Global accounting network BDO has welcomed the UK Government’s decision to exempt individuals with low trading incomes from the self-assessment tax filing requirement.
The government has relieved 300,000 low-income traders from filing self-assessment tax returns.
However, BDO noted that this was a “missed opportunity” to further ease administrative burdens on a broader scale.
BDO tax dispute resolution partner Dawn Register said: “All in all, today’s announcement feels a bit peripheral.”
The new measure applies to individuals with side incomes such as online clothing sales, dog-walking, gardening, taxi driving, or online content creation.
The reporting threshold for trading income will increase from £1,000 ($1,294) to £3,000 during this parliament. This change is expected to reduce the workload for HMRC and simplify tax obligations for some taxpayers.
Register added: “This would help many thousands of pensioners and others with relatively simple financial affairs who have been pulled into self assessment by fiscal drag.
“Frankly, we would like to have seen a little more imagination to create genuine simplification for taxpayers, the vast majority of whom just want to pay the right amount of tax in the easiest possible way.”
Despite the relief from filing requirements, individuals with trading incomes above £1,000 will still be required to pay taxes.
Those earning between £1,000 and £3,000 from side hustles can settle their tax obligations through a simple tax bill or potentially via their PAYE tax code.
The government also plans to introduce a new reward scheme for tax informants later this year.
According to BDO, this initiative aims to address serious non-compliance by large corporations, wealthy individuals, offshore entities, and avoidance schemes, offering informants a share of the recovered tax.
Register concluded: “While we await the exact details of the scheme, this does represent a big culture shift. Although there is a rewards scheme already in place, if the new inducements on offer are attractive enough, it could encourage a new ‘culture of snitching’ which hasn’t really been a feature of the UK tax system to date.
“However, HMRC already has access to vast amounts of data from national and international sources to help them identify and focus their investigations. This might be a better place to start if they want to start clamping down on serious non-compliance and close the tax gap.”
Last month, research from BDO revealed a growing number of UK mid-sized businesses facing the threat of becoming ‘zombie’ companies.
Over the past year, nearly one in six (15.9%) of these businesses have been classified as at risk, reflecting a 3.5%-point rise compared to the previous year.
