Tax simplification for self-employed

17th July 2019

The Office of Tax Simplification (OTS) was established in July 2010 to provide advice to the Chancellor on simplifying the UK tax system. The OTS has recently published a new document setting out the scope of a project looking at simplifying tax reporting and payment arrangements for the self-employed and for landlords of private residential property.

The OTS will initially:

  • Aim to secure the maximum level of direct input from a wide range of taxpayers, agents, businesses, platforms and others such as software providers.
  • Explore the potential segments or populations of self-employed people where their circumstances or business models may point to different approaches or options.
  • Give consideration to the merits or otherwise of having different approaches for different groups or creating one overall system with sub-options, and wider trade-offs as well as taking account of the significant number of self-employed people using the cash basis rather than accrual accounts.
  • Consider the issues arising with different potential approaches or opportunities for information about self-employed people’s income and expenses to be reported to tax agents and to HMRC.
  • Consider the scope, including opportunities and risks, for self-employed people’s tax affairs to be managed in real time or closer to real time, taking expenses into account.
  • Consider the issues involved where the self-employed person has other income, whether from employment or other sources, and links with personal or business tax accounts.
  • Look at the extent to which such approaches would be best pursued on an optional, incentivised or potentially on a mandatory basis.
  • Examine the wider practical, behavioural or competitive factors which would need to be considered, both in relation to self-employed people and others including HMRC.

The OTS will be examining these issues over the Summer with a view to publishing an initial paper in the Autumn. It is possible this could then be followed by a more extensive review.

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