HMRC is Making Tax Digital…And It’s Coming Soon
How you manage your taxes is changing. A modernised tax system is being put in place, which means Tax Returns may really be coming to an end!
HMRC is Making Tax Digital (MTD). Which means from April 2018 all Businesses, Self-employed people and Landlords will be required to start using the new digital service. At Spring Budget 2017 it was announced that the government would provide 3.1 million small businesses with an extra year (until 2019) before they are required to comply with the new requirements of keeping digital records and sending HMRC quarterly updates, which is expected to be in full effect by 2020.
WHAT DOES THIS MEAN TO YOU?
By implementing this new tax system, HMRC are hoping to make it easier for you to manage your tax in many ways including the following:
- By providing a tailored service according to each one of its customers’ individual circumstances
Implementing the new tax digital system will mean that taxpayers will no longer have to provide HMRC with information that it already has, or that it is able to obtain from elsewhere such as from employers, banks building societies and other government departments. With digital tax accounts taxpayers will now be able to access information that HMRC holds through their digital accounts, and check at any time that their details are correct.
- By Keeping you as up to date as possible with tax in real time
No longer will you have to wait until year end, or in some cases even longer before finding out how much tax you either owe to or are owed from HMRC. The new tax system will allow HMRC to collect and process information affecting tax as close to real time as possible, to help prevent errors and stop tax due or repayments owed building up.
- By placing everything under the same roof
The days when taxpayers could not see a single picture of their liabilities and entitlements in one place are coming to an end! By 2020 taxpayers will be able to see a complete financial picture in their digital account, just as they would with online banking.
As well as all these benefits listed above, taxpayers and their agents will now not only be able to interact with HMRC digitally but also at a time to suit them. And digital record keeping software will be linked directly to HMRC systems, allowing you to send and receive information directly to and from your software.
SO, WHO IS MOST LIKELY TO BE EFFECTED AND WHEN?
All Businesses, Self-employed people and Landlords will be required to start using the new digital service from:
- April 2018 for income tax and National Insurance Contribution (NICs) purpose if your turnover is over the VAT threshold
- April 2019 for income tax and NICs purposes if your turnover is below the VAT threshold
- April 2019 for VAT purposes for everyone who is VAT registered
- April 2020 for Corporation Tax (CT) purposes for everyone who pays CT
If you are a Business, Self-employed person or a Landlord with a turnover under £10,000 you will be exempt from these requirements. All those who have secondary income of more than £10,000 per year through self-employment or property will also be required to use the digital service.
Please be aware that these dates are subject to change
HOW DO I PREPARE FOR DIGITAL TAX?
The new digital system will be implemented in stages from 2018 to 2020, which will allow your business enough time to adapt to the changes. If yourself or your business does not already make use of an online accounting solution, then you should start using one as soon as possible. This is to allow your data to be collected and submitted to HMRC more efficiently.
We at Outsourced ACC we will be assisting our clients with the implementation of the new digital tax system. You can be assured that if you are not already keeping your accounts digital, there is absolutely no need to panic! Outsourced ACC are here to not only help you get started, but to manage the whole process for you. We will take care of everything from preparing all digital uploads to reviewing your estimated tax position, to ensure that this is correct. Also, explaining to you exactly what these estimates mean. In line with managing your digital tax account we will also be ensuring that the content is accurate and compete. As well as automating the quarterly update.
HMRC are currently in the process of resolving the agent access problem to DTA’S (personal tax records), but once completed we will then be able to advise our clients throughout the year to mitigate problems before it’s too late!
Don’t leave it too late to start the switch, speak to your accountant. If you do not have one then it’s time to give us a call on 0208 249 6007 or email us at email@example.com. If you are not yet on the cloud, we can advise the best solution for your business.
For more information please visit the HMRC website at www.gov.uk