We will be digital: the use of technology to facilitate taxes

Call me John ‘Geek’ Robins, but I love making my tax declaration.

The small gain of foot comedy may have been the great loss of accounting. Appeals to the part of my brain that likes ordination and order.

I love making everything accumulate, I love its rules and peculiarities.

In a job in which success or failure hangs in balance, I am safe in the knowledge that I can claim 45P for mile for gasoline, whether the audience is relyed or not.

But I also understand that many people find confused prosecutors.

The good news is that there is a lot of help available. All you need are the right tools for work, and the tax enthusiast of its neighborhood John Robins to translate problematic fiscal terms in simple English.

This is what I cover in this article:

Do digital prosecutor (MTD)

My VAT return used to take weeks to classify. He had spreadsheets and notebooks throughout the place.

The tracking dates back to an error, or discovering why two numbers are not added was a nightmare. If I lost a receipt, well, I could say goodbye to that night.

Making a fiscal digital is a government initiative to facilitate the maintenance and sending of your easiest fiscal information and, which is faster.

Since April 1, 2022, all VAT registered companies have been forced to keep digital records that update and store all relevant VAT tax data in one place.

And if the idea of ​​a ‘digital record’ sounds vague and complicated, for that the accounting software is there: only your transactions enter and let the technology make the rest for you.

Perform digital taxes for income tax

The best way to relieve that fiscal stress is to keep up with your records and be connected to how your business is in real time.

If it is the owner or owner of a business on their own with a total income of more than £ 50,000 per year, as of April 2026, you must submit quarterly updates on the income and expenses of your business as part of the manufacture of digital taxes (MTD) for the Income Tax.

The same goes for those who earn more than £ 30,000 since April 2027, and then those who earn more than £ 20,000 as of April 2028.

“That?” I hear you cry, “four returns a year?”

Do not fear.

When configured with the correct accounting software, this complete process is reduced to only a few clicks of a each quarter button, instead of a heavy and stressful elevator at the end of the year.

Phew!

Each quarter can also mean a quick email, unlike a large email and bags full of receipts at the end of the year.

My accountant is well used to receiving daily emails about the latest tax trends: it is his cross, and includes it with a quiet dignity.

Authorization of agents

As part of MTD for income tax, you can authorize someone else, such as a accountant and/or accounting, friend or in relation to HMRC for you.

It is fast and easy to do: just send them a link through the HMRC website and once they have completed the authorization steps, they can act in their name.

Think about it as a handshake online, a little digital delegation.

Tax declaration

What is a gift without an elegant arch? Well, it would not be a satisfactory year of online accounting without being able to sign everything, hitting the air.

And that is what you can do when you send your digital tax declaration, which is also part of MTD for Income Tax. This used to be the final statement, but HMRC has eliminated that terminology now. (For what is worth, the concept of end -of -period statements (EOP) has also fallen completely, so you can forget to have heard of that).

As with self -assessment, the digital tax declaration brings together all the information about its income, expenses and relief in a final hurdle. If that sounds a little intimidating, don’t worry.

That accounting software we are talking about earlier does all that.

So, if you are already configured, it is just another click of a button and a job well done. All you have to do is a party as if it were on April 6.

Some fiscal terms and what they mean (in simple English)

Value Added Tax (VAT)

VAT is an added tax to most products and services sold by registered VAT companies.

It is literally a value tax. But the rates and things to which they apply to vary, so their food offer at lunch time does not have VAT, but its gas tank does it (20%).

Its train ticket has no VAT, but the gas you use to heat your home (5%). You create it or not, the grass that you buy from your Delicatessen local has gone through five tests to see if it meets the criteria for VAT, so it will vary depending on how they are cooked, stored, announced and served.

You do not need to know the intimate history of each grass you buy, but the receipt must tell you how much VAT has been charged.

Once that information is in your accounting software, it will help you make the rest.

Pay as desire (Paye)

This is the bit of your monthly receipt that puts a grimace.

Six months in work on their own, I would long for these calculations to be made by some accounting genius.

Paye is basically an automatic deduction made of his salary before they affect it. Payment is highlighted as you win, and means the money that earns for income tax, national insurance and student loan payments.

In other words, the money that does not reach your pocket before it passes.

And although this may seem upset, he saves him a tax declaration every year and, what is crucial, protects him from the horrible understanding that has spent all that money when the invoice arrives, a lesson that is learned in my case.

People who do not have taxes deducted through Paye tend to be autonomous and are responsible for calculating what they owe.

But this does not have to be stressful with the help of a good software and a trusted counter.

Fiscal year

Why the fiscal year of the United Kingdom extends from April 6?

Actually, it is quite interesting, if you find interesting fiscal years. Therefore, I am guilty as loaded.

In the Middle Ages, our fiscal year used to run from Lady Day, a religious festival that takes place on March 25. In 1752, he moved to April 5 when we changed Julian to the Gregorian calendar. But it had to be transferred to 6^th In 1800 because the years Salas do not join at all.

That said, the United Kingdom is an exception that begins the fiscal year on April 6. In fact, we are the only country in the world that uses these dates.

So, if you find it frustrating or unusual, you are not alone.

The fiscal years of most countries follow the calendar year, which seems simpler. But I am not sure that the ‘New Year’s Eve Declaration Party’ really seizes here.

Gross and net income

Let’s say you are making delicious jam cakes for your family because if you are honest, they are easy and you have run out of ideas. But not all raspberry flour and bit grains will end up in their dessert plates.

When he returned from the supermarket with all purchases, he had gross ingredients. But when you made the jam cakes, a little flour could have come out of the bowl.

You didn’t wear all the jam. And there was a leftover mass. What comes out of the oven is the net gain of those gross ingredients.

It is the same with your profits and income.

Your business can have many income flows, paid bills, products sold, interest, capital gains, even tips. These are the ingredients. When he adds all this, it is his gross income or rotation.

But if a tax on that was imposed, it would not be fair, because providing those products and services costs you money. Things like gasoline, packaging, public services and subscription to your accounting software.

Calculating what costs can and cannot be claimed is something that an accountant can help him. The figure that remains when you have eliminated all the costs of your gross income is your net income, and that is the figure on which you pay taxes.

Final thoughts

Their taxes do not have to be serious. Using some expert tips and elegant accounting software, you can save time and, more importantly, eliminate some stress of your life.

And that is my type of battery.

Editor’s note: This article was first published in December 2022 and has been updated by relevance.