3m small firms spared digital tax returns as ministers relent

THE Government has backed down on plans to force more than three million self-employed workers and small business owners to file four digital tax returns a year by 2019.

Businesses with turnover below the £85,000 a year threshold for paying VAT have had their deadline for filing returns digitally scrapped entirely, as the Treasury confirmed they would be able to continue filing paper tax returns once a year until at least 2020.

Under the scheme, called “Making Tax Digital”, tax payments were to be made online only while paper returns would be phased out in a bid to raise revenue by minimising the opportunity for errors.

The decision has come as a relief to small businesses and follows fierce campaigning by tax experts and trade bodies, which warned millions would not be ready for the change.

Fears had been growing that business owners in rural areas, where broadband speeds are slow, would fall foul of the rules as they would be unable to access the new online system.

Under the previous timescale, businesses with a turnover of £85,000 or more were told the deadline for “going digital” would be April 2018 for income tax and National Insurance contributions, with April 2019 the deadline for VAT. Those with turnover below the VAT threshold were told the deadline was April 2019 for income tax and NI.

A spokesman for the Federation of Small Businesses said: “Today’s announcement promises to make the roll-out of the programme far more manageable for all of the nation’s small firms.”