threshold

The rise is down to the triple lock which means the state pension is tied to the highest of average earnings growth, inflation or 2.5%. The latest ONS figures showed 4.7% earnings growth including bonuses for May to July 2025.

The government has not yet confirmed the 2026-27 increase for pensioners, but this is usually confirmed in the autumn and it is committed to maintaining the triple lock.

A 4.7% increase would see the ‘new’ state pension rise to £12,534.60 a year, just below the frozen basic rate tax threshold of £12,570, meaning millions of pensioners will be perilously close to paying tax assuming they have no other earnings.

Those earning the old state pension would not be affected as their base pension is so much lower at £9,607 per year.

Nigel Green, chief executive of global financial advisory deVere Group, warns that the headline increase masks a serious problem. 

 ‘The state pension is now almost level with the personal allowance,’ he said. ‘Any private pension income, savings interest or taxable benefits will push people over the threshold. Many who have never paid tax in retirement will soon find themselves in HMRC’s sights.’

With the allowance frozen until at least 2028-29, the triple lock is creating a tax nightmare. Before the general election, the Conservatives said they would introduce a special tax threshold for pensioners, but the current chancellor Rachel Reeves has never addressed the potential problem. 

HMRC figures already show about 8.5m pensioners pay income tax, up from 7.8m just a year ago. 

Green warned: ‘If nothing changes, the state pension will overtake the personal allowance entirely within a few years. That would make every pound of additional income taxable for millions.’

The tax problem raises further questions about the long-term sustainability of the pension triple lock, long criticised as a distorted measure and more of a politically driven factor to draw in pension age voters. With the Labour government’s removal of the winter fuel allowance for the majority last winter, albeit the chancellor u-turned on the policy, it will be interesting to see whether there are any moves to address this issue before next year’s Budget.

in March, the Office for Budget Responsibility (OBR) projected that the state pension budget will rise to £182bn billion by tax year 2029-30.

Rachel Vahey, head of public policy at AJ Bell, said: ‘This poses a significant conundrum for Rachel Reeves and the Treasury. If the triple lock sees the state pension increase above the personal allowance for the first time, then the government will come under increasing pressure to make a decision regarding either the personal allowance or whether it can sustain the triple lock.

‘Removing the freeze on the personal allowance would come at significant cost to the Treasury at a time when the chancellor’s fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election.’

The state pension age will gradually increase to age 67 between 2026 and 2028, and it is due to rise to 68 in the mid-2040s, although this could be brought forward to the 2030s. 

As the Employment Rights Bill edges closer, nearly two thirds of businesses say the proposals will have a negative impact with concerns about costly changes to statutory sick pay and day one rights

The latest survey from Peninsula has shed light on the real views of businesses and how they believe the new employment rules will impact them.

Just 10% of the businesses surveyed believe the Employment Rights Bill would have a positive impact on their organisation, while 68% said it would have a negative impact.

Kate Palmer, employment services director at Peninsula, said: ‘Clearly businesses are incredibly concerned about the impact the Employment Rights Bill will have. The chancellor’s hike in employer national insurance contributions (NICs) had a crippling effect on many, with more small businesses closing their doors than ever before.

‘And with increased national minimum wage, the day one right to statutory sick pay and paternity leave, changes to tipping laws and the removal of lower earnings limits to come, this financial pressure is only going to increase.’

Across the country many businesses are adamant the day one right to paternity leave will have a negative effect with 42% saying this in the east of England and around the same number sharing this view in Yorkshire and the Northwest.

However, there is a regional divide with many London based businesses (39%) saying the day one right to paternity leave would be a positive development against only one in five viewing it as negative.

The most unpopular measure in the Bill was the new day one right for employees to claim unfair dismissal with nearly two thirds (62%) of respondents against this move.

Despite the widespread use of hybrid working, a vital tool in staff retention, nearly half (47%) viewed the introduction of flexible working as the default as a negative move, followed by 42% concerned about the changes to statutory sick pay (SSP), which will see SSP paid from the first day of sickness, instead of after three days as currently.

