Making Tax Digital is the government’s way of getting businesses to keep digital records and report them in real time.
What this means is that you will no longer be able to keep manual records and just submit them with your tax return at the end of the year.
Records will need to be kept digitally using accounts software and quarterly submissions will need to be made to HMRC as well as your annual tax return.
Who Does Making Tax Digital affect?
Making Tax Digital will eventually be compulsory for every small business and landlords. We’ve set out the timetable below.
Benefits of Making Tax Digital
- Keeping on top of your records actually makes it easier, by doing your books monthly rather than yearly it becomes much less of a chore
- Doing your accounts regularly will give you an idea of how well (or how badly) your business is performing and give you a chance to plan and save for the amount of tax you’ll have to pay.
- Your business tax account (for Limited Companies or Partnerships) or personal tax account (for sole traders) which will be available on the HMRC website will give you an overview of how much tax you have to pay.
- Making Tax Digital is designed to bring all of the different taxes in line with each other. So if you have a PAYE, VAT and Self Assessment account, these will all be shown on your business or personal tax account.
- If you’re already an established business it is likely that you already do your books monthly on some kind of software so this isn’t going to affect you as much as others.
Problems with Making Tax Digital
- You may be in a business where you don’t generally use computers very much (for instance if you’re a hands on trade such as plumbing or hairdressing) and you may not even own a computer. We have a solution to this which is our dot-to-dot all inclusive accountancy package, which is explained below.
- There will definitely be some sort of cost involved – if you don’t already, you will need to either invest in some computer hardware and software or outsource your book-keeping to someone else.
Timetable for Making Tax Digital
The current timetable for implementation of Making Tax Digital (correct at the moment but the government keep changing their mind) is: -
April 2019 - All businesses with a turnover over the current VAT threshold (£85,000) will have to comply with Making Tax Digital. They will only need to use Making Tax Digital to report VAT returns initially. They can report on other taxes voluntarily. Smaller businesses can opt in voluntarily.
April 2020 - All businesses will have to report on all taxes under Making Tax Digital.
How Can We Help?
Our dot-to-dot fully inclusive accountancy package includes for all of your book-keeping and we will submit your Making Tax Digital submissions as part of this. Simply send us your paper information in our freepost envelopes each month and we will take care of everything else. For more details visit our “what’s included” page on the website or give us a call on 0333 305 8772.
1 March 2018