31 October 2016 16:00
Online filing to make paper tax returns obsolete
There are just three days until this year's paper tax returns are due, but nine in ten businesses now file online and the days of the paper return are well and truly numbered.
The deadline for anyone submitting their tax return in paper form this year is Monday 31 October. But those using the traditional method are dwindling and more businesses are opting to file their tax returns online every year.
Even so, HMRC statistics show that 11% of businesses submitted paper tax returns in 2015 - accounting for 1.14 million out of the 10.39 million submissions filed with HMRC. Online returns represented 89% of all tax returns in the last tax year.
Paper tax returns are to be phased out by April 2018 under the Government's Making Tax Digital plans. In fact, these plans promise the end of the tax return altogether by 2020, with businesses expected to keep digital financial records and update HMRC on a quarterly basis.
According to research conducted by FreeAgent, nearly half (43%) of micro-business owners and freelancers don't know what Making Tax Digital is. And 86% of respondents who knew what Making Tax Digital was did not feel that they had been provided with enough information about the plans.
However, those in the know were broadly positive, 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 is undoubtedly one of the biggest changes made to the UK tax system for a generation and will start to impact businesses from as early as 2018.
"This research, however, highlights that many micro-businesses still need more information about how tax digitisation will actually work. Contrary to some beliefs, businesses will not need to file a tax return every three months in future. Instead, businesses will need to send summary data to HMRC about their business each quarter, or more often if the business prefers."