Two thirds of the respondents claim these changes will increase their administrative burden and increase operating costs. By the government’s own estimates the cost of implementing the measures in the Bill will be in the region of £5bn to businesses annually.

It is not all negative though as some changes that are coming are welcomed by most, as 58% of respondents said the enhanced protection against sexual harassment will be a positive change.

Those most concerned about the upcoming Bill were businesses with between 21 and 50 employees with 68% of them saying they were worried about the impact.

Some companies are already taking steps to prepare for the changes, with 13% saying they have hired internal experts for the very purpose of preparing for the Bill, while more than half have approached external HR advisors for help.

However, over half of the respondents had not yet done anything about the upcoming changes while only around 5% of businesses had set aside budget to pay for compliance with the Bill.

Palmer said: ‘These changes are coming whether businesses like them or not, so preparation is key.

‘Just over half the businesses we surveyed have started to plan for the implementation of the Bill, with only 12% stating that they feel “very prepared”.

‘Those without internal HR knowledge should seek advice to ensure they stay ahead of all the incoming changes, keeping policies and processes up to date with all latest legislation and reducing the risk to their business.’

The first measures in the Employment Rights Bill, still to be given Royal Assent, are due to come into force next April, only eight months away.

From 1 April 2026, the rules on eligibility for statutory sick pay change. It will have to be paid from the first day of absence, instead of the fourth day as it is currently, and low earners will become entitled to SSP as the lower earnings limit is removed, increasing costs for employers. Paternity and parental leave will become a day-one right. Employees will therefore no longer need a minimum amount of service to take this time off. Relevant policies will have to be amended, and managers will need to told to ensure employees are not unlawfully denied their right to these types of leave.

Later in the year, in October, sweeping changes to fire and re-hire come into effect, while there will also be a new requirement for employers to provide a statement to employees, alongside the employment contract, detailing their right to join a trade union.

The laws on sexual harassment will also change, with employers required to take ‘all reasonable steps’ to prevent sexual harassment of their employees and the introduction of an obligation on employers not to permit the harassment of their employees by third parties.

This goes further than the proactive duty introduced in October 2024 and will mean employers must review their policies and procedures on preventing sexual harassment.

HMRC has created a dedicated bereavement service phone number and postal address to support families and representatives deal with tax issues 

Bereaved customers or their representatives can call the new dedicated Bereavement Service to:

• report a death;
• settle all the deceased’s tax affairs up to the date of death, including income tax and capital gains tax (CGT) before they died;
• ask about informal administration period tax.

The helpline uses speech recognition software, so callers will be asked for the reason they are calling HMRC.

The new number will use voice response messages to direct callers to the appropriate advisers for PAYE, self-assessment or child benefit.

The helpline will be available 8am to 6pm Monday to Friday, and HMRC says it is less busy before 10am daily.

The bereavement service helpline number is 0300 322 9620 in the UK, and +44 300 322 9620 for callers from outside the UK.

HMRC said the new service ‘will ensure the customers reach the right team first time to discuss issues in a single call.

‘We will continue to route any customers that continue to use the existing numbers to bereavement advisers using the speech recognition platform.’

It is also very useful to use the gov.uk Tell Us Once service where a death can be reported to most government organisations in one go after the death is registered and the registrar issues a unique reference number to access the service. Tell Us Once is available in England, Scotland and Wales, not Northern Ireland.

The HMRC postal address for help with PAYE, self assessment or National Insurance contributions after someone dies has also been updated to: Bereavement Services, HM Revenue & Customs, BX9 2BS.

With just seven months to go until mandatory Making Tax Digital (MTD) for Income Tax, HMRC has confirmed that 864,000 landlords and self employed will be caught by the quarterly reporting rules from day one

The first phase of MTD for Income Tax will kick in from April 2026 requiring individuals with a qualifying income over £50,000 to file quarterly returns using software with a final year end round out. The first quarterly filing date is set for 7 August 2026 and a new penalty system for non compliance will be in force.  

Initially MTD will only affect higher earners in this cohort, but quarterly filing will be quickly rolled out to a wider audience with the threshold dropping to £30,000 in April 2027 dragging in 1,077,000 individuals, then falling to a negligible £20,000 from April 2028 with another 975,000 required to report.

