Making Tax Digital – Managing Your Tax Online
On 14th December 2015, HM Revenue & Customs published “Making Tax Digital”. The document outlines HMRC’s vision to remove tax returns and instead create a user-friendly, digital tax system for individuals and small businesses that will feel similar to an online bank account.
Under this system, tax-payers will be able to do the following online:
- register for new services
- update personal information
- see clearly the tax to be paid or repaid to them
The aim is that the new system will be simpler to use, personalised to each user and more secure. It will also bring together all of the information held by HMRC that taxpayers need to understand their tax position, such as national insurance contributions, PAYE, income tax and pensions. They will also be able to file their tax returns and pay their taxes at any time of the year and amend their information as required.
For individuals with more complex tax affairs, they will be able to inform HMRC about additional income and see it reflected in their digital tax account. Those that have to pay several taxes, such as corporation tax and VAT, will be able to see a single view of all of their taxes and make one single payment rather than paying separately.
For those who do not wish to manage their tax account themselves online, they will be able to authorise an agent to manage it on their behalf. Agents will be able to access all the features of the account and clients will be able to view the same information as their agents.
In 2020, businesses will be able to link their accounting software with their online tax account with the aim that accounting software will sync the accounting information straight to the online tax system.
It is expected that by early 2016 five million small businesses and the first ten million individuals will have access to their personalised digital tax accounts. By 2020, this will have increased to more than fifty million individuals and small businesses. It is the government’s vision that, by the end of the next parliament, every individual and small business will be able access and manage their tax affairs through their digital tax account thus making the tax return obsolete.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at February 2016. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 319 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.
