Why Is Tax Changing?

HMRC believe Making Tax Digital will allow businesses to integrate tax into their day-to-day business record-keeping, and have the confidence that they have got it right.

What I need to know…

Making Tax Digital (MTD) is an HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers. The vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) will be mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software from April 2019.

Following the ministerial announcement in 2017, MTD will not be mandated for other taxes until at least April 2020, but businesses can get involved in the Income Tax pilot now on a voluntary basis.

Making Tax Digital for business (MTDfb) begins on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software. Other components of Making Tax Digital, such as income tax and corporation tax, have been placed on hold until April 2020 at the earliest. Check this resource hub for updates on the latest developments, straight from HMRC.

When does it all happen?

The MTD pilot for VAT is open now ahead of businesses being mandated to use the service next year. Income Tax is also available now on a voluntary basis for the smallest businesses and landlords.

Currently over half of businesses with turnover above the VAT threshold use software for tax purposes, but no taxes other than VAT will be mandated before 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record-keeping to become more widespread amongst businesses.

April 2019

VAT (Phase 1)

Who’s affected? VAT registered businesses with turnover above the VAT threshold (currently £85,000 excluding VAT).

How?

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions.
  • MTD-compliant software or apps will have to be used to submit VAT returns.
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible.

April 2020

VAT (Phase 2)

Who’s affected? The remaining VAT registered businesses – those voluntarily VAT registered with VAT-able turnover under £85,000.

How?

  • MTD-compliant software or apps will have to be used to keep a digital record of VAT transactions
  • MTD-compliant software or apps will have to be used to submit VAT returns
  • Submitting VAT returns using HMRC’s own VAT online services (currently accessed by logging on to HMRC’s site) will no longer be possible

April 2020+

Corporation Tax & Self-Assessment

Who’s affected? Sole-traders, partnerships, landlords and trading companies. (The start date will be confirmed by the government following the successful roll out of Making Tax Digital for VAT.)

How? It’s likely that:

  • MTD-compliant software or apps will have to be used to keep a digital record of financial transactions
  • MTD-compliant software or apps will have to be used to submit quarterly updates to HMRC for both income and corporation tax purposes

What do I need to do?

You need to switch over to a digital system for your finances and compliance obligations. Don’t panic as this is where we come in: all of our clients are already MTD ready and compliant from the moment they sign up to us, no matter which package you choose. Contact us now to find out more.

Our Packages

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Initiate

Perfect for clients just wanting compliance services. You will get annual accounts, quarterly MTD returns and a tax return along with 1tap software to take pictures of all of your receipts.

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Innovate

This is our most common starting point for clients. You get all that you need to start being innovative in your business and take it to the next level. This includes accounting software, Receipt Bank software to store digital images, a 3 month on boarding service and unlimited advice. Add-on services available to build your bespoke package.

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Infinite

The Ultimate package for anyone wanting to gain real insights into their business to help drive it forward. Packed with all of the Innovate features, it also includes payroll, VAT, Tax Protection and the new DuaL Vision Reporting product as standard.

Looking for a Making Tax Digital consultation?

Making Tax Digital for business (MTDfb) begins on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software. Other components of Making Tax Digital, such as income tax and corporation tax, have been placed on hold until April 2020 at the earliest. Check this resource hub for updates on the latest developments, straight from HMRC.