Around 2.9 million (42%) of which have a qualifying income above £20,000 and will need to join MTD for Income Tax, based on self assessment figures for 2023-24.

From April 2026 businesses with a qualifying income over £50,000 will need to join MTD. Based on tax year 2023-24 there are 864,000 individuals with a qualifying income over £50,000.

For many of these landlords and self employed people, the new MTD requirements will be onerous, and they will be reliant on HMRC notifications about the changes as 25% of the £50,000 earners do not have an accountant or tax adviser.

Authorised agent representation falls in line with qualifying income. For those in the £30k-50k bracket, 37% do not have an accountant, while only 41% are represented in the £20k-30k band.

Of greater concern is the very large number of people who will need to invest in software to file their MTD reutrns. Currently only half of landlords and self employed used commercial software to submit their end of year self assessment tax returns.

Not only will they be faced with a total overhaul of the tax return process, but they will also have to shell out money for software, usually charged on a monthly basis for around £20, equivalent to an annual subscription cost of up to £240 a year.

For the software providers, MTD will be an absolute winner, with a captive audience required to buy software, in most instances, to comply with the government’s MTD rules.

For those that do not want to pay for a subscription, there are some basic software options available for free, including a stripped back software offering from Sage called Sage Accounting Individual Free, which is described as ‘ideal for freelancers with straightforward accounting needs’ and was launched in 2023.

When asked whether this would always be free, the company said ‘it was committed to offering a free digital tax solution’, but stressed that it was scalable as requirements became more complex for the customer.

Neal Watkins, EVP, small business at Sage, said: ‘We see this as a milestone that will enable businesses to focus more time on growth and we are committed to play our part by providing a free software tool that will help them spend more time on growing their business.’     

At the same time, 37% of £50,000 plus individuals did not use software to submit their end of year return for 2023-24 meaning they will have to invest in software to file their quarterly returns, adding to business costs.

Going down the earnings scale, use of software drops off, with only half of the £20k-£50k bracket using software to file their tax returns.

Software use is much higher for those who have authorised agent representation. For businesses with an authorised agent and over £50,000 qualifying income, 78% used commercial software to submit the end of year return, while only 21% for those without an authorised agent.

Number of self employed and landlords under MTD for Income Tax

Qualifying income £	Total	Start date
Up to £10,000	2,429,000	Not yet
£10,000.01 to £20,000	1,674,000	Not yet
£20,000.01 to £30,000	975,000	06 April 2028
£30,000.01 to £50,000	1,077,000	06 April 2027
Over £50,000	864,000	06 April 2026
Total	7,020,000

Source: HMRC

Accountants are facing heavy workloads and long hours so employers need to focus on how to support their mental health and wellbeing

On the back of Mental Health Awareness Week the experts at CIPD HR-inform look at how to make supporting employee mental health a priority.

Stress, depression and anxiety accounted for the majority of days lost due to work-related ill health in 2022/23, at 17.1 million, showed figures from the Health and Safety Executive.

On average, 19.6 days working days were lost for each person suffering with these mental health issues. That, alongside the findings of the mental health charity Mind that one in four of us will experience a mental health problem every year means that making efforts to support employee mental health is an important priority.

It is important to show commitment to employee mental health by introducing a mental health policy. This should set out the company’s legal obligations and outline what actions will be taken to ensure a safe and non-discriminatory environment for employees. The policy can also outline how to respond to issues caused by poor mental health.

Mental health policies can include:

• adjustments during the recruitment and selection processes for those with poor mental health.
• examples of indicators of poor mental health.
• how the organisation will support action planning to help improve mental health.
• workplace adjustments.
• how absences caused by poor mental health will be managed.
• supporting those absent through mental ill health in returning to work.
• confidentiality and disclosure to third parties.
• additional support such as employee assistance programmes.

It should be accessible by all members of staff, and they should be encouraged to read it. 

To help promote a workplace culture that supports mental health, take steps to raise awareness of mental health and what it is being done in the workplace to support it.

