- 2 August 2022
- Posted by: Lisa Plumb
- Category: Company News
You may have seen, read or heard something about HMRC “making tax digital” (MTD). You’ve been left wondering what it is and what this means for your business.
What does “making tax digital” mean?
It has been introduced by HMRC to make it easier for business owners to keep on top of their taxes. HMRC have plans to become “one of the most digitally advanced tax administrations in the world”. You may currently be using spreadsheets or even pen and paper to keep records of your accounts. Soon you will need to start keeping digital records instead.
When is the “making tax digital” deadline for income tax self assessment?
If you’re VAT registered you will already be familiar with keeping digital records of your accounts as this came into place April 2022. For those not VAT registered and declaring income tax through self assessment, you will need to keep digital records from April 2024. This is currently only compulsory if you earn over 10k (this 10k threshold also includes income from any rentals you have).
What do I need to do to be HMRC compliant?
If we’re your accountants then we will take care of everything for you. All of our clients are already keeping records digitally (through software that we provide) therefore making this transition a breeze. If you don’t yet have an accountant then this is what you need to do to be HMRC compliant:
- Sign up for making tax digital with HMRC.
- Start using software that is compatible with making tax digital for income tax such as sage, APARI, xero or quickbooks.
- Send quarterly updates for income and expenses.
- Submit your end of year statement as you normally would. If you’re currently doing this by paper and posting it then you will now have to do this digitally instead.
- Submit a final declaration.
We think this initiative is fantastic as it will mean no last minute tax shocks and will put you in a better position to prepare for your tax liability. By submitting your books quarterly, you will be given tax estimates and have a better handle on your business and tax you owe.
If you’re looking for SMART accountants who can help you transition with ease, book a discovery call with us here.