When you work for yourself, navigating the tax and financial regulations can be a challenge at times due to their complexity. Making Tax Digital is the most recent project that the government has planned to bring about change.
What is Making Tax Digital?
Making Tax Digital, often known as MTD, is a programme that the British government intends to implement in order to modernise the country's tax system, simplify the procedures involved in its administration, and do away with the requirement that taxpayers keep paper records. According to the new regulations, the requirements of tax legislation will be satisfied exclusively by information that is submitted using bespoke software.
When exactly will the adjustments be implemented?
The alterations are scheduled to be phased in over the course of the following few years in a manner that will allow for gradual implementation at various stages, depending on the following criteria:
Beginning with the new fiscal year, you will be expected to record all of your business transactions digitally if you are a VAT-registered business with a turnover of more than £85,000 for the previous fiscal year. You will be required to utilise software that is MTD compliant rather than submitting your present VAT return online because it will no longer be available.
If your company is registered for VAT but its earnings are lower than the VAT threshold, you will not be obliged to retain digital accounting records until the 2020 fiscal year. This exemption applies only if your company is VAT registered. On the other hand, you will be responsible for keeping track of your annual turnover, and if it rises above the threshold of £85,000, you will be compelled to comply with MTD.
After April 2020, the self-employed, partnerships, trusts, and landlords who complete self-assessment tax returns will not be able to file their income tax returns electronically.
The timings for corporation tax, which applies to limited enterprises, have not yet been finalized but will not be required until April 2020 at the earliest.
Exist any exceptions to this rule?
The exemptions are the same for digital tax as they are for the current online VAT filing system. This includes people who are unable to participate owing to considerations such as age, disability, location, or religious or cultural reasons.
When Making Tax Digital becomes required, there will be an exemption for enterprises and landlords with a small turnover. This exemption will be available when Making Tax Digital becomes mandatory.
What do I need to do?
Nothing, your accountant will handle the transition of your accounts to the required VAT reporting software in time for the deadline. You are going to be kept up to date on these changes, as well as on whether or not there are any steps that need to be taken in order to transition to digitalization in the future.
Learn the details here.
Our group of tax professionals is standing by to answer any questions you may have about the recently implemented changes to the filing process.
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