Groups predict small business tax confusion

Experts are predicting that thousands of small businesses will suffer when the basic tax threshold is raised later in the year.

Confusion over the increase in the personal allowances – which will enable all basic-rate tax payers to earn £600 more this financial year before they have to start paying tax on their income – is to be expected, the Independent reports.

According to Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants, speaking to the newspaper, employers need to ensure that their employees’ September pay packet show ‘quite a difference’ because the changes are backdated.

Simon Briault from the Federation of Small Businesses (FSB) comments that it will be difficult for small business owners who do their payroll themselves.

He says to the Independent: ‘It’s the thousands of small enterprises with a handful of employees I fear for. This is about the government getting itself out of a political hole, with no thought for the businesses that are going to have to implement it.’

The change in the personal allowances was introduced as a result of the uproar from backbench Labour MPs in response to the abolition of the ten pence tax band.

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