The Institute of Chartered Accountants in England and Wales (ICAEW) has predicted that almost 250,000 partners and 280,000 sole traders in the UK may face higher tax bills next year following government proposals to change the date when businesses disclose their income.
Whilst the changes would raise billions of pounds for the Treasury years in advance of when it would have received the funds, but would also decrease in the amount of operating capital available to partners and sole traders for up to five years where tax liability is brought forward.
Draft legislation published last month revealed plans to alter the 12-month period partners and sole traders use to calculate profits to bring everyone in line with either 31 March or the end of the tax year on 5 April. Tax liabilities that can currently be deferred will be brought forward as a result of the change.
Anita Monteith, Senior Policy Adviser at the ICAEW, said: 'Because these big partnerships 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.