30/04/2017 by Pete Bird
Newsletter May 2017
Making Tax Digital
End of the Self-Assessment Tax Return.
Mandatory digital record keeping and reporting for businesses will be phased in from April 2018. Unincorporated businesses with turnovers above the VAT threshold will be the first to make quarterly reports.
Making Tax Digital (MTD) aims to create one digital account for each taxpayer incorporating all of your taxes. Quarterly filing obligations will be imposed for businesses and landlords, with a view to enabling you to track your business transactions as and when they occur. At present, there is no plans to change the tax payment dates, although a voluntary ‘pay as you go’ system will be introduced.
From April 2018 unincorporated businesses (self-employed, sole traders and partnerships) and landlords with annual turnover above the VAT threshold (currently £85,000) will be required to keep digital records and send HMRC quarterly updates. From April 2019, unincorporated businesses and landlords with turnover below the VAT threshold will need to comply with the new rules. All incorporated businesses (limited companies) and landlords will be required to meet the MTD filing requirements from April 2020. Those with an annual turnover of less than £10,000 will be exempt from digital record keeping and quarterly updates unless they choose to enrol.
If your accounting year end is 5 April, your turnover is over £85,000, your first quarterly update will be for the period 6 April 2018 to 5 July 2018. However, if your year end is 31 March, your first quarterly update will therefore be from 1 April 2019 to 30 June 2019, a delay of one year.
At the moment as we understand the position, after four quarterly updates have been submitted, there is a period of 10 months for the reconciliation of end of year accounts and final submission of any adjustments or further claims necessary.
We believe that, for most clients, MTD will be a positive transition, which should simplify reporting, making taxation more efficient and accurate through the use of digital tax accounts – we just have to get over the transition period. How we manage and budget