Rishi Sunak’s secret tax raids create tax return headaches for 200,000 more workers


Rishi Sunak’s sneaky raids on income create tax filing headaches for an additional 200,000 workers a year, analysis shows.

Experts say the deep freeze of tax brackets means hundreds of thousands of taxpayers are at risk of a £100 fine for not realizing they now have to complete a tax return.

Many people who have never had to submit a self-assessment could be caught because their untaxed income exceeds tax thresholds that have been frozen until 2028 under Prime Minister Rishi Sunak.

RSM’s Chris Etherington, who carried out the analysis, said many landlords and pensioners will have to file a first-time return with HM Revenue and Customs if their income exceeds the tax-free personal allowance, frozen at £12,570.

He said: “Similarly, those whose incomes are rising due to inflationary pressures of more than £50,000 may now be faced with a higher income child benefit and have to file a tax return for it.”

ALSO READ  Meet the Mayhews - for whom rugby is a family affair

The reduction in the capital gains tax deduction from £12,300 to £6,000 will also prompt thousands more individuals to self-assess next year, including young DIY investors, Mr Etherington said.

He added: “In recent years there have been a lot more young people investing in stocks and shares and crypto assets, and while the majority may have just been doing this and not having to report anything to HMRC, the planned phasing out of the annual exemption could result in many having to declare small capital gains.”

This is because HMRC is sending letters to thousands of social media stars and online marketplace sellers, urging them to work out how much tax they owe and complete a tax return.

ALSO READ  Top 10 Most Famous Paragraphs Of British Political Speeches Since The War | John Rentul

Tax returns are complicated and time-consuming, taking an average of 132 minutes to complete, according to a survey by the Consumer Association Which?.

But many self-assessment applicants who encounter difficulties in completing their assessment face long phone waiting times when calling HMRC for assistance.

MPs recently told HMRC it had three months to improve customer service, which it deemed “unacceptable”.

Mr Etherington said he wondered whether HMRC could handle the deluge of tax returns he expects the taxpayer to receive in the coming years.

He said: “HMRC’s customer service support is already at the seams and the government may need to invest seriously in the department if it is to adequately deal with the increased number of taxpayers.

ALSO READ  Euro 2024: when and where it will be held, plus qualifying groups and matches

“This will be a problem created by the Treasury itself and perhaps a false economy for the additional tax revenue it will generate.”

A spokesperson for HMRC said: “We provide comprehensive support to help self-assessment clients get their tax in order and the vast majority file their returns on time.

“We encourage all new and existing Self Assessment clients to take advantage of our enhanced digital services which provide a quick and easy way to manage more of their tax affairs online through their online client account or the HMRC app.”