Making Tax Digital is intended to bring the UK tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HM Revenue & Customs (HMRC). The timetable for rolling Making Tax Digital has been amended to ensure that small businesses have more time to prepare for the changes.
The first to be affected will be small businesses and individuals with a turnover above the VAT threshold of £85,000, who will be required to keep digital records for VAT purposes from April 2019.
Making Tax Digital is intended to help you keep better track of how much tax you owe – or how much you are due back – throughout the financial year.
- Accurate Tax Information
Replacing paper-based bookkeeping with digital tax accounts will let you check the information HMRC holds about you is 100% correct.
- Reduced Errors
Making Tax Digital’s new reporting function will allow HMRC to look at your tax information almost immediately, reducing human error from data input.
- Easier to understand
HMRC anticipates taxpayers will better understand how much tax is owed within the digital tax account – much like online banking.
- Easier contact with HMRC
Making Tax Digital will make it easier for you to contact HMRC online via webchats and secure messages.
On 13th July 2017, HMRC announced that it would be amending the original timeline for rolling out Making Tax Digital to give businesses more time to prepare for the changes once it completes a pilot scheme that began in April 2017:
Spring 2018 – HMRC starts a wider, live pilot of Making Tax Digital
Spring 2019 – Businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
2020 – Further roll out of Making Tax Digital is expected to affect small businesses under the VAT threshold.
Please be aware that the above dates are still subject to change and will be updated accordingly.
We will work with you to prepare for Making Tax Digital. As small business owners ourselves, we fully understand what is required to manage your business records digitally.
HMRC will not be offering software to help you report quarterly, so we have already partnered with Xero to help make managing your accounting records easy, wherever you are.
If you would like us to help you through these changes then contact us today on firstname.lastname@example.org
The information provided above is based on current guidance from HMRC and may be subject to change.