21 Jul 21
The Government has announced reforms to the tax system to make it easier for small business and self-employed individuals filling out their tax returns.
The changes will come into force by 2023 and see businesses and freelancers taxed on profits arising in a tax year, rather than profits of accounts ending in the tax year.
Financial secretary to the Treasury Jesse Norman added that current rules “lead to thousands of errors and mistakes in self-employed tax returns every year”.
“Simplifying them will allow self-employed people to spend less time doing tax admin and more time growing their business and creating jobs.”
Currently, businesses that draw up their accounts to a different date to the end of the tax year (5 April) pay for their first tax year to its end and then on the basis of their full accounting year for subsequent years, meaning profits are taxed twice, for which they can apply for relief.
Critics say that changes would see the self-employed pay extra as the changes are brought about, with about a fifth of self-employed people expected to be hit by the extra one-off costs involved in familiarising themselves with the new system and updating software.
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