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The way you do your taxes is set to change. HMRC intend to have a full digital tax system in place by 2020.

Taxpayers could be expected to account for their income, taxes and payments quarterly. Systems are currently being trialled and HMRC have said they are hoping the change will be in place within the next 4 years.

The change comes as part of the government’s objective to modernise the tax system. Individuals will be able to update their information, register for new services and understand what tax needs to be paid and when.

Digital accounts are already available to some individuals, although not fully operational.  To sign up you will need to create a government gateway on https://gov.uk. The eventual change is said to be beneficial to business owners as they will be able to pay personal taxes on income as they occur for each quarter rather than on completion of self assessment. This does, however, have a  cash flow implication with the initial quarter being paid 18 months before the normal due date of 31 January following the end of the tax year.

HMRC will use the information it already holds along with bank interest information together with third party broker information to populate tax returns which in turn will mean less work for the taxpayer. Those with accountants who have third party access to HMRC accounts can be assured that their accountant can continue to still do everything they are already doing for them online.

Any change in regulation can be difficult to get your head around. Business owners can receive free advice from Foremans by giving us a call on 01244 625500.