Contractors & FreelancersMaking Tax DigitalSmall to Medium Businesses

Who Needs To Prepare For MTD?

By February 14, 2019 May 27th, 2019 No Comments

Making Tax Digital (MTD) is being gradually rolled out by the government over the next couple of years, meaning that different businesses will be affected at different times. The first deadline, ‘Making Tax Digital for VAT’, is coming up at the end of March 2019.

Read on to find out who needs to take action, and when.

MTD

 

Businesses over the VAT threshold

You must be MTD-compliant by 1 April 2019 if:

  • you are VAT registered, and
  • you have a taxable turnover above the VAT threshold (currently £85k) when MTD begins

Note that this will include businesses whose revenue exceeds the VAT threshold during the current tax year, so watch your turnover in the next few months if you think you’re close to the £85k mark.

A small minority of businesses have been given a further 6 months to prepare for MTD for VAT, including trusts, non-profits, traders based overseas and public corporations – see the full list of who’s exempt on the government website. If this applies to you, we recommend that you start the process early anyway, so that you’re not rushing to be compliant at the last minute.

To comply with MTD, you need to keep your VAT records in digital form and file your VAT returns at least quarterly, using HMRC-recognised software. And soon after, all business tax will also need to follow suit via the same MTD-compliant software (April 2020 tbc).

Going digital can actually be a real benefit to small businesses, saving time and money throughout the year by simplifying processes and reducing the time you spend on admin. You’re likely already using spreadsheets to manage your finances, and these can be easily replaced by your chosen cloud accounting software.

We have chosen five of the best HMRC-approved software providers, and can offer exclusive discounts for Warr & Co clients. Once you’ve decided which one you prefer (we can help you decide if you’re stuck), you’ll be able to take advantage of our limited-availability discounted rates and we’ll even register your account, so all that’s left to do is to get started! Get in touch with your accountant today to take action.

Already keeping digital records? Check to make sure that your software is HMRC-approved. If it’s not, you’ll need to take action and change providers.

 

Businesses that fall under the VAT threshold

If your taxable turnover falls under the VAT threshold (currently £85k) then you are not required to be compliant until April 2020, although this date is subject to change.

We strongly recommend that you do start using cloud accounting software anyway – it will make it quicker and easier to manage your finances, and will help you prepare for next year’s deadline early, without the stress.

A good first step would be to decide which software package is best for your specific requirements, you can ask your Warr & Co accountant if you’re unsure. Take a look at the HMRC-approved software providers that we have chosen as partners.

Plus if you act now and get onboard with MTD early you may be able to access the exclusive discounts that we’re offering clients at the moment – we have limited availability of discounted licences, so act fast to save!

Note: there is currently an MTD for Income Tax pilot that allows self-employed businesses and landlords to send their business records digitally to HMRC on a quarterly basis, rather than filing an annual self assessment tax return. Find out more here.