With more and more services being made available to the online user, it is clear that the world is slowly changing from a physical one to a digital one. Ranging from booking train tickets online to making a doctor’s appointment or furthering your education. You could promote your business, do online banking, or even perform the weekly grocery shop using the technological facilities at your fingertips. In fact, millions of people and businesses benefit from the practicality and ease of digital services as compared to physical ones.
In March 2015, the Chancellor proposed an “end of the tax return” by introducing a transformation to the country’s current tax system using digital tax accounts. Consequently, the HM Revenue and Customs’ digital service was set up bringing a person’s individual and business tax information to them at any single time; thereby, making it much easier for a person to register, file, update and pay the tax information using digital means at any time.
The foundations of the newer system involve:
- Tax Simplified
Tax simplified involves the use of a centralized taxing system where you are able to view and update information; thereby, offering a more customized service. You will not have access to the official HMRC information that can be obtained elsewhere, but this information can be obtained using specific third-party services such as banks or employers.
- Making Tax Digital For Businesses
Businesses will not need to wait until the end of the tax year to review their overall tax balance when using the online tax service. This system helps collect and process tax information in real-time; thereby, reducing the amount of tax due from accruing.
- Tax In One Place
A digital tax system will help you view all of your tax information in a single place, including all the entitlements and liabilities. As of April 2016, individuals will have complete access to all of their financial data via their digital tax accounts.
- Making Tax Digital For Individual Taxpayers
An individual taxpayer will be able to review and update their accounts on any device at any time in the day. By April 2016, individuals will have access to their digital accounts, gain support via online web-chats, and receive reminders regarding tax deadlines via secure messaging.
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What Does This Mean For You?
With the development of a single, centralized digital tax system, it is possible to reduce or remove all time-consuming paperwork; therefore, you will not need to tell numerous HMRC services the information they already know. This will help eliminate the unnecessary time delays making them a thing of the past with the tax system operating in real-time, showing you updated and full calculations whenever you log in.
For companies, this is also a method of being aware of monies owed and allowing a person to plan ahead. The more businesses using digital records, and from April 2018 you will be required to send tax information to HMRC at least every three months or quarterly.
Individuals will have access to their HMRC records utilizing their digital accounts with all relevant information required by the HMRC already updated. By combining all information with the accounting data held, the individual can see their overall fiscal year outcome. This will also contribute to the end of the annual self-assessment tax return for many people. To reduce the effort and time placed in these returns even further, HMRC can acquire information from third-party services removing the need for you to report these figures. Moreover, an online billing system will allow you to pay any outstanding tax which cannot be collected via PAYE; thereby, eliminating the self-assessment tax returns and allowing you to make payments in smaller monthly amounts or at the due date.
To help keep details updated and accurate, as well as improving communication with the “tax man”, you will be able to access support resources including web-chat facilities and virtual assistance. You can also provide other people permission to assist with your tax details, such as a personal accountant. The system will inform people of pending deadlines and, therefore, will reduce accruing debt or penalties.