Confused about Making Tax Digital?
Following the announcement of a snap general election to take place on 8 June 2017, the Government dropped clauses relating to Making Tax Digital from the Finance Bill 2017 so that it could quickly receive approval from MPs before Parliament dissolved. The policy is now on hold until after the election.
While Making Tax Digital is currently on hold, the Government has said that the clauses dropped from the Finance Bill remain policy and it intends to put forward legislation at the start of the new Parliament to enact them.
We will update this page as details of any new legislation are announced after the election.
Making Tax Digital (MTD) is already well underway. HM Revenue & Customs (HMRC) has made it clear that all tax systems will need to be 100 per cent digital by 2020 – and many UK firms have already started to adopt online accounting systems in advance.
The Association of Taxation Technicians (ATT) has branded MTD “the biggest change to the way taxpayers will engage with HMRC since the introduction of PAYE in 1945,” and the project will effectively reshape UK tax as we know it. MTD was first announced at the tail-end of 2015, but, in the wake of the EU Referendum and the Government’s post-Brexit Cabinet reshuffle, HMRC consultations into what the project involves, how it affects us, and when it will take over, have been postponed twice – and Britons remain increasingly and understandably confused and uncertain. However, one thing remains very clear: British businesses and individuals alike will need to ensure that they are compliant – and should seriously consider doing so sooner rather than later. Fortunately, Bishops Chartered Accountants are here to help.
What will MTD involve?
The MTD project proposes the following:
- Tax will be 100 per cent digital and businesses and individuals will need unique online tax accounts
- Businesses will need to submit quarterly accounts information to HMRC
- Self-employed individuals will need to submit quarterly accounts information to HMRC
- Taxpayers of all kinds will need to use HMRC-compliant digital software
According to the Institute of Chartered Accountants in England and Wales (ICAEW), a staggering 82 per cent of self-employed individuals and 75 per cent of businesses will need to completely change the way they currently keep their records in order to comply with the changes.
When will I need to prepare for MTD?
Since HMRC published the outcomes of the first consultations on Making Tax Digital, further information has been published at the Chancellor’s Spring Budget and in an HMRC Policy Paper.
Crucially, this includes the timetable for the introduction of Making Tax Digital. The requirement for businesses, self-employed people and landlords will begin from:
- April 2018 if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold
- April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
- April 2019 if they are registered for and pay VAT
- from April 2020 if they pay Corporation Tax (CT)
The easiest way to ensure that you are compliant – and avoid any future complications – is to take advantage of an intelligent online accounting service today.
How can Bishops help?
At Bishops Chartered Accountants, we would like to ensure that your adoption of MTD is as fast, easy and hassle-free as possible – which is why we are offering you the chance to take advantage of our Online Accounting Services today, powered by Kashflow. Our Online Services have been developed with busy business owners and self-employed individuals in mind, not only to ensure that you are MTD compliant, but also to save you time and provide you with a clearer insight into your finances. Kashflow comes loaded with the following benefits:
- It is accessible from anywhere
- Invoicing is usually easy
- Credit control can be managed simply
- Quotes and estimates can be achieved at the press of a button
- PDF management reports are generated
- It can handle direct debit and card payments
- You can transfer your existing bookkeeping and invoicing data
For more information about how Kashflow could benefit you today, please contact Bishops Chartered Accountants. Tel: 01254 261166 – E-mail: firstname.lastname@example.org