Making Tax Digital
Making Tax Digital (MTD) is a project to transform the UK tax system so that accounting data flows into HMRC digitally and at least quarterly. The General Election has created a temporary pause in MTD, but it is clear that the project will continue, whatever the result of the election, as HMRC has invested too much in MTD to scrap it.
Individuals with total business or rental income of less than £10,000 per year won’t have to make periodic reports under MTD. Most other businesses and landlords will have to use accounting software to submit details of income and expenses to HMRC, and make a final return of all other income. We will be able to do this for you.
If your unincorporated business turnover is larger than £10,000 but less than £85,000 per year, you will be required to start quarterly reporting under MTD in 2019/20. Most other unincorporated businesses will commence MTD reporting in 2018/19, and companies will start MTD reporting in 2020/21. Large partnerships with turnover of £10 million or more will also join MTD in 2020/21.
These commencement dates are not set in stone, and the MTD timetable could be revised after the election. This would be welcomed, as the software companies need more time to produce accounting software to suit the needs of all types of taxpayer, and at various prices. HMRC has promised that free software will be available to the smallest unincorporated businesses, who have no employees, and who are not VAT registered.
You may also need some time to review your own accounting records. If your business income and receipts are mixed up with your personal expenses in one bank account, reporting under MTD will be very difficult. Let’s talk about the small changes which could make recording your expenses much easier.