I’m A Small Business – How Will Making Tax Digital (MTD) Affect Me?
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Even with HMRC closing the knowledge gap on Making Tax Digital (MTD), it’s still a source of confusion for many. This is particularly the case for small businesses, who are uncertain whether they actually need to adopt this into their accounting systems or not.
To assist, we’ve detailed who exactly needs to submit digital records, along with what you’ll need to do if you are liable.
MTD for VAT is the closest arrival of the digitalisation of tax. However, unless you’re VAT-registered or have a taxable turnover that exceeds the current threshold (£85,000), you won’t need to complete your return online.
2020 is the proposed date for submitting other forms of tax in this way. Those who either have an unincorporated business, or only submit a Self Assessment return because they are a landlord, may not need to do so digitally. If their annual turnover is below £10,000, they will be exempt.
Taxpayers with income above this amount, but below the VAT threshold, will have an additional year after MTD’s roll-out date to prepare for it.
There are a few other exemptions too, which aren’t specifically related to being a small business. If you can’t use MTD software due to your religion, disability, age or remote location, then this is also reasonable grounds for exclusion.
Whilst you might fall under the exemption criteria, you may want to file your tax records online anyway. In this situation, you can voluntarily do so.
If submitting tax online falls on your to-do list, then preparation is vital. You’ll be providing HMRC with tax information at least four times a year – so not only will the way you complete your accounts change, but your administration burden will increase too.
You’ll then have a decision on your hands: which Making Tax Digital software provider to choose. There are compliant accounting software suppliers available, and HMRC have a list of those they have approved, like Liquid Accounts.
If you want to use spreadsheets, then this is still possible. However bridging software will likely be necessary so that any information is in the correct format for submission to HMRC.
It’s important to keep up to date with what is happening with MTD also. Whilst the chances of a delay on the VAT roll-out are now extremely unlikely, it could be that the Income and Corporation Tax launches are deferred.
MTD will be introduced eventually, so even though we can’t rule out a postponement, the sooner you prepare for it, the better. This is especially because software tools make accounting significantly easier.
There’s no need to look any further for your MTD-compliant software than Liquid Accounts. We’re ahead of the VAT roll-out already with our MTD VAT Filer. It offers all the features to make your transition to digital tax seamless. There are no limits on integration either – we retain your details to provide one-time-only data entry, and the platform is scalable too.
Get started by finding out more about our VAT Filer today. If you require any more information about the impact of MTD on your small business, give our team a call today on 0161 413 5050 or email info@liquidaccounts.com.