Dubbed as ‘Tax Day’, HM Treasury released 30 documents and consultations today as part of their tax policies and consultations update to inform future tax policies. These would normally be published on Budget day but this year they have been published separately in a what they say is a move to ‘strengthen policy making and modernise the UK tax system.’
In July 2020, the government announced its 10-year tax administration strategy, today’s update is part of that on-going review and reform process.
What does ‘Tax Day’ mean to most businesses and individuals
In amongst the technical information surrounding tax legislation and reform announced today, there were also updates that have the potential to significantly impact the tax affairs of many small business owners, and some individuals.
Making Tax Digital
Making Tax Digital for VAT registered business with a turnover over £85,000 has been the first phase of what the government hope will become a new, digital way of working that will include all taxpayers reporting their income and expenses via digital software, in a more timely manner. With all VAT registered businesses needing to be Making Tax Digital compliant from 1 April 2022 and subsequently, businesses and landlords with trading income over £10,000 from 1 April 2023, being the next phase of the ’10-year strategy’.
Ultimately, HMRC are looking for this to lead to the more frequent payment of tax, in line with the increased reporting requirements, for all self-employed and small businesses owners.
Holiday Lets
It is currently the case that many holiday lets in England are registered to pay business rates, rather than council tax, when an owner declares that they intend to let their property in the next year. As a result, many are able to benefit from Small Business Rates Relief, providing up to 100% relief against business rates, meaning no tax is due.
In today’s announcement a change was tabled that will mean that owners of properties that are not genuine businesses are not able to reduce their tax liability by declaring that a property is available for let but make little, or no realistic effort to let it out.
Inheritance Tax
From 1 January 2022, over 90% of estates that do not need to pay inheritance tax will no longer have to complete inheritance tax forms for deaths when probate or confirmation is required.
The areas summarised are a small part of today’s tax policies and consultations update, that I feel have the most relevance to the businesses and individuals that we support. These announcements are part of a consultation process by the government and a call for evidence before considering whether they will become part of its 10-year tax administration strategy.
We will be keeping a close eye on the developments and will inform our clients on any changes that are made that may affect them.
If you wish to discuss any of these areas further, please contact us
Related Pages: Making Tax Digital and Inheritance Tax
Related Articles: Budget 2021: Response from Henry Pettitt
Profile: Kayleigh Wilson
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