A plan to reform Income Tax Self-Assessment for individuals with income from property or self-employment has been panned by the Association of Accounting Technicians.
Currently individuals have up to six months after the end of a tax year to notify HMRC of a tax liability.
Accountants point out that this means that currently an individual who starts self-employment on April 5 2022 needs to tell HMRC by October 5 2022 (six months). But an individual who starts self-employment one day later, on April 6 2022, does not have to tell HMRC until October 6 2023 (18 months).
A government proposal now out for formal consultation wants to accelerate payment by slashing the six month period from the end of the tax year to a lower period - possibly just one month.
The proposal has been criticised by AAT Licensed Accountants: in a survey 40 per cent wanted the existing rules retained and 10 per cent wanted a longer period. Only five per cent supported the government proposal.
However, 40 per cent wanted a complete break from basing the payment on a period after the end of a tax year.
That 40 per cent agreed that “…there should be a new obligation to tell HMRC about the new self-employment or property income at a specified period after it starts rather than there being any connection to the tax year.”
The government’s Call for Evidence and consultation on the issue closes on February 22 2022 and can be seen here.
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