Tax goes digital: everything you need to know
March 2015, George Osbourne – Chancellor of the Exchequer at the time, takes the floor of the House of Commons and declares and end to the tax return. Tax is to be digital, the current tax system is a relic of the pre-cyber age and needs improvement, and thus HMRC initiates the beginning of the digitalisation of UK Tax.
Since then, the implementation of this system has been underway – progress has been somewhat slow since 2015, but as we arrive at the 2 year anniversary of Mr Osbourne’s announcement, the scheme has come along nicely and it’s time for UK business to start taking note and adjusting to the changes.
The initiative to digitalize tax revolves around simplicity, its foundations lie in collating current tax system functions and refining the process to a single online solution. Essentially (and rather unsurprisingly) the government would like to make is easier for you to pay tax.
But while simplicity is at the heart of this endeavour, there are still a few important things for you to note as we move into the realms of digital taxing:
- Tax made simple: The new home of UK tax is a centralised web service, this means you’ll never have to give HMRC information about yourself or your business that they would be able to get somewhere else. Instead, they will collate information from specific, trusted, third parties such as your bank or your employer.
- Digital Tax for Business: The headline here is that businesses will no longer need to wait until the end of the year to know their tax balance, instead the tax system will collect and process tax information in real time, aiming to reduce tax due and repayments owed from accruing.
- All in one place: The new system will allow you to see all of your tax information in one place, including all of your liabilities and entitlements. As of April 2016, individuals have been able to complete and have full access to all of their financial data through their digital tax account.
- Digital tax for individuals: Individual taxpayers will be able to check and update their accounts at any time across any device (mobile, desktop, tablet). As of April 2016, all individuals will have access to their digital accounts and be able to receive support through live chats and set deadline reminders by secure messaging.
What’s going to change for me?
Essentially all these developments mean is that the process of paying and organising taxes is going to be easier than it was before. The introduction of a centralised digital tax system removes the requirement for tedious form filling and means that unnecessary time delays are a thing of the past as the new system processes your tax details in real time.
Businesses will be able to plan ahead better with access to records of money owed and with the option of sending tax information to HMRC quarterly. Individuals will have a better understanding of their tax systems through full access to their digital records and relevant information held by HMRC.
Additionally, an online billing system allows you to pay any outstanding tax that can’t be collected through PAYE, it will eliminate self-assessment tax returns and will allow you to make payments by the due time using smaller monthly payments.
To help improve communication with the taxman, you will have easy access to support resources such as a virtual assistant and web chat functions as well as being able to give permissions to someone else (possibly your accountant) to assist with your tax details.
When is it going to happen?
The whole process began in 2015 when over 2 million businesses started using their digital tax accounts, right now in 2017 we’ve just seen the introduction of the new online billing system and new features will be continually added to the service until the full functionality is completed in 2020.
See below for our detailed timeline of when the systems key features will be rolled out:
What do I need to do now?
All you need to do to get started is to log into your personal tax account and verify your identity using the GOV.UK Verify system – this will confirm that you are who you say you are and prevent anyone from impersonating you. When you have confirmed your identity and your account you will have access to your personal tax account and several other government services through the GOV.UK website.