Digital tax, Self employment, the Taxi Driver and Taximanager

When we first thought about our web app Taximanager back in 2010, one of the main considerations was to produce a ‘real time’ opportunity for a driver to be able to record their business income and expenses whilst on the go. We also wanted to assist the driver in being able to budget for any impending tax and national insurance bill.
This idea was born in 2010 and here we are now facing what HMRC are referring to as digital taxation. Did we have good foresight, or were we pre-empting what was likely to be around the corner.
Whilst it is early days in the delivery from HMRC as to what this will mean, there is a belief that tax and nic for the self-employed will have to be paid probably on a quarterly basis and also there could be the need to deliver information of earnings (profit) on a more regular basis.

So our message is simply, be prepared and get ready!
Many of our drivers use the system as it was designed, and either complete in real time i.e. on a daily basis or regularly update their records so that they are never more than a few weeks or a month behind.
Conversely we also have users who actually play ‘catch up’ after the year in question, whilst not ideal, this still allows them to provide the information in time for the submission of their self-assessment return without receiving any penalties. The down side of this, is really the fact that the final tax/nic liability is not known until almost at the filing date which is 31 January following each year end fifth of April. Any liabilities have to be paid by 31 January also.
As long as you have budgeted, this is not really a problem, but for many, it is the first time that they actually see what their tax liability is. As discussed in previous blogs we also have the ‘payment on account’ to consider which when it is applicable, can catch people by surprise.
With digital tax around the corner we at Taximanager feel that this is an ideal opportunity for drivers to change their way of thinking. Record your information in real time and get into the habit of keeping your information up to date as this will be a mandatory process to be done in future, especially if HMRC are wanting payment of tax liabilities on a quarterly basis.
Preparation is the key, all we can do at Taximanager is try to stress that there is a very important change around the corner. This is your opportunity to get into the habit of recording your information so that when it becomes a  mandatory requirement in future, you will be better prepared for the digital tax system.
We will inevitably need to make some changes to our system in due course once we are fully aware of our clients needs.
Kind regards
Paul Taylor
PBT Tax Solutions