Sole traders, landlords and unincorporated businesses will be able to submit ‘voluntary’ tax payments towards unexpected tax liabilities, under new proposals from HM Revenue & Customs (HMRC).
The news comes alongside the much anticipated publication of six consultation documents into HMRC’s Making Tax Digital (MTD) campaign, which the tax authority hopes will make all tax “100 per cent digital by 2020”.
PAYG – HMRC’s proposed pay-as-you-go system – is one of many unanticipated changes to MTD outlined in the tax authority’s latest consultations, which were published yesterday.
The PAYG system will allow taxpayers to take full control over how often they wish to pay, and how regularly they wish to pay – although businesses with an annual income of £10,000 or more will also find themselves under a new obligation to report accounts information to HMRC “at least quarterly,” according to consultations.
HMRC has said that their optional voluntary system will apply to the likes of Capital Gains Tax (CGT), income tax and National Insurance (NI) contributions from 1 April 2018 – and to VAT from April 2019.
By 2020, HMRC hopes PAYG will be also open to incorporated businesses in respect of their corporation tax affairs.
Proposals under MTD are complex and confusing, and taxpayers and businesses alike are advised to seek advice, to determine exactly how HMRC’s tax overhaul will affect them personally.
The Association of Taxation Technicians (ATT) recently branded MTD “the biggest change to the way taxpayers will engage with HMRC since the introduction of PAYE in 1945”.