This can increase understanding of mental health conditions and their symptoms, and counteract any negative stigma associated with mental health.

In turn, this can encourage greater tolerance of mental health at work and help employees be more understanding about the impact poor mental health on their colleagues.

Awareness can be raised through days dedicated to supporting mental health or participation in awareness events such as Mental Health Week. It is also worth implementing an employee assistance programme that can provide external support and counselling for employees struggling with their mental health.

As well as raising awareness, organise specific mental health training to help the workforce become more informed about this area and highlight what support is available if an individual, or team member, experiences mental ill health.

Training managers on how to spot mental ill health and manage an employee struggling with this this can be invaluable, as it increases the likelihood of issues being identified and dealt with sooner than otherwise.

The quality of HMRC service has hit ‘an all-time low’ with wait times on phone lines five times longer than just four years ago and online services unable to fill the gap

In the face of funding pressures, HMRC has pressed on with attempts to reduce costs despite its poor performance, meaning that the tax authority and taxpayers ‘have been caught in a declining spiral of service pressures and cuts’, warned a highly critical report from the National Audit Office (NAO).

HMRC is not expecting to meet its telephone performance target this tax year and has not made clear what level of service taxpayers should expect, added NAO.

This was despite spending £881m on the HMRC customer service directorate in 2022-23 and having 21,282 full time equivalent staff. But the outlook for taxpayers is not good, as HMRC has indicated that it is going to have to cut staff by 14% this tax year.

The message is to avoid HMRC helplines wherever possible, and there are signs that many taxpayers do just that with 60% of taxpayers using online services, webchat and the HMRC app to complete transactions.

This still leaves 40%, or at least 14 million taxpayers who could prefer to use the phone to contact HMRC. The only saving grace is that millions of taxpayers avoid ever having to contact HMRC unless they have a problem.

Despite HMRC’s plans to go ‘digital first’, it admits that an estimated seven million taxpayers will still need support to use online services.

But awareness of HMRC’s online services is limited, with NAO reporting that ‘many of HMRC’s customers do not know about its digital services, so it may be able to increase uptake by improving awareness’.

HMRC’s advertising and communications budget to promote digital services has been increased to £3m for 2024-25, up from £1m last year but there is a challenge to persuade people that online services are safe to use.

There is widespread fear felt by taxpayers that they might do the wrong thing based on their own information sourced from the HMRC website especially as most people are not tax experts.

The NAO stressed that ‘despite recent improvements, HMRC does not know enough about how effectively digital services meet customers’ needs’.

For example, less than a third of customers in 2023-24 completed transactions covering fixed-rate expenses, or tax relief for expenses of employment using the interactive P87 form.

‘The high level of avoidable contact that HMRC reports shows that it has not yet optimised its digital channels to meet customers’ needs,’ NAO said.

Taxpayers cumulatively spent 798 years, or seven million hours, on hold waiting to speak with HMRC in 2022-23 – more than double the 365 years spent waiting in 2019-20.

The average wait time was 23 minutes for the majority of 2022-23 when it was just five minutes four years ago, highlighting the rapid deterioration in HMRC service. Advisers answered 22% fewer calls compared with 2019-20, but these took 21% more time to handle on average.

In addition, NAO said: ‘Many avoidable customer calls are caused by HMRC itself for reasons including process failures and delays, and customers chasing progress.’

One of the shocking figures in the report was that HMRC estimated 72% of calls in 2023-24 were caused by ‘failure demand’, which included calls caused by HMRC’s process failures or delays, taxpayers chasing progress and taxpayer errors. This proportion had increased from 65% in 2018-19.

Another sign of the increasing complexity of the tax rules resulted in the length of phone calls with advisers go up from 11:24 minutes in 2019-20 to 13:48 minutes in 2022-23.

While the total number of telephone calls has reduced, the total amount of time HMRC advisers are spending on each call has increased. This means HMRC’s workload has reduced more slowly than reductions in call volumes.

More taxpayers have complex affairs, for example, working for multiple employers simultaneously or as freelancers, meaning they have less straightforward needs, while fiscal drag has also brought more people into the tax system.

