“ARE ACCA PROFESSIONALS PREPARED FOR THE SHIFT IN DIGITAL TAX ENVIRONMENT OF THE UK?”
Are you aware of the digital advancements in the UK’s tax landscape? With innovation and advancements in every sector, the tax system of the UK has also witnessed a great shift in terms of digital enhancements. The tax systems are no longer following the traditional taxation practices; rather, for accuracy, efficiency, and transparency, it has started incorporating digital tools and techniques with updated tax regulations.
In such a scenario, it has become vital for ACCA professionals and students to stay well aware of digital tax and learn skills to incorporate it into their professional practices.
If you are willing to build a successful career in taxation in the UK, know that staying updated with changes in trends and regulations, along with proficiency in digital tax practices, is essential to survive in this complex sector. Accountants and finance professionals building careers as tax consultants with proficiency in digital tax practices are highly valued by the big employers and clients.
Want to know more about digitalization in the tax landscape of the UK and what skills are needed to stay competent in the job market? This blog will help you find answers to all your queries and confusions.
THE DIGITAL SHIFT IN UK TAXATION:
The tax system of the UK has undergone a significant transformation over the years; digitalization in tax practices is no longer an option but a mandatory practice. The HMRC’s flagship programme, Making Tax Digital (MTD), has made it a mandatory and evolving requirement of the sector. Therefore, it has become a crucial skill to survive in the tax world of the UK; if you are willing to begin a career as a tax consultant or in advisory roles, consider it a very crucial requirement for your career-readiness and professional growth.
KEY COMPONENTS OF MTD:
MTD (Making Tax Digital) is an initiative taken by HMRC to modernise the UK’s tax system and introduce digital tax practices. According to MTD, organizations and individuals are required to fulfill the following requirements:
- Maintain digital tax records
- Leverage compatible software/tools to submit tax data
- Quarterly updates for VAT, Corporation Tax, and Income Tax should be filed.
1: MTD FOR VAT:
MTD for VAT-registered businesses over the threshold of £85,000 has been mandated since April 2019. Whereas, from April 2022, all VAT-registered businesses must comply with MTD, regardless of the size, weightage, or type of the business.
2: MTD FOR ITSA:
ITSA stands for Income Tax Self-Assessments, and MTD will become mandatory for self-employed individuals as well as landlords with income over £50,000 from April 2026. This will be further extended to individuals earning over £30,000 from April 2027.
3: MTD FOR CORPORATION TAX:
The MTD threshold for corporation tax is yet to be decided; it is in the consultation process. However, the implication of this is expected to be after 2027.
WHY ACCA STUDENTS MUST PAY ATTENTION:
Here are the key reasons why ACCA students must pay attention to the digital tax practices and skills:
1: RELEVANCE TO EXAM SYLLABI:
You all must be aware of the fact that ACCA is highly focused on keeping its curriculum updated with relevant industry trends and skills. Therefore, the syllabus includes modules that equip you with an understanding and skills for digital tax practices. These modules include Taxation (TX), ACCA P6, also known as Advanced Taxation (ATX), and Strategic Business Leadership (SBL). To achieve success in these modules of ACCA in the UK, a good understanding of the role of technology in automation, advisory, and compliance is very important.
2: DIGITAL SKILLS ARE ESSENTIAL:
ACCA students must pay attention to digital tax skills as employers expect skilled finance professionals to be efficient with digital tools, techniques, and software like cloud accounting platforms, digital record-keeping requirements, as well as ethics and governance of using tax technology. Just cramming over the principles and theoretical facts is not enough for ACCA students; rather, they should focus on equipping themselves with technical skills as well.
3: CLIENT ADVISORY OPPORTUNITIES:
Equipping yourself with these skills can enhance your work opportunities in client advisory and tax consultancy as well. It enables students to also advise clients on transitioning to MTD-compliant systems, avoiding penalties, ensuring timely filings, and digital recordkeeping.
KEY STEPS ACCA STUDENTS SHOULD TAKE:
Do you want to know what steps you can take next to make your taxation journey in the UK worth it? Here are the key steps to be proficient in the digital tax system in the UK:
- Stay current with MYD rollouts
- Gain relevant hands-on practical work experience
- Adapt to advancements in the digitalization of tax in the UK
- Stay aware of data protection and cybersecurity.
CONCLUSION:
The digitalization of tax in the UK has become a mandatory practice, and these skills are highly valued in finance professionals. The demand for these digital tax skills is expected to grow in the coming years. Therefore, ACCA students who are aiming to build careers in taxation are advised to equip themselves with the relevant skills to survive in the modern digitalized tax systems of the UK.
Frequently Asked Questions (FAQs)
Q1: Which taxes are affected by MTD in the UK?
Answer: Taxes that are currently affected by MTD in the UK include VAT, ITSA (Income tax), and Corporation tax.
Q2: How does this change in tax systems affect ACCA students in the UK?
Answer: It affects ACCA students as MTD is changing the tax practices from its calculation to its reporting and management. To stay relevant in the industry, ACCA students are required to be proficient in using digital tax tools for tax reporting, comply with MTD deadlines and requirements, etc.
