Joshua Leigh & Co

Take the next step on the road to Making Tax Digital

Businesses, investors and workers across the UK face a challenging time ahead, as the Government continues to implement its Making Tax Digital (MTD) initiative.

This landmark change in the recording and reporting of tax will gradually see the major components of taxation taken online, using the latest HM Revenue & Customs-compliant software, apps and programs.

Taxpayers must be fully prepared for these changes, as they could face fines of penalties if they do not comply in future.

Already, many businesses have had to comply with the MTD rules for VAT which began in April 2019, and which have become mandatory for VAT-registered businesses above the £85,000 threshold. HMRC has introduced a penalty system for non-compliance from April 2021.

The next big step in Making Tax Digital in April 2023 will target Income Tax for the self-employed and partnerships, as well as property income from some landlords and investors.

According to HMRC, businesses and landlords who join MTD for Income Tax will need to send a quarterly summary of their business income and expenses to HMRC using MTD-compatible software. In response they will receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs using MTD-compatible software. This replaces the need for a Self-Assessment tax return.

This will be followed by the introduction of new digital tax systems for Corporation Tax, which will affect every limited company in the UK.

Below is a link where you can find the key dates for Making Tax Digital to help you track your journey and ensure you are compliant with the changes ahead.

Download our PDF roadmap here

Act now

While the deadlines for the various stages of Making Tax Digital may seem some way off, the changes required to comply with this new tax system are complex and onerous.

Businesses and taxpayers may need to invest in new technology, such as cloud accounting software, and alter their method of recording and reporting accounts and tax information.

There are however benefits to working with modern accounting (cloud) software irrespective of meeting the MTD compliance requirements, including:

• Secure, online storage – Store years and years of invoices and receipts in the cloud securely, without having to keep boxes of receipts.
• Ready to use anytime, anywhere – Reconcile banking, send invoices, create expense claims and much more – anywhere, anytime – as long as you have an internet connection.
• Real-time collaboration – Cloud accounting software helps enable you to work in real-time with other members of your team and your advisers as the data is more up to date, particularly when the bank is linked to the software.
• Get paid quicker– Cloud packages also allow you to send invoices to your customers via email, track when they have been opened and even automate credit control.
• Additional support – There is a wide range of apps that run with and alongside many of the core software packages that make running a business fair simpler and less stressful.

We have already helped a wide range of businesses with the initial stages of Making Tax Digital for VAT and can assist you by putting the necessary software, apps and procedures in place.

If you have further queries or concerns, please do not hesitate to contact us.

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