If you’re an accountant or a small business owner then you should be aware of the impending shift to digital tax. The monumental change which will see the HMRC completely transition to digital tax by 2020, is actually long overdue and will make it easier and quicker to manage taxes without having to fill in so many forms.
We can all look forward to a tax system which is frequently updated over the course of the year, and allows you to keep tabs on things so you know how much you have to pay in advance. Sounds good, right? But are you ready for the change?
What You Need to Do for Digital Tax
From April 2018, many businesses and self-employed individuals will need to update HMRC quarterly using the new digital system. While this means you no longer have to wait until the end of the tax year to find out how much you owe, it also entails new responsibilities. You will have access to a personal online account which you are required to update; it will prompt you when action needs to be taken and includes support via webchat and messaging.
If your business does not already make use of an online accounting solution like QuickBooks, then you should start using one as soon as possible. Accountants need to advise their clients on this now, so that their data can be collected and submitted to HMRC more efficiently.
The new digital system will be implemented in stages from April 2018 to 2020, giving your business time to adapt. The transition will be easier for early adopters of online accounting software like QuickBooks and associated apps, which help you to keep digital records of your income and expenditure. HMRC will also develop free apps and software products for these purposes, but it is wiser to rely on a tried and trusted commercial software package such as QuickBooks.