From 2018 HMRC will begin introducing its new tax scheme – Making Tax Digital. First announced in the government’s 2015 budget, the scheme will be a major overhaul of the way that individuals and businesses pay their taxes – streamlining the process to cut down on unnecessary waste and errors. At Dua & Co we know that you will want to navigate these changes as effortlessly as possible – so here is everything you need to know about the new tax scheme, and what we can do to help.
What is Making Tax Digital?
Making Tax Digital is designed to transform the current tax system by digitising the entire process. Every individual and business will now have access to a personalised digital tax account that is regularly expanded and updated – putting an end to the annual tax return.
Under the current system, HMRC estimates the tax gap at £36 billion – that’s 6.5% of theoretical tax liabilities. Even the most compliant businesses can end up paying extra penalties for simple mistakes in their tax returns.
‘Making Tax Digital for Business’ (MTD) has been set up by the government to make it easier for businesses to pay tax without making these mistakes. Under MTD sole traders and landlords will be obliged to keep digital records of their income and expenditure and send quarterly summary reports of this information to HMRC.
Will this affect me?
The new digital service will apply to businesses, landlords and the self-employed. If you’re in employment or you’re a pensioner, Making Tax Digital will not affect you unless you receive a secondary income of more than £10,000 from self-employment or property.
The following relaxations on the scheme have also been announced:
It is possible that further exemptions – including for smaller, unincorporated businesses – may be decided upon in the future. If decided upon, these are expected to be announced later this year.
When is this happening?
Although the changes are being rolled out from April 2018, the start date for making the changeover will depend on your current tax arrangements:
In the Spring 2017 budget the government also announced that an extra 3.1 million small businesses will have until 2019 to make the switch to digital records and quarterly updates.
How can Dua & Co help?
At Dua & Co we know that an overhaul of the way that you pay tax can seem daunting. Making Tax Digital is designed to streamline the entire tax process, but for some the changeover may initially prove difficult. As experienced accountants based in Watford, we are available to help you adjust to the changes.
Arrange a free initial meeting and we will guide you through the finer details of Making Tax Digital, as well as what your company can do to adjust. For an initial fee we can provide you with a review of your record keeping and educate you on the digitisation process.
Whether you’re looking for advice on your company structure or someone to offer record-keeping services, Dua & Co are here to offer our expertise in accounting and wealth management.
Please get in touch to find out how we can help make your business a success.