5 things you need to know about the new Self Assessment process

HMRC have announced an overhaul of the Self Assessment process, claiming that the move will make life easier for the self-employed.

Annual tax returns, heaps of paperwork, and time-consuming forms could soon be a thing of the past, as HMRC shake up their out-of-date and often confusing processes.

Some businesses could be using the new tax system as early as 2018, while the changes are likely to be phased in entirely by 2020.

This year alone, over 800,000 people are running the risk of late fines, and a simplified process could apparently save the self-employed millions of pounds.

So what are the changes that you need to know about?

1. No more annual tax returns (as we know them, at least)

Ah, tax return season. There’s often a smell of desperation in the air as those who’ve left it to the last hour scramble for receipts, invoices and the like. In fact, over 30,000 people filed their return in the last hour this year.

Of course, not everyone cuts it so fine, with many business owners organised enough to have it settled months in advance.

However, under HMRC’s new proposals, the annual return will be phased out, with Government saying “Everyone can expect a very different experience from the one they receive today — it will be simple, personalised and secure.”

2. HMRC do the leg work

The self-employed can also forget about having to update information on the likes of pensions, employment or savings.

“HMRC will automatically use the information it holds, along with new data from third parties, to populate the digital accounts,” it is promised in HMRC’s digital guide.

HMRC and Companies House will also be working more closely together to make registering a company easier.

3. Quarterly updates

With the move away from annual returns, traders and landlords will soon be required to submit quarterly updates.

To help manage cash flow, people will also be given the option to pay-as-you-go.

4. Going digital

Most landlords and self-employed workers will no longer have the option of filing a paper tax return.

Reporting the likes of income and expenditure will now be done via an online account. Many taxpayers are doing this already, although it could prove problematic for those who aren’t as digitally savvy.

5. Online accounts

All taxpayers will have their own online account, giving users an overview of their taxes across multiple liabilities. It’ll be an up-to-date view of their tax position.

People will also be able to let agents manage their account on their behalf (while still being able to see their account), giving the self-employed and landlords greater freedom to decide how they manage their taxes.

It’ll also be possible to link the likes of accounting software to the new digital account, to make life easier still.

What do you make of the proposed changes? Tell us your thoughts below.

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