With just under a week to go until new digital tax legislation comes into effect in the UK, new research has found that only a third (33%) of Brits have heard of it.
According to a new survey of 1,000 British workers, carried out by award-winning cloud accounting software provider FreeAgent, millions of Brits appear to be are unaware about the forthcoming Making Tax Digital (MTD) for VAT legislation and only half of those who had heard of MTD actually understood the process.
FreeAgent found that, of the 40% of British workers who had filed a tax return, almost 60% said it took them 1-2 hours, and over a fifth (22%) said it took them 3-4 hours. The most time consuming aspects of the process were finding the information needed to submit the form (48%) and backtracking through expenses (16%).
Part of the reason for the arduousness of tax returns could be because of working Brits’ reluctance to embrace digital receipts. 37% of respondents said that they preferred paper receipts, compared with 28% who preferred digital.
A lack of filing systems could also be to blame for workers’ struggles with their tax returns, with only 32% of those surveyed saying that they filed their receipts. 30% of respondents admitted to throwing away their paper receipts, and 32% said that they stored their receipts.
British workers have been more willing to embrace digital bank statements (45%) and bills (40%), though 30% said that they still preferred to receive paper bank statements and bills.
Only 19% of those surveyed said that they processed their taxes digitally, far less than the number who use digital bank statements (61%), phone bills (54%), energy bills (55%) and council tax (29%). 19% of those surveyed did not use digital processes for any of these tasks.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “While most Brits have embraced digital processes for other aspects of their financial lives, there is still a degree of reluctance to embrace digital tax returns. Making Tax Digital is coming, whether people like it or not. Over the last few years, we have seen people becoming increasingly comfortable with handling their banking and bills online, so it’s likely that the same will soon become the case for our taxes.
“Filling in tax returns can be a real drain on peoples’ time, partially when it comes to gathering all of the right information together. By using online receipts, and online accounting tools, freelancers will be able to spend less time on their tax returns, giving them more time to focus on building their businesses.”