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Making Tax Digital

The Future of our Tax System

The start of Making Tax Digital (or MTD for short) happened on the 1st of April 2019 and it’s the biggest shake up the UK tax system will have seen for many years.

HMRC’s main goal of MTD is to make tax administration simpler, faster and more efficient when it comes to us managing our accounting processes. It is also HMRC’s aim to become one of the most digitally-advanced tax administrations in the world, but ego aside, MTD is a good thing.

The first phase being rolled out starts with VAT.

From the 1st April 2019, any business registered for VAT will need to file VAT returns through MTD-friendly software for VAT quarters that start on or after that date.

Here’s what you will need to do:

Corporation and Income Tax come next.

The second phase will be Corporation Tax and Income Tax from 1st April 2020. This date is still yet to be confirmed, however you can start preparing now by moving over to software at your next year end.

What should I do?

As an existing CHA client, or anyone already using Xero, you will have nothing to worry about as you are already compliant with the new rules and are one step ahead of the game.

Find out more about Xero and Online Accounting here.

 

Xero Making Tax Digital Ready Badge

Please don’t panic!

MTD doesn’t need to be a big scary thing; the new tax rules will ultimately help small businesses get a better grasp on their finances. Yes, HMRC is making us all do this gradually and nobody particularly likes change, but the benefits of taking your business digital are a real game changer.

HMRC is very aware that businesses will need time to adjust to the new processes and become more familiar with the requirements of MTD.

During the first year, HMRC will be lenient with businesses who can demonstrate they are doing their best to comply with the new rules.

If you’re not already using software, don’t panic, we can help!

Read our Making Tax Digital Blog for more information.

Here’s a quick run-down of the many benefits:
  • Efficiency and accuracy are the biggest benefit
  • Your accounts will be much faster and easier to complete
  • You’ll have more awareness of your numbers meaning you can plan more strategically and lower your tax liability
  • By switching to software at year end will give maximum impact/efficiency to your business

“I just wanted to say thank you so much for introducing me to Xero. It has made life so much easier. I will admit I was sceptical and with so much to do, I had routines and everything fitting in so changing things does take persuasion. I will admit I pretty much went with it as with MTD didn’t have much option. But wow, I am a convert now and love it. So much so that I am now getting our other business onto Xero which isn’t VAT registered but you have managed to convert me from my spreadsheets. Thank you for making life easier and simpler for a busy working Mum.”

Caroline Hancock, Hancock Maintenance Services & Garden Beehives: