In 2015, the government first announced that it would be making tax digital for businesses. In the Spring Budget 2017, more information about this initiative was shared. We have written this article to explain who will be affected and some of the benefits of this change.
Making Tax Digital for Business
Firstly, we want to clarify what this means and how tax returns will be submitted in the future. The plan is that businesses and individuals that are eligible to use this system will submit all their tax information directly to HMRC on a quarterly basis.
This includes all income and expenditure. There will be software that needs to be used, and the submission can be made directly by the business or their accountant. You can also pay the tax on a quarterly basis so that you don’t need to make one large payment at the end of the tax year.
Who is eligible to go digital?
- This initiative will be available for sole traders, Limited Companies and Partnerships that have a business income greater than £10,000.
- Also, landlords generate more than £10,000 income from their property portfolios.
- Finally, anyone that is employed and has a second income that greater than £10,000. This income could be through self-employment or property.
What are the benefits of making tax digital for business?
As always when there is a new initiative especially something as major as this there has been a lot of debate about whether this is a change for the better. The HMRC are stating that the four key benefits are:
- Better use of information: HMRC will hold all records in one place, and you will be able to check these at any time.
- Tax in real-time: You will have an up to date view of how much tax you need to pay.
- A single financial account: You will be able to see a comprehensive financial picture in your digital account.
- Digital interaction: You will be able to interact with HMRC online at a time that suits you.
The plan is that all eligible businesses and individuals will be submitting digital records by 2020. If you want to find out more about how this affects you or your business, please do get in touch by calling 01623 490 120 or email