Making Tax Digital

Making Tax Digital... Ever heard of it?  Know what it is?

Whether you have or haven't it seems as though you're in good company.

About half the people we speak with have heard something about it and to the other half it's completely new.

So, what is it?

Quite simply Making Tax Digital or MTD, is the biggest change to the way tax is collected since the introduction of Self Assessment more than twenty five years ago.  In fact, we think it's bigger because it effects both individuals and companies.

MTD is the government and HMRC bringing the way individuals and businesses report on their tax affairs into the modern age.  It brings together all the different ways tax is reported on into one new process.

It is so big that it's being introduced over three reporting periods: April 2018 is the first critical date, followed by April 2019 and April 2020.

Before I launch into a huge explanation of what MTD, how it will work and what we're doing about it I need to make one thing perfectly clear: this is a huge project and timelines might shift and change.

In fact, there has already been some movement - so expect more.

Big Picture first.

HMRC and the government want to modernise reporting of income, expenses and profits because they reckon businesses make too many mistakes.  They also want to make the whole process more efficient and help (for 'help' read 'force') businesses to have better information about their finances.

Still big picture.

In essence when the project is fully implemented every business and individual tax payer with untaxed income of more than £10,000 will have to complete a return for HMRC four times a year and then complete a 'consolidating' report as well.

Just a little bit of detail...

If you run let's say a market stall as as sole trader and you make more than £85,000 a year from April 2018 you will have to submit a return of estimated figures cover the period April, May and June by 31st July.

You'll have to do the same again for the period July, August and September by the end of October... and so on.

And you'll have to keep records digitally... and you'll have to submit using government approved software.

At the moment the timescales for implementation look like this:

- April 2018: unincorporated bodies with turnover more than £85,000 will start reporting for Income Tax and NI

- April  2019: all other unincorporated bodies with turnover of more than £10,000 will start reporting for Income Tax and NI and all VAT registered businesses will report for VAT

- April 2020: all companies will report for Corporation Tax

Our message.

This is a huge, even mahoosive, project and details are still a little thin on the ground.

But please rest assured that we're on it.  We'll keep you posted and we'll make sure you know exactly what's happening, when, how and even who.

To start the ball rolling here's a link to a video we've prepared which should give you a high level view of MTD:

https://youtu.be/2eVaXroeVbo