A Look Into the Future: Will Business Britain Be Cashless?

The UK is rapidly embracing digital payments, with the use of cash declining year by year. As businesses and consumers move toward more efficient, tech-savvy solutions, the question arises: Will Britain soon become a fully cashless society? And what does this mean for businesses navigating the future?

At Black and White Accounting, we are always looking ahead to ensure our clients stay ahead of the curve—so let’s dive into the future of a cashless Britain, the government’s role in this shift, and the challenges businesses will face in this new landscape.

The Digital Payment Revolution

We’re already seeing a surge in digital payment options—from contactless cards to mobile wallets like Apple Pay, Google Pay, and fintech innovations like Revolut and Monzo. In 2020, cash payments accounted for just 17% of all transactions, a significant drop from previous years, and the pandemic only accelerated this trend. By 2023 this had fallen to 12%.

The appeal of going cashless is obvious:

1. Convenience: Digital transactions are faster and more convenient for both businesses and consumers. No need to count change, and payments can be made anywhere, anytime;
2. Security: Cash can be lost or stolen, but digital transactions are traceable, offering an added layer of protection for businesses; and
3. Efficiency: For businesses, going cashless means fewer cash-handling tasks and lower overheads on security and banking fees.

However, as the country leans into this digital payment revolution, it’s also raising important questions about what a cashless society could mean for businesses—and for the government’s ability to tax everything it wants to.

Making Tax Digital (MTD): The Government’s Response

As the economy becomes more digital, the UK government has responded with initiatives like Making Tax Digital (MTD). Launched in 2019, MTD is the government’s effort to bring the UK tax system into the 21st century. But why the rush?

MTD aims to:

1. Increase Tax Accuracy: By requiring businesses to submit tax data digitally, HMRC can reduce errors, improve efficiency, and close the tax gap—estimated to be worth billions of pounds due to underreporting or non-compliance;
2. Improve Transparency: With more real-time data on business income and expenses, HMRC can get a clearer picture of the UK’s financial landscape, making it easier to track what’s owed; and
3. Modernize the Tax System: As businesses go digital, so must the government. MTD is part of a broader push to modernize the entire tax system, ensuring it’s fit for purpose in an increasingly cashless economy.

While MTD is a step toward streamlining tax compliance, it also signals the government’s recognition that it must adapt to a world where traditional cash transactions are becoming rare. The UK is a long way behind countries like Italy and Portugal (formerly the PIGS of Europe) where the government have gone so far that a business owner can get arrested if they do not provide a receipt for a sale.

The Rise of Cryptocurrency: A New Challenge for the Taxman

While digital payments are becoming the norm, another trend poses a unique challenge for both businesses and the government: the rise of cryptocurrency. Bitcoin, Ethereum, and other digital currencies have seen meteoric growth in recent years, and as more businesses start accepting them as payment, they introduce a new complexity to the tax landscape.

Cryptocurrencies offer several advantages to businesses, including:

1. Global Reach: Crypto allows businesses to accept payments from anywhere in the world without the need for intermediaries or excessive fees;
2. Faster Transactions: Unlike traditional bank transfers, which can take days to process, cryptocurrency transactions are often completed in minutes; and
3. Lower Costs: With fewer transaction fees, crypto can offer cost savings for businesses—particularly those with international clients.

But for the government, crypto creates a significant tax headache. Cryptocurrencies operate on decentralized, often anonymous networks, making it difficult for tax authorities to track transactions. While HMRC has begun imposing capital gains taxes on crypto profits, the decentralized nature of the currency makes it hard to enforce taxation on every transaction.

As crypto becomes more widely adopted, it could further complicate the government’s efforts to tax everything they want. Businesses that deal in crypto will need to stay on top of evolving regulations to avoid falling foul of HMRC’s rules.

What a Cashless Future Could Look Like for Businesses

While the rise of digital payments and cryptocurrencies might seem like an exciting frontier, it’s important for businesses to prepare for the challenges that come with it. Here’s what you need to consider as Britain moves further toward a cashless future:

1. Adapting Your Payment Systems
   If you’re not already set up to accept digital payments, now is the time to make the switch. Investing in contactless payment systems, mobile wallet integrations, and even cryptocurrency payment gateways will ensure your business stays competitive and accessible to tech-savvy customers.
2. Complying with Digital Tax Regulations
   With Making Tax Digital in full swing, you’ll need to ensure your accounting systems are compatible with HMRC’s digital requirements. This means using MTD-compliant software to keep track of your income and expenses and submitting tax returns electronically.
3. Preparing for Crypto Taxation
   If your business accepts or deals in cryptocurrency, understanding your tax obligations is crucial. HMRC treats cryptocurrency as property, meaning you’ll need to report any gains or losses when filing taxes. Staying on top of crypto tax rules can help you avoid penalties down the line.
4. Navigating Cybersecurity Risks
   With more digital payments comes the increased risk of cyberattacks. Ensuring your business has robust cybersecurity measures in place to protect customer data and transactions will be essential in a cashless world. This includes securing your payment systems, training staff on cybersecurity best practices, and regularly auditing your IT infrastructure.

The Future is Digital—Is Your Business Ready?

As Britain marches toward a cashless future, businesses must be prepared to adapt. Whether it’s ensuring your payment systems are up to date, staying compliant with Making Tax Digital, or understanding the tax implications of cryptocurrency, now is the time to future-proof your operations. The transition to a cashless society might seem daunting, but with the right support and planning, it can open up exciting opportunities for growth and innovation.

At Black and White Accounting, we’re committed to helping businesses navigate the evolving financial landscape. Whether you need advice on digital tax compliance, crypto taxation, or preparing your business for a cashless future, we’re here to guide you every step of the way.

Let’s Talk: Is your business ready for the cashless future? Get in touch with our expert team today to learn how we can help you stay ahead of the curve and ensure you’re ready for what’s next.