Following yesterday’s unveiling of the chancellor’s Autumn Budget in the UK, it’s great how George Osborne has recognised the crucial role played by small businesses in the UK economy as it moves ahead faster than most European countries.
There were some notable highlights for small businesses this year. In particular:
- £450M funding going to HMRC GDS to accelerate digital transformation
- 10m people with digital tax accounts by 2016 (1/3 of working population)
- Everyone with a digital tax account by end of 2019
Small businesses received lots of encouraging news from the chancellor yesterday but the biggest positive impact will be HMRC’s ‘making tax easier programme.’ George Osborne announced that HMRC is building one of the most digitally advanced tax administrations in the world and this will create efficiencies of 18% to its own budget. The chancellor pointed out that in the new digital age, we don’t need taxpayers to pay for paper processing or the 170 tax offices around the country.
Xero applauds this proposal. Anything that removes or streamlines the burden of compliance for small businesses is a good thing for the UK’s 5.3 million SMBs which generate more than 50% of our GDP. It’s also good for HMRC in that it eliminates wasteful state expenditure on inefficient compliance processes.
These efficiencies will in turn assist Britain’s wider economic prospects in the next ten years, enabling small businesses to be more productive through technology whilst creating a window of opportunity for British businesses to be a real powerhouse of growth in Europe and globally.
As part of the government’s vision to modernise the tax system, tax returns will be replaced by digital accounts. These accounts will bring together all details in one place so businesses can understand quickly and easily what they need to pay — without ever having to complete a paper tax return again! HMRC is expecting to have 10 million digital tax accounts up and running by 2016.
HMRC will make smarter use of the data it holds, linking it up in ways that weren’t previously possible. This will also be a major help for small businesses, that will be able to link their accounting software to their tax account and have the option to pay as they go. This will give more certainty about what needs to be paid and when so businesses can manage their cash flow better.
With these ambitious digital plans in place, the way that small businesses and individuals interact with HMRC is going to radically change over the next few years. And definitely for the better!
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