The UK tax system is undergoing a digital revolution, with far-reaching consequences for businesses, landlords and taxpayers.
Making Tax Digital is intended to bring the UK tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HM Revenue & Customs (HMRC).
The timetable for rolling Making Tax Digital has been varied over the recent years, however we now know for certain that it will commence in April 2019.
Any businesses, or individuals having rental income, above the threshold of £85,000, will be required to keep digital records for VAT purposes from April 2019.
Why is HMRC introducing it?
Making Tax Digital is intended to help businesses better keep track of how much tax you owe – or how much you are due back – throughout the financial year. HMRC state the benefits include:
- Accurate Tax Information – Replacing paper-based bookkeeping with digital tax accounts will let you check the information HMRC holds about you is 100% correct.
- Reduced Errors – Making Tax Digital’s new reporting function will allow HMRC will to look at your tax information almost immediately, reducing human error from data input.
- Easier to understand – HMRC anticipates taxpayers will better understand how much tax is owed within the digital tax account – much like online banking.
- Easier contact with HMRC – Making Tax Digital will make it easier for you to contact HMRC online via webchats and secure messages.
We are urging businesses to use this requirement to their own benefit – for example, a correctly implemented system will allow regular management information to be obtained with ease. This can provide business owners and managers with up to date, relevant information to manage and make decisions.
How can Salisburys Help?
From April 2019 for VAT, but not before 2020 (and possibly later) for personal tax and corporation tax, businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and send quarterly updates to HM Revenue & Customs (HMRC). Making Tax Digital will be available on a voluntary basis for businesses and landlords with a turnover below the VAT threshold.
Salisburys can advise you on the best and most cost-effective way to meet the challenge ahead to make your life easier. This can range from assistance with implementing a system for your own use, through to Salisburys handling all your bookkeeping needs.
If you would like advice on how to get ready for MTD, or help in choosing an accounts system that will comply with HMRC’s MTD requirements, please get in touch – we’d be very happy to help.