Important tax reporting changes for 2025/26

As is customary for a new tax year, there have been sweeping changes to how the Government handles the reporting and recording of financial information.

This has involved the change to some proposals that have been set for implementation, as well as the introduction of some other measures.

We are examining two of the most notable changes that are likely to impact you in this coming tax year.

Employee hours reporting scrapped

The Government has abandoned its proposal to require the reporting of actual hours worked by employees through payroll.

Originally delayed to April 2026, the plan has now been dropped entirely due to concerns over the implementation cost, which was estimated at nearly £60 million.

This will come as a relief to those who were concerned about the increase in admin time that such a proposition would bring with it.

Monitoring and implementing compliant payroll techniques is already a challenge for many businesses, so it is good that the extra information is no longer being forced upon hard-working business owners.

Business owners are instead being left to manage their payroll information in much the same way as before, but payroll compliance checks are subject to change and seeking professional advice and support is a valuable way to stay ahead of any changes.

Compulsory questions are coming

The question about whether a taxpayer is a director of a close company will also become mandatory on the Self-Assessment return from 2025/26.

As a director, you will need to be prepared with accurate figures, particularly where shareholdings change during the year or where different share classes are involved.

These changes are an indication of a move towards increased transparency and more detailed individual reporting.

This is part of a wider movement by the Government to clamp down on noncompliance and fraud by ensuring that all financial information is consistent and accurate.

To stay ahead of these changes, keeping up-to-date records will be essential, as you do not wish to risk noncompliance.

What does this mean for the future?

Here we have examined a failed proposal and an implemented one to gauge where the Government’s priorities are.

With the global economy struggling, the Government need to ensure that they remain capable of meeting the needs of the country, and they have elected to clamp down on bad actors to facilitate this.

What it is likely to mean for honest businesses is more admin work and a greater need to stay abreast of changes as and when they happen.

Contact our team today to ensure that you remain compliant with the latest tax reporting requirements.