Making tax digital (first announced in 2015) was a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. However, it is now believed that the initiative has been wounded by the current political affairs.
The government’s original goal was to transform the tax system by 2020 by introducing digital recordkeeping and quarterly updating for businesses, the self-employed and landlords for income tax self-assessments, value-added tax and corporation tax. This original timeline proposed a phased introduction between 2018-19 and 20-21 tax years.
Now, whilst it is still likely to proceed, it will be at a slower pace and not in the previously planned way. It was originally proposed for changes to begin happening in April 2018 and to continue in April 2019 and 2020. However, following the feedback and concerns, the scope and timetable have changed.
- Only businesses with a turnover above the VAT threshold will have to keep digital records and only for VAT purposes – this will only need to be done from 2019.
- Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least 2020.
- Small businesses will be able to file digitally on a voluntary basis for other taxes.
This is a huge step forward as it enables the businesses and accounting industry to adapt to the methods of compliance record-keeping in an adequate amount of time. Making tax digital will allow taxpayers to view their tax information online and in one place. It aims to offer individuals much more flexibility and certainty when it comes to managing tax affairs. It also proposes to provide a more convenient method to interact with HMRC including through web chat and secure messaging.
In the process of making tax digital, there will be changes to personal tax accounts and self-assessment tax returns. Therefore, if you want some more information or advice regarding making your accounts digital, please don’t hesitate to contact us. We understand how stressful dealing with your accounts can be, especially with all the new changes occurring, we offer a free callback service to deal with any questions you have.