This is a guest post from our friends at 1Tap. The new expenses management app from Receipt Bank.
Self-assessment is ending. So why does the new Making Tax Digital initiative seem to be one of HMRCs best kept secrets?
As an employer, there will be people in your business who need to complete self-assessment tax returns. With the completion deadline fast approaching on 31 January, many of them will be preparing to submit their return on time, or risk facing a penalty.
Perhaps unsurprisingly, not everyone is a fan of this process. New research, carried out by YouGov for 1Tap Receipts, the expenses management app, found that over half (55%) of those who have to submit a tax return say they dislike doing so.
The research also identified just how time-consuming the process can be, with 45% of respondents saying they spend five hours or more completing their tax return, and 22% spending over ten hours.
Despite the fact that the majority of people filling out a tax return dislike the process, and many are spending the best part of a day doing so, the research highlighted a startling lack of awareness about what is set to replace self-assessment by 2020: the Making Tax Digital initiative, with 94% saying they hadn’t heard of it.
So who is affected? Basically, anyone who currently completes a self-assessment return. That’s not just sole traders and small businesses, it’s also individuals, employed or otherwise, who have multiple income streams, anyone with income from properties, company directors, those receiving share dividends and anyone with income from abroad.
Under the new system, all of the above will have to keep track of their tax affairs digitally and report quarterly to HMRC.
The data they submit will give them a clearer, up-to-date view of how much tax they owe and of their finances in general. The Government’s vision is that, by 2020, taxpayers will be able to see their complete financial picture in their digital account in the same way they would with their online banking. They will also be able to pay their tax bill in payments spread over the year – helping to ease cash-flow issues that can result when individuals and small businesses have to cough up a lump sum.
Michael Wood, Co-founder of 1Tap Receipts said, “Make Tax Digital is a big, but overwhelmingly positive, change as it will help people manage their finances in a much more streamlined and efficient way. In fact, many people are already automating various parts of the tax return process to give them a real-time view of their accounts, but without the headache of hours spent poring over a spreadsheet.”
The 1Tap Receipts app helps anyone who has to submit a tax return with managing their expenses. The user simply takes a photo of their receipt, the technology then does all the work for them including categorising the expense information. This data will then automatically populate the HMRC self- assessment form for them. 1Tap Receipts has seen huge growth since launch this summer and is now the #1 Business App in the UK*
*#1 Top Grossing App in the iOS App Store, January 2017