You may have heard about Making Tax Digital. It’s the UK Government’s scheme to move all personal and business tax administration online. Beginning this year, and due to be completed in 2020, anyone who needs to file a tax return or deal with business tax will be impacted by Making Tax Digital (MTD).
And this week the government has made further announcements on the time frame and requirements for MTD. In the immediate future you don’t need to take any action but it does always pay to be aware of developments.
Commencing in 2018, you’ll be able to start saving digital records and it’s expected that by 2019 this will be compulsory and penalties will begin to be issued, aside from some specific exceptions.
One new aspect of MTD that was announced this week confirmed that digital records could be uploaded and submitted to HMRC in a spreadsheet format and not just via an online form.
One aspect of MTD that’s new, and controversial, is that you’ll be required to update your records on a quarterly basis. So rather than filing a single annual return, you’ll need to sorting similar at least four times a year. For many this will seem like a needless burden, but others will welcome the opportunity to keep on top of record-keeping and the like. Certainly it will take a bit of pressure off accountants in January as the 31st deadline for the previous year looms. Of course, you can do it every week or month if you feel moved to.
Another interesting development is that HMRC will also offer a new pay as you go option (PAYG) to help you keep on top of your tax affairs. This will be voluntary but all new options to help people are very welcome.
A few aspects of the changes are still out to consulatation. Whilst you likely won’t have to make quarterly payments (although some businesses already do), you can opt to. But it’s not currently clear how the personal tax free allowance will be allocated. Will it be spread over the year or can you enjoy it for the start of the year only as you PAYG?
Obviously for people who have not embraced the internet and technology this will be a daunting step (but it looks as though some allowance will be made) it’s clearly the way the world is going and it does present a whole lot of benefits. It also recognises that there is something fairly old-fashioned about having a single deadline for al people to file their tax return and as that deadline looms the technology inevitably starts to creak. This should take some pressure of the technical infrastructure.