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HMRC consults self-employed on tax reforms

 

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HMRC consults self-employed on tax reforms which will see a transformed tax system by 2020

The transformed tax system of 2020 has four foundations.

  • Tax simplified - Taxpayers will see the information that HMRC holds through their digital tax accounts, and be able to check at any time that their details are complete and correct.
  • Making tax digital for businesses - Businesses should not have to wait until the end of the tax year or even longer before knowing how much tax they should pay. HMRC will collect and process information affecting tax in as close to real time as possible, to stop tax due or repayments owed from building-up.
  • Tax in one place - At the moment, most taxpayers cannot see a single picture of their liabilities and entitlements in one place. HMRC is changing that. By 2020, taxpayers will be able to see their complete financial picture in their digital account.
  • Making tax digital for individual taxpayers - Individual taxpayers will interact with HMRC digitally, and at any time to suit them. By April 2016, every individual and small business will have access to a digital tax account.

From April 2018, businesses, including everyone who is self-employed and those letting out property, will update HMRC at least quarterly where it is their main source of income.

Digital record keeping providing regular quarterly updates to HMRC will become a central feature of Making Tax Digital. Underlying tax rules will be simplified and free software and advice will be provided to small firms. HMRC is now consulting on how this digital tax system will work, and one particular consultation is aimed at the self-employed and landlords.

HMRC is also proposing that unincorporated businesses will be exempt from the obligation to keep digital records and report regularly to HMRC if their annual turnover is less than £10,000.

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