Tax legislation and administration were key topics covered in the Spring Budget, including the government’s ‘Making Tax Digital’ initiative. The scheme will aim to simplify the tax return process, ending the age of the annual tax return and making it easier for individuals and businesses to get their taxes right.
Chancellor Philip Hammond announced the deadline for ‘going digital’ has been pushed back to April 2019, meaning unincorporated businesses and landlords with turnover below the VAT threshold have more time to get their tax affairs in order before the transition. In order to ensure a consistent approach across all taxes, the government is also consulting on the design aspects of the system.
Paula Steele, managing partner at John Lamb Financial Planning, says: “Measures such as the increase of the cash basis entry threshold to £150,000 and the exit threshold to £300,000 should make the process of digital reporting easier under the government’s new initiative.”
Meanwhile, the government is set to crack down on tax avoidance by introducing further legislation to stop scheme promoters reorganising their business to circumvent disclosure rules. This follows plans announced under the Autumn Budget that a penalty will be imposed for people who have enabled other people or businesses to use tax avoidance schemes that have later been defeated by HMRC.
In addition, Philip Hammond announced that the government will amend legislation to ensure that all profits made by offshore property developers developing land in the UK are subject to tax. Consultations will also be held over proposals to redesign rent-a-room relief to ensure it is adjusted to support longer-term lettings in line with the aim to offer more affordable long-term lodgings.