UK Moves Closer to Digital Tax Returns
The UK government confirmed plans to phase out end-of-year paper tax returns by 2020, enabling small businesses as well as individuals to submit accounts at any time during the year via computer, tablet or smartphone.
Chancellor George Osborne made the announcement when presenting his annual budget. He said that the “complex, costly and time consuming” annual return would be scrapped in “a revolutionary simplification of tax collection”, with the option to spread the cost by paying tax in instalments also available.
Taxpayers will be allocated a login and password, enabling them to submit tax information regularly and ensure their bills relate more closely to current performance. The online accounts will show how tax is calculated, as HM Revenue & Customs (HMRC) also updates information available to from employers, pension providers and banks.
Businesses and individuals will be able to link their own accounting software and their bank accounts to the digital tax account, removing the need to submit an end-of-year return and paying an annual tax bill in one go.
The switch is expected to start with 5m small businesses and the first 10m individuals early next year. By 2020, businesses should be able to link their accounting software to their digital tax account, so they can feed in information directly.
Other budget measures announced by the chancellor included increased funding for UK Trade & Investment (UKTI), which works to promote British exports and attract inward investment. Osborne said that it would now receive £7.5mto promote UK trade with China.
The decision was welcomed by Philippe Gelis, chief executive (CEO) and co-founder of Kantox, who said that it would provide “a great opportunity for small and medium enterprises [SMEs] looking to diversify from a reliance on the struggling eurozone.”