As HMRC comes under increasing pressure to respond to a growing demand for help on its phonelines, it has had to abandon plans to cut six helpline services in 2024/25 after an outcry from all the professional bodies and even the Chancellor Jeremy Hunt.

The NAO warned that ‘the move to digital service has not eased pressure on traditional services as much as HMRC expected. The quality of service provided by HMRC telephone and correspondence has been far below the levels expected in recent years, and has not met annual targets.’

In 2022-23, HMRC advisers answered 20.5m calls, out of 38m call attempts.

With HMRC’s call-handling workload falling less than expected, it has not been able to make all the staff reductions it planned. Due to budgetary constraints, it now needs to cut staff numbers by 14% in 2024-25, despite only achieving a 9% reduction over the last five years.

This brutal job cutting programme may now be put on hold, however, as this week the Treasury gave HMRC an emergency £51m of funding to address the phone line chaos.

Gareth Davies, head of the NAO, said: ‘HMRC’s telephone and correspondence services have been below its target service levels for too long.

‘While many of its digital services work well, they have not made enough of a difference to customers, some of whom have been caught in a declining spiral of service pressures and cuts. HMRC has also not achieved planned efficiencies.

‘HMRC must allow more time for these services to bed in and understand the difference they make before adjusting staffing levels.’

The NAO recommends that HMRC develops more realistic plans for cutting the services it is replacing with online services and adopts a more customer-focused approach to encourage the take-up of new services.

It must also ensure that as well as the need to develop not new digital services it focuses on improving its existing digital services, particularly where performance or customer satisfaction is low.

The NAO also said that there should be less reliance on old fashioned means of communication like letters, stating that HMRC should ‘increase opportunities for customers to send correspondence and documentation through secure electronic networks, including HMRC portals, which are cheaper, or faster than postal correspondence for customers to use and easier for HMRC to track and administer’.

For future spending reviews, HMRC should only plan to make staff cuts from changes to its digital services once improvements have taken effect and the benefits can be estimated with confidence.

HMRC should also reduce avoidable and expensive forms of contact, for example by increasing opportunities for customers to send correspondence and documentation through secure electronic networks, and learn from the implementation of its digital projects.

NAO report, HMRC Customer Service 2024-25

Companies House has begun a phased rollout of new powers to improve the quality and reliability of its data and clamp down on abuse of the companies register

The register is used 14 billion times a year and the new rules are designed to ‘improve the quality and reliability of the register. Cleaning up the register will not happen overnight but it will enable us to improve transparency,’ Companies House said. ‘We will use data matching to check the company details and we will do more and more as time passes.’

Most of the changes require significant IT investment and will take place over a number of years with a need to hire more specialist investigators. Companies House has already heavily invested in data science capabilities so they can be ‘ahead of the curve in terms of our future capabilities. We recognise that technology is changing all the time and we have to keep pace with that’.

The organisation has grown quite dramatically in the last year with the recruitment of over 160 people, and plans to take on another 60 over the next few months to deal with the rollout of identity verification using the new Gov.uk One Login, which is replacing Government Gateway accounts.

Down the track, Companies House will introduce compulsory identity verification in 2025, as well as streamlining accounts filing requirements for small companies to require all companies to provide profit and loss accounts, a director’s report where accounts are not audited, and no more abridged accounts from 2026.

A timetable for these changes has not been announced but they are expected to come in over the next two to three years. The measures will require secondary legislation through a number of statutory instruments.

‘This large and complex set of changes will be introduced in phases over the coming years,’ Companies House said.

The first measures under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) came into force on 4 March.

Companies House currently has quite limited powers to question information – under the new rules, it will be able to take a much more robust approach, and will be able to query information already on the register. This will see officials at the registry challenging any inconsistences from new and existing entries on the register, for example, if a company has unusually high share capital, or directors registered at other addresses, then this will be investigated.

The most significant changes include greater powers to query information and request supporting evidence, more robust checks on company names and the ability to remove factually inaccurate information.

In future, companies will not be able to use a PO Box as their registered office address and must have an appropriate address at all times.

