In his budget speech yesterday, Chancellor George Osborne announced the scrapping of the Annual Return paper tax which will be replaced with individual digital accounts.
This new system should be up and running by early next year and should first benefit around 5 million businesses according to the Treasury.
Businesses should see 3 major benefits:
- They will see the disappearance of the mad rush associated with filing on time. By 2020, this cumbersome and consuming task will no longer be necessary for SMEs.
- It will remove the stress associated with the risk of being heavily fined if making an honest mistake.
- Businesses will no longer have to make one heavy payment. By 2020, all Small and Medium size Businesses will be able to control their tax online with a Pay as You Go payment system. According to the treasury, businesses will then pay “the right tax at the right time”. This however, suggests the end of the grace period which enabled businesses to pay the bulk of their income tax a year after it was earned.