This is a term that will become more emphasised over the following months and years. ‘Making tax digital’ is an attempt by the government to modernise the UK’s tax system. Initially announced in the March 2015 budget, it was planned to be in place for a wide range of taxpayers, including businesses, the self employed and landlords by April 2018. It is planned that the system will be completely rolled out by 2020. During the spring budget 2017 the Chancellor announced that businesses with a turnover above the VAT registration threshold will have until April 2019 before MTD becomes mandatory.
MTD plans to transform the tax system by implementing a number of significant changes. These changes include, but not limited to:
HMRC will require up to date information for their quarterly reporting. This means that there will be no more waiting to the year-end and handing over a shoebox of receipts to your accountant!!
In order to prepare, small businesses need to look at investing in appropriate accounting software. This will enable them to keep their records digitally, and up to date, for upcoming quarterly reporting.
Accounting software such as SAGE One “start” (our recommended solution) will make it possible for small businesses to keep track of their income and expenses and file the necessary returns. There are also other advantages such as automatic bank feeds that will in general reduce manual input time, apps for mobiles and ipads etc.
This type of software also allows ourselves to access in real time and offer assistance – a monthly subscription from SAGE directly is £10+vat/month (ignoring intro offers of 50% for the first 3 months) but we are able to offer it directly at £6.50+vat/month. Any opening balances/system setup will be provided to you free of charge by ourselves.
Our overall feeling
There’s really no way of avoiding these upcoming changes. We will offer support and guidance as always. Should you have a preferred different platform to SAGE One “start” (such as Xero, IRIS KashFlow or FreeAgent) we will accommodate, although SAGE is our recommended option and has been integrated into to our fixed fee offering.