The government has recently announced major changes to the way that self-employed and small businesses need to file their tax returns. These reforms are meant to make the current tax situation much simpler and to help them to be taxed on their profits from the tax year with ease.
The current tax return situation requires that taxes are filed by self-employed and sole traders based on the company’s accounts which end April 5th. HMRC has claimed that the tax situation is complicated when businesses draw up accounts to a different date and believe that this has caused lost tax income.
Experts are concerned because these changes are set to go into place in 2023 and have been formed without any warning. The government claims that this process will make filing taxes less difficult and lead to fewer errors. Experts are worried because all of the recent changes to the way that contractors pay taxes have been much more complicated than the old tax arrangements.
There is no promise that these new rules will prove to be any different. The pace of the changes is not promising for contractors who are still reeling from the recent IR35 changes. The lack of resources and support for contractors that have been delivered to contractors during the recent pandemic does not indicate that the government will be more generous in this instance.
Tax Reforms Included in Finance Bill
Experts have protested including these changes in the upcoming finance bill because these kinds of changes never allow contractors the time to prepare for them. It would be a nice change of pace for the proposed changes to be warned about and then discussed and improved before going into effect.
It can be hoped that the reforms that are being proposed will actually be helpful for contractors as promised. Contractors and experts alike are always concerned these days when the government promises them improvements. HMRC has yet to prove that any of their ideas actually lead to improvements for contractors.
