Making Tax Digital is a government initiative that aims to provide a "transformed tax system".
The current plans are:
Taxpayers will have to report their income and expenditure on a quarterly basis.
The smallest businesses/landlords will be exempt from Making Tax Digital. This is businesses/landlords with a turnover less than £10,000.
Now, of course, you need to know what "Digital" means. Well... it means you will have to start reporting to HMRC through approved accounting software,
such as Xero, which we use ourselves.
This WILL be mandatory and there will be fines and penalties for those who do not comply.
Making Tax Digital is being phased in depending on which type of tax we're talking about, as follows:
Limited Companies and Individuals with turnover above the VAT threshold (currently £85,000) have to start quarterly reporting for VAT purposes through approved accounting software from NOW.
As for VAT for all other Limited Companies and Individuals, they have to start quarterly reporting for VAT purposes through approved accounting software from 1st April 2022.
Then for income tax and corporation tax purposes, they have to start quarterly reporting for VAT purposes through approved accounting software from the first day of their annual accounting period, beginning in the 2023/24 tax year.
However, we would strongly suggest it's best to go digital as soon as possible. This is coming for everyone and it will be most beneficial to have more time to get used to the digital software and processes.
We CAN and WILL provide solutions for all of our clients for Making Tax Digital. We will make sure the switch over is as easy and painless as possible. We have been working with digital accounting software for years and are very confident that we will thrive in the new Digital Tax environment, as will you with our help and guidance.
Feel free to get in contact with us if you have any questions.
ALL VAT DUTIES
FOR ANYONE WITH ANNUAL TURNOVER ABOVE THE VAT THRESHOLD
ALL VAT DUTIES
FOR ANYONE WITH ANNUAL TURNOVER BELOW THE VAT THRESHOLD