You all know the quote about life’s certainties, and taxes being one of them – so it was inevitable that taxes needed to get with the programme and enter the digital age, introducing Making Tax Digital
But what does that mean? Last year, the Chancellor announced that the tax return would be no more. Hurrah, you all cry.
But seriously, you didn’t think you’d get away with it that easily did you?
Don’t be daft! The Government is developing digital tax accounts – a single, centralised digital tax system. This will all be phased in gradually, with an estimated completion date of 2020.
To make this easier to understand, HMRC has said that there will essentially be four different areas to the Making Tax Digital programme which will all contribute to the revamp of the tax system.
- Tax simplified: tax payers will not need to provide HMRC with information it already has, or that it can get from elsewhere (from banks and other financial institutions, for example) and tax payers will also be able to easily check the information that HMRC has received (hopefully this will make it easy for any wrong information to be corrected)
- Tax in one place: this means that tax payers will be able to log-in and check all their information in one place, kind of like online banking. They will have a ‘digital’ account with HMRC and they’ll be able to look at their latest status, check what tax is owing, and they’ll even be able to pay anything outstanding online too
- Making tax digital for businesses: as a business, you will need to update HMRC quarterly (see, told you that you couldn’t get away with it!) which allows HMRC to calculate any interim tax more accurately. However, businesses will still also need to file an ‘end of year’ report, but it should match up with the interim reports and therefore be easier to do
- Making tax digital for individual taxpayers: the new online system will allow individuals to look at a personalised report of their tax situation, and will also be able access a wide range of advice and support
So just a few small changes then! What does this mean for you?
Well, at the moment these changes are still in consultation, so don’t count the above as gospel. Also, HMRC has announced that the smallest businesses in the
UK will be exempt from reporting using this new system, so if this is you, then you don’t need to panic just yet. For others, then it means that you should really
start keeping on top of your accounts, and that’s no bad thing if you don’t already.
If you are going to have to report quarterly (and there will be fines payable for late submissions) then it’s wise to make this process as painless as possible. There are plenty of online apps and software packages available to help you keep on top of your incomings and outgoings.
If accounts aren’t your strong thing, then it’s wise seeking professional advice and support. These new rules could mean a lot more work for an entrepreneur, who, as we all know, are already overworked! So if you want to start out like you mean to go on, then get in touch with us, and we’ll get your accounts whipped into shape before you can say quarterly tax return, and you’ll have nothing to worry about by the time it comes into play!
So what’s all the fuss about? Nothing if you get Blue Rocket on board! Let us do the worrying!