Companies House has written to a few thousand companies telling them to change their addresses as they are currently using PO Box numbers.

All companies will also have to supply a registered email address although this will not be published.

There will also be a requirement for subscribers to confirm they are forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement.

In terms of powers to target criminal abuse of the register, Companies House will also be able to share information more proactively with other government departments, including HMRC, and law enforcement agencies.

Some of the fees for sharing the information with law enforcement have been removed and Companies House is already sharing trust data from the register of overseas entities with other departments, which is proving to be a ‘really rich resource of data especially for HMRC’.

This means that Companies House will be able to ‘share data to help disrupt economic crime. We will be much more proactive and will help UK’s drive to tackle economic crime. We have received funding to increase capabilities in this area and have hired more investigators’.

The new powers to investigate entries are similar to powers for monitoring the Register of Overseas Entities.

There will also be new criminal offences and civil penalties for failure to comply with the rules. 

Companies House CEO Louise Smyth said: ‘These new and enhanced powers are the most significant change for Companies House in our 180-year history.

‘We’ve known for some time that criminals have misused UK companies to commit fraud, money laundering and other forms of economic crime.

‘As we start to crack down on abuse of the register, we are prioritising cases where people’s names and addresses have been used without their consent. It will now be much quicker and easier to report and remove personal information that has been misused. This will make a real difference to individuals.’

From 1 May 2024, Companies House will also increase fees to take new future expenditure into account, as well as making sure costs are recovered from existing expenditure.

This is the first phase of measures to improve corporate transparency, with further legislation required to enforce new reporting rules for smaller businesses with the introduction of mandatory profit and loss accounts, and end of abridged accounts, , and the new failure to prevent fraud offence.  

Vincent Billings, partner in the corporate and commercial team at SA Law, said: ‘The aim is to create better transparency and remove the presence of so-called ‘Mickey Mouse’ companies. But this is a source of anxiety for many company directors, who are worried about being caught in a position where they have failed to comply with the new laws.

‘There are other major changes to be expected later down the line – including a new ‘failure to prevent fraud’ offence, which means directors could be held liable for failing to prevent fraud committed by a member of staff, or a business or individual they’re associated with.

‘With consequences including financial penalties and potentially even prison sentences, it is vital directors are up to speed with the changes and seek appropriate advice if they’re unsure about anything.’

The new rules are meant to crack down on kleptocrats, criminals and terrorists who abuse the current open economy. 

Business minister Kevin Hollinrake said: ‘Companies House now has the tools to take a much harder line on criminals who take advantage of the UK’s open economy and can now ensure the reputation of our businesses is not tarnished by the UK playing host to the world’s scammers.

‘The new reforms provide further protection to the public from companies fraudulently using their address and will begin to remove the smoke and mirrors around companies hiding behind false information.’

The government is investing £305m in a single login system for taxpayers and agents using online services such as HMRC with the launch of GOV.UK One Login

The new login service has two factor authentication and will be rolled out across all government web services to replace Government Gateway accounts over the next three years.

The project is being led by the Cabinet Office with HMRC one of the first government departments planning to roll out the service.

In future, users will only need a single login to access all central government services, rather than remembering multiple accounts and passwords. Gradually, over time, One Login will replace all existing login and identity checking platforms across central government. Government Gateway is over 20 years old and was first introduced in January 2001. 

The Cabinet Office said: ‘The GOV.UK One Login programme as a whole has a cost of £305m, which includes development, implementation, running the system and support for users and services. This is over a three-year period and will see up to 145 services from across government join by March 2025’.

In a bid to prevent fraud, One Login includes two factor authentication, which requires users to set up their account with a code used in addition to the password, for secure logging in.

When a user proves their identity using GOV.UK One Login, there will be sophisticated counter-fraud measures in place to ensure they are who they say they are.

GOV.UK One Login will improve digital inclusion by offering multiple ways for people to prove their identity – including those without photo documentation (like a passport or driving licence) – and access government services online, the Cabinet Office confirmed.

As the rollout is expected to be completed within a year, there will be pressure to transfer millions of Government Gateway individual users to the system.

