The Government’s recent proposals to remove 300,000 taxpayers, including those with side hustles, from their self-assessment obligations will help free the UK’s ‘clogged’ tax system, say leading audit, tax and business advisory firm, Blick Rothenberg.
Robert Salter, a Director at the firm, said, “The Self-Assessment Tax Return filing system and HMRC is clogged with many returns where the costs of reporting tax, for both the individual taxpayers and HMRC, often outweighs any tax which might be payable.
“Removing 300,000 taxpayers from self-assessment, which includes those who trade clothes online, dog-walk or do gardening on the side, will free up the system to hopefully deal with returns in a more timely manner.
“However, there must be clear communications between the Revenue and all individuals affected by this change, both when the new rules are initially introduced and after they are in place, so that those individuals know if they have any further obligations as taxpayers to report income to HMRC. HMRC must have some type of auditing and review process in place, so that it can check whether any individuals who are being taken out of Self-Assessment, should subsequently be reintroduced into the system.”
He added: “Although some self-employed individuals with income that is below the personal tax allowance of £12,570 per annum may not have any income taxes to pay to HMRC and do not need to be within the Self-Assessment system, they should consider whether they wish to make voluntary National Insurance Contributions (NICs) to HMRC at a rate of £3.45 per week, to protect their state pension accrual position. In practice, these voluntary class 2 contributions can be made outside the Self-Assessment process, but it is important that people in this situation, do not forget about the need to make their NIC ‘stamp’, if they wish to preserve their long-term state pension rights.”
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