Making Tax Digital – Are You Ready?
You’re probably beginning to read and hear the phrase Making Tax Digital more and more.
In a nutshell from 1st April 2019 HMRC will be rolling out its Making Tax Digital (MTD) initiative. Announced in the Spring 2015 Budget, HMRC is replacing the old tax system for businesses and individuals with digital tax accounts. Everything will be completed online and those affected will be expected to report their accounts and business transactions quarterly.
HMRC will be rolling out MTD in three stages:
The first organisations to be affected will be larger, VAT registered businesses with a taxable turnover above £85,000. These will be expected to comply from 1 April 2019. There are some exceptions, such as trusts and not-for-profit organisations and more information can be found on HMRC’s website about who and for how long they are exempt.
The second phase of organisations to be affected are limited companies which are not VAT registered, and they will need to comply from 1 April 2020.
Finally smaller businesses, sole traders, freelancers and even landlords will need to submit their tax returns quarterly and online from 1 April 2021.
HMRC will be contacting by letter all those involved, but only when it affects them. So don’t expect to hear until much nearer the time. However, you can find out more information at https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital if you want to prepare in advance.
Individuals and businesses will need to be more organised, but for those VAT registered companies who already submit their returns quarterly, there should be little change.
For those using an accountant manage their accounts, there may be a small increase in time costs but submitting information quarterly should make the final submission easier and faster. For those organisations and sole traders that don’t use accountants, they will need to submit their accounts through an approved software package such as Sage, Quickbooks or Zero costing approximately £10-15 per month.
Only time will tell how smoothly the transition takes place but hopefully in the long term, HMRC will be right and Making Tax Digital will ensure the whole system is more effective, efficient and easier for taxpayers to get their tax right!
If you’re worried about Making Tax Digital, please contact us and we can help. At Lewis & Co we have been providing support to businesses in Kent for nearly three decades. Please contact 01892 513515 or email firstname.lastname@example.org
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