The Government will publish its response to the Making Tax Digital consultations – which closed earlier this month – in January 2017, as confirmed by Chancellor Philip Hammond in his inaugural Autumn Statement.
The Government’s focus on digital was further underlined today by pledging a £1bn investment to upgrade and futureproof the UK’s digital infrastructure.
Mr Hammond also confirmed to the House of Commons that innovative companies who choose to invest in fibre broadband for their business would secure 100% business rate relief, incentivising innovation among growing firms.
HM Revenue and Customs (HMRC) hopes that by digitalising the UK tax system, the regime could become much less burdensome with a reduction in red tape for small business owners.
HMRC believes the benefits of the Making Tax Digital programme include:
- Cash-basis accounting so that thousands more can pay the tax they owe based simply on the difference between money they have taken in and what they have paid out; so tradesmen will pay tax on cash received as opposed to invoices issued.
- Prompts and alerts to help businesses get tax right and provide advice on tax reliefs they might be missing out on.
- Greater certainty over tax bills so businesses don’t have to wait until the end of the year to discover how much tax they owe.
Jane Ellison MP, Financial Secretary to the Treasury, had previously said: “We are committed to a transparent and accessible tax system fit for the digital age, and Making Tax Digital is at the heart of these plans.
“This new system will make the UK’s tax administration more efficient and straightforward, and will offer businesses greater clarity when it comes to paying their tax bills.
“By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.”