Time to explore the Budget back roads

Over the last couple of weeks, I’ve explored the main roads of the Budget and the Chancellor’s infamous Red Book, so today I’m exploring the side roads and byways for any interesting minor points whose knock-on effects could be profound.

The first B-road explored

We already knew the broad roadmap of HMRC’s plans for further digitalisation from the recently published Transformation Roadmap. The Red Book highlights investment to “improve how HMRC uses information from third parties and to build new technology to increase the use of data-driven prompts to help taxpayers avoid errors when submitting tax returns.”

The use of technology to prompt taxpayers to help correct errors at the point of transaction recording is one of the biggest potential advantages of digital technology in tax administration. Following on from ‘The Roadmap’, HMRC will acquire third-party data far more frequently for interest income and card sales from April 2028, with businesses forced to issue all VAT invoices as e-invoices in an ‘approved’ electronic format.

Also, in an attempt to dissuade businesses start-up entrepreneurs leaving the UK, there will be a major evaluation exercise to determine how these new businesses can be helped to scale up their UK operations by offering financial and logistical support.

Whistleblower bonus

Financial rewards for informants have been an open secret for years, but now the Treasury is planning to increase the rewards for provision of high-value information. High value is deemed to be a tax recovery of at least £1.5million. HMRC will now pay a reward of up to 30% of the additional tax collected, that would have otherwise gone unpaid.

Regulation of tax advisers

There is another significant piece of news in the Red Book, which I presume is targeting unqualified and unregulated tax advisers: It states that ‘whilst we don’t plan to regulate all tax advisers and accountants it is planned to work in partnership with the sector to raise standards in the tax advice market’.

In the next paragraph they confirm that there will be compulsory registration of all tax agents with effect from 1st April 2026, plus the Treasury and HMRC would be given new powers and sanctions to address any non-compliance by tax agents from the same date.

Digital highway

Also announced was the Crypto-asset Reporting Framework for the UK, with crypto-asset service providers being required to report on all of their UK tax resident customers. Information for the first reports will be collected from 1st January 2026 and reported to HMRC in 2027.

HMRC have now released a Budget Day note on a couple of minor changes to the introduction of Making Tax Digital for income tax. The note confirms what I’ve long expected that there will be no late submission penalties for those mandated to provide quarterly updates during the 2026/27 tax year.

The note also shows that the government has bowed to pressure from accountants and a number of charities, such as Citizens Advice, Turn2us, and StepChange, and has agreed to exempt a number of very small taxpayer groups from MTD altogether and will defer the start date to April 2027 for some others.

This is welcome news and is commonsense, as we already have a number of carve outs for some types of income and the April 5th 2026 start date is fast approaching. Putting in some limitations to ensure that what is launched works effectively is far more important than trying to deliver everything in one go.

Nearing the end of the road

As with so many recent Budgets, we have a set of measures spanning a number of years. We also have in the Red Book and HMRC documents both detail and indications of the direction of travel on particular issues. For a Budget where many measures had been widely trailed in advance, there was still an enormous amount to trawl through, digest and reflect on.

Much of the impact of many of the measures, especially the technical tweaks to existing legislation, I suspect will take a while to fully sink in and I fully expect some further tweaks to the myriad of announcements, especially to those measures scheduled to kick in in the latter stages of thus Parliament.

One final hidden nasty little nugget I found and will share with you today, is that paragraph 4.192 of the Red Book made it clear that any taxpayers who are claiming deductions from income tax for non-reimbursed home working expenses will lose this concession, with effect from 6th April 2026.

Accountant’s view

There was a huge amount of detail in the small print, some of which will have a significant impact on both accountants and our clients, but to avoid making this Blog more esoteric than it already is, I’ll finish this Blog now, but rest assured, if I hear of any plans afoot that could have an impact on you, I will of course let you know.