In a statement, HMRC said: ‘From Spring 2024, HMRC will begin to invite individual customers without existing HMRC online sign-in details to create a GOV.UK One Login account. There will then be a gradual migration of existing Government Gateway customers starting with very small and controlled numbers.

‘HMRC is still in the private testing stage, so precise dates are yet to be confirmed.

‘Initially, only a small number of users will be able to access HMRC services through GOV.UK One Login, with volumes building gradually over time. There will be no sudden switch-off of the Government Gateway service.

‘This measured approach is designed to ensure a high-quality experience for users.’

It is important to note that HMRC will contact individual taxpayers to advise them to migrate.

HMRC stressed: ‘Existing Government Gateway users will be informed when they need to create a GOV.UK One Login account to replace their Government Gateway – they don’t need to contact HMRC.’

‘It will not happen for everyone at the same time, and you do not need to do anything unless we ask you to.

‘You do not need to do anything differently to access HMRC online services, until we prompt you to.’

The scheme is projected to deliver at least £700m of benefits by April 2026, the Cabinet Office said.

This spring, users new to HMRC will have to set up a new GOV.UK One Login. Later in the year, all users returning to HMRC services will be directed to use One Login, rather than Government Gateway.

Agents will continue to use Government Gateway to access their services for the time being and HMRC has not yet finalised details of how the agent rollout will work and the timetable.

Once the system is fully operational, the full range of HMRC and wider government services will be available online through the single login, including income tax, student loans, and Universal Credit, which are currently available through Government Gateway.

At the moment, there is simply a list of links to other pages on gov.uk sites, including find a grant, apprenticeship assessment service and basic DBS checks.

HMRC has issued initial guidance on the new login, stating that ‘GOV.UK One Login is a new way of signing in to government services. It provides a simple way for you to sign in and prove your identity using an email address and password’.

Over time it will replace all other sign in routes including Government Gateway that many customers and businesses currently use. 

Going forward, anyone accessing government services online, including HMRC, will automatically be asked to create a GOV.UK One Login.

The One Login service will have to be used by accountants and tax agents although full details of how these accounts will interact with client accounts has not been published.

HMRC confirmed: ‘If you’re a tax agent, or an organisation with a business tax account, you will continue to use Government Gateway until you’re asked to create a GOV.UK One Login.’

There is a new authorisation and identity verification process to sign up to the One Login, which means you will need to have some identification documents such as a passport or driving licence to complete the application. 

Users will have to input an email address and include the preferred method to get security codes, either via a mobile number or an authenticator app.

Once you start the registration process, HMRC first checks your email address by sending a six-digit security code to verify the email.

Once an account is created, the system will send security codes to verify identity via text message or authenticator app for mobiles, tablets or computers. Then users can access their account via https://www.gov.uk/account

Taxpayers are being warned to pay any tax due by the 31 January deadline as HMRC interest rates hit their highest rate for more than 20 years

The interest for not paying self assessment tax on time has been charged at 7.75% since last  August and penalties accumulate for late payment.

The self assessment tax deadline is rapidly approaching and if any outstanding assessments are not paid by 31 January charges can quickly mount up, warn accountants at Blick Rothenburg.

Through 2023 the late payment charge increased from 6% on 6 January to a high of 7.75% on 22 August 2023.

In April 2020 the late payment interest rate was just 2.60% then went up to 2.75% in January 2022 when the Bank of England raised the base rate. There were a further eight increases in 2022 to 5.50%.

January 2023 saw a further increase to 6%, with five increases last year to the current high of 7.75%. This is the highest rate since it was 7.5% in May 2001.

Stefanie Tremain, tax partner at Blick Rothenberg said: ‘If any tax due by 31 January 2024 is not paid in time, HMRC will charge interest. Currently at a rate of 7.75% per annum, from the due date to the date of payment.

‘In addition, a 5% penalty will be charged if the 2022-23 balancing payment is not paid within 30 days of the due date, with an additional 5% penalty charged if the tax remains outstanding after six months and 12 months.’

Tremain advised that taxpayers should ‘consider making an estimated payment’ to avoid additional charges, even if it is not exactly correct at the time.

