'£10k freelancers' let off quarterly tax reporting
Self-employed freelancers with annual turnover of less than £10,000 are the only definitive winners of a waiver from the taxman’s ‘at least’ quarterly online reporting regime.
Confirmed yesterday by HMRC, the waiver means all unincorporated traders will not have to update a digital tax account at least every three months if their sales are shy of £10,000.
If their sales are above £10,000 (or if their income is above £10k if they're a self-employed landlord), then such individuals will have to wait to see if they must report quarterly.
This is because the tax authority is yet to set the maximum threshold for the waiver – or “exemption,” and freelancers can have their say as to how much they think it should be.
“Businesses with very low annual incomes will be entirely exempted from the new obligations,” HMRC said, before reiterating its claim that those obligations will not equate to four tax returns a year.“No unincorporated business or landlord with a turnover or gross income from property under £10,000 per annum will have to… [report online at least quarterly]. We will consult further on whether £10,000 is the right threshold for this exemption.”
The ten-thousand-pound mark is also going to determine whether other businesses will qualify for a one-year deferral to when the quarterly reporting regime begins.
The maximum value of sales such traders should be allowed to make in order to qualify for the 12-month grace period is an another area that HMRC is seeking views on, before the consultation closes in November.
“Most businesses, self-employed people and landlords will [by 2020] need to keep records digitally and will update HMRC more frequently than is currently the case,” adds an HMRC document.
“For the majority of businesses, the transition to the new system will be straightforward. Many businesses are already using digital tools.”
Traders who aren’t already keeping records digitally were reassured by the Revenue that they will receive free software and "straightforward advice" to help become compliant.
to the small minority of businesses that “genuinely cannot use digital tools,”
the department says that they “will not have to do so” and will be exempt from the
quarterly reporting system.
16th August 2016