10 April 2019
It’s been the talk of the town for some time, but now the UK’s Making Tax Digital (MTD) Initiative is here.
According to the official gov.uk website ‘Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.’
However, through the prism of online news and social media, this point of making business owners lives easier has been lost. Replaced instead with myth and misinformation.
Thankfully, our team of accountants and business advisors have spoken with business owners throughout Bristol and across the UK. In doing so they’ve collectively collated (and busted) the following MTD myths:
Although we may not be any closer to knowing the UK’s departure date from Europe, there’s much less ambiguity around Making Tax Digital. There was no delay and the plan came into effect at the start of April this year – Despite a number of reports to the contrary.
For businesses with a taxable income over £85,000, MTD came into effect on 1st April 2019. Those affected are now required to submit digital VAT business records using compatible software.
It is expected to apply to those completing income tax reporting (self-employed, partnerships, trusts and landlords) by 2020.
Although it’s been referred to as a ‘switch’ to digital accounting, the reality is most businesses across the UK already manage their tax return online. Recent reports have these figures as high as 99% of VAT returns, 98% of Corporation Tax returns and 86% of Self Assessment returns.
If you’re one of the businesses that hasn’t yet transitioned to online/digital, consider that using one of the MTD compatible software solutions will give you both a real-time view of your finances and save you time.
Put simply, this is incorrect. While you will need to provide HMRC with quarterly updates if you meet the VAT threshold, this will not be as in-depth as an annual tax return. This quarterly collection and processing of data is intended to give taxpayers an accurate overview of their tax position throughout the year.
Here at FD Works our team of accountants and business advisors work with innovative in Bristol and throughout the UK.
Our team of accountants, business advisors and Xero specialists work with clients across the UK in a variety of sectors. If you’re a business owner that’s looking to get more from your time, seize life’s opportunities and create a business that makes you proud – we can help. As a trusted partner we provide hands-on finance support and FD-level strategic advice.
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