Government retreats on forcing freelances to file tax online
The government has backed down on forcing freelances and other microbusinesses to file their tax returns quarterly online. For now.
Much of the Finance Bill 2017 was temporarily scrapped when the snap election was called in the spring, including the loathed proposals for Making Tax Digital. However, MTD hasn't gone away and the discarded legislation will be back on the agenda soon.
Even so, there is much to celebrate just now as it seems the government has finally listened to at least some of the concerns raised by professional taxation bodies, MOS and the Treasury Select Committee regarding the timetable to switch and the earnings threshold at which MTD becomes obligatory.
Small victories have been won regarding the burden MTD would be on freelances. Firstly, businesses with a turnover above the current VAT threshold of £85,000 will have to keep digital records from 2019, but only for VAT purposes. This is likely to affect a small number of freelances. Most freelances will now not be affected until at least 2020 and even then MTD - for now at least - will be on a voluntary basis only in terms of keeping digital records and filing quarterly returns.
HMRC is still running pilots for MTD, with a full live pilot from spring 2018. However, questions about how much financial data on our business transactions we will have to submit and what safeguards there will be have still to be answered.