You'll be familiar with the process of filing your tax return each year. However, a new system called Simple Assessments is on its way, and it will change the way both businesses and individuals report their taxes ...
If you have a single source of income and no deductions then you'll be using Sime Assessments in the near future!
Simple Assessments are a new way for HM Revenue and Customs (HMRC) to collect income tax from individuals and businesses. Instead of filing a tax return each year, eligible taxpayers will receive a Simple Assessment, which will show their tax liability based on the information HMRC holds about them.
"Initially, Simple Assessments will only apply to individuals with straightforward tax affairs!"
These are people who have a single source of income, such as a pension, and have no other sources of income or deductions to claim. However, the government plans to expand the use of Simple Assessments to all taxpayers in the future.
If you are a business owner, you may be wondering how Simple Assessments will affect you. The good news is that for now, businesses will not be required to file Simple Assessments. However, if you are self-employed or have income from other sources, you may receive a Simple Assessment for your personal tax liability.
The main benefit of Simple Assessments is that they simplify the tax reporting process for individuals and businesses. Instead of having to gather all the necessary information and fill out a tax return, you will receive a pre-populated form from HMRC, making the process quicker and easier. Additionally, Simple Assessments will help to reduce errors and ensure that taxpayers pay the correct amount of tax.
Here are some tips to help you get ready for Simple Assessments:
Keep accurate records: With Simple Assessments, HMRC will use the information they hold about you to calculate your tax liability. Therefore, it is crucial to keep accurate records of your income and expenses to ensure that the information HMRC has is correct.
Review your tax codes: With Simple Assessments, HMRC will use your tax code to calculate your tax liability. If your tax code is incorrect, it could result in you paying more or less tax than you should. Make sure to review your tax code and inform HMRC if it needs to be updated.
Seek professional advice: If you are unsure about how Simple Assessments will affect you or need help preparing for their implementation, it is always a good idea to seek professional advice from a qualified accountant or tax advisor.
Keep up to date with changes: As the government plans to expand the use of Simple Assessments, it is essential to stay informed about any updates or changes to the system. This will help you to avoid any penalties for non-compliance and ensure that you are prepared for any future changes.
Simple Assessments are on their way, and they will bring significant changes to the way we report our taxes in the UK, so it is crucial to be aware of these changes and take necessary steps to prepare for their implementation.
By keeping accurate records, reviewing your tax codes, seeking professional advice, and staying informed, you can ensure compliance with Simple Assessments and avoid any potential penalties.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about Simple Assessments, it may be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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