The new financial year starts on the 6th April, and it is the beginning of a year that will see HMRC announce a number of changes to the tax process for millions of businesses. The end goal of these changes will be to give companies real-time insight and allow them to automate more of their tax filing, a further move towards a fully digital process and a lessening of the red tape burden that has hampered companies for so long.
What are the changes?
Better online facilities: As part of HMRC’s “Making Tax Digital” initiative, every individual and business will have access to their own “digital tax account” almost like an online bank account in terms of its personalisation and insight into payments and amounts owing. This initiative has already been trialled and received an 80% satisfied rating. HMRC’s telephone support is also to be bolstered by the addition of a live webchat system.
Quarterly reporting: Perhaps the biggest change (and some may say challenge) is HMRC’s move away from annual reporting to quarterly reporting. HMRC is going to want to receive quarterly updates from most self-employed people. However this does not equate to four tax returns a year but rather very lightweight reporting that is submitted automatically by a range of online services and apps. It is believed that instead of increasing the burden on small business owners, this step will help to provide more predictability and oversight for the self-employed, enabling them to better plan their finances and tax payments.
More automation: HMRC will look to automate the submission of some information for example from 2018, bank and building society interest will be included in tax codes removing the need to report it in a tax return. HMRC is also looking to pull other third party information in, such as investment income, property income, etc.
We would urge all individuals and small businesses to approach the 2016/17 year very much with a digital filing mind-set, as full digital taxation is very much just around the corner.
More information can be found at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413975/making-tax-easier.pdf