The changes, which will come into force by 2023 and have been drawn up alongside representatives of small businesses, will mean businesses will be taxed on profits arising in a tax year, rather than profits of accounts ending in the tax year. It should help them spend less time filing their taxes - aligning the way self-employed profits are taxed with other forms of income, such as property and investment income.

The rule change affects the self-employed, partnerships, trusts, and estates with trading income.