What is Making Tax Digital and What Does It Mean For My Business?
The way small business owners deal with their taxes is going to change, and here at LiteTax we’re here to tell you that this doesn’t have to be a difficult or time-consuming process. LiteTax is an accounting firm in Bristol and our clients are asking about this all the time. With the right information and hands-on help, the transition to the digital future of tax can be handled smoothly and efficiently, reducing the amount of time, effort and stress it can currently take to handle your tax accounts.
With that in mind, here are five important facts about Making Tax Digital that your business needs to know about.
1- What is Making Tax Digital?
Making Tax Digital is a government initiative that affects all businesses and some individuals. Essentially, it’s exactly what is says on the tin. If you are VAT registered you will now need to record this online. It is important to know that this is now compulsory, and as of the 1st of April 2019, you, or your accountant, will have to comply with this new regulation and supply this information to HMRC electronically.
2 – Why is HMRC introducing it?
There are several key reasons HMRC have implemented Making Tax Digital, but the most important factor behind the initiative is that it will simply make tracking the tax you owe, or are owed back, a great deal more efficient. In a similar way to online banking, taxpayers will be able to keep track of their taxes in a secure, easy to understand way.
3 – Can Making Tax Digital benefit my business?
Absolutely. While moving to a new online system can seem quite daunting, or simply bothersome, there are some major benefits to filing your taxes electronically. First and foremost, you will be bypassing a lot of the stress and effort associated with physical bookkeeping, and with paper-based book-keeping a thing of the past, human error will also be left behind, resulting in a highly accurate and time-efficient system for your business. Reducing the paper usage of your business is also an added bonus for the environment!
4 – Is there a specific time-frame for my business?
HMRC’s vision to digitalise the UK tax system was initially designed to be staggered over a period of two years. When Making Tax Digital was first designed, the proposed timelines were as follows:
April 2018 – Income Tax and NICs reporting for unincorporated businesses and landlords with turnover above the VAT threshold
April 2019 – Income Tax and NICs reporting for unincorporated businesses and landlords with turnover below the VAT threshold. VAT Reporting for all businesses registered for VAT
Apri 2020 – Corporation Tax submissions for all relevant businesses.
This proposed timeline is still being rolled out, and is likely to go into 2021. So do please be aware that the above dates could change – and it is important to keep up to date with the latest news about Making Tax Digital, please click here to follow our facebook page.
5 – Who can help me make the move to digital?
While we have outlined the benefits of Making Tax Digital, we appreciate that moving into the digital era can be challenging for some people, particularly if you are unsure of the software or tools you may need to get this done. HMRC will not be offering software to help small businesses report quarterly, so in order to help manage your accounting it is a good idea to get some help and advice from a qualified accountancy practice to help you through these changes and move your business into the digital age.[/vc_column_text][/vc_column][vc_column width=”1/6″][/vc_column][/vc_row]