Paying tax will become less burdensome for British businesses under plans for a 21st century tax system detailed by HMRC.
Plans for the new, streamlined and efficient tax system were issued in a Press Release from the Government, with HMRC and the treasury promising more clarity and less red tape for small businesses.
HMRC is issuing HMRC is issuing 6 consultation documents, which seek views on HMRC’s Making Tax Digital programme which aims to simplify the tax system and make assessment and payment quicker, easier and cheaper for SMEs. HMRC also announced that 1.3 million small businesses will be able to benefit from Making Tax Digital without needing to update HMRC quarterly or keep their records digitally.
The benefits of Making Tax Digital include:
- Cash-basis accounting so that thousands more will be able to pay tax based simply on the difference between money they have taken in and what they have paid out, meaning tradesmen will pay tax on cash received rather than invoices issued
- Prompts and alerts to help businesses get tax right and giving advice on tax reliefs they might be missing out on
- Greater certainty over tax bills so businesses don’t have to wait until the end of the year to find out how much they have to pay
The decision to exempt the smallest businesses and landlords from digital record-keeping and quarterly updates follows months of constructive engagement with business and agent groups.
The government is also considering deferring digital record-keeping and quarterly updating for a further group of small businesses and will explore options to assist businesses with the transition. Finally the consultation documents confirm that those who cannot go digital will not be required to.
The Financial Secretary to the Treasury, Jane Ellison MP explained the Government is committed to a transparent and accessible tax system fit for the digital age, and Making Tax Digital is at the heart of these plans. This new system will make the UK’s tax administration more efficient and straightforward, and will offer businesses greater clarity when it comes to paying their tax bills.
By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.
Askews Accountants can advise you on the Digital revolution for the tax system and how to reduce the amount of red tape. We can discuss how these changes will affect your business so that you understand which options are best for you in complete confidence.
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