Making Tax Digital
Making Tax Digital (MTD) will come into force in April 2024. It’s HM Revenue & Customs’ (HMRC) plan to modernise small business and landlord bookkeeping & accountancy by digitising bookkeeping records and making regular online submissions to HMRC instead of yearly tax returns.
Their plan is that all unincorporated businesses (sole traders & partnerships) including landlords, with sales/turnover of over £10,000 p.a. keep digital records and make quarterly submissions to HMRC, followed by a yearly confirmation, so that’s five tax returns per year instead of the current single self assessment tax return.
It marks the end of hand-written paper based “books” which won’t be acceptable to HMRC from April 2024. Book-keeping will have to be done using software. Spreadsheets are acceptable but will need special “bridging software” to take the spreadsheet data and convert it into the right format and then submit it electronically – for most people that’s actually more complicated than using bookkeeping software in the first place!
It’s easy to think of this as extra work and extra cost, but given it’s going to happen anyway, why not look for the positives and benefits instead? Done properly, most people could save time and see tangible benefits to their business by being more professional and using proper software.
Some of the main advantages are:-
- Automatic import of transactions from your bank by means of live feeds;
- “Rules” can be set up in software to automatically allocate repeating transactions to the correct account heading/code;
- Email invoices instantly to customers with links for immediate payment by card;
- Expense receipts can be “photographed” by your phone, and imported straight into the software;
- Data securely backed up to “the cloud”;
- Access data from any PC via an internet browser;
- Phone/tablet “apps” for easier data entry on the move;
- Uploading of images of invoices so you can be truly “paperless”;
- Real time “live” reports on business profitability, tax liabilities, etc:
- Submission of returns to HMRC directly from the system;
- We can access your data live to provide support.
With the right choice of software and with the software set up correctly and linked, your bookkeeping time could well be massively reduced, you won’t be bogged down with paperwork, your data will always be up to date and more accurate, and you will have lots of reports as to how your business is improving. What’s not to like?
Let us help you turn, what first appears as a negative, into a positive. MTD is going to happen, HMRC have been wanting to do it for several years, so let’s embrace it together and make it beneficial and worthwhile to you rather than just another load of time consuming “red tape”.
If you’re not interested in doing the bookkeeping yourself, we can do it for you. You’d just need to set up electronic links and bank feeds from your bank(s), and email us all your invoices (sales and purchases/expenses), and we’ll do your digital bookkeeping for you and make the quarterly submissions required by HMRC.
Contact us for more details of how we can help you with your transition to Making Tax Digital.