Instead of doing any annual self-assessment tax return, with the due date of the 31st January, you will instead be required to do quarterly returns and then another one after that. So, instead of one return, you will have to do 5!! Progress for businesses?
No-one surely believes that making the tax return system digital is a bad thing, as that is the way the world is moving, and it brings with it enormous benefits and time-saving potential. However, the problem with this HMRC idea is, in my opinion, that their starting point is the smaller businesses, and only working up to the larger businesses in 2 years time. This direction of travel does not appear to be sensible, or to show any business acumen.
When is this all supposed to happen? - well, apparently it will all be up and running by April 2018, and will therefore come into play for the tax year 2018/19. Beta testing will begin in April 2017.
Who does this going to apply to? - this is the key information which has currently not yet been confirmed by the HMRC. Current proposals are that this will apply to any businesses, or landlords who have a sales or rental income of at least £10,000 per annum!! This figure is, in my opinion, ridiculously low, as this is even less than the personal allowance for income tax purposes! Current thinking, and there are lots of us who agree, is that this should be pushed up to the VAT registration limit of £83,000.
HMRC will be commenting soon on whether this £10,000 threshold is going to be applied or sensibly changed to something more feasible. We will keep you posted!
What do I need to do in the meantime? Well, you could possibly consider incorporating your self-employment business, as the new rules only apply to companies from April 2020. At least by then, the systems will have been tried and tested for at least 2 years on the self-employed businesses.
Alternatively, you need to contact us and we can talk you through how to improve your own systems in order to make the transition an easy one.