Addressing concerns about timescales, the government has pulled back on the Making Tax Digital initiative, which aims to shift all tax records and payment online. They have now said that the three million small businesses affected by the proposed changes will be able to move over to the new online tax system at their own pace.
It’s likely to be a big relief for the small businesses affected by the Making Tax Digital government initiative.
Updated Finance Bill
Announced as part of the updated and altered Finance Bill, the government has said that businesses will be able to make the change from filling out manual self-assessment forms to doing it online “at a pace that is right for them.”
Concerns had been raised by various groups, including the Treasury Select Committee, in response to the original proposed timescale. The backtracking on Making Tax Digital now means that just those businesses that have a turnover that is greater than the VAT threshold (£85,000 as it stands currently) must keep online records for VAT. They also don’t have to start doing this until 2019.
Moving into the 21st century
The government launched Making Tax Digital as part of their wide scope vision to “bring the tax system into the 21st century”. The aim of the system is to enable all taxpayers to both manage their information and make payments online.
With these changes, the move is now voluntary for very small businesses. This means that companies that turnover less than the VAT threshold of £85,000 can choose when they want to move to the online digital system.
Every business now has two years minimum to make sure they can adapt to the changes before they’ll have to start thinking about keeping online records for other taxes.
Listening to feedback
This alteration to the scope and speed of the digitisation of the tax system is another move by the minority government to show that they are listening to the needs of all business owners in the UK.
The financial secretary for the Treasury and Paymaster General has been quoted as saying: “Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.”
More information and help
If you’d like to discuss your tax and how the digitalisation of the system could affect your business, contact Turner Little. We’d be happy to help.