Businesses will be required to submit quarterly updates to HMRC as part of the new system
The smallest businesses will be exempt from quarterly reporting to HMRC, government proposals about the transition to digital tax accounts have revealed.
The six consultation papers detail plans to allow the majority of businesses, self-employed people and landlords to manage their tax affairs digitally by 2020.
Businesses will be required to submit quarterly updates to HMRC as part of the new system. These updates will only need to contain summary data.
Currently, 98% of corporation tax returns and 99% of VAT returns are submitted online.
The main proposals:
unincorporated businesses and landlords with an annual turnover or gross income of less than £10,000 will be exempt from the quarterly updates and digital record-keeping requirements
the current £83,000 threshold for cash basis accounting will be raised
digital tax accounts will provide users with prompts and alerts to help them avoid non-compliance and to take advantage of the full range of tax reliefs open to them.
Small businesses should already be able to access their digital tax account.
Jane Ellision MP, financial secretary to the Treasury, said: “By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.”
Chairman of the Treasury select committee, Andrew Tyrie MP, said: “The fundamental problem remains: making digital recording compulsory for business – particularly small businesses – will be a substantial new burden on them.”
Kate Smith, head of pensions at Aegon, said: “We hope it will encourage more people to claim back higher rate tax relief on their pension contributions.
“Only basic rate tax is added automatically to people’s pension savings, with any additional tax relief claimed back, currently via self-assessment tax return at the end of the tax year.”
Condies can help you make the most of the transition to digital tax accounts.