The way businesses file information and update their tax accounts is changing. Here is what you need to know.
Last July, the Government announced that Making Tax Digital (MTD) will be commencing in April 2019. This change will affect many business owners, landlords and self-employed taxpayers, with penalties for those who do not comply.
What is Making Tax Digital?
MTD is an initiative set out by the Government to update the current HMRC tax system, whereby businesses’ tax information will be held in their digital accounts, keeping records on a quarterly basis.
The aim is to make the tax system fully digital.
Originally intended to be introduced from April 2018, the Government delayed MTD’s introduction until April 2019 to ensure businesses have adequate time to adjust to the changes. These digital records will only be required for VAT purposes, with the eventual aim of abolishing the annual tax return.
The start dates for MTD are staggered, depending on the turnover of each business:
- Only businesses above the VAT threshold, which is currently at £85,000, will need to start planning for Digital Tax now.
- Businesses below the VAT threshold will most likely need to comply by 2020, although this is not yet confirmed.
- No business will need to keep digital records for other taxes until at least April 2020.
What are the benefits of MTD?
The Government have planned Making Tax Digital to “make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions.”
Here are the main benefits of Digital Tax:
- More efficient management of tax information
- Less time inputting data
- Reduced amount of tax lost to error
AccountingWEB outlines more benefits for both businesses and accountants here.
What do businesses need to do right now?
Some businesses will need to act quickly.
Chris Humpage, Partner at TBL Accountants, points out that: “As MTD for VAT starts on 1 April 2019, the first quarter will be 30 June 2019. This means that businesses with a 30 June 2018 year-end may need to go digital from 1 July this year if not already done so. That is only five months to get everything in order.”
Although it may seem a deadline in the distance, the reality is MTD is coming and you may need to start preparing your accounts now.
How can TBL Accountants help businesses?
With some businesses only having five months to get their affairs in order, we have already started to help our clients on Digital Tax.
Our team of experts have the skills to ensure your accounts are fully compliant and we are committed to helping local businesses migrate to MTD as easily as possible.
Are you ready for Digital Tax?
For more advice, support or to answer any of your questions, please request a call back today.
MTD is coming and all businesses will need to be compliant with the digital world.