NEWS & UPDATES IN THE ACCOUNTING WORLD
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WHAT IS MAKING TAX DIGITAL FOR INCOME TAX?
Making Tax Digital for Income Tax Self Assessment (Making Tax Digital for Income Tax, or MTD for ITSA) is new legislation that will come into effect on 6 April 2024.
MTD for Income Tax will require you to use software for your accounting too.
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MTD for Income Tax will be introduced for sole traders & landlords with gross income over £10,000.
All businesses in existence immediately before 6 April 2023 will have to follow the new legislation, regardless of their accounting period end.
Impact of Employer Tax Increases on the Retail Sector
The British Retail Consortium (BRC) has raised alarms about potential job losses in the retail industry following the government's decision to raise employer National Insurance contributions (NICs) and the national minimum wage by 6.7% in the October 2024 budget. These measures, aimed at funding infrastructure and public services, are projected to add £5 billion to retailers' labor costs in 2025. The BRC estimates that up to 160,000 part-time retail jobs could be at risk over the next three years as a result. The increased costs associated with hiring part-time workers, due to the lowered NICs threshold, may lead retailers to reduce their workforce or increase prices, impacting both employment and consumer costs.
Adoption of Artificial Intelligence in Accounting
A recent study by Sage, in collaboration with the think tank Demos, highlights the transformative potential of artificial intelligence (AI) in the UK accounting sector. The research suggests that widespread AI adoption could boost the nation's economy by £2 billion and create nearly 20,000 jobs. AI-enabled accounting practices are expected to hire ten times more employees and anticipate tripling their revenue growth compared to non-AI users. The study also indicates that AI adoption could enhance UK exports by £238 million, with 61% of accountants believing that AI will create more opportunities than risks. To fully realize these benefits, the report recommends government initiatives such as investing in AI skills, extending capital investment incentives to digital technology, introducing e-invoicing to support tax digitalization, and establishing a supportive regulatory framework for AI use in accounting.
