Making Tax Digital is fast-approaching for many, comes with penalties for those that don’t comply and involves big changes for most businesses out there. But what is it, how does it affect finance operations and how can businesses prepare?
What is Making Tax Digital?
Making Tax Digital is a mandatory government initiative that sets out a bold vision to have one of the most digitally advanced tax administrations in the world. ‘Making Tax Digital’ represents a big change to the way you record financial information and submit tax returns and most businesses will be affected.
The scheme promises to make tax admin more effective, efficient and easier to get right. Put simply Making Tax Digital requires businesses to adopt compatible software to manage tax affairs with HMRC – this means moving to cloud accounting software.
Who does Making Tax Digital affect?
The UK government plans are underway to modernise our UK tax system. Businesses are either already digitally filing VAT and accounts quarterly, or will need to in the near future. Those with an annual turnover of above £10k, will need to use certain software or apps to keep their business records in the future. The days of manual record keeping will be over!
- All VAT companies over the £85k threshold will already have been moved to digital tax as their deadline was last year.
- All remaining VAT-registered businesses with a taxable annual turnover below £85,000, need to follow Making Tax Digital rules now, to comply in time for April 2022.
- Making Tax Digital for Income Tax will be introduced in 2023. So anyone self-employed including landlords and individuals earning over £10k a year, will need to comply.
It is advisable all types of businesses act soon, to avoid a stressful transition and to fully benefit from cloud accounting.
What do I need to do?
At LHP, we’ve teamed up with major cloud software providers (Xero, QuickBooks and Sage) to provide our clients with best-in-class, fully-compliant accounts. Our recommended cloud software can bring you significant benefits like:
- a clear view of your finances, ‘any time, any place’
- ability to run your business from work, home, or on the go, on your smartphone
- automatic recording of bank receipts and payments in real-time
- mobile phone photos of purchase invoices/expenses are easily uploaded to app
For more detailed information, please download our Making Tax Digital Factsheet (PDF, 2Mb).
LHP will be working closely with clients and any businesses that come to us for support here, to discuss the new HMRC roles – and to show you how easy the new system is to use.
As Xero Platinum partners we can say that cloud does make life simpler, more convenient and can save you significant time and money.
Making tax digital is mandatory, but we’re best-placed to assist you smoothly through this transition, so do not worry!
If your accountant has not spoken to you about Making Tax Digital, or you wish to speak to specialists in cloud accounting prior to the deadlines, get in touch with us! You can email firstname.lastname@example.org or ring us on 01267 237534.