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1 out of 4 SMEs unaware of new tax deduction changes

A new study recently discovered that 1 out of every 4 small businesses – including freelancers and contractors – don’t know of upcoming tax deduction changes.

A new research study from the Federation of Small Businesses has discovered that many self-employed and small business owners have absolutely no idea that income tax and national insurance deductions will have to be made in real time from this April, unlike the current arrangement which has employers making deductions just once. In fact, nearly 25 per cent erroneously stated that there will be no change in April, simply assuming in their ignorance that PAYE rules will still permit them to deduct annually.

The new Real Time Information system, coined so by Her Majesty’s Revenue & Customs, is being put into effect in order to make it easier to make universal credit calculations. However, more than half of those polled by the FSB had not even been given any materials by HMRC, according to the Federation’s results.

FSB national chairman John Walker commented on the recent findings, remarking that the Federation has serious concerns that the new Real Time Information scheme could flop if the government does not rectify the lack of communication. Business owners could be seriously caught out, especially because of the specialised payroll software HMRC is requiring for the Real Time Information scheme, which necessitates an internet connection in order to make tax deductions every time an employee is paid.

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