Making Tax Digital: Are you ready?
Making Tax Digital (MTD) is part of the government's plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
HMRC's ambition is to become one of the most digitally advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for tax payers to comply.
MTD will be phased in from next year, however a recent survey showed that many company owners are still completely unaware of the project. The research by British Chambers of Commerce and Avalara gathered responses from over 1,100 UK businesses, and found that 24% had never even heard of MTD.
Here at Perrys, we like to keep you as well informed as possible. With this in mind, we've outlined below the forthcoming changes and how they might affect your business.
MTD will begin in April 2019 for VAT
As part of the MTD initiative, businesses and landlords with a turnover above £10,000 will be required to use commercial software to maintain their records and to update HMRC on a quarterly basis.
From April 2019, all VAT registered businesses with a turnover above the VAT threshold (currently £85,000), will be required to keep digital records and will need to submit their VAT information to HMRC using third party commercial software.
Businesses registered for VAT but with turnover below the VAT threshold can choose to submit their VAT information via MTD or continue to use HMRC's online portal.
HMRC are encouraging businesses to use commercial accounting software for MTD. However, the use of spreadsheets will be permitted, although bridging software will be required to transfer the relevant VAT information to HMRC. Please be aware that the bridging software is not currently available and the cost is unknown.
From 2020, at the earliest, businesses and landlords may be asked to update HMRC on a quarterly basis in respect of income tax and corporation tax.
Plan ahead with Perrys
If you require any advice in respect of MTD then please contact your local Perrys branch. We look forward to hearing from you.