UK freelancers and micro-businesses still need more information about the government’s plans to make tax digital, according to new research by cloud accounting software provider FreeAgent.
In the wake of the announcement of six new consultations being launched about tax digitisation, almost half (43%) of the UK’s micro business owners have admitted they have no idea what Making Tax Digital actually is.
The research found that 86% of respondents who knew what Making Tax Digital was did not feel at this stage that they had been provided with enough information about the plans – which would see small businesses having to keep digital financial records and provide quarterly updates about their tax to HMRC.
FreeAgent also found that businesses who knew about tax digitisation were generally positive about it, with 45% saying the plans would make their life easier while just 20% said they felt digital tax would make things harder for them.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “Making Tax Digital will be one of the biggest changes made to the UK tax system for generations and will start to impact businesses from as early as 2018. But it’s clear from our research that many micro-businesses still require more information about what tax digitisation actually is and how it will potentially impact them.
“We’ve already seen some confusion in recent months about how the micro-business sector will affected by digital tax, including stories about how businesses will need to file a full tax return every three months. However, the reality is that when micro-businesses are well-informed about the changes, they are actually quite positive about them- with only a small minority of people we polled saying that they felt Making Tax Digital would make their life harder.
“Although this new consultation is certainly a step in the right direction towards helping micro-businesses understand more about tax digitisation, there is still a lot of work to be done. I hope that we see even greater clarity over the plans in the future so that micro-business owners feel fully informed and, hopefully, more positive about the benefits that digital tax can provide for them.”
Research also finds that 84% of businesses believe that the government has not provided enough information about digital tax plans
A total of £16bn was lost through tax fraud last year, according to estimates released by Pinsent Masons
Additional tax a result of compliance investigations by HMRC, but overall revenue falls
Firm expands East Anglian team with appointments to the audit practice and private client tax team