Making Tax Digital is a governmental scheme in the UK aimed at making taxes more efficient, streamlined, and less error-prone for both individuals and businesses. The changes will see those responsible for making their financial figures known to HMRC moving from tedious paper submissions, which require constant updating, to online channels which can be easily accessed and updated.
The Making Tax Digital plans will first roll out in 2018 and will continue to develop fully until 2020 whereby it is hoped that all appropriate businesses will be managing their tax digitally. It is hoped that this modernisation of the tax system will result in two main things; closure of the gap of tax that is remaining uncollected due to errors and making it easier, faster, and more accurate for individuals and businesses to submit their tax information.
Making Tax Digital will bring taxation in the UK into the 21st century; however, local Glasgow businesses must be ready to move along with the times in order to hit the ground running in 2018. By understanding what is involved with the transition to this new system, business owners can plan accordingly with the help of our knowledgeable and modern tax accountants.
What Making Tax Digital Means for Glasgow Businesses
Glasgow businesses, just like all well-established companies in the UK, will have to know what Making Tax Digital will involve in the next few years, as well as having the support of a tax accountant who is in-the-know.
What Will Happen in 2018?
The first wave of Making Tax Digital changes will occur in 2018 and will begin simply with paying Income Tax and National Insurance digitally if you are a business or self-employed. It is expected that HMRC will make information available on their new web-based tax submission service before putting this service live; your tax accountant will likely be privy to how this will work before this.
It is important to note that it is only individuals and businesses with a turnover above the VAT threshold that will be affected by this change. This is individuals or businesses with a turnover of more than £85,000.
What Will Happen in 2019?
In 2019, further changes will be introduced to make Income Tax digital for all businesses and self-employed people who have an annual turnover of £10,000 or more. VAT will then be implemented alongside Income Tax as part of the digital switchover.
What Will Happen in 2020
By 2020, the full plans of Making Tax Digital will be in place, the final stage being adding Corporation Tax onto HMRC’s digital submission platform. At this point, it is hoped that all applicable businesses, from local to international level, will be enrolled into the digital tax system and submitting paper tax forms by specific dates will be a thing of the past.
How This May Affect You
Tax moving into the digital sphere is something that has been long overdue; most well-established tax accountants keep their clients’ important tax information in digital format already. There is a range of advantages associated with this new change which will take effect over the next 3 years, mainly:
• It will be much easier to view the status of your tax contributions.
• Amendments to your information kept by the HMRC will now be made in an instant.
• No longer will businesses have to use up precious time to submit details to HMRC which the organisation usually already has.
• Less paper will be used in dealing with tax issues, which is great for the environment.
While it is great news that business taxes will be somewhat more straightforward and modern, tax accountants are still extremely relevant, perhaps even more now than ever. A well-established accountant will be able to view and handle your online tax account for your business in order to ensure that all information is correct, accurate, and in the correct format for HMRC. Not only that, a good tax accountant will also be able to ensure that you are not over or underpaying your tax and that your genuine financial figures are giving you the best tax deal possible for your setup.
It is very worthwhile to read through the plans the UK government has for the Making Tax Digital push in the next few years. If you are a business-owner, you will want to be in the know as to where your money goes and how an expert accountant can continue to help you make the most of your money as the digital age of tax collection phases in.
If you have any questions about how this new transition might affect your business or if you want to enquire about how our tax services may be able to assist you, please get in touch with our friendly team. You can give us a call at 0141 333 1852 or send us an email at firstname.lastname@example.org