By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Nearly 300,000 sole traders face bigger tax bills than expected next year, following the government’s proposal to change the date small businesses report profits.
The move, which also affects partners in accountancy and law firms, would generate billions of pounds for the Treasury years before it would otherwise have received the money.
The changes to tax bills will also eat into the amount of working capital sole traders have for five years as they now have to pay more tax earlier.
>See also: Why the Government’s new insolvency bill is bad news for sole traders
A consultation and draft tax bills legislation published last month revealed plans to alter the 12-month period sole traders use to calculate profits, to bring everyone in line with either March 31 or the end of the tax year on April 5.
What this means is that the date sole traders have to pay their tax bills – which small businesses are currently able to defer by having a later date for their end-of-accounting year – will be brought forward.
According to the Financial Times, the measure is expected to affect 280,000 sole traders, based on