In November, we announced that the government were implementing an initiative to ‘Make Tax Digital’ in April 2018, however this legislation has been put on hold.
The legislation had already been delayed until 2019 by the Chancellor in the Spring Budget for some small businesses.
Since the government’s announcement of a general election, they are only carrying 63 out of the 135 clauses from the Finance Bill 2017 forward. Of the clauses that have been dropped, ‘Making Tax Digital’ is one of them.
What is Making Tax Digital?
This initiative would have seen businesses and the self-employed completing quarterly tax reporting as opposed to annual tax returns we’re used to. It was introduced to advance the tax system and prevent tax errors.
Many professionals highlighted that quarterly tax reporting would mean that businesses and individuals would have to deal with a tax deadline during most months of the year. For example, individuals who are self-employed but turning over in excess of £85,000 would be expected to complete at least 5 tax returns per year in addition to the regular VAT returns.
In addition, many argue that if taxpayers choose to submit their tax returns online without the help of a professional, it could actually increase the chance of mistakes.
However, it did have its positives, any information that HMRC hold about you, such as, your employment and pension, would be automatically brought together so you’d never have to submit the same information more than once.
What’s Next for the changing in tax legislation?
This legislation is likely to be passed in the future, however, until then businesses and individuals who are self-employed are able to continue with their annual tax accounts. This delay allows potential issues to be debated before the implementation of the Digital Tax Accounts, should the initiative be reinstated in the future.
Franks accountants are more than just expert tax planners, we go the extra mile to do more for all our clients rather than just keep HMRC on your side. We offer a hands-on approach to accountancy including: business advice, tax planning, business start-up advice, management accounts, payroll, VAT and support you in your day-to-day running of your business!
Contact us today, we are happy to answer any questions you may have relating to your finances. We look forward to hearing from you!