A new system for completing self-employment tax returns has been announced by HMRC.
These changes will come into affect in 2023 and have been created in collaboration with representatives from small businesses. The changes mean businesses will be taxed on profits originating in the tax year, instead of the current system of taxing on the profits on accounts ending in the tax year.
It will adjust the way self-employed profits are taxed with other forms of income, such as property and investment income.
With the current tax system, tax returns submitted by self-employed, sole traders and partnerships are based on the accounts at the end of the tax year, April 5th. There are more complex rules are in place if your business starts and draws up its accounts ending on a different end date than the tax year.
In these cases you will pay the tax for the incomplete year at the end of the tax year and then for the following years you will pay the tax for complete years. But there are more complex rules in place in these situations, contact us today if you need help regarding tax and any other finical support for your small business.
Financial Secretary to the Treasury, Jesse Norman said,
“These complex 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”
The changes to tax are designed to reduce the number of errors and make the whole process of self-employed tax much easier at every stage. We will aim to keep you updated with the specifics of the changes as they are released.