Contact: 01858 289189 | hello@thebusinesshut.co.uk

MTD

That’s right, another fancy acronym to get your head around. Great.

Don’t worry, we’ve got this one wrapped up for you and we’ve kept it as short and sweet as possible.

Making Tax Digital (MTD), as it’s name suggests, is all about going digital. It is the most fundamental change to the administration of our tax system for over 20 years.

MTD will phase in starting April 2019 covering VAT. MTD for Income Tax and Corporation Tax will be effective from April 2020.

VAT
This initially starts with VAT return submissions from 1stApril 2019. From this date all VAT registered businesses (both incorporated and unincorporated) that turnover more than £85,000 will need to keep records digitally and submit VAT returns to HMRC using MTD-compatible software.

Income Tax
MTD is expected to become mandatory for income tax records and submissions (self-assessments), but not before 2020. This includes self-employed, partnerships, trusts and landlords completing self-assessments.

Corporation Tax
The timings for MTD for limited companies submitting their corporation tax returns is yet to be confirmed, but it will not be mandatory before April 2020.

MTD essentially changes how we record and submit our information to HMRC.

Paper records will no longer be sufficient

It will become mandatory for almost all businesses and landlords (self-employed, partnerships and limited companies) to use software. Paper accounting records will cease to meet the requirements of tax law.

Quarterly Reports

There will be a requirement to submit updates to HMRC each quarter directly from accounting software for income and corporate tax purposes. You’ll have one month from the end of the period to complete each quarter.

There are few exemptions to MTD which we’ve noted below.

  • There are some exemptions for those who are not able to engage digitally for religious reasons or due to factors such as age, disability or location (no broadband availability for example). These are the same exemptions as the current exemptions for VAT online filing. So you’ll know if that applies to you.
  • VAT registered businesses with turnover of less than VAT threshold of £85k, i.e. those of you have registered for VAT voluntarily, will initially be exempt from MTD VAT reporting but this may be lifted in 2020 or later.
  • When MTD for income tax becomes mandatory there will be an exemption for businesses and landlords with a very small turnover, however this level has not yet been set.

Great news! If you’re already a client with The Business Hut you’re MTD ready! There’s nothing you need to do, because your business accounts are already MTD compliant using the beautiful accounting software, Xero. The current HMRC portal used to submit VAT returns will be phased out in time for April 2019. All future submissions will need to be submitted directly through Xero- which it’s already capable of doing. As your bookkeepers we will support you through these changes and provide any ongoing services that you need.

If you’re not a client and you’re unsure about MTD or have any questions we’d be happy to answer them. Pop into the office, give us a call or hit send – hello@thebusinesshut.co.uk

The use of this technology is compulsory so it’s a good idea to start thinking about your accounting software soon – that way you can avoid any potential complications from upgrading or migrating your software mid financial year. It’s worth remembering it’s far easier to submit returns using online accounting software compared to traditional desktop software.

Find out more about how MTD works with Xero and keep up to date over on the blog.

If you’d like to find out more, we’ve got lots more MTD resources over on the blog. If you have any other questions, we’d be happy to answer them! Pop into the office, give us a call or hit send – hello@thebusinesshut.co.uk

Why choose The Business Hut?

Free Consultations

Offering fixed monthly costs and hourly rates

Fully licensed and qualified bookkeepers

Cloud based accounting – Xero

On site and remote support

Friendly and helpful

Free consultations

The Business Hut offer completely free of charge business consultations to discuss your business support requirements
and for you to establish if we are a good fit for your business. Get in touch to see how we can help you and your business.
Telephone 01858 289189 or email us at hello@thebusinesshut.co.uk.

What our clients say

Got a question?

My bookkeeper is due to go on maternity/paternity leave, do you provide temporary cover?

Of course, we can support your business with temporary cover on site or remotely to include a handover with the existing bookkeeper. It is our priority to ensure it’s ‘business as usual’ for you.

Are your services priced on an hourly basis or as a fixed price?

We can accommodate both types of pricing. Many of our clients prefer fixed monthly costs to enable them to budget. However, we do recognise that some services are better priced per hour.

I am thinking of changing my accounts software to Xero, but where do I start?

During our free consultation, we can demonstrate and discuss the benefits of switching to Xero cloud accounting software. Many of our clients have made the move with us and are delighted with the outcome. The Business Hut offer Sage to Xero conversions and full training for you and your staff.

What does “on site” and “remote” support mean?

On site support means we visit your place of work and complete bookkeeping tasks whilst there. Remote support means we complete bookkeeping tasks in our own offices once provided with relevant data either electronically or following physical collection from you.

Do you produce year end accounts?

We are licensed with the Association of Accounting Technicians to prepare year end accounts for sole traders and partnerships only. For limited companies we work closely with your chosen accountant to ensure the smooth transition of accounts data at year end.

Need more information?