Business Savings Blog | March 2018 – Making tax less taxing

The start of the new tax year on 6 April acts as a prompt to many businesses to get their affairs in order.

However, while this is an important task this is not something many of us relish as, let’s face it, sorting out your taxes can be taxing.

According to research from the Federation of Small Businesses (FSB), small businesses spend on average £5,000 and three working weeks every year on tax compliance, with Value Added Tax (VAT), Pay As You Earn and Employer National Insurance Contributions highlighted as the most time consuming tasks.

The thought of completing tax forms can be overwhelming. Indeed, in our recent SME survey*, when asked what tasks they were most likely to put off, completing tax forms and legislation materials came top with 29% of the vote. According to FSB research, due to the complexity of the tax compliance process, 77% of small firms pay a specialist to ensure their taxes are paid correctly.

So, how could tax be made less taxing? While it is too early to tell, the Government’s Making Tax Digital initiative could help to streamline the tax process for many.

As the name suggests, Making Tax Digital is designed to provide a simpler and more streamlined tax service. According to HM Revenue & Customs (HMRC), “for Income Tax, businesses, including self-employed and landlords, will be able to keep records of their income and expenditure digitally, and send summary updates quarterly to HMRC from their software or app from April 2018 if they choose to do so”.

From April 2019, HMRC states that “VAT registered businesses, including self-employed and landlords, with turnover above the VAT registration threshold, which is currently £85,000, will have to keep their records digitally (for VAT purposes only) and provide their VAT return information to HMRC through Making Tax Digital compatible software”.

It is hoped that the new service will help to free up time so firms can get on with expanding and growing their businesses. Find out more about Making Tax Digital.

Find out more about our Business Savings and Personal Savings accounts.

Stuart Hulme
Director of Savings and Marketing

*Hampshire Trust Bank commissioned research in partnership with Opinium Research. As part of the research, which took place in December 2017, Opinium Research conducted online interviews with 500 UK SMEs, defined as businesses that have 250 employees or less.

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