Following the publication of further details about the government’s Making Tax Digital (MTD) initiative this week, a survey from FreeAgent reveals that many micro-business owners also said they had no knowledge of the plans.
Despite HMRC launching an eight month public consultation on MTD, a fifth of (20%) respondents in the FreeAgent survey said that they did not know what MTD actually was. The MTD initiative would see small businesses having to keep digital financial records and provide quarterly updates about their tax to HMRC by 2020.
Prior to this week’s announcement, the majority of UK freelancers and micro-business owners also said they did not think they have been given enough information about the government’s digital tax plans. FreeAgent - who provide award-winning cloud accounting software for freelancers, micro-businesses and their accountants - found that 84% of respondents said they didn’t think that the government has provided enough information about Making Tax Digital or how the legislation would affect UK business owners.
However, FreeAgent also found that businesses who knew about tax digitisation were generally positive about it, with 41% saying that they felt positive about the plans and more than a quarter (27%) of respondents saying that they thought the legislation would make running their business 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.”