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Is It Time To Make The Shift To Digital Bookkeeping?

The UK tax landscape is experiencing a tectonic shift. Government plans for a total digital switchover are underway, set to be rolled out from April 2019. For some, this isn’t revelatory – Making Tax Digital (MTD) has been floating in the public consciousness for a while now.

More people are submitting their Self Assessment tax returns online than ever before. Last year, 89% were completed online via HMRC’s tax portal. According to GoSimple’s Amanda Swales, this will only increase, and mitigate the £8bn annual loss resulting from submission errors.

With the 31st January deadline fast approaching, many taxpayers are exploring online solutions for the first time. If that includes you, here’s why you should get started sooner rather than later.

 

Submitting online? Don’t delay!

While a few weeks remain until the 31st January deadline, it’s wise to start your Self Assessment tax return before the New Year. In January 2016, over 513,000 returns were completed on the 29th, totalling more than 21,000 every hour. As HMRC’s servers and phone lines are bombarded at this time of year, those leaving their submission to the last minute can suffer from a slower, more stressful experience. 

Compiling your tax returns requires a clear understanding of what you’ve earned, what you’ve spent, and what allowable expenses you can claim. Starting now means you’ll have plenty of time to look back through your records, identify any gaps and resolve any queries you have ahead of the January rush

This is all infinitely easier if you’ve made the switch from spreadsheets and paper to digital bookkeeping solutions.

Digital bookkeeping solutions can automatically flag up allowable expenses, so you can make full use of tax breaks you’re entitled to. Databases are updated with the latest legislation, meaning you don’t need to consult an accountant.

Why bring your bookkeeping into the cloud?

Any business earning over £85,000 per annum will have to go digital, whether they like it or not. MTD’s first rollout is going to target VAT tax returns; online submissions will be compulsory from April 2019, before being extended to include the Self Assessment and other tax returns for businesses in this revenue bracket in 2020.

Even before the implementation of Making Tax Digital, paper receipts, folders and spreadsheets are far less efficient for getting an accurate sum of what you owe. As HMRC plans to phase out its online Self Assessment calculator, it’s partnering with an ever-larger number of third-party software tools to make it easy for taxpayers to digitise and send records, and store them for future reference.

Some of the best bookkeeping software even lets you take images of receipts, erasing paper collection altogether. The user merely has to snap a picture, upload it, and see their updated tax bill in real-time. It’s impossible to lose any receipts, because they are stored in the cloud, readily accessible for a final check-up.

What’s more, as cloud functionality isn’t bound to a single piece of hardware, it can be reached from any smart device or web browser. All it requires is a secure internet connection.

The next few years are going to signal a huge transformation for the UK tax system. While VAT-registered businesses will be the first to be affected by MTD, every non-PAYE earner should be making the leap to digital tax software. And the January Self Assessment tax deadline is a great place to start.

 

GoSimple Software provide cloud-based solutions for digital bookkeeping. Alongside their HMRC-approved tax return software, they offer SimpleBooks to help businesses keep on top of their income and expenditure.

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