HMRC has announced that by 2020 the Making Tax Digital initiative will be in place meaning it will be easier for individuals and businesses to ensure their tax is correct and access their own tax affairs online via digital accounts.
At the moment, it is estimated that £8 billion a year in tax is lost from avoidable errors and so making tax digital is hopefully going to reduce these costs. The aim is for everyone to go through one digital platform to gain a complete financial picture and be allowed to set an over-payment of one tax against the under payment of another, resulting in feeling like they have only paid a single tax.
Making tax digital will also mean you will be able to view in real time how much tax you should pay, without having to wait until the end of the year. Some benefits for small businesses include the real-time view will allow businesses to see how well they are performing, income and expenses reporting can be simplified and a chance to see what monies are owed, allowing you to plan ahead.
The end of the yearly tax return means businesses, landlords and self-employed people will be required to keep track of their tax digitally and update HMRC at least quarterly via their digital accounts. Another advantage to this will mean less forms to fill out and HMRC will also be easier to speak to via a digital web chat.