Michael Lansdell discusses the government's plan to accelerate tax payments - with quarterly or maybe even monthly payments demanded from companies and individuals who pay through self-assessment.
This isn’t the first time this suggestion has been floated, but now with borrowing at a record high as a result of the pandemic, the Treasury does need to boost its finances, in order to mitigate the impact of (the probably inevitable) tax rises to come.
Will this impact on you – and how?
A consultation about accelerated tax payments launched in March (now closed), to give HMRC all the information it needs to advise the government about changing the laws around when people pay. This gave tax payers, as well as tax experts, the opportunity to offer their views about moving to more frequent, in-year calculations and payments. The focus of the consultation was self-assessment and corporation tax (CT), although insights and perspectives on other taxes were welcome too.
When introducing the consultation document, Call for evidence: timely payout, it was noted that accelerated tax payments are part of the now decade-long strategy to “build a trusted, modern tax administration system”. It had been mooted (and abandoned) as part of Making Tax Digital (MTD); MTD for income tax has been deferred itself for two years, for unincorporated businesses and landlords whose turnover exceeds £10,000. For companies, it will be even later.
So, a future of accelerated tax payments shouldn’t be a surprise, although the timing is still unclear. It is unlikely to happen before 2023, though – but we also know a) how quickly time can pass and b) how rapidly things can change! The greatest impact of accelerated tax payments will be on small businesses and – to be realistic – the transition process is likely to be bumpy, to say the least.
For all our clients, we always recommend a pragmatic approach – to keep a keen eye on potential future developments and changes to legislation, while focussing on the present. Being ruthlessly organised, including having robust processes and protocols for record-keeping is key too. For guidance and advice on tax-planning, give our experts a call so we can explore how to make you more efficient, along with ways to optimise your finances.
For more information call Figurit (formerly known as Lansdell & Rose) on 020 7376 933.