The Key Points of Making Tax Digital for Business
As a system that never stays truly still or basic, the UK taxation system is in the process of a major change once again. Taxation changes are commonplace, but one of the biggest changes to taxation comes from Making Tax Digital (MTD). If you have not heard of this, then it only goes to show how negligent the advertising of this key tax change has been!
If you are unsure of what it is or what it means for you, though, read on. We’ll cover some of its most pertinent points. It’s become a major part of the UK tax program, and every business owner should try and look closer into this. If you want to keep running a business that has the chance to continue to grow, then you need to get more astute with taxation.
What does MTD mean for you?
Well, for one, it’s already here. This has been in place for some time now, and it will become much clearer as to how it can be used as the year progresses. At the moment, if you were to take a look at your digital taxation account then you will be able to see the foundation of what is to come. This should help you get ready for the major move to a less stressful digital experience overall.
Businesses with a turnover that exceeds the VAT threshold will come first, with the aim to roll it out in full by April 2020. While delays will no doubt make that hard to achieve, it is coming and you can benefit from taking part moving forward.
The End of Annual Tax Returns
Business owners – rejoice!
The days of having to make an annual run for your taxation is over. With MTD, you will be able to avoid the tedious form filing that once followed your business. Instead, you will use a digital planning system to help you send the details at least four times a year.
For those who think this means doing four times the paperwork, it’s nothing of the sort. You simply need to fill in a very basic and easy to manage form that lets the Government see where you are in terms of your finances.
That’s one of the major benefits of MTD; no more January dashes to Microsoft Excel or Quickbooks!
You’ll Need Digital Coaching
Now comes the tricky part. Many people are simply not tech-savvy; there is no harm in that. However, you will need to get used to the concept of using MTD’ new digital system in the near future. You will need to be able to keep HMRC abreast of financial performance and this will mean probably using spreadsheet software.
It’s not yet decided what software you will need to use, but it will become a thing to consider as time goes on. At the moment, we recommend you start testing popular accounting software to get a grounding of the coming changes. (We are experts in QuickBooks which will help make your choice a little easier!!!)
Since this is all going to be happening in real-time, you’ll get a rapid response to what you fill in. The aim is to help make sure that errors are minimised and that repayments are dealt with easily, with information sent to you about payment plans and what you are due to pay (or owed) as the year goes on.
This means that you no longer need to worry about how much your tax bill is going to be at the end of the year; they will let you know in good time.
It’s Not for Everyone, Truly
Also, please note that some groups will not have to worry about MTD. If your annual sales are under the £10,000 margin, you will not have to take part. You can if you want, but there is no set in stone requirement. If you go over £10k, though, you will need to begin using the MTD program.
Those who are ‘digitally excluded’ or unable to use digital technology due to their religious purpose, may also be exempt. There is still a lot of change to the taxation program to come, and the sooner you can get to grips with what these changes mean the sooner you can prepare accordingly.
With so much to think about, it’s important that you pay attention to MTD. It’s not for everyone, but if it’s for you then you need to be prepared to work to its requirements moving forward.
JUST CLICK HERE if you would like to discuss your accounts and MTD in more detail why not book an appointment today and see how we can help you