Making Tax Digital
Making tax digital is essentially HMRC’s scheme to ensure all individuals and businesses digitally report their profit/loss.
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Individuals
HMRC have introduced the Personal Tax Account to allow individuals to monitor their personal tax in real time, online. Eventually, the aim is to have all information on the personal tax account, making tax returns and year end information obsolete. The Personal Tax Account will allow you to check how much tax you have due, update your information, apply for new services, amend your personal allowance allocation and report issues. It will consolidate all information held to prevent having to request information twice for two different departments.Businesses
HMRC have realised that the current system is prone to mistakes with over £8billion worth of tax not collected each year. With the introduction of Making Tax Digital, they hope to bring the tax system into the 21st century giving business owners a modern digital experience. Software will be linked to HMRC allowing information to be transferred at the click of a button. Free software will also be available for businesses with straightforward tax affairs.
Exemptions
These include businesses with turnover below £10,000, charities, community amateur sports clubs (CASCs) and those who ‘cannot engage digitally’.
Benefits
Benefits of making tax digital include more transparency, less errors and less compliance checks.
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