I’m sure you would have seen in the press or heard people talking about HMRC’s plans in regards to Making Tax Digital (MTD). For those of you who haven’t heard – you soon will!
MTD is a government initiative that sets out a vision for “a transformed tax system and will mark the end of the personal tax return” by 2020. The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.
The biggest impact of this will be to the ‘S’ in SME’s. MTD will add a level of reporting that in the past, perhaps wouldn’t have existed. The days of dropping your bag of receipts to your accountant on the 31 January will certainly be a thing of the past!
The process for Making Tax Digital is similar to VAT returns, where each quarter a business would need to summarise their sales and purchases and calculate the VAT to declare to HMRC. With MTD rather than VAT, each quarter you will calculate your personal tax position.
Let’s look at the positives for MTD. You will now be able to take control of your finances, know what your income is, what you are spending your money on, and most importantly, what your profits are. Having this information will allow you to plan, make informed business decisions and ultimately not land you with a large personal tax liability the month after Christmas!
So how can you prepare yourself for this change? With MTD being mandatory from April 2018, now is the time to get ready and embrace change. Cloud technology, as the name suggests, is going to play a huge part of MTD and we at UHY have partnered up with Xero, to help our clients prepare for this change. Whether it be Xero or QBO or Sage, I would encourage you to start looking at cloud technology solutions and embrace change sooner rather than later.
I am running free monthly ‘Introduction to Xero’ workshops in our Letchworth and Cambridge offices, so if you are considering change, come along and see that Cloud is nothing to be afraid of, and can, dare I say it, be quite fun!
We will be writing a series of Making Tax Digital blogs, to keep you up-to-date and we would love to hear your thoughts, concerns, ideas and experiences – so please feel free to contact me via email at firstname.lastname@example.org or via Twitter at @AdamBFernandes.
Additionally, please find below some links in relation to this blog post that you may find useful:
HMRC MTD Consultation document: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484668/making-tax-digital.pdf
This post first appeared at http://www.uhy-uk.com/letchworth/blog/every-silver-lining-has-a-cloud/
Accounting is a huge bugbear for most small business owners. Already challenged with all the things they need to do…Read More