Partners and sole traders could be facing bigger tax bills in 2022 after a government proposal to change the date for businesses to report their profits, the Institute of Chartered Accountants in England and Wales (ICAEW) has predicted.
The move could generate billions of pounds for the Treasury in advance, thereby reducing the working capital partners and sole traders could have for up to five years
A consultation and draft legislation published last month revealed plans to change the reporting date for sole traders and partnerships to 31 March or the end of the tax year on 5April. This would mean that businesses, which would be able to defer taxes by having a later reporting date, would incur tax liabilities earlier.
Based on the tax returns for 2019/2020, it is expected that almost 250,000 partners and 280,000 sole traders.
Anita Monteith, Senior Policy Advisor at the ICAEW, said: ‘Because these big partners earn mega bucks, you can get a nice healthy lump of cash flowing into the exchequer that will help to pay down some of the enormous national debt’