it’s time to plan for more MAKING TAX DIGITAL:
UK tax legislation will soon see a major change to how accounting records are kept and managed. Whilst this is moving accounting to the 21st century, there is nothing to fear. We work with all the major digital cloud-based accounting systems and we can guide businesses through the important changes and help you start implementing the necessary changes towards the digital shift.
WHAT iS ‘MAKING TAX DIGITAL:
Making Tax Digital (MTD) for VAT started in April 2019, requiring VAT registered businesses above the current turnover threshold of £85k, to move away from manual or spreadsheet-based recording systems to submit VAT data to HMRC. Instead, returns are to be submitted digitally. It is one of the largest and most significant changes to tax legislation we have seen for decades and will most certainly have a significant impact across the accounting industry. For businesses, the aim of MTD is to simplify ‘getting tax right’. Whilst that sounds perfect, in reality, there will be a lot of new processes and procedures to follow as HMRC progresses its MTD rollout.
what are THE DIGITALISED TAXES:
VAT: All VAT-registered businesses, regardless of turnover, will need to be digital. Those above the current threshold (£85,000) are already required to follow HMRC MTD rules. In April 2022, VAT-registered businesses with a taxable turnover below the threshold will also be required to be digital.
INCOME TAX SELF-ASSESSMENT: April 2024 is the digital live date for self-employed businesses and landlords with annual business or property income above £10,000.
CORPORATION TAX: Digital will not be mandatory for Corporation Tax for some time (likely between 2026 and 2030), the government, however, is giving businesses an opportunity to take part in a pilot in advance.
KEY DATES:
April 2019 – Mandatory for all businesses with a turnover of £85,000 and above to submit VAT returns digitally from this date.
April 2021 – Third-party filing for non-VAT registered businesses came to an end, with the Business Tax Account becoming the designated channel.
April 2021 – HMRC gave a period of time (they have called it the soft-landing period) to help businesses put digital links between VAT figures and the original source transactions. This period has now ended.
September 2021 – HMRC announce that MTD for Income Tax will now be introduced in April 2024, giving businesses an extra year to prepare for digitalisation.
how to prepare:
This is the introduction of a completely new process of filing taxes and will bring about many challenges and obstacles for businesses. We will help you overcome those. We have, however, time to think about:
- The best way to transition to digitalising all records (including land and property income).
- Choosing the digital cloud-based system most suitable for your requirements.
- Reorganising timelines to meet quarterly filing requirements rather than once per year.
- Incorporating income into the MTD submission process including pension relief contributions, dividends, bank interest and any pensions received.
If you are a VAT-registered business, or growing to be VAT-registered, self-employed, running a partnership or receiving land or property income, we are here to help you work out MTD, comply with the mandates and rules and prepare for the road ahead. It is a huge task and change, but we are here to help! Contact us