What is Making Tax Digital?
Making Tax Digital has already transformed HMRC into one of the world’s most advanced and efficient tax administrations.
Making Tax Digital was brought in by HMRC to help advance the UK tax system by streamlining and computerising the system and methods used to keep, store and submit accounting records to HMRC.
The new system took effect from April 2019 for those small businesses and individuals with a turnover above the VAT threshold (currently £85,000) who are required to complete VAT returns already.
Further changes will be coming in the near future for all other entities (next changes delayed until April 2021).
Advantages of Making Tax Digital
Making Tax Digital is intended to help you achieve more efficiencies in day to day business – for example
- More accurate information
Paper records to be replaced with digital tax systems
- Reduction in potential errors
Making Tax Digital’s new reporting function will allow HMRC to look at your tax information promptly upon filing. The electronic filing method not only reduces human error from data input by the client but also by HMRC’s data analysis team.
- Easier to understand
Each taxpayer will have access to their own unique Digital Tax Account allowing easier understanding of outstanding taxes and upcoming return periods.
When will Making Tax Digital affect me?
April 2019 – The start of the Making Tax Digital regime when businesses with a turnover above the VAT threshold (currently £85,000) started keeping digital records but only for VAT purposes
2021 – Further roll out of Making Tax Digital is expected to affect small businesses under the VAT threshold.
Please be aware that the above dates are subject to change and we will update accordingly when we hear more announcements.
How can LBW help with Making Tax Digital
No matter what stage of the process you are at, we can work with you to prepare for Making Tax Digital. We have been helping clients to be compliant under the new legislation since January 2019 (some early adopters under the pilot scheme) and so our staff have the knowledge required to assist and train you to manage your business records digitally. At LBW Chartered Accountants, we've spent a great deal of time training staff and developing our support services to help small businesses through this period of change.
If you would like us to help you through these changes then call us today on 0151-644-4848 or contact a member of the team to arrange a free initial consultation.