In 2015, HMRC proposed to move the recording of all tax to fully digital system which will affect all businesses no matter how large or small. The scheme known as ‘Making Tax Digital’ will change the way that all businesses and landlords liaise with HMRC.
HMRC have moved the the implementation date and qualifying criteria back due to requests from Parliament, businesses and some of the online accounting software providers like Xero, QuickBooks and Sage. All parties felt that more time was needed to be fully ready for the changes necessary.
If you are a business or landlord with an annual turnover of £85,000 then you or your bookkeeper will need to record all your accounting transactions and file all Income Tax and National Insurance quarterly from 2019/20.
The following year will see even more changes for all VAT registered businesses who will have to file all their VAT returns using online accounting software. As well as businesses, landlords and the self-employed with an annual turnover of between £10,001 and £85,000 will have to use an ‘MTD’ compliant accounting software to file their Income Tax and National Insurance returns quarterly.
By the fiscal (financial) year 2021/22 all businesses, landlords and partnerships will be required to record all their financial transactions digitally using online software; as above all returns will be due to HMRC on a quarterly basis.
Very much like the ‘Auto-Enrolment’ Pension scheme introduced in 2012, ‘Making Tax Digital will affect all businesses, partnerships, landlords and the self-employed at some stage between 2019 and 2021.
What can you do about it? The simple answer is to move your bookkeeping records to an online accounting software solution of which there are lots. There is no time like the present and this should be something that you consider doing soon.
Although this may seem daunting to you there are lots of advantages to you too for example you will be able to view your accounts wherever you are (WIFI permitting) as your records will be online. There’s no longer the need to take backups of your data as your accounting information will be securely stored in the ‘cloud’.
A lot of the online accounting software options will drastically improve your quality of bookkeeping and financial reporting. Some of the online software providers offer you the ability to take pictures of your receipts and automatically upload them straight into your accounts. There’s also other advantages like bank feeds that upload your bank transactions and companies like Receipt Bank that enable you to scan and upload your invoices and receipts straight into your chosen software.
The best advantage is though, is that your new online accounting software will do the returns for you at the touch of a button saving you or your bookkeeper time.
To find out more about how Cain & Beer can help you make the transition to digital and to book a FREE consultation with us please call us on 020 3633 1340, email us at info@cainandbeer.com or book via our website www.cainandbeer.com