Making Tax Digital
Small businesses will soon be required to keep digital records and send HMRC quarterly updates. Johnston Smillie can help you get ready for the change.
Making Tax Digital is the government’s plan to modernise the UK’s tax system. The plan is to move, by April 2020, to a fully digital tax system which will replace annual self-assessment and corporation tax returns and also vat returns. A key part of the plan is to make it “easier” for businesses and landlords to get their tax right and stay on top of their tax affairs.
Sole traders, partnerships, companies, charities with trading subsidiaries and some landlords will soon be required to keep digital records and send HMRC quarterly updates via their software. Johnston Smillie can help you get ready for the change.
Why is The Government Making Tax Digital?
The government has outlined four foundations for Making Tax Digital. These involve:
- Making better use of information
- Offering tax in real time
- Providing access to a single financial account
- Interacting digitally with customers
In short, these foundations will mean that you won’t have to give HMRC information it already has, or is able to source from elsewhere (from employers, banks, building societies, or other government departments).
You’ll be able to check how much tax you owe in real-time, rather than waiting for the year end, and by 2020 you will also be able to log in to a comprehensive tax dashboard, similar to your online banking account.
This means you (or your agent) will be able to interact with HMRC digitally at a time that suits you.
And your overall tax picture will become more personalised via your digital account, which will be directly and securely linked with HMRC systems.
When does digital quarterly reporting under Making Tax Digital Start?
|From April 2018||
Income tax information for businesses, the self-employed and landlords with turnover in excess of £85,000 (except for partnerships with turnover of more than £10m)
|From April 2019||
Income tax information for businesses, the self-employed and landlords with turnover between £10,000 and £85,000
|From April 2019||VAT information (affecting all VAT registered businesses)|
|From April 2020||
Corporation tax information (affecting all companies and charities with trading subsidiaries) and Income tax information for partnerships with turnover of more than £10m
The Benefits of Working with JSCA
As with any new government initiative, we are fully expecting a whole host of teething problems.
That’s why we have our fingers firmly on the pulse of Making Tax Digital so that we can better advise you when the time comes to make the switch.
You can get on with doing what you do best – running your business – and our friendly team of experts will make sure you know what you need to know, when you need to know it.
We’ll Help Keep You Right
With this major change to the UK tax system on the horizon, it’s a good idea to plan ahead.
We’ll help you do just that, sitting down together in our offices, or yours, to discuss how Making Tax Digital will impact you and your business.
We will recommend, in plain English, ways to improve your internal record keeping and overall approach to tax as you prepare to change from yearly to quarterly returns.
Update – 26th April 2017 – In view of the impending election in June the measures to enact Making Tax Digital have now been dropped from the Finance Bill 2017. It is expected that most, if not all, of the Making Tax Digital provisions will return in a Bill after the election, regardless of which party wins.
Contact us today to find out how we can help get ready for Making Tax Digital.