OTS summer budget news for the UK SME

The government announced in its Summer Budget that the Office of Tax Simplification is due to review the closer alliance of National Insurance and income tax.

On the government agenda this autumn will be consultation on reforming Class 4 NICs, abolishing Class 2 NICs and simplifying NICs for the self-employed.

Taxation of SMEs will also be reviewed, with a focus on deformations between personal and business tax systems and the complexities that are faced by many small businesses in the UK.

The OTS has been in place since 2010 and will now remain on as a permanent office of HM Treasury.

It is there to advise the government on how to develop and deliver a simpler tax system, including compliance issues and provide independent advice on tax complexity issues.

Financial secretary to the Treasury, David Gauke, outlined the plan in a letter to the leaders of the OTS:

“The first is a closer review of alignment of income tax and national Insurance contributions. This is an area often cited as an area of complexity for taxpayers.

“I would like the OTS to look at what the impacts, costs and benefits of closer alignment would be and to set out what the necessary steps would be to achieve closer alignment. This is a new type of review for the OTS, focusing on the issues and impacts rather than on making specific recommendations.

“The second is a review of the taxation of small companies, focusing on the distortions between the personal and business tax systems. This builds on your previous review of small business tax which focused on unincorporated small businesses.”

OTS summer budget news for the UK SME

What do you think about the OTS – will they really simply business for the UK SME? Join in the conversation on twitter @OmnitasTax or like us on Facebook!

Getting your Self Employed tax return right

Getting your Self Employed tax return right

To work out whether you must pay income tax, you need to fill in the self-employment supplement (SA103) as well as the main tax return.

Usually, this is sent to you automatically once you've registered as being self-employed.

If you have registered but don’t receive one, you can download it from the HMRC website or get a copy by calling the HMRC orderline (0845 900 0404).

Tax return supplements

There are now two tax return supplements – a short one and a full one.

You can fill in the short one if your turnover for 2014/15 was £77,000 or less and there are no complications like a change of accounting date, for example.

However, you cannot use the short one if your accounting period is not the same as your basis period (i.e. your business year), so you may not be able to use it in the first year. The onus is on you to make sure you get the right supplement.

Getting the right advice and an affordable accountant

Of course, by instructing an accountant, you can avoid worrying about this – self employed tax return services from Omni Chartered Accountants start from as little as £95.

To find out more, request a free of charge call back from our website or click here and we will contact you at your convenience to discuss the options available to you.