Tax agency is inviting feedback on proposed legislative updates that will require businesses to provide contemporaneous income tax information, as well as asking for additional data from the self employed

HM Revenue and Customs has launched a consultation process to collect feedback on legal updates that, from next year, will require businesses and individuals to provide the department with a greater  range of data.

The tax agency has published details of two proposed new statutory instruments, each of which represents an amendment to the UK’s current set of income tax laws. When they come into effect at the beginning of the 2025/26 tax year, the changes will mandate businesses and self-employed people to provide government with more data.

This will include requiring employers to “provide more detailed information on employees’ hours paid via real-time information PAYE reporting”, according to HMRC’s consultation documents. The legislative updates will also see directors of owner-managed firms asked to “provide the amount of dividend income received from their own companies separately to other dividend income, and the percentage share they hold in their own companies”. Self-employed people, meanwhile, will need to provide HMRC with additional details on the start and end date of their period of self-employment.

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According to the department: “The objective is to improve the quality of the data collected by HMRC to provide better outcomes for taxpayers and businesses, as well as improving compliance, resulting in a more resilient tax system. The additional data HMRC will collect is in areas where taxpayers already hold the data or provide it on a voluntary basis through the tax system.”

The department estimates that about two million PAYE-registered businesses and civil society organisations will be impacted by the new regime, as well as 900,000 directors of small firms and 1.2 million self-employed individuals.

Those affected by the proposed changes are being asked to provide their views on the matter via a public consultation period that runs until midnight on 9 May. To take part in the exercise, submissions can be sent via email to responsivenessdataconsultation@hmrc.gov.uk.

HMRC forecasts that it will need to spend between £5m and £6m to “implement a series of IT changes to support safe delivery” of the new data-collection regime.