This article summarises the key tax developments in May 2025 and explains how Taxomonk, a professional outsourcing and compliance firm, can help navigate these changes seamlessly

1. Expansion of Making Tax Digital (MTD) Requirements

MTD for Income Tax Self Assessment (ITSA) Phase II Begins

From April 2025, MTD for ITSA has been extended to include sole traders and landlords earning between £30,000 and £50,000 annually. May marks the first full month under the new regime, and HMRC has started active communication and enforcement regarding digital record-keeping and quarterly submissions.

Implications

• Digital record-keeping is now mandatory for more taxpayers.
• Failure to comply may lead to penalties from late or inaccurate submissions.

How Taxomonk Can Help

• Assist in transitioning to compatible MTD software like Xero or QuickBooks.
• Provide regular quarterly submission support and real-time compliance tracking.
• Educate clients on digital processes and automation benefits.

2. Corporate Tax Reliefs and Allowance Updates Latest Tax Developments in the United Kingdom

Full Expensing Made Permanent

The Spring Budget 2025 confirmed that full expensing for capital investments will be permanent. This allows companies to deduct 100% of qualifying capital expenditure on plant and machinery from taxable profits in the year of purchase.

R&D Tax Relief Reforms Implemented

As of April 2025, the merged R&D scheme for SMEs and large companies is in full effect. This includes:

• A standardised rate of 20% for qualifying R&D expenditure.
• A new requirement to notify HMRC in advance of R&D activities.
• Stricter rules on overseas R&D expenditure.

How Taxomonk Can Help

• Identify and document qualifying capital and R&D expenditure.
• Handle advance notifications and maximise relief claims.
• Review previous filings to assess any underclaimed benefits.

3. National Insurance and Employment Taxes Latest Tax Developments in the United Kingdom

Class 2 NICs Abolished

As promised, Class 2 National Insurance Contributions have been officially abolished for self-employed individuals from April 2025. This simplifies self-employed tax calculations, though it shifts pension qualification entirely to Class 4 contributions or voluntary Class 3.

IR35 Compliance Checks on the Rise

HMRC has begun a new wave of compliance checks on off-payroll working (IR35) rules in the private sector. Businesses hiring contractors should ensure that status determinations are well-documented and reasonable.

How Taxomonk Can Help

• Support employment status assessments and maintain documentation.
• Automate NIC tracking and calculate optimal voluntary contributions.
• Manage payroll and contractor compliance to avoid penalties.

4. International Tax Reporting and Crypto Asset Compliance

OECD’s CARF Implementation Begins

The UK has initiated the framework for implementing the Crypto-Asset Reporting Framework (CARF) developed by the OECD, aiming for full adoption by 2026. May 2025 sees initial guidance released for exchanges and intermediaries.

New Disclosure Requirements for Crypto Traders

HMRC has published updated disclosure guidance requiring crypto asset investors to report holdings and gains more explicitly, in line with international standards.

How Taxomonk Can Help

• Advise on crypto asset tax disclosure and CARF alignment.
• Maintain accurate capital gains records from exchanges and wallets.
• Prepare and submit digital asset declarations per HMRC rules.

5. VAT and Indirect Taxes Latest Tax Developments in the United Kingdom

Digital Platform VAT Reforms Continue

HMRC is expanding the scope of VAT obligations on digital platforms, including those facilitating services like accommodation, freelance work, and transport. Platforms are now required to collect and remit VAT on behalf of sellers.

Brexit-Related Customs Simplification

As part of post-Brexit trade facilitation, HMRC has simplified customs procedures for small and medium exporters. A new “trusted trader” scheme has begun pilot testing.

How Taxomonk Can Help

• Evaluate digital platform compliance and VAT registration requirements.
• Assist e-commerce businesses with VAT submissions and record-keeping.
• Help exporters apply for trusted trader status and manage documentation.

6. Personal Tax and Trusts

New HMRC Trust Registration Enforcement

All UK trusts and certain non-UK trusts must now be registered with the Trust Registration Service (TRS), with May 2025 marking the start of formal enforcement notices for non-compliance.

Higher Penalties for Inaccurate Returns

HMRC has tightened penalty rules under Schedule 24 FA 2007. May 2025 sees new thresholds in effect for ‘deliberate’ and ‘careless’ inaccuracies in tax returns.

How Taxomonk Can Help

• Handle trust registration and annual maintenance.
• Conduct accuracy reviews for self-assessment and other filings.
• Advise on inheritance tax and estate planning in light of enforcement changes.

Conclusion: Stay Ahead with Taxomonk for Latest Tax developments in the United Kingdom

With constant regulatory updates and increasing digitalisation, compliance can be a complex and time-consuming task. Taxomonk offers end-to-end tax outsourcing services, ensuring clients stay updated, compliant, and penalty-free.

Why Choose Taxomonk?

• UK ACA & ACCA qualified Team members with deep UK tax expertise.
• Specialised teams for bookkeeping, tax filing, VAT, crypto tax, payroll, and MTD.
• Proactive alerts and updates to avoid non-compliance.
• Secure cloud-based processes integrated with Xero, QuickBooks, and HMRC systems.
• Dedicated support for your queries

Get in Touch Today! Let Taxomonk simplify your tax world — whether you are a small business, sole trader, or large enterprise. Email us at biz@taxomonk.com or visit www.taxomonk.com to learn more.

Contact us on 📞 +44 203-479-5370 or on +44 74574 07007

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