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Major changes coming for UK-based self-employed translators
Thread poster: Tom in London

Tom in London
United Kingdom
Local time: 10:47
Member (2008)
Italian to English
Mar 30

I only heard about this yesterday, by chance:

Beginning from 2018, all self-employed workers in the UK will be required to produce 3-monthly tax returns. The annual tax return will cease to exist. Currently I am trying to get more detail about this.

In some ways it may be a positive move (information about your bank interest will be sent automatically to HMRC by the bank, rather than by you), but in other ways (e.g. late payers witholding payment for 3 months or more) it could lead to problems.

Your thoughts?

[Edited at 2017-03-30 07:12 GMT]


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Jack Doughty  Identity Verified
United Kingdom
Local time: 10:47
Member (2000)
Russian to English
+ ...
Only above a certain turnover figure Mar 30

I was worried about this myself, but found in the small print that it only applies to those with a turnover above £84,000. The same point was explained by Theresa May in answer to a question in PM's Question Time in Parliament yesterday.

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Sonia Hill
United Kingdom
Local time: 10:47
Italian to English
Interesting Mar 30

My initial thought is that this could lead to significantly increased accounting costs for people like me who use an accountant. I think I would probably have to start doing my tax returns myself.


Edited to say, having just seen Jack's comment, it seems this won't apply to many of us.

[Edited at 2017-03-30 08:15 GMT]

[Edited at 2017-03-30 08:22 GMT]


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Tom in London
United Kingdom
Local time: 10:47
Member (2008)
Italian to English
TOPIC STARTER
Only for a limited period - after 2019 EVERYONE will be affected Mar 30

Jack Doughty wrote:

I was worried about this myself, but found in the small print that it only applies to those with a turnover above £84,000. The same point was explained by Theresa May in answer to a question in PM's Question Time in Parliament yesterday.


"Individuals and landlords with turnovers lower than £85,000 were given a reprieve in the Budget earlier this month. They will only move into the system from April 2019"

http://www.telegraph.co.uk/tax/self-employed/new-tax-system-self-employed-will-seriously-harm-economy/


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Tom in London
United Kingdom
Local time: 10:47
Member (2008)
Italian to English
TOPIC STARTER
Increased costs Mar 30

Sonia Hill wrote:

My initial thought is that this could lead to significantly increased accounting costs for people like me who use an accountant. ....


..or even if you don't use an accountant. I do my own returns and it takes a lot of time and effort. Once a year is bad enough; every 3 months would be punitive. Unsurprisingly, the parliamentary question to which Jack referred was a plea for those on lower incomes to be let off. Needless to say, the response from the government was completely unhelpful.

I'm hoping that between now and 2019 common sense will win the day.

QUOTE from Hansard:

Bill Esterson (Sefton Central) (Lab)

Q2. The Treasury Committee says that for many small companies, having to fill in a tax return every three months will mean facing disaster, and the Federation of Small Businesses says that the extra annual cost is likely to be at least £2,700 a year—yet another burden on business from this Government. The Prime Minister got it wrong on national insurance; is she going to backtrack on tax returns as well?

The Prime Minister

Perhaps the hon. Gentleman should have listened to the announcement that my right hon. Friend the Chancellor made in the Budget, when he indicated that he would delay the introduction of the change for a year for the smallest businesses below the VAT threshold. It is right that Her Majesty’s Revenue ​and Customs tries to move to a greater digitisation of how it operates, enabling it to provide a better service to those who are completing their forms. We should always remember that aspect of what is being proposed.

[Edited at 2017-03-30 08:23 GMT]


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Chris S  Identity Verified
United Kingdom
Member (2011)
Swedish to English
+ ...
Major? Mar 30

If, big if, this happens, it just means a trifle more admin, and maybe not even that.

Let's face it, self-employed tax returns aren't rocket science. It's just money in and money out.

As for late payers, you can always prepare your accounts on a cash basis.


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Jenny Forbes  Identity Verified
Local time: 10:47
Member (2006)
French to English
+ ...
Announced in autumn 2015 Mar 30

Alas, this clever project was announced in his 2015 Autumn Statement by George Osborne, then Chancellor of the Exchequer. George is no longer Chancellor and is lucratively employed in several other non-governmental jobs alongside his duties as MP for Tatton, Cheshire.
His idea was that, with tax returns from the self-employed and small businesses four times a year instead of once, the Exchequer would collect taxes sooner, in four instalments.
Allegedly, it will be so "easy" because it will all be digitalised and hence completely reliable and straightforward.
Hundreds, if not thousands, of self-employed people, including me, objected vigorously and wrote to their MPs. There was a "debate" about it in a committee room, not in the House of Commons, which reached the limp conclusion that further investigation was needed.
It now appears that the new system is being introduced in 2018 regardless.
I'm furious.
It's annoying and time-consuming enough to have to collect and remit all this information once a year, let alone four times.
Not everyone is computer-literate, you know. There may even be some (not us translators, of course) who don't use computers or who have unreliable internet connections - or none at all in some parts of the UK ... and it is well known how efficient and reliable government online programs can be ☺ ... and how often "confidential" information is left in briefcases on buses and trains and even in litter bins ...
Ugh!


