The UK government has announced that it will be changing the way small firms and self-employed people report their income to HMRC for tax reasons to make it simpler and to reduce errors.
These measures are expected to be ready to go within the next two years, and they will see the self-employed and owners of small firms required to pay taxes on income that arises during the tax year, not their profits up to the end of it. The government consulted with leading small business figures before deciding how to reform the system, and it is indicating that it expects the new rules to make completing tax returns less time consuming.
They will be of most significance to those sole traders and small businesses that do not employ an accountant specialising in tax return services in Goole or wherever they live, but they should make reporting a bit simpler.
Under the existing rules, should a business or individual have accounting dates that diverge from the tax year dates, filling out a return correctly can be particularly tricky.
Speaking to Gov.uk about the reforms, Jesse Norman, the Treasury’s Financial Secretary, said:
“These complex rules lead to thousands of errors and mistakes in self-employed tax returns every year.”
Norman went on to add that the changes the government was introducing would enable people in that position to focus more of their time and energy on expansion and job creation, instead of having to spend it doing the administrative work to ensure that their returns are accurate.