Tax is getting easier for the 532,260 small businesses in the North West and HM Revenue and Customs (HMRC) is showing people how in a new video.
We know that independent traders and people running small businesses in the North West region want a simpler tax system. They are busy seizing business opportunities and serving their customers, so would rather not spend time digging out months of receipts to fill out their annual tax return.
That’s why HMRC is committed to transforming the tax system to create something that is more effective, more efficient and easier for taxpayers.
Most of the UK’s 5.4 million businesses already manage their tax online – over 99% of VAT returns are submitted online. By 2020 we will have abolished the dreaded annual tax return and replaced it with a simpler online system.
The new digital tax accounts integrate the different information businesses have to provide into a simple, seamless process, from entering it in a business recordkeeping app through to sending it to HMRC.
So instead of one big, onerous tax return each year, businesses can check that the information they are recording is correct, and simply click “send” to update HMRC once a quarter.
Many taxpayers want more certainty over their tax bill and access to an in-year picture of their tax position, which their new digital accounts will provide. We know that too many viable new businesses go under when they receive their tax bill simply because they didn’t know how much to set aside. Digital tax accounts will help fix this issue.
For those small businesses who aren’t already keeping records digitally, there will be a range of software packages and apps available to use, including free ones for those with simple, straightforward tax affairs. There will also be clear, simple advice on how to use the new digital tax account.
Some businesses will want time to adjust, which is why these reforms are being introduced bit by bit, with no one moving onto the new system before 2018.
Later this spring, we will consult widely on how the new system should operate.
And people who genuinely can’t use digital tools – perhaps because they can’t access broadband, or don’t own a computer or smartphone – will be offered alternatives, like nominating someone else to update their information for them, or giving information by phone.
This new system will be a major step towards the UK having the best tax administration system in the world. It means the end of the annual tax return, and is a simpler and easier way of doing things.
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