Will tax returns come back?
IN HIS pre-election Budget - what is the most important word in that phrase? - the Chancellor of the Exchequer announced "the end the annual tax return". So what does this mean for freelances?
We need to read the small print, of course. The document Making tax easier: The end of the tax return specifies that "By early 2016 five million small businesses and ten million individuals will have access to their own digital tax account." For most purposes, freelances are considered "small businesses". The official estimate is that in 2014, 4.6 million people were self-employed - so it seems so.
We will still have to keep receipts for business expenses we claim. At least, it is currently impossible to imagine any alternative.
It is also nearly impossible to imagine the end of penalties for late filing. They're too important a source of revenue. Will there now in fact be more frequent deadlines?
The document says "small businesses will have the option to 'pay as you go' to help manage their cash flow". We need to keep an eye this. The temptation to force earlier payment will be strong - the effect would be to get 5 million people's tax in six months early on average.
- Buried in the Chancellor's "simple tax" proposal are fines for late returns being replaced by a points system, under which late filers could end up paying £2000 for their late returns, the Daily Mirror has reported.
- More details as we discover them, or soon after HM Revenue & Customs make them up in response to the Chancellor's entirely non-election-related proposal.