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Tom in London
United Kingdom
Local time: 10:47
Member (2008)
Italian to English
TOPIC STARTER
ROckets Mar 30

Chris S wrote:

.... self-employed tax returns aren't rocket science. It's just money in and money out.



It's a lot more than that. It's expenses, capital equipment, foreign income, etc. and you have to be extremely careful not to make any mistakes - and the rules are constantly changing. You apparently find all this easy. I don't. I agree with Jenny 100%.

[Edited at 2017-03-30 08:27 GMT]


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Dan Lucas  Identity Verified
United Kingdom
Local time: 10:47
Member (2014)
Japanese to English
Worrying lack of clarity Mar 30

Tom in London wrote:
Beginning from 2018, all self-employed workers in the UK will be required to produce 3-monthly tax returns. The annual tax return will cease to exist. Currently I am trying to get more detail about this.

Tom, Making Tax Digital has been in the pipeline for years and in that sense should not be surprising.

However, what is and should be surprising is that there still seems to be a remarkable lack of clarity about exactly how everything is going to work, with less than one year to go before implementation. Despite that the government is forging ahead.

For sole traders the regulations come into effect in April 2018. It does not come into effect for companies paying corporation tax until April 2020.

I agree, it is a worrying trend: more tax returns is likely to equal more work unless there is some radical streamlining of the process. So far there has been no clear indication that this is the case.

I agree with your point that if you have anything other than a very basic setup, tax returns can get complicated quite quickly. I let my accountant sort them out, but paying her once a year is very different to paying her four times a year.

This is not the kind of low-bureaucracy, small-business friendly approach I have come to expect from the UK and, in that sense, disappointing.

Dan


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Tom in London
United Kingdom
Local time: 10:47
Member (2008)
Italian to English
TOPIC STARTER
Digital Mar 30

Dan Lucas wrote:

Tom, Making Tax Digital has been in the pipeline for years and in that sense should not be surprising.


It isn't. I've been doing my tax return digitally for the past 2 years. Once you get used to it, it's easier. That is not the problem for you or me (although, as Jenny has pointed out, it is for many; if a person is not even computer-literate and perhaps does not even own a computer, it's an impossible mountain to climb).

I'm hoping that as in so many other cases, the government will cave in under pressure from business groups and others before these nefarious new arrangements become operational.

[Edited at 2017-03-30 09:04 GMT]


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Merab Dekano  Identity Verified
Spain
Member (2014)
English to Spanish
+ ...
Not happy Mar 30

The government is lowering Corporation Tax, which will make doing business via a UK-registered company more attractive. However, they increase administrative burden (which also involves higher cost), which will make doing business via a UK-registered company less attractive. I am not getting it.

I would learn how to do my tax returns, but I cannot track all the changes that take place. Therefore, making a mistake would be just around the corner. Will my accountant quadruple her fee by 2020? Not happy, to say the least.


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Jenny Forbes  Identity Verified
Local time: 10:47
Member (2006)
French to English
+ ...
Doing something about it Mar 30

If you live in the UK and object to this quarterly tax returns plan, write to your MP.
The number of objections MPs receive on a subject really can make a difference - and he/she will probably be relieved to be contacted about something other than Brexit for a change.
I've just written to mine again. He said he agreed with me the first time - but perhaps he says that to all the girls ...
As Dan has pointed out, unless your income is derived solely from your earnings as a freelancer, filling in tax returns can be complex and time-consuming, whether on line or on paper.
Many self-employed people have modest incomes from sources other than their freelancing work - for example, pensions, interest on savings, dividends, income from letting a room, supplying bed and breakfast in the summer, odd jobs, etc. etc.
It's not necessarily so simple - apart from the unreliability of online systems and broadband connections.


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Tom in London
United Kingdom
Local time: 10:47
Member (2008)
Italian to English
TOPIC STARTER
Yes... Mar 30

Yes - I was thinking of doing that. My local MP is Tulip Siddiq

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Sheila Wilson  Identity Verified
Spain
Local time: 10:47
Member (2007)
English
+ ...
I find it a strange discussion Mar 30

I'm amazed at this topic. In the UK do you really do absolutely nothing about taxes until the summer after the tax year ends, and then get faced with going through the entire year? And some do it all on paper? Goodness! I hadn't realised the UK hadn't streamlined things for the computer age. However do accountants manage their workflow?

I don't honestly remember how it was done in France when I first set up there in 1998, but when I switched to a different regime later on it was definitely all digital, and quarterly. It used to take a few minutes each quarter to fill in a few key bits of information. Pressing "submit" kicked off a direct debit and that was that. Just a simple reconciliation to do along with the personal income tax returns at year end. Here in Spain it's exactly the same, although as a non-proficient Spanish speaker - in a more complex system - I submit the information to my accountant who kicks off the direct debit (plus one for his fee).

What happens in other EU countries, I wonder?


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Chris S  Identity Verified
United Kingdom
Member (2011)
Swedish to English
+ ...
Lol Mar 30

Sheila Wilson wrote:

I'm amazed at this topic. In the UK do you really do absolutely nothing about taxes until the summer after the tax year ends?


As a limited company we don't pay tax for September 2015 until January 2018!


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