What is Making Tax Digital?
In March 2015 the government announced in the budget their vision to modernise and transform the current tax system and lose the need to file an annual tax return by 2020.
HMRC claims that this will make the administration of tax more efficient as well as be easier for taxpayers to get their tax right and keep on top of their affairs, through the implementation of a fully digitised tax system.
These changes will apply to a wide range of taxpayers, including most businesses the self-employed as well as individual taxpayers and landlords.
So what is changing?
HMRC released consultation papers which outlined what they were planning to do and they asked for feedback from taxpayers and their agents.
HMRC have now released their responses but in brief, they are;
Very small businesses with a turnover no more than £10k will be exempt from MTD but this figure may well change!
Taxpayers will need to send in a summary of their turnover and expenses quarterly with one final year end update.
More taxpayers will be able to use the cash basis of accounting. The threshold for cash basis will increase to £150,000.
When will the changes happen?
Making Tax Digital has a phased roll-out plan which started in early 2016 and is set to end in 2020. Anticipated key milestones are included here in HMRCS Digital Roadmap
What are we doing to get ready for the changes?
Here at Childminder Accountancy, we are working hard behind the scenes to make sure our clients will be MTD ready! We have put various new systems in place to help our clients meet these changes as well as working towards helping those clients that wish to move onto cloud accounting software with our preferred partner QuickBooks online to do so.
Continue to check our website for more updates.