Pay as you go to be ready in 2018, HMRC announce
HM Revenue and Customs (HMRC) has announced that its pay-as-you-go tax system for landlords and sole traders will be up and running from April 2018, in what could be an innovative development for tax payers.
The plan is to allow businesses to employ a digital tax account in order to estimate their liabilities and make a payment. This will make it easy for HMRC to allocate the funds directly from their accounts when their taxes are due.
The system would also make it easier for overpayments to be returned more promptly, and would allow businesses to reclaim payments on account.
The scheme, which is known as ‘Voluntary PAYG’, is set to apply to all unincorporated businesses, landlords and sole traders, and will include income tax, National Insurance contributions and capital gains tax from April 2018 and VAT from April 2019. There are plans in place to expand the system to all incorporated businesses from 2020.
HMRC stated that under this system, the customer will be able to make the decision on what to pay and how often, rather than having to abide by fixed time intervals. Voluntary payments will remain on their account, and unused credits should be carried forward.
The government institution is also planning a series of measures to encourage businesses to take up the system, including paying interest on credits, streamlining its own security processes, and even promoting cash rewards.