HMRC alert to employees who fail to report 4 key life modifications
Not reporting four key life changes to the tax authority could increase your bill by up to 100% in some instances
There are several life and career changes that can impact how HMRC calculates your tax dues. While some of these changes are reported by your employer or pension provider, there are four specific changes that workers must report to HMRC themselves.
These changes can be reported online or by calling HMRC directly. More information can be found here.
Failure to inform HMRC could result in workers paying the incorrect amount of tax. This could lead to either a tax refund or an additional tax bill at the end of the year.
In more serious cases, if HMRC discovers that you’ve intentionally hidden these changes, the penalty could be as severe as doubling your tax bill. More information about penalties can be found here.
The things that workers need to report to HMRC include changes to names or addresses, income, family or relationship status, and gender. Changes to names and addresses can be updated online, although people may need to sign in through the Government Gateway.
Alternatively, they can use the HMRC app. For those changing their gender, their name will be automatically updated. Employers and pension firms will tell HMRC when staff begin or end employment, or when earnings from your job or pension alter.
But workers must report various other changes themselves – such as income from fresh sources like rental properties, certain workplace perks, taxable benefits or lump sums from sales subject to Capital Gains Tax. Should your spouse or civil partner die and your earnings change, you must inform HMRC.
After this notification, HMRC might alter your tax code, request you complete a Self Assessment return, or issue a refund if you’ve paid too much. Changes in relationship or family circumstances also need reporting to HMRC. This covers marriage, entering a civil partnership, divorce, or separation.
You can handle this online through your tax account. But HMRC cautions: “Tell HMRC straight away – if you do not, you could pay too much tax, or get a tax bill at the end of the year.”
Regarding gender transitions, HMRC usually receives automatic updates when you officially change gender by securing a Gender Recognition Certificate. Workers are advised to simultaneously update their employers to refresh payroll systems and National Insurance records.
Once reported, HMRC will update its records with your new gender and any name change, inform the Department for Work and Pensions, restrict access to your records to specialist staff only, and transfer your tax affairs to HMRC’s Public Department 1. You’ll receive a letter confirming the move, after which you can contact Public Department 1 with any queries about your tax or National Insurance.
If you fail to inform HMRC about changes to your income tax liability, the authority will investigate and classify your actions under one of three different behaviour types. Each type carries a different penalty level, calculated as a percentage of the tax that went unpaid due to the failure to notify.
The behaviours and penalty ranges are as follows:
- Non-deliberate – 0% to 30%
- Deliberate but not concealed – 20% to 70%
- Deliberate and concealed – 30% to 100%
However, the authority has stated: “If you have a reasonable excuse for a non-deliberate failure to notify, we will not charge you a penalty.”
