23 May Are you ready for Digital Revolution?
If you hadn’t already heard, HMRC are planning to fully replace the current tax return system with digital tax accounts. From April 2018, anyone who has received income hasn’t taxed at source, landlords and those who are self-employed will need to report their income tax and National Insurance obligations to HMRC on a quarterly basis. Requirement to report VAT obligations and corporation tax will commence from 2020.
What is digital tax accounts?
Imagine that you have online accounts which automatically collates all your financial information from various sources such as banks, employers, pension providers and the DWP on a real-time basis to builds a picture of tax liabilities for you as individual or as a business.
Landlords, self-employed and those with additional sources of income will be expected to have data up-to-date on a quarterly basis from April 2018. Those who pay their tax through PAYE will have their Income Tax, National Insurance Contributions and pension position shown in their digital tax accounts, as well as any interest from banks and building societies.
Why are HMRC doing this?
There are a number of possible benefits of having Digital Accounts e.g.
• The annual run-a-round of preparing accounts and the annual tax return, which can be a highly stressful and business-disruptive time of year for both individuals and businesses, is completely removed.
• Easier to pay tax, with options to pay by direct debit, instalments or even pay as you go.
• Will allow tax payers to self-solve their queries online, rather than by phone, letter or paper forms.
• Tax-payers can log on to their account and be able to see how exactly how their tax is calculated by HMRC, update their information and register for new services.
HMRC believe that the new digital account system is being designed will make the whole process a lot easier for people and, with everything nowadays being digital and online most taxpayers will find the process fairly routine.
How can we help?
There are number cloud accounting systems already on the market and we recommend giving yourself time to make an informed decision. By starting now, and getting ahead of the Government deadlines, you will have the freedom to choose applications that best suit your business needs.
Makes Sense has teamed up two leading cloud accounting solutions providers, Xero and FreeAgent. Using cloud-based accounting software we help clients from bookkeeping, VAT, Payroll, Accounts to Management Reporting. To find out more about Xero or FreeAgent to help you embrace the digitisation of accounting please contact Tim Hammond (firstname.lastname@example.org).