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Making tax digital

27th March 2017

Making tax digital

There are important changes ahead which will affect your tax affairs.  Whilst the government have announced a one year deferral for smaller businesses, the change for many will still take place from 6 April 2018.  This means we are about to enter our final year of self-assessment under ‘old’ rules.

Making Tax Digital (MTD) aims to create one digital account for each taxpayer incorporating all of your taxes. Quarterly filing obligations will be imposed for businesses and landlords, with a view to enabling you to track your business transactions as and when they occur.  At present, there are no plans to change the tax payment dates, although a voluntary ‘pay as you go’ system will be introduced. 

The intention is to minimise some of the inefficiencies that hinder us with paper returns and improve the accuracy of business records so that there are no nasty surprises.  We can also identify tax planning opportunities earlier in the process rather than reacting to tax return information after the end of the year. In due course, the annual tax return will be abolished.

Although taxpayers are effectively being forced into dealing with their taxes online, it is being designed to allow access from most devices, so that the system should cater for the vast majority of taxpayers. There will be people who cannot use or access computers and the internet and we will of course aim to support these people with managing their tax affairs. 

From April 2018 unincorporated businesses and landlords with annual turnover above the VAT threshold (currently £85,000) will be required to keep digital records and send HMRC quarterly updates. From April 2019, unincorporated businesses and landlords with turnover below the VAT threshold will need to comply with the new rules. All incorporated businesses and landlords will be required to meet the MTD filing requirements from April 2020. Those with an annual turnover of less than £10,000 will be exempt from digital record keeping and quarterly updates unless they choose to enrol.

We believe that, for most clients, MTD will be a positive transition, which should simplify reporting, making taxation more efficient and accurate through the use of digital tax accounts.  How we manage and budget for this change will depend on the software available, and we will be working closely with our clients to ensure a smooth transition.  

CLIENTS WORDS

I have always found Stephen Morgan to be very friendly, helpful and interested in my business. I am more than happy to recommend the services of Wise & Co to anyone who needs them.
Utilities client

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