In the modern digital world that we live in we expect to able to do everything online. We shop online, bank online, pay bills online, and with new accounting platforms such as Xero, we are now handling all of our financials online too. However, one thing that has previously lagged behind is how we pay our taxes. Enter Making Tax Digital…
Long gone are the days of having paper trails with documents and files, although paper documents have been the method of paying taxes for a long time now. This has not always been the smoothest and most hassle-free way of paying taxes, particularly for businesses, as mistakes can be made and it can be difficult to keep on top of your financial affairs. Progress has been made, however, with the government scheme, Making Tax Digital, which makes tax easier and more accurate.
Making Tax Digital was introduced by the government in 2015 and it set out plans to reform the tax system by 2020. Efficiency and simplicity was key in this transformation as the previous tax system was slow, complicated and a headache for many people. Not only this, the dreaded annual tax return will be phased out for many. With these plans everyone will have access to their own digital tax account, businesses included. There are so many benefits to this system and it will come as a huge relief for many.
The features of Making Tax Digital include being able to see all of the information that HMRC holds and you will be able to correct it when necessary, meaning you won’t need to repeatedly give information that HMRC already has. Know how much tax you owe in real time, and not at the end of the year and see all of your liabilities in one digital account. Everybody will have experienced calling HMRC at one point in their lives and will know how impractical and frustrating it can be, well, with these new tax system transformations you will be able to communicate with HMRC digitally!
Making Tax Digital has already began for many, however, businesses will not be obliged to use this scheme until April 2019 and will apply to businesses above the VAT threshold of £85,000. Making Tax Digital will be optional for smaller businesses. This new tax system is revolutionary for businesses as it takes away the stress and uncertainty of how much tax is paid and when to pay it. It is an efficient system that’s sure to change the way we pay tax in the future.
If you want more advice on tax for businesses be sure to get in touch with our expert and friendly accountants on 0151 426 4512. We have all the know on how to save tax and can advise you on the various tax schemes that are available to you.
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