Filing a return after midnight on 31 January will result in a penalty of £100, then after three months a £10 a day penalty kicks in until the payment is made. This can go up to a maximum of £900.

Tremain said: ‘If your tax return remains outstanding after six months, a tax geared penalty will be charged at the rate of £300, or 5% of your overall tax liability if that is higher.

‘If your return is over 12 months late, another £300 (or 5% of the overall tax liability if greater) penalty will be charged.’ 

However, there are some excuses HMRC consider to be reasonable for filing late. These include a relative passing away close to the deadline, you were in hospital or had a life-threatening illness, your computer broke, HMRC services were down and lastly, a fire, theft or flood stopped you from being able to complete the return.

Amendments to a tax return can be made to a tax return up to 12 months from 31 January 2024, although you will be charged interest if it was underpaid.

Tremain said: ‘You could, however, amend your return if you realise you have missed a relief you are entitled to, such as relief for Gift Aid donations or pension contributions, which means you may be due a tax refund.’

A Time to Pay arrangement can be set up if individuals are struggling to pay their bills but ‘such arrangements are specific to each taxpayer and will depend on your own individual position as to whether HMRC agree to a Time to Pay and, if they do agree, what the terms will be,’ Tremain added.

One in four taxpayers still have to file their annual tax return or face a £100 penalty with only one week to go until the self assessment deadline

HMRC has warned that 3.8m people still have to file their tax return by 31 January, up on last year’s figure of 3.4m at the same date. An estimated 12.1m taxpayers have to file under self assessment rules, and so far 8.3m have filed online for the 2022-23 tax year.

It is important to file by the deadline or face an automatic £100 penalty, which was paid by an estimated 2.7m taxpayers last year.

Dawn Register, head of tax dispute resolution at BDO said: ‘There could be tens of thousands of people who will have been drawn into the self assessment tax net for the first time in the 2022-23 tax year. Many may be unaware of their obligations to file a tax return before 31 January 2024 and could run the risk of penalties.

‘These new filers could include parents claiming child benefit whose salaries crossed the £50,000 threshold for the first time in the 2022-23 tax year and who will have to repay some or all of their benefit through the high income child benefit charge.

‘They might be higher earners whose salaries topped £100,000 or pensioners who earned more than their savings allowance because of rising interest rates. Alternatively, they could be working people whose side hustle earnings were above £1,000 during the tax year.’

Due to pressure on HMRC phone lines, the availability of call agents has been reduced and only complex enquiries will be dealt with over the phone. All other enquiries will be directed to HMRC’s online services.

Myrtle Lloyd, HMRC’s director general for customer services, said: ‘If you are a self assessment taxpayer, now is the time to take action and get your return done. People can familiarise themselves with the process by checking out HMRC’s online resources on gov.uk.’

For anyone unable to pay outstanding tax in full, it is possible to set up a time to pay arrangement online, without speaking to HMRC, if less than £30,000 is owed.

When completing a return, it is important to ensure bank account details are included, so that if HMRC needs to make a repayment, they can do so quickly and securely without needing to issue a cheque.

The penalties for late tax returns are:

•            an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;

•            after three months, additional daily penalties of £10 per day, up to a maximum of £900;

•            after six months, a further penalty of 5% of the tax due or £300, whichever is greater;

•            after 12 months, another 5% or £300 charge, whichever is greater.

HMRC will consider a taxpayer’s reasons for not being able to meet the deadline. Those who provide a reasonable excuse may avoid a penalty.

There are also additional penalties for paying outstanding tax late. These are 5% of that unpaid at 30 days, six months and 12 months. Interest will also be charged on any tax paid late.

It is important to let HMRC know of any changes to personal details or circumstances, such as a new address or name, or if you have stopped being self-employed or your business has closed.

Anyone who thinks they no longer need to complete a self assessment tax return for the 2022 to 2023 tax year, should tell HMRC – so that they can issue a withdrawal notice – before the deadline on 31 January 2024 to avoid any penalties.

Customers need to be aware of the risk of falling victim to scams and should never share their HMRC login details with anyone, including a tax agent, if they have one.