Making Tax Digital (MTD) is the biggest change to tax admin in 20 years.
What do you need to know?
Paper records aren’t enough
Whether you’re self-employed, in a partnership or a limited company almost all businesses and landlords will have to keep digital records of all accounts.
HMRC will require quarterly reports, directly from your accounting software, within one month of the end of each quarter.
You will need to consider cloud technology to link to HMRC’s systems. If you don’t know where to start, our cloud accounting specialists can take you through a cloud consultation. We would review your current software and reporting processes and determine exactly what support your business needs to be MTD ready.
When does it start?
From April 2019, all business registered for VAT will be required to keep digital records and file their VAT returns using MTD compliant software. Pilots of MTD for VAT are expected to start in April 2018 as the current return process won’t meet the new requirements.
All those who complete self-assessment tax returns – self-employed, partnerships, trusts and landlords – don’t have a set date for mandatory digital tax reporting.
It’s likely to be 2020 or later, however pilots for small scale digital tax reports were started in April 2017 are likely to be rolled out between now and 2020.
Corporation Tax (limited companies)
The timings for MTD for corporation tax have yet to be confirmed but it will not become mandatory before April 2020.
What are the exemptions?
Under the new legislation, there are a number of people and business who are exempt from submitting digital tax returns. These reasons range from religious, to disability and location but their reach is further than that.
VAT registered business who turnover less than the VAT threshold i.e. those who have registered voluntarily, are exempt from the initial MTD changes. This doesn’t mean that they won’t ever have to file digitally, it just means that they don’t have the same imminent deadline.
When MTD for income tax also becomes mandatory, there will be an exemption for businesses and landlords with a very small turnover; the level of this has not been set.
What do I need to do now?
- Know your dates.
- Review your software – is it HMRC ready.
- If you need to move to the cloud, speak with an advisor like us about the best package for you.
- Review your processes, are you ready for quarterly reporting.
- Ensure you meet deadlines to avoid penalties.
Get In Touch
At elev8, we’re here to help with everything from small questions to handling your cloud accounting for you. For more information, please contact us below and our expert team will be on hand to help.