Industry News - 5th February 2018
Digital tax is a modern tax system that uses technology to calculate and record taxes of individuals and businesses. ‘Making Tax Digital’ is 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 – through the introduction of digital tax returns, meaning the end of the annual tax return for millions.
Every individual and business now has access to their own personalised digital tax account and these are being regularly expanded and improved.
What are the benefits?
Digital tax systems are beneficial in terms of recording and editing taxes within a business or for an individual’s tax files. A digital system creates a reliable source that will record any changes or updates to tax files immediately.
This means that taxes become simpler to view and refer back to, due to the recorded dates of changes. Other benefits include:
- Taxpayers can see the information that HMRC holds and be able to check at any time that their details are complete and correct.
- You or your business will not have to wait until the end of the year or longer to know how much tax to pay. HMRC will collect and process information affecting tax as close to real-time as possible, to help prevent errors and stop tax due or repayments owed building up.
- You or your business will be able to interact with HMRC digitally and at a time to suit you. Taxpayers already have access to a digital account which will present them with an increasingly personalised picture of their tax affairs, along with prompts, advice, and support through web-chat and secure messaging.
Digital tax accounts will also work in conjunction with the already popular use of digital technology within business accounts now, therefore helping to turn the whole financial and accounts areas of business into a digital method.
A common problem many businesses face is getting their tax figures correct when using the present non joined-up digital method, which can often be a difficult process.
Making tax digital
Although the government is working towards a full digital tax system, businesses will not be obliged to use the ‘Making Tax Digital’ system until April 2019, and then only to meet their VAT obligations.
This will apply to businesses who have a turnover above the VAT threshold – the smallest businesses will not be required to use the system, although they can choose to do so voluntarily.
Find out more about what’s happening with making tax digital here.
Perrigo Consultants have an expert team that is able to offer key advice and guidance to you or your business to enable you to gain the full benefits of digital tax accounts. We specialise in many areas, including contractors’ accountancy and property accountancy.
We offer a free, no-obligation phone consultation that will provide you with knowledge and information you require when looking at new digital tax accounts. Contact us on 01299 488860.