During the 2015 March Budget, the Government announced its plans for all individuals and businesses to have digital tax accounts by 2020. Nearly all businesses – companies, partnerships and individual taxpayers who are self-employed – will need to keep track of their tax affairs digitally. This move will significantly change the way window cleaning businesses need to manage their finances and do their accounting – but what does it actually mean? Here are 5 things window cleaners need to know about Making Tax Digital
What are the objectives of Making Tax Digital?
HMRC has set out 4 main objectives as the basis for the transformed tax system:
Tax Simplified – Taxpayers will be able to see all the details HMRC holds for them and can check and update this at any time. Taxpayers should not have to re-provide information held on them elsewhere such as banks, employers etc. – it will all be recorded together.
Tax in One Place – Taxpayers will be able to see all the details of their entitlements and liabilities in one place, just as they have a complete financial picture with their online banking.
Making Tax Digital for Businesses – HMRC will collate and process tax information in as close to real time as possible meaning businesses should not have to wait until the end of the tax year to see how much tax they owe.
Making Tax Digital for Individuals – Every individual and small business will have access to their own digital tax account with prompts, advice and support to help them submit and pay tax.
This is the end of the paper tax return
HMRC’s slogan is “Making Tax Easier – the end of the tax return” and they’re aiming to do exactly that with Making Tax Digital. All tax reporting will be done online and all businesses will need to use software that is compatible with HMRC’s digital accounts.
What support will be available?
Acknowledging that taxpayers need varying levels of support, HMRC have stated that taxpayers will receive all the data and support relevant to them and, for those who have difficulty going online or who are digitally unfamiliar, help will be made available through other mediums. There will be helplines available for people to call, and team members dedicated to spotting and assisting taxpayers who need extra help. These individuals will be offered alternative means of support — over the phone, through face-to-face visits or through partners in the voluntary and community sector.
Non compliance penalty points system
The current system of penalty fines for late submission of tax returns will change to a points based system similar to that applied to a driving license – a fine is incurred when a certain number of points are accrued. However customers will have at least 12 months to become familiar with the changes before any late submission penalties will be applied.
Get your business ahead of the game using cloud-based software and apps
All liable businesses will be required to update HMRC using digital tools such as software or apps to keep a record of their financial affairs. HMRC will ensure that relevant tools are easily available, but your business or accountant may also use compatible software that is commercially available to compile your tax details and update HMRC. As the most cutting edge window cleaning software CleanerPlanner is committed to making digital tax as simple and efficient as possible and is developing features to help achieve this for our customers
This video explains how Making Tax Digital will work for small businesses and you can find out more on the Government’s plans for Making Tax Digital here.
We will be uploading a series of posts as Making Tax Digital becomes a reality, and there will be more information to come on new CleanerPlanner features. You can stay up to date with Making Tax Digital by subscribing to our newsletter below: