While no one likes having to pay tax, it’s something we all need to do
At least the calculation and collection process has moved on from the days when the local sheriff, backed up by a bunch of thugs would call round to see what they could extract.
Today, taxpayers use a range of digital services to manage their tax affairs, and more than 85 per cent of self-assessment tax returns are already done online.
It’s not always a joined-up process though, and people frequently find themselves having to provide information that HMRC already holds. But the way individuals and businesses engage with HMRC and pay their taxes is going to undergo radical reformation over the next few years.
The Government is committed to making life easier for UK tax payers by modernising the tax system, and has announced plans to replace tax returns with digital tax accounts. These will work along the lines of online banking, bringing each taxpayer’s details together in one place. This is good news, and means taxpayers will be able to register, file, pay and update their information at any time of the year – using any digital device.
Key benefits of a digital account will include being able to:
This is just the beginning!
HMRC says that by early 2016, five million small businesses and the first ten million individuals will have access to a secure, personalised digital tax account, and this will grow to more than 50 million by 2020 — removing the need for millions to complete a tax return and simplifying the tax system for millions more.
It seems likely that this is just the beginning of a move towards ‘real time’ tax management – while it will initially be voluntary, it is likely to become compulsory, and a logical future possibility might be for HMRC to use information in personal accounts for ongoing tax calculations, and for small businesses and self-employed individuals to be required to pay their tax monthly rather than at the end of the financial year as they are currently.
Whatever long term plans HMRC might have, their new approach makes it even more essential for all owners of small businesses to closely track their finances.
If you’re self-employed and your personal circumstances change, this will directly impact on your tax position – but how can you understand the implications of change on your finances unless you’re getting regular accounting reports that make it clear?
- Appoint a bookkeeper to do it for you
- Take control and do it for yourself
If you’re going to take the first option, it would be sensible to do it sooner rather than later – HMRC’s changes are likely to start a run on bookkeepers and it’s a serious possibility that there will not be enough qualified professionals to meet the demand. If you want to take control yourself, you need to get a grasp of the basics – and that’s exactly what our upcoming workshop will give you!
Understanding Your Finances Workshop 26th November
26th November 2015, 930am-1pm, Howberry Park, Wallingford.
Are you a business owner who comes out in a cold sweat at the mention of finances? You’re not alone – many start-up entrepreneurs are passionate about their businesses, but can turn into gibbering wrecks when they have to explain their financial position.
Areas we’ll cover in this workshop will include:
As well as making finance fun and accessible, our workshop will ensure that the critical information you need to drive your business forward is always at your fingertips.
Here’s what some of our previous workshop delegates had to say…
“A very clear explanation of the important elements of the finances of a business.”
“A good opportunity to step back and look objectively at the business!”
“An extremely useful practical education on business accounting!”