Four ways the Government is simplifying the tax system for small businesses

Written by Chris Barlow


April 4, 2023

Quite often, the complexities of the UK tax system may be off-putting when considering starting a business. This was not helped by Kwasi Kwarteng’s closure of the Office of Tax Simplification (OTS) in the mini-budget last autumn. At the Spring Budget 2023, Jeremy Hunt announced a series of administrative changes with the hope of simplifying the tax system, to make it easier for small businesses to interact with the UK’s tax regime. To help cultivate a tax system that is simple, fair and supportive of growth, the government opened a consultation on 15th March 2023; Simplifying and modernising HMRC’s Income Tax services through the tax administration framework.

Small businesses make up 52% of the private sector, with an estimated turnover of £2.3 trillion. It’s hoped that by simplifying the tax system, there will be an end result of more time and money for these businesses to grow. Going forward, the government has emphasised that tax simplification will be kept at the core of policy development processes when changes to tax and administration changes are considered for future fiscal events.


1. Changes to the EMI scheme from April 2023

The Enterprise Management Incentive (EMI) scheme is a government backed initiative to provide tax advantages to businesses. If a company has a turnover of £30 million or less, then they may be able to offer EMIs, which are employee share options up to the value of £250,000 within a three-year period. When employees take part in an EMI scheme, they do not have to pay Income Tax or National Insurance, providing that they have bought the shares for at least the market value they had when the option was granted.

Under new plans, the government aims to simplify the process to grant employee share options. This will be done by reducing the administrative burden on companies who participate. Furthermore, the requirements to sign a working time declaration and setting out details of share restrictions in option agreements will be removed from 6th April 2023. 


2. Delivery of IT systems to enable tax agents to payroll benefits in kind on behalf of their clients. 

Benefits in kind (BiK) are goods and services provided to employees for free or at greatly reduced costs. If an employer has these in place, then they are legally obliged to provide their employees details of relevant benefits in kind that they have received in a tax year. Although the method of implementation is yet to be announced, allowing tax agents to do this on behalf of their clients will reduce the burden currently on employers.


3. Simplification to the customs import and export process.

In a bid to support the UK’s competitiveness and promote economic growth, the government announced improvements to the Simplified Customs Declaration Process, and the Modernising Authorisations project. This is expected to make the process easier for traders when importing and exporting goods, complementing wider transformational changes at the border that the government has committed to delivering. 


4. Consulting on the Help to Save scheme.

The Help to Save scheme allows people to get a bonus of 50p for every £1 they save over 4 years. Only certain people are eligible to open a Help to Save account, and this is if they are receiving:

  • Working Tax Credit
  • Child Tax Credit (and entitled to Working Tax Credit)
  • Universal credit (and they had a take-home pay of £722.45 or more in their last monthly assessment period – with their partner if making a joint claim).

In March, the government announced an extension to this of 18 months, meaning that those entitled to can open an account until April 2025. In the meantime, the government will be in consultation to establish how low-income savers can be supported from April 2025.


The aforementioned Tax Simplification consultation will run for 12 weeks from 15th March 2023, ending on 7th June 2023. At this point, the government is encouraging engagement from anyone who has a view on the administration and simplification of Income Tax. They have also explained that this particular consultation is likely to pique the interest of the self-employed, landlords, accountants, tax agents, legal professionals, payroll professionals, bookkeepers, insolvency practitioners, software providers, financial advisers and their clients.

If you would like further tax advice or clarification about the current system/upcoming changes, then please don’t hesitate to get in touch:

[email protected]

+44 (0)1942 816 512

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