Making Tax Digital
Making Tax Digital (MTD) is being introduced with the intention off bring the UK tax system into the 21st century by providing businesses with an up to date modern and streamlined system off keeping tax records and providing information to HM Revenue & Customs (HMRC).
The original timetable for rolling out Making Tax Digital has been revised to ensure that all small businesses have more time to prepare for the changes.
The first to be affected will be small businesses and individuals with a turnover above the VAT threshold of £85,000, who will be required to keep digital records for VAT purposes from April 2019.
Why is HMRC introducing this?
Making Tax Digital is intended to provide you with the tools to help you to keep track of how much tax you owe – or how much you are due back – continually throughout the financial year.
- Accurate Tax Information
Replacing paper-based bookkeeping with digital tax accounts system which will let you check the information HMRC holds about you is 100% correct, providing HMRC with updates to your circumstances as they happen.
- Reduced Errors
Making Tax Digital’s new reporting function will allow HMRC to look at your financial/tax information almost immediately, reducing any potential human error.
- Easier to understand
HMRC anticipates taxpayers will better understand how much tax is owed within the digital tax account – much like online banking.
When will this start affecting me?
On 13th July 2017, HMRC announced that it would be amending the original timeline for rolling out Making Tax Digital to give businesses more time to prepare for the changes once it completes a pilot scheme that began in April 2017.
Making Tax Digital is to be introduced in 4 key stages which are:
- Late 2017 – HMRC begins small-scale private testing of Making Tax Digital;
- Spring 2018 – HMRC will start a wider, live pilot of Making Tax Digital;
- Spring 2019– Only businesses with a turnover above the VAT threshold (currently £85,000); will need to keep digital records but only for VAT purposes initially;
- From April 2020 a further roll out of Making Tax Digital for all other businesses. All other business will have to keep digital records, and to update HMRC quarterly, for other taxes. This means that the pace at which businesses and landlords with a turnover below the VAT threshold will be slowed, allowing these smaller businesses to adapt over a longer period of time.
How we can help
ABS Accountancy will work with you to ensure that you are fully prepared for Making Tax Digital, and to understand your obligations. As a small business owner myself, I fully understand what is required to manage your business records digitally.
We’ve spent a great deal of time; training and money developing the right support services to help small businesses through this period of change.
HMRC will not be offering any software to help you report quarterly, so we have partnered up with Xero & Quickbooks to help make managing your account records easy, wherever you are.
If you would like us to help you through these changes then call us today on 01298 808497 or contact us online here to arrange a free initial consultation.