Making Tax Digital
Making Tax Digital what is it all about?Making Tax Digital or MTD as it is often shortened to, is a key part of the Government’s plans to make it easier for individuals and businesses to get their tax correct and to ensure they keep on top of their affairs.
What is Making Tax Digital (MTD)?It is HMRC’s ambition to become one of the most digitally advanced tax administrations in the world. Making Tax Digital (MTD) has made significant changes to the way the tax system works – transforming tax administration so that it is all online and replacing paper-based reporting in the anticipation that it will be:
- More accurate:
Replacing paper bookkeeping records with digital tax accounts will ensure that the information held by HMRC is ‘live’ and accurate with fewer errors from data input.
- Easier to understand:
HMRC hopes that digital accounting will help businesses and individuals see how much tax is owed (or due to be returned) with up-to-date records in the financial year– similar to online banking.
- Easier to report to HMRC:
Making Tax Digital will make it easier to communicate with HMRC online via webchat and secure portals for tax submissions.
The primary legislation for Making Tax Digital relating to VAT and Income Tax is contained in the Finance (No.2) Act 2017, providing certainty about the broad framework in which Making Tax Digital will operate, with secondary legislation for VAT laid in February 2018, which came into force from April 2019.
Making Tax Digital TimelineThe first to be affected were small businesses and individuals with a turnover above the VAT threshold of £85,000, they have been required to keep digital records for VAT purposes since April 2019. If you are below the VAT threshold you can still voluntarily join the Making Tax Digital service.
VAT-registered businesses with a taxable turnover below £85,000 will be required to follow the new Making Tax digital rules for their first return starting on or after April 2022.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the new rules for Making Tax Digital for Income Tax from their next accounting period starting on or after 6 April 2023.
For up-to-date information, please also see hmrc.gov.uk
Let TBA help you go digitalMTD changes the way HMRC need information from tax payers and you will need to move from your existing manual record keeping processes onto an HMRC compliant online accounting solution such as QuickBooks. As we are experts in digital/online solutions, we can help get you compliant.
We have decided to Partner with QuickBooks as our preferred digital solution, we feel this is the best fit for our new and existing clients.
As QuickBooks accountants we will be offering training to new and existing clients to give a better understanding of QuickBooks as well as understanding your obligations and responsibilities under MTD.
Please call us on 0208 661 7878 to discuss our training or for further information about how we can help you.
If you would like us to help you with your MTD obligations, then call us today on 0208 661 7878 or email us at email@example.com to arrange a free initial consultation.
In summary, Making Tax Digital will mean:
For the taxpayer:
The end of the tax return
The ability to pay tax based on your business activity during the year
The ability to upload or update your tax account in real time
All of your tax information in one place
For small businesses:
All of the tax information and interactions are in one place
No separate notifications of change of address or other details
Easy payment, time to pay and other options
Less direct contact with HMRC
The end of the tax return
Smoother processing of data by removing peaks
Better interaction with taxpayers
“Customer Golden Record” – all of the information about a business in one place
The ability to target information and support much more directly
What are the advantages of going digital?
- See a clear picture of your current financial position in real time;
- Have your accounts 100% online so there is no software to install and everything is backed up automatically
- Have your bank feed your data directly into your accounts on a daily basis
- Take a photo on your phone of a purchase invoice and it then be posted automatically
- See your results, who owes you money, who you owe to and your business bank balance 24/7, 365 days a year from your phone.
What can I really do with digital accounting software like QuickBooks:
- Create and send invoices on the go
- Track sales, purchases, debtors and creditors
- Connect to your online banking
- View a snapshot of your business
- Estimate tax payments
- Easy tax filing that matches HMRC requirements
- Manage customers and suppliers
- Create estimates, purchase orders and manage your stock
“At turpin barker armstrong, we are experts in market-leading accountancy and cloud-based digital solutions. As making tax digital accountants we are excited to move our clients towards a digital way of accounting and tax reporting, this will streamline processes for our clients and help us at turpin barker armstrong to work in a more environmentally sustainable way. We are following the guidelines from HMRC closely and will offer training and implementation services to help clients feel confident in the digital ways of working”Dean Clark, Partner
We have also partnered with Receipt Bank who offer a paperless solution to accounting.
Read more about receipt bank here