How “open banking enhancements” could transform your business finances

HM Revenue & Customs (HMRC) has rolled out a new initiative known as “open banking enhancements,” designed to make tax management more efficient for businesses.

This scheme allows you to break down your tax payments into manageable instalments, alleviating the financial strain of lump-sum outgoings.

Using their scheduling service, you can organise your payments to HMRC early whilst retaining the cash in your accounts for continued use.

Taxes eligible for scheduled payments

The taxes you can currently schedule include:

  • VAT
  • Pay As You Earn (PAYE)
  • PAYE settlement agreements
  • PAYE late payment or filing penalties
  • Class 1A National Insurance Contributions (NICs)

Additionally, HMRC plans to extend this service to:

  • Capital Gains Tax
  • Self-Assessment
  • Simple Assessment
  • Corporation Tax
  • Soft drinks industry levy
  • Plastic Packaging Tax

Why should you opt for scheduled tax payments?

  • Ease of administration: Automating your payments to HMRC eliminates the need to remember deadlines or manually handle transactions.
  • Financial planning: Knowing exactly when payments will be deducted from your account aids in effective resource allocation and cash flow management.
  • Regulatory compliance: Automated payments reduce the risk of incurring fines due to late payments, helping you maintain a clean financial record.
  • Eligibility: If you have a UK bank account, you’re likely eligible to set up a Direct Debit with HMRC.

Setting up Direct Debit payments

To establish a Direct Debit for your taxes, simply log into your HMRC account and follow the on-screen instructions in the relevant tax section.

Once confirmed, this will automate future payments, easing your financial responsibilities.

Consulting a qualified accountant can guide you through the process of setting up scheduled payments within the scope of these new “open banking enhancements.”

A tax expert can simplify your tax obligations and allow you to focus on your core business activities.

By leveraging HMRC’s Direct Debit and scheduling services, you can enjoy benefits such as improved cash flow, reduced administrative burden, and ensured compliance, allowing you to concentrate on successfully running your business.

For tailored advice on making your tax management more efficient, feel free to reach out to our accounting team.

Posted in blog, Business, Financial Planning.