Over the past decade or so, the world has increasingly moved into the digital realm. More and more aspects of our lives are available online; from booking cinema tickets and restaurants reservations, to banking, planning your holiday and ordering your weekly shop. And the latest thing to become digital is tax.
The intention of the move to digital tax is to try to make the whole process simpler; enabling businesses to pay, file and update their taxes online.
What are the benefits of digital tax?
The current, complex tax system means that it is all too easy to make genuine mistakes for which you could be punished by HMRC. A digital tax system should help with the accuracy of your filing. This means you can concentrate more on running your business.
Inputting the information online rather than putting pen to paper should mean less tedious filing for you, and less repetition.
The system is updated with real-time information. This means you will have an accurate depiction of your tax information whenever you access your account. If any changes or updates occur, you’ll know about them. This provides you with a better picture of your tax situation, rather than it being a surprise at the end of the year.
Like everything that moves online, digital tax should increase efficiency from both your end and HMRC. By providing regular updates to the system throughout the year, you should be better able to keep on top of the job rather than wading through a backlog of information at the end of the year. The reduction in paperwork also makes the whole process of entering your information that much smoother.
When will we move to digital tax?
The move to digital tax began back in 2015, with over two million businesses using digital tax. The full system should be completed by 2020. Small businesses can already access their own digital tax account online. More updates are scheduled throughout the year, including a new online billing system function, reporting of additional sources of income, introduction of automatic tax codes and an overview of tax liabilities.
By late 2018, businesses, self-employed and landlords will need to start updating HMRC quarterly for income tax and NI obligations.
What do I need to do?
As with any big changes like this, there are likely to be technical teething issues as the new system get under way. We would recommend that you speak to your Accountant regarding any tax-related matters.
Struggling with a tax bill?
Taxes are things that all companies have to pay. However, for some business owners the tax bills cause real cashflow problems and, in some cases, threaten the survival of their company.