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Chartered Certified Accountants
and Business Advisors

01530 267320

Digital Tax Accounts - Making Tax Digital

Making Tax Digital - Digital Tax Accounts

 

In 2015 the government announced major plans to modernise the tax administration system by introducing digital services for tax. There are three main strands to these proposals, as follows:

  • personalised digital tax accounts for individuals and for businesses
  • quarterly digital reporting of income and expenditure by businesses, self-employed people and landlords
  • options for paying tax.

Consultations have now been published by HMRC which provide further details of these proposals and so we have set out below what we currently know about the changes.

Digital tax accounts

Digital tax accounts for individuals have already been created by HMRC. These are called Personal Tax Accounts. These accounts have been linked to HMRC internal systems so that they will be pre-populated with income and tax details that HMRC already hold. This includes:

  • Employment income,
  • PAYE
  • NIC
  • State retirement pension.

From April 2018, it is intended that interest paid by banks and building societies will be included in digital tax accounts. In order for this to happen, banks and building societies will be required to provide information to HMRC earlier, and more frequently, than currently. Taxpayers will also be able to report any additional sources of income through their digital tax accounts in 2018.

HMRC expect that with pre-populated information and taxpayers able to add in other sources of income, the digital tax account will mean that a significant number of taxpayers, with relatively straightforward tax affairs, will not need to complete a tax return.

Digital tax accounts are also being established for businesses and these will show:

  • An overview of the income tax or corporation tax,
  • VAT
  • NIC details of the business

In order to show details of the income subject to income tax or corporation tax, details of the business’s income and expenses will be provided by new quarterly tax updates.

Timeline - key dates

November 2016

Consultations on Making Tax Digital closed

Accounting periods starting after:

 

April 2018

Quarterly updates for unincorporated businesses and landlords

April 2019

VAT comes within Making Tax Digital

April 2020

Quarterly updates for companies

 

Frequently Asked Questions

We are often asked a number of questions about Digital Tax Accounts - read our answers today - Frequently Asked Questions - FAQs

How we can help you

Please note that, at the moment, you do not have to do anything in respect of these developments. If you do want to access your digital tax account you may need to verify your identity. You can find details at: www.gov.uk/personal-tax-account. If we are your tax agents, we cannot access the account on your behalf.

Please be assured though that we will continue to assist you with your tax affairs and we will keep you informed of developments in the Making Tax Digital project.

Please speak to us if you have any questions regarding Making Tax Digital on 01530 267 320 or email info@senceaccounting.co.uk.

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