Making Tax Digital with MJ Smith

Making Tax Digital is coming and we at M J Smith & Co are prepared for the first implementation commencing April 2019. We are using the latest software including Xero and other cloud-based technologies as well as in-house systems to link directly with HMRC for seamless integration into quarterly accounting. Please see our book keeping page 

Who is likely to be affected?

Businesses, self-employed people and landlords will be required to start using the new digital service from:

  • April 2019, if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold currently £85,000.
  • April 2020 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
  • April 2020 if they are registered for and pay VAT
  • from April 2020 if they pay Corporation Tax (CT)

Businesses, self-employed people and landlords with turnovers under £10,000 are exempt from these requirements.

Those in employment who have a secondary income of more than £10,000 per year through self-employment or property will also be required to use the digital service but no date has yet been set.

The government announced at Spring Budget 2017 a one-year deferral from the mandating of Making Tax Digital for Business (MTD) for unincorporated businesses and landlords with turnovers below the VAT threshold. This means that only those businesses, self-employed people and landlords with turnovers in excess of the VAT threshold with profits chargeable to Income Tax and that pay Class 4 NICs will be required to start using the new digital service from April 2018.

General description of the measure

The government recognises that the majority of businesses want to get their tax right, but the latest tax gap figures published by HMRC show that too many otherwise compliant businesses find this hard, even some who use an agent to help them. As a result over £8 billion, a year in tax is lost from avoidable taxpayer errors.

This not only costs the public purse, it also causes businesses cost, uncertainty and worry when HMRC is forced to intervene to put things right.

HMRC wants to do more to help businesses get their tax right and these changes are a very important step in that direction. It will help businesses steer clear of avoidable errors, and give them a clearer view of their tax position in a year.

Businesses (including self-employed and landlords) will be able to keep records of their income and expenditure digitally and send summary updates quarterly to HMRC from their software (or app).

Those who genuinely cannot get online due to their individual circumstances such as disability, geographical, or other reasons, will be exempted from these obligations.

Exeter Accountant M J Smith

Celebrating 25 years of excellence.

Free 1st Meeting
Fixed Fees
Free Support!

Find out more

Exeter Accountant News

Bereavement leave for parents who lose a child

The Parental Bereavement (Leave and Pay) Bill has been published by the government. Although the Bill is a Private Members’ ...
Read More

Managing staff experiencing mental ill health

Acas has launched new guidance to help employers manage staff who are experiencing mental health issues. The new guidance aims ...
Read More

What is a ‘K’ tax code?

The letters in an employee’s tax code signify their entitlement (or not) to the annual tax free personal allowance. The ...
Read More
 

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

Sign up for the newsletter

Login

Twitter Feed