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Heads up for Making Tax Digital

13th October 2017

Heads up for Making Tax Digital

One of our most important roles at Wise & Co is to help our clients prepare for changes in the way taxes are calculated, collected or reported.

At the moment, we are watching the government’s initiative to move to a fully digitised tax system. It’s a move that’s designed to make reporting more transparent and more accurate – and which the government hopes will lead to the end of the self-assessment process.

The government has currently set a date of April 2019 for digital VAT reporting. This is just over 18 months away, which is why accountants and businesses alike need to be thinking about the best approach to take.

What is Making Tax Digital?

From this date, all businesses, including the self-employed, with annual income above the VAT threshold – which is currently £85,000 but could change in the intervening period – will need to keep digital accounting records to meet their VAT requirements.

Currently, from 2020 - an exact date is yet to be announced - all businesses with annual income over £10,000 will need to digitally record their quarterly profit and loss account for HMRC.

What will you have to do?

The government has said that each business will be given its own online tax account. This account can integrate with the business’ own accounting software so that transactions and accounts are automatically updated on a rolling basis.

Records can still be kept on spreadsheets, but all businesses will need to use some kind of online accounting software by this point. If your business is not already using online accounting, you can make the switch at any point before the Making Tax Digital start date.

Transferring to online accounting

Once you have chosen your accounting software, it is fairly straightforward to transfer your financial information and set up the reporting and analytics you need. Software helps you to invoice more efficiently and to chase late payments. It also helps you to manage payrolls, produce cash flow reports and aid financial planning.

You can give your accountant access to your finances, making the whole process of preparing and filing accounts and understanding your tax liabilities much more transparent. Good quality accounting software is reliable and secure, so your financial data is always protected.

Beyond the software

To prepare for, manage and maintain good financial management for Making Tax Digital, you’ll still need a professional, understanding accountant. Not only can Wise & Co make sure you are handling all of your record keeping and reporting accurately; we can help you to plan ahead, manage your business growth and improve your strategy.

For further information about Making Tax Digital and online accounting, talk to Wise & Co on 01252 711244, or follow us on social media.

 

 

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