With the tax self-assessment deadline fast approaching on January 31st, many tax payers will be preparing to submit their return on time, or risk facing a penalty.
Not everyone is a fan of this process, finds a study by 1Tap Receipts, with more than half (55 per cent) of those who have to submit a tax return saying they dislike doing so.
The research also identifies just how time consuming the process can be – with 45 per cent of the self-employed people surveyed saying they spend five hours or more completing their tax return, and 22 per cent saying they spend ten hours or more on their annual submission.
Despite the fact that the majority of people filling out a tax return dislike the process, and many are spending the best part of a day doing so, the study highlights a startling lack of awareness about what is set to replace self-assessment by 2020; the Making Tax Digital initiative, with 94 per cent saying they hadn’t heard of it.
Under the new plans, sole traders and small businesses will have to keep track of their tax affairs digitally and report quarterly to HMRC. The data they submit will, give them a clearer, up-to-date view of how much tax they owe and of their finances in general. The government’s vision is that, by 2020, taxpayers will be able to see their complete financial picture in their digital account in the same way they would with their online banking.
Michael Wood, co-founder of 1Tap Receipts says, ‘Making Tax Digital is a big, but overwhelmingly positive change as it will help self-employed people manage their finances in a much more streamlined and efficient way.
‘In fact many of them, and their accountants, are already automating various parts of the tax return process to give them a real time view of their accounts, but without the headache of hours spent poring over a spreadsheet.’
Further reading on tax returns