A fifth of micro-businesses have no knowledge of the government’s Making Tax Digital (MTD) plans, according to research from FreeAgent.
The findings followed the publication of further details on the MTD plans by the government at the end of January.
The research also found that 84% of respondents to the FreeAgent survey thought that the government had not provided enough information about the digital tax plans or how the legislation would affect UK business owners.
However, 41% of businesses that were aware of the plans said they felt positive, with 27% believing that the legislation would make running their businesses easier.
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 potentially start to impact businesses from as early as 2018. But although many micro-business owners appear to be positive about the proposals, it’s clear from our research that many others still require more information about what tax digitisation actually is and how it will potentially impact them.
“We believe that Making Tax Digital is a great opportunity for business owners to have proper clarity over their business finances and be better equipped to calculate and pay their tax bills. But it is also a major piece of legislation that will have a significant impact on the UK’s micro-business sector.”
“The good news 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. Therefore, we urge the government to keep these business owners fully up to speed with the changes and make sure they clearly explain how and when the proposals will be implemented,” he added.
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The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
ACCA and the ICAEW welcome the decision, which provides an opportunity for the measures to be discussed in full following the general election on 8 June