The tax system not only imposes a financial burden on business that pay tax, but a regulatory burden and an overhead cost as well. I want to reduce those burdens on businesses. Simply running PAYE and national insurance contributions is difficult for many small businesses. From next April, I propose to increase by more than 30 per cent. the threshold for businesses to make quarterly rather than monthly payments to the Inland Revenue.
That will benefit around 100,000 employers at a one-off one-year cost of £75 million. That means that nearly two thirds of all employers in the country will now be able to make quarterly payments on their PAYE. I also propose to consult on a move towards annual VAT payments for small traders and to further simplification of VAT accounting.
Furthermore, I intend to improve the administration of the tax system by encouraging closer working between the two revenue departments, the Inland Revenue and Customs and Excise, as well as closer co-operation between the Inland Revenue and the Contributions Agency. This will all be directed at improving the service offered to businesses seeking to comply with their tax obligations.
I would also like to make some progress towards closer alignment of tax and national insurance. From next April, clearances given by the Inland Revenue concerning non-taxable expenses will also count for national insurance purposes. My right hon. Friend the Secretary of State for Social Security will give details of this and other measures in his statement tomorrow.
I also intend to raise the registration threshold for VAT to £46,000 tomorrow in line with inflation. This will help a number of the smallest businesses.
Finally, I turn to self-assessment. I am publishing today for consultation some details of the remaining legislation for self-assessment. The Inland Revenue has been consulting widely on the changes. The response has been positive and it is a worthwhile reform for which to aim. My right hon. Friend the Financial Secretary and I intend to go ahead with our proposals and aim to keep any burden placed on employers as low as possible.
Taken together, this latest extensive package of tax reliefs and deregulatory measures provide a substantial package of support for the business community. They aim to strengthen British businesses not by intervention, but by easing cashflow problems, cutting back red tape and providing targeted help for small businesses. That is how we maintain our improved business performance, help to sustain the recovery and help to create more jobs.