What do small businesses really think of Making Tax Digital?
About the author: Emily Coltman, FCA is the chief accountant for FreeAgent, who make accounting software for small businesses, freelancers and their accountants.
As Making Tax Digital (MTD), the government’s initiative for a fully digital tax system, moves on to the next phase, just how prepared are the small businesses that it will affect? To find out, we asked the people that look likely to be impacted first – the UK’s micro-business owners and freelancers. Here are the results*:
84% think there's a lack of information
20% of the UK’s micro-businesses and freelancers have not yet heard of Making Tax Digital and 84% of respondents feel that the government has not provided enough information about its plans for MTD. Despite the majority of the UK’s unincorporated businesses being required to use some form of digital tax reporting as early as next year, our survey highlights that many are still unclear about what will be required of them or the potential impact it could have on the way they manage their finances. Just 4% feel they have enough information about how MTD will impact them.
41% feel positive about Making Tax Digital
Our survey also found that 41% of micro-business owners feel positive about MTD and 27% of respondents think the new digital tax legislation will make running their businesses easier. A minority of 14% feel that MTD will make their life harder.
The full results
How do you feel about Making Tax Digital - the UK government's plan to digitise tax by 2020?
|I feel positive about it||41%|
|I don't know what Making Tax Digital is||20%|
|I'm not sure||15%|
|I don't have any opinion either way||13%|
|I feel negatively about it||11%|
What impact do you think Making Tax Digital will have on your business?
|I don't know||29%|
|I think it will make running my business easier||27%|
|I don't think it will have an impact either way||21%|
|I think it will make running my business harder||14%|
|I don't have any opinion on it||9%|
Do you think the government has provided enough information about Making Tax Digital and how it will affect small business owners like you?
|I don't know||11%|
Preparing for impact
Although a lot of businesses surveyed feel that MTD will have a positive effect on them, many still don’t know enough about digital tax or the impact it will have on their financial reporting. MTD will undoubtedly be a major shift in the way that all UK businesses manage their finances and as the government provides more information it should become easier for the UK’s micro-businesses and freelancers to prepare.
Download our free guide to find out more about how Making Tax Digital will impact you.
If you're an accountant, we've created a handy version for you to share with your small business clients.
*Total sample size was 701 owners of UK micro-businesses with fewer than 10 employees. The survey was carried out online between 15th December 2016 to 17th January 2017.