The majority of UK freelancers and micro-business owners do not think they have been given enough information about the government’s digital tax plans, according to new research from cloud accounting software company FreeAgent.
In a survey carried out by FreeAgent - who provide award-winning cloud accounting software for freelancers, micro-businesses and their accountants - 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.
Despite HMRC launching a public consultation over the proposals last year, many micro-business owners also said they had no knowledge of the plans - which would see small businesses having to keep digital financial records and provide quarterly updates about their tax to HMRC by 2020. A fifth of (20%) respondents in the FreeAgent survey said that they did not know what Making Tax Digital actually was.
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.”