Making Tax Digital
Making Tax Digital (MTD) is part of HMRC’s plan to transform the current tax system into one of the most digitally advanced tax administrations in the world.
The vision is that paper tax returns will be abolished and replaced by digital records that will enable taxpayers to update HMRC quarterly (or more frequently if desired) on their tax position. This will give the tax-payer a ‘real-time’ picture of their tax liabilities and enable them to plan.
The phased roll-out starts with a pilot of 400,000 people in April 2017.
Businesses, self-employed people and landlords will be required to start using the new digital service from:
- April 2018 if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold
- April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
- April 2019 if they are registered for and pay VAT
- from April 2020 if they pay Corporation Tax (CT)
Businesses, self-employed people and landlords with turnovers under £10,000 are exempt from these requirements.
Those in employment who have secondary income of more than £10,000 per year through self-employment or property will also be required to use the digital service.
(* Above thresholds as per HMRC announcement 8/3/2017. Please refer to HMRC website for the latest announcements)
Making Tax Digital presents challenges and opportunities for the small business owner.
It will be essential to record information on digital applications or accounting software packages in order to transmit the information to HMRC through your digital tax account. It is hoped by accounting professionals that there will be a way to submit from spreadsheets but that is currently unclear as is a lot of the fine detail of how this will operate. The one year pilot scheme will be challenging.
The idea is that we will not have to tell HMRC anything that they don’t already know like interest received on our bank accounts or income received from PAYE or benefits or pensions. All we have to do is provide the missing self-employment information on a regular basis.
Initially there will be a soft-landing stage where we all get used to the new system but after a while those that do not file on a quarterly basis will receive fines for non-compliance.
Businesses that have previously managed on paper systems that get delivered to their accountants once a year are going to have to make changes that will lead to increased costs.
FC Bookkeeping Solutions can help you to keep your costs as low as possible, find the right solution for you and help you to become compliant and more efficient as a result.
The following are a few examples of the software that we are skilled in using and setting up:
Xero, Sage One, QuickBooks, Kashflow, Free Agent, 1Tap.
Cloud-based solutions are our specialist subject and we can work with any package required even if it not listed above.
Whether your requirement is just for an initial set up process that leaves you to manage the accounts yourselves afterwards or whether you require more regular assistance, you will find your solution with us.
We match the needs of the business to the software on offer in today’s market.
We cover all sorts of things; simple spreadsheet options; linking of Paypal and bank accounts to accounting software; scanning and uploading receipts from your telephone to a package that analyses data for you; invoicing by email; automatic statement reminders etc. Technology is changing so fast these days you would be surprised what you can do and how simple you can make things for yourself.
It costs absolutely nothing to come and have a conversation about your requirements with us to see what we can do to help you.