Freelancers may need to know that the Government has introduced new legislation that will put an end to a tax avoidance scheme.
Under post-cessation trade relief, entrepreneurs have been able to deduct bad debts and certain other payments from their income tax calculations after a profession, trade or vocation has come to an end. The Government hopes to stop people exploiting this relief artificially to claim tax deductions.
It is thought that the Exchequer has been at risk of losing a significant amount of revenue as a result of this avoidance scheme.
David Gauke, the exchequer secretary to the Treasury, said that one of the Government's priorities is to tackle tax avoidance. The UK is trying to reduce the budget deficit and it is totally unacceptable that a minority of people are trying to avoid paying what they owe.
He went on to explain that the Government has acted quickly to stop people profiting from this scheme and will not hesitate to take the same action as soon as it becomes aware of other avoidance schemes.
The new legislation will be included in this year's Finance Bill and will apply to payments made after the twelve of January this year.
Although the Revenue will not incur additional costs implementing this measure, it will be monitoring tax returns to make sure the legislation is being effective and tax avoidance does not occur.
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