As we progress further into the digital age, the time has come for charities to move from traditional paper tax statements and spreadsheets and enter a new realm, submitting their tax information digitally. Launching from 1st October 2019, charities will only be able to submit their tax returns online and this will be compulsory across all organisations, regardless of the size of the company.
The new scheme, known as “Making Tax Digital”, will enforce a new set of rules around how organisations process and submit their tax going forward. This means that they will have to wave goodbye to submitting dog-eared, paper tax forms and move to suitable HMRC compliant software.
All financial information, including tax returns, will need to be completed and submitted through HMRC software in order to be accepted. This will encourage charities to keep comprehensive digital records of their financial details and taxes paid.
Why is Tax Becoming Digital?
Governments are hoping to push fully digitalised tax by 2020. The goal is to make the tax administration process more efficient and easier for taxpayers over the coming years. Not only will it help to ease the load on the government, but charities will also benefit from the ‘new and improved system’, allowing for more accurate tax management and an easier to access record of tax owed and paid.
The expectation is that the new investment software will save both time and energy, especially for organisations that already struggle with tight internal resource. Despite the initial investment required for the brand new software, there are plenty of advantages in the long term. One of the main benefits is that it presents the opportunity for more accurate tax calculations, preventing the risk of overpaying due to human errors in the tax return.
The charity sector has had plenty of time to adapt to the new software. There is a later deadline to switch when compared to other organisations which have had to comply with the new scheme since April 2019. This is because it is common for charities to lag behind digitally, particularly when it comes to complete digital transformations. For instance, only 10% of charities surveyed in this year’s Charity Digital Skills Report completed a full digital transformation and an incredible 52% of charities had no digital strategy in place at all.
When is it Happening?
Currently, charitable organisations will need to be ready for 1st October 2019 and there will be no buffer time given for companies that cannot organise themselves for the digital switchover. This will include doing away with paper tax forms and moving all financial records onto HMRC compliant software. An approved list of accurate tax management software for income tax can be found here.
Businesses and charities that have already embraced the digital age and undergone full digital transformations are ahead of the curve by making use of efficient systems that reduce the amount of resource required for finance and administration. With the “Making Tax Digital” scheme, the aim is to make the process easier for all businesses, regardless of the number of individuals employed or the amount of revenue generated.
Is your charity ready for the digital tax switchover, or is your organisation still preparing for a digital transformation and implementing your web presence? At i3MEDIA, we specialise in charity web design supported by quality integrated tools including built-in sponsorship modules, donation-driven campaign landing pages, and our bespoke donation platform with one-click quick donate.
Get in touch with our sales team today and find out how we can make your digital transformation seamless.