Do you dread the annual tax return and fear the process of having to make sense of receipts and invoices filed away many months before? The new digital way of managing your tax returns could be the answer.
Millions of businesses have already jumped on the back of the digital age through marketing, selling and banking online. The HMRC is jumping on the back of the online revolution in the hope that its new initiative will make help small businesses concentrate on doing business rather than stressing about tax!
Making Tax Digital
Making Tax Digital (MTD) is the most radical overhaul of the tax system in a generation as the Government plans to make it easier for individuals and businesses to get their tax right with the help of £1.3 million worth of investment.
Starting in April 2018, MTD will mean the end of the dreaded annual tax return for millions of individuals and small businesses across the country with the introduction of a new policy that will make tax easier and more transparent for everyone.
What’s in it for small business owners?
There are lots of reasons to be happy about the introduction of MTD including:
- Avoidance of stress related to getting the tax right whilst running a business
- Reduction in errors that not only costs the public purse but the businesses themselves
- Opportunity to integrate the management of tax into the day to day running of a business
- Ability to update HMRC quarterly using software or an app rather than it all being submitted at the end of the year
- Opportunity for businesses to stay up to date with their tax affairs throughout the year as well as providing a more accurate picture of what they’ll need to pay at the end of the financial year.
Already two million small businesses are managing their accounts using digital record keeping software and 30,000 are using apps to regularly record their income and expenses.
Rollout of Making Tax Digital
- The first businesses have already started keeping digital records and are providing updates to HMRC as part of a live pilot
- A wider, live pilot will start Spring 2018 which will allow for a year of testing before any businesses are mandated to use the system
- April 2019 businesses above the VAT threshold will be mandated to keep their records digitally and provide quarterly updates to HMRC for their VAT
- Then from 2020, the government will extend MTD to corporation tax.
Sources and more information
There is lots of information available on Making Tax Digital for business.