In the past year we’ve wrote our business blogs to raise awareness of crucial changes that impact business owners.
We’ve raised awareness about GDPR, Brexit and the next big crucial change that should be in your calendar is Making Tax Digital.
Making Tax Digital (MTD) is a HMRC initiative designed to make sure the UK tax system is effective, efficient and easier for taxpayers.
However, there are some worrying statistics around the awareness among business owners:
- 60% of businesses are unaware of Making Tax Digital requirements
- 70% are unaware they need to use specific, approved software.
- 71% of businesses are unaware they will be required to submit quarterly returns.
It’s essential for businesses to be aware of these changes. The severity of ignoring MTD is on par with GDPR, when it came into action in 2018.
A Timeline Of MTD: What Happens & When
The three main benefits for the introduction of Making Tax Digital are accuracy, speed and ease.
Accuracy: Tax recording will be more accurate and provide fewer opportunities for errors, miscalculations and fraudulent activity.
Speed: The process will be faster and more automated for everyone involved: businesses, accountants and HMRC. It will save everybody valuable time.
Ease: With the right software, Making Tax Digital will make it easier for small businesses to record and file their tax returns online.
Below are some dates for the diary.
1st April 2019: MTD for VAT Commences
Making Tax Digital begins on 1 April 2019 with MTD for VAT.
From this date, VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software.
1st April 2020: Income Tax & Corporation Tax (ON HOLD)
Making Tax Digital for income tax and corporation tax is on hold until April 2020.
Sole traders, partnerships, landlords and trading companies will be mandated to keep digital records and submit quarterly updates for both income and corporation tax purposes.
Since the initial announcement for MTD, there has been lots of conversation about delaying it.
However, the 2020 date seems to be dependent on the success of MTD for VAT in April 2019.
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