Making Tax Digital
Making Tax Digital (MTD) is the HMRC initiative to get everyone reporting digitally. The four foundations are:
HMRC will use information from third parties, such as employers, banks and other government departments so that individuals will not have to supply information themselves.
HMRC will obtain and process information affecting tax as close to real time as possible, so that individuals and businesses no longer have to wait until after the end of the tax year to know how much tax they have to pay.
Taxpayers can now see a comprehensive picture in their digital account with all their tax information in one place.
Customers (and agents) will be able to interact with HMRC digitally at a time to suit them.
New Deadlines for MTD for VAT
2019 saw the first roll out of this process with MTD for VAT. The two key requirements for this are:
- To keep transaction-level records digitally; and
- to use compatible software to submit VAT returns to HMRC.
These requirements were imposed on businesses that had turnover over the Vat limit which was £85,000 but is now to be extended to those who are voluntarily registered for VAT from April 2022.
What should you do now to prepare for Making Tax Digital?
Our recommendation is that you get ready early. The best time to change your systems is at your year end as it gives a clean break between years. Many of you will have a 31 March or 5 April year end and you really do not want to wait and deal with these changes on top on having to send live data to HMRC when you are still learning the system. Last time we recommended out clients adopt the new systems 12 months early so that they were all ready for MTD in advance. The feedback we got was overwhelmingly positive with many saying they were grateful to have this run in and practise period.
So it’s not too early to start to get ready as the deadline is only 18 months away.
Making Tax Digital for Income Tax
From 6 April 2023 ALL self employed businesses and landlords with annual business or property income above £10,000 will need to follow new Making Tax Digital rules from their next accounting period starting on or after 6 April 2023.
This will represent a huge change for most businesses across the UK who currently have no formal records at all and get everything sorted once a year at the year end.
Don’t leave it late to decide how you will comply with the new requirements. We are here to help.
How Maynard Johns can help …
If your current bookkeeping method does not allow you to submit directly to HMRC through compatible software you need to start preparing.
If you think that you do not have the time to carry out this yourself, we can offer an all-inclusive service that will take the worry off your shoulders. We will carry out all of your bookkeeping in-house and, once you have approved the figures, submit your VAT to HMRC on your behalf with our fully compatible in-house software.
Alternatively, if you currently have a manual bookkeeping system we can offer bespoke set-up on Xero, Sage or FreeAgent, fully customised to suit your business and train you in how to use it through our sister company Cirrusli Limited.
Cirrusli has already trained 100’s of business cross the UK in using accounting software and we are very lucky to have them here in North Devon tooter their expertise in training and support.
If you currently have a computerised bookkeeping system but are unsure if it is compatible with MTD, contact us for assistance.
Visit us in our Bideford office or give us a call!
Telephone 01237 472071