Are you ready for Making Tax Digital?
The government’s Making Tax Digital programme launched in 2019 – by 2023 there will be an expectation on most businesses and self-employed individuals to keep digital records and use software to submit their returns.
Which businesses does this affect now?
If your business is VAT registered and has a taxable turnover above the £85,000 VAT registration threshold you are now required to maintain your accounts digitally and submit your VAT returns to HMRC using functional compatible software – maintaining purely paper records no longer meets the legal requirements of the tax legislation. There is room to apply to HMRC for an exemption if it’s not reasonable or practical for you to use computers, software or the internet.
The requirement does not currently apply to businesses who are not VAT registered, or who are registered but have taxable turnover below £85,000. Although voluntarily registered businesses can opt into the scheme if they wish and we would recommend that you may consider this as best practice and forward planning for your business.
When will it affect me or my business?
VAT registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax Digital rules for their first return starting on or after April 2022.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from their next accounting period starting on or after 6 April 2023.
We would recommend that as part of your forward planning for your business that you look to start keeping digital records and providing updates to HMRC electronically.
Across the Stephenson Smart offices, we have accountants who have specialist knowledge and accreditations to support our clients with their Making Tax Digital obligations.
Please get in touch if you would like to discuss how you can prepare for these changes.