It’s tax Jim but not as we know it…..
As you may already know from our previous blog regarding the Personal Tax Account, HMRC are launching their Making Tax Digital Programme (MTD).
The basic premise of Making Tax Digital is to update HMRC with regular quarterly (yes you did read that right!) tax information.
Every tax payer and business in the UK has been provided with a digital tax account. Individuals have a personal tax account and every business – whether sole trader, partnership or limited company – has a business tax account. The business tax account will handle PAYE, VAT, Corporation tax, tax duties etc.
The digital accounts have been designed in order to have regular data fed into them by various software products. This is already happening for payroll in the form of RTI, and this enables individual’s personal tax accounts to display a payroll history.
In time HMRC want other sources to feed into the account including bank interest, dividends, rental income and self employed income.
How does this affect you…?
Businesses, self-employed people including partnerships and landlords will be required to start using the new digital service and will be required to submit quarterly returns as well as an end of year return.
Self Employed / Landlords / Partnerships
Turnover more than VAT threshold – After first financial year after 5 April 2017. So if you prepare accounts to 31 March then your first quarterly return would be to 30 June 2019. However, if you prepare your accounts to 30 April then the first return would be to 31 July 2018.
Turnover below the VAT threshold – After first financial year after 5 April 2018
April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
Turnover below £10,000 – at the moment MTD won’t affect you.
From April 2020
What do I need to do?
We’ll be keeping you regularly updated with the requirements of MTD here and will speak to all of our clients directly as to the effect on them.
It is still early days in the development of MTD so there are plenty more developments to come out. Although there may be some delays along the way we’ve no doubt at all that MTD will happen.
The key to making it as painless as possible will be to have good records that you keep up to date. Now is the time to start moving your bookkeeping up a notch with online bookkeeping packages like Xero. If you want to find out more then just get in touch.
Edit: We’ve got an updated post talking about the Making Tax Digital scheme!
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