Open banking, MTD and The Personal Tax Account – what does 2018 have in store for us?

Open Banking
A quiet little deadline passed in January with the introduction of open banking. It is a series of new rules meaning that banks must let you share your financial info with other authorised providers. It was originally called for by financial industry watchdogs and its proper name is ‘The Second Payment Services Directive’ (PSD2).
All UK-regulated banks will have to let you share your financial data, like regular payments, companies you use and stuff like your spending habits. (bank and credit card statements). Authorised providers are people like apps, or other banks or accountants and bookkeeping software for that matter.
The idea behind these changes is that they’ll bring more competition and innovation to financial services which, in turn, it’s hoped will lead to more and better products to help you manage your money. Up until now, as I said, you’ve been able to let third-party providers like finance apps have access to your bank account details and numbers. However, since 13 Jan 2018, you are properly protected when you do.
Great news for accountants and our Making Tax Digital apps and systems that we are struggling to introduce to clients. If you have a bank account with any of the big banks, you’ve probably received a letter or email in recent weeks sharing this and asking you to read your new terms and conditions.
So, like it or not open banking is here. It can be seen as a way to increase competition, going beyond just banks and helping all of us tap into the really useful stuff. Let’s face it, the use of apps has transformed our industry and strangely enough the accounting profession is still running to keep up. In a good way, it will hand control of this data from the bank over to the consumer, allowing a personal customer or small business to share their data securely, at last. The aim is genuinely to simplify the system.

MTD (Making Tax Digital)
You didn’t think I was going to let you get away without the Making Tax Digital plug. So once again here are the ground rules, and remember, we are the test practice rolling out the MTD pilot, so you are getting it from the “horse’s mouth”.
Your books and records will be reported to the HMRC on a quarterly basis. There will be five reporting points, four quarterly and one final return. This means that you need to speak to your accountant to see if they are bringing in new software to deal with this or to make sure they tell you how they will be rolling it out to you the client.
For example, anyone who looks at the new Drivertax website will see that we now have a mobile books and records recorder for your phone, downloadable sheets, a simple pre-set spreadsheet so that people can get used to simple bookkeeping. Our expense photo app will be rolled out in the next few months. I am sure that most accountants are dealing with this as well helping and training clients to deal with this. Most of these processes are simple but people need to get to know them. Be prepared.
In reality, your requirements and costs will very much be based on your own feelings about technology, and everyone is different but once again remember how people went from radios to XDAs or mobiles, iPad and apps, not fun but in the ground transport industry we all got there in the end!
If you absolutely cannot cope in any way, for most people their accountant will take it all over from start to finish but there will, of course, be an increased cost. We do not have unlimited resources.

The Personal Tax Account
Did you know that you can already find out loads about yourself online because the HMRC are centralising your information and updating for you? Good news for most of us, bad news for anyone who wants to be under the financial radar. Anyway, according the taxman;

“HMRC will automatically use the information it holds, along with new data from third parties, to populate the digital accounts,”

This means that even if you use an accountant all taxpayers will have their own online account, which will show in detail all your taxes; national insurance, income tax, PAYE and pension-related info. It does mean that you can keep up to date with the NI position, make sure that your state pension is in order and supply the right income details to your accountant as well as checking what they have done and when.
That allows us to manage your account whilst you can still see it yourself. It’ll also be possible to link the new types of bookkeeping software the new digital account.
Next month we will look in detail at both the smaller tax changes for self-employed people in the trade and we will be looking at the oncoming rush of tribunals based on driver status, all of which will have a long-term effect on both drivers and operators, for good and bad.
It seems that potentially the wishes of the few will impact on the good of the many if these don’t go right.

Watch this space.

Drive Safe

Gary