31 Aug Making Tax Digital – HMRC vision for 2020
Making Tax Digital (MTD) is a 5 year project for HMRC to make the tax reporting, filing and the management of UK tax, one of the most sophisticated and digitally-focused in the world. The plans are already underway and changes will be phased in between 2018 and 2020. How could this affect your tax?
Putting customers at the forefront
In the Budget 2015, the vision was set out to create a more transparent tax system that was suited to the digital age.
The plans are to remove the annual tax return completely and for the new system to be accessible and customer focused, reducing the burdens for tax-payers in the process.
Gradual changes will be made between 2018 and 2020 to ensure that the new system is robust enough and that it allows time to adapt for businesses and individuals.
The MTD process has included many consultations where HMRC are listening to the views of business owners, landlords, and individuals that have a requirement to file a tax return, in order to find out the real struggles and create solutions.
Changes proposed so far, to ease the transition to MTD include:
- Exempt small businesses from having to legally keep digital records and update quarterly. This includes sole traders, partnerships and landlords with income under £10,000 per year.
- Enabling some small businesses more time to adjust to the MTD system, so delaying the start date to comply.
- Extending Cash Accounting to more businesses, for a more simple method of reporting.
- Allowing flexibility for how businesses manage their accounts
- Transforming the tax system, by better using available information
- The possibility of Voluntary “Pay as you Go” for settling tax liabilities.
These are just some of the topics being discussed and ironed-out at the moment.
AJN will cover more about Making Tax Digital in the coming months and as we approach 2018 when changes will start to be implemented.
In the meantime as a contractor or freelancer, it is important to keep an eye on your current, and changing responsibilities.