The Practical Guide to Limited Company Tax
If you have chosen to operate your business as a limited com...
By Jonathan London on 23rd March 2015
Last week’s Budget confirmed that the annual self-assessment tax returns are to be replaced by a simpler process.
George Osborne announced the yearly tax return will be scrapped in favour of a digital option that will allow taxes to be taken by HMRC directly.
It is expected the news will be welcomed by the country’s self-employed workers and small business owners – many of whom have called for an easier tax system over the past few years.
Around five million people currently work for themselves in the UK and the news could help increase support for the government ahead of May’s general election.
The chancellor admitted the system of submitting a self-assessment tax return is a “complex, costly and time-consuming” way of HMRC gathering the relevant data.
Up to five million small firms will initially be transferred to the digital system, with all companies filing taxes under the new platform within the next five years.
Mr Osborne explained: “Businesses will feel like they are paying a simple, single business tax … for most, the information needed will be automatically received.
“We believe people should be working for themselves, not working for the tax man. Tax really doesn’t have to be taxing and this spells the death of the annual tax return.”
One of the benefits of the new system is that self-employed workers and small businesses will be able to spread the cost of their tax obligations across the whole year as they will not have to submit a tax return at a set time. Such a “pay-as-you-go” approach could help them manage their finances more effectively.
HMRC is expected to produce a timetable for the changes and exact details of the new system before the end of the year.
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