From MTD for Income Tax to HMRC’s increased compliance activity, these are the developments your business should be watching this quarter.
We track the moving parts of UK tax and accountancy so you don’t have to. Here’s what’s caught our attention in April 2025, and why each one matters for business owners and sole traders.
1. Making Tax Digital: MTD for Income Tax is Coming - April 2026
If your total business and/or property income exceeds £50,000 – Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will be mandatory from April 2026 for those earning over £50,000. Income over £30,000 follows in April 2027.
This means quarterly digital submissions instead of one annual return. You’ll need compliant software and a clear record-keeping process in place. The time to start preparing is now, not next March.
2. HMRC Compliance: Investigations on the Rise
HMRC collected a record £41.8bn from tax investigations in the last reported year. Focus areas include the gig economy, property rental income, and side-hustle income not declared through Self Assessment.
Online marketplaces (Etsy, eBay, Vinted, Airbnb) are now legally required to report seller income to HMRC. If you sell online and haven’t declared it, this is urgent.
3. Corporation Tax: The Two-Rate System Is Now Fully Embedded
The small profits rate of 19% applies to companies with profits up to £50,000. The main rate of 25% applies above £250,000, with marginal relief for profits in between.
If you have associated companies, the thresholds are divided between them, meaning a company with one associate has an upper threshold of just £125,000. Many directors don’t realise this applies to them.
4. VAT Registration Threshold Now £90,000
The VAT registration threshold increased to £90,000 (from £85,000) in April 2024, the first rise in seven years. The deregistration threshold is now £88,000.
If you’re approaching £90,000 in turnover, Monitor your rolling 12-month figure carefully. Registering late carries automatic penalties, the clock starts the moment you exceed the threshold, not when you notice.
BOTTOM LINE: MTD ITSA is the biggest structural change to how sole traders and landlords report their income in a generation. If you're in the £50k+ income bracket, you have roughly 12 months to get your digital records in order. We're already helping clients transition, get in touch before it becomes urgent.
5. Pension & ISA: Maximise Your Shelters
The annual pension contribution allowance remains £60,000 (or 100% of earnings, whichever is lower). Higher and additional rate taxpayers get tax relief at their marginal rate, an extremely efficient way to reduce your bill.
The ISA allowance remains £20,000 per year. With CGT rates now higher, sheltering investment growth inside an ISA is more valuable than ever.