Sshhhh – making tax digital is just around the corner
It’s the big change no one’s talking about, it just sounds so difficult – 1 tax return a year is bad enough but 4? It’s just more work for already busy small businesses – or is it?
Making tax digital (MDT) is about bring tax and the collection of tax up to date, we have the technology to look at our bank balance from our mobile phones at 1 o clock in the morning, we can transfer money and pay bills at the touch of a button, why should managing our personal and business tax be any different? Its lovely to get a tax rebate at the end of the year, but wouldn’t it be better to have never paid that tax in the first place?
For several years now employers have been reporting to HMRC every time they pay employees, meaning that changes to tax codes are being processed quicker than ever before, if you are employed and paying PAYE, the tax man is told what you are being paid at pretty much the same time as you are receiving a payslip. If you are self-employed, you tell the tax man what you earnt up to 21 months after the event, then you find out what tax you owe. It’s really no fun paying tax on money you earnt (& spent!) that long ago. Making tax digital will help you manage your tax affairs in real time, you won’t need to pay any more or any sooner, but keeping up to date accounts mean you will know what you need to pay.
You will need to submit your accounts digitally to HMRC on a quarterly basis. If you are already using software for your accounts, then your supplier will be working on a way to do this, you may however need to upgrade your software. If you are using a spreadsheet, HMRC have said it will provide a means to submit digitally, but no further information is available, it will most likely involve you transferring data from your spreadsheet to an online form, with lots of scope for error. Now’s the time to look at moving to software (we recommend Freeagent, and offer packages including set up and support).
Well that depends, are you a sole trader, a limited company are you VAT registered, is your turnover less than £10000, or more than £85000?
April 2018 – Self employed and unincorporated landlords, with a turnover of more than £85000
April 2019 – All VAT registered business’s, plus self employed and unincorporated landlords with a turnover of between £10000 – £85000
April 2020 – All limited companies