WHAT’S GOING ON?
Two years ago, it was proposed that Her Majesty’s Revenue and Customs (HMRC) was to move to a fully digital based tax system. By the end of the 2020/21 tax year the way that businesses, including landlords, currently interact and liaise with HMRC will change beyond all recognition. This initiative is known as “Making Tax Digital” (or MTD).
Under current proposals the introduction of MTD will be phased in, as follows:
- 2018/19 Self-employed and unincorporated landlords with net turnover above £85,000 will be required to record their business related transactions digitally using MTD-compliant software and to update HMRC on a quarterly basis for income tax and National Insurance obligations.
- 2019/20 All VAT registered businesses, whether they are filing quarterly updates or not will be required to file VAT returns using MTD compliant software. In addition, self-employed and unincorporated landlords with net turnover below £85,000 and above £10,000 will be required to record their business-related transactions digitally using MTD-compliant software and to update HMRC on a quarterly basis for income tax and National Insurance obligations.
- 2020/21 Companies (including incorporated landlords) and complex partnerships will be required to record their business related transactions digitally using MTD-compliant software and to update HMRC on a quarterly basis for income tax and National Insurance obligations.
What does it mean for me and my business?
As mentioned above, all businesses will be required to become compliant with MTD, but not at the same time. You will be required to move into the MTD regime (on-board) from the start of your accounting period commencing in one of tax year listed above. The timing of your migration will be determined by the nature of your business i.e. self-employed, limited company and the level of your turnover (as set out above).
How Does this benefit me?
MTD might seem like a arduous task but it is actually a positive move for everyone. Moving to cloud-based, compliant software will have huge befits to you and your business. Here are just a few:
- Improved quality of record keeping
- Reduced likelihood of error (due to less manual entry)
- More efficient management of business affairs
- Less time gathering and inputting data
To find out more please visit our MTD page
MTD is happening and in time everyone will have to adjust their business practices. It makes absolute sense to become compliant as soon as possible, get used to your new system, iron out any teething problems and get ahead of everyone else. We are partnered with Xero, Quickbooks and Sage and a ready to help you make the shift as soon as possible. Please don’t hesitate to get in touch with the office to discuss any queries and get the ball rolling.