Making Tax Digital - are you aware?
Updated: Jun 22, 2018
Many self employed taxpayers and property landlords who are unaware of HM Revenue and Custom's radical plans to transform the tax online filing system.
· The way that you report your business profits to HMRC is changing.
· From April 2017 the cash reporting rules change for the self employed and for property landlords.
· From April 2018 (for unincorporated businesses and landlords with income over the VAT threshold, April 2019 for those below the threshold and April for all incorporated businesses and landlords) the self assessment tax return is being replaced by five new reporting obligations made during and after the tax year.
· Your first tax return under the new system is due by July 2018: you will then have to file with HMRC every three months.
· If you are not already using software for your record keeping/ accounting, you will need to learn how to use a spreadsheet, or some type of accounting software or App.
· You will need a reliable internet connection and a facility to store your electronic data.
What equipment (hardware) and software or Apps do I need?
· Your requirement depends on you, how you feel about technology and the nature of your business.
· Every business is different.
· If you use an accountant you can continue to do so.
· You can delegate all your bookkeeping and online filing to an accountant, tax adviser or bookkeeper if you feel you cannot cope with this new system.
· If you are one of the 2 million taxpayers who do not engage any professional help in reporting to HMRC you need to decide which system to use.
· Accounting using a phone is not for everyone: choose what may be best for you from the table below.
· You will be allowed to voluntarily pay your taxes as you go: the detail is still being decided.
· Eventually it is likely that you will be required to make four payments per year on account of tax.
· There will be no late filing penalties for at least a year while the new system beds in. After that you will suffer penalties if you file your returns late.
· Penalties already apply for errors in returns or documents.
· Late payment interest already applies.
If you want to know more about how this will affect you and your business get in touch.