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How will it work ? The changes aim to move to a fully digital system requiring the online filing of quarterly returns with HMRC followed by year-end finalisation of the figures .
The full details of how the Making Tax Digital ( MTD ) scheme will work in practice are yet to be confirmed , but some key principles are likely to apply as follows .
Payments The original idea of quarterly tax payments has thankfully been dropped in favour of a voluntary ‘ pay as you go ’ system .
Filing Businesses can still use spreadsheets for record-keeping ; however , these will need to work with HMRC ’ s new software . Those using third party systems , such as Sage and Xero , will need to rely on their software
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providers to make changes so that their systems are compatible .
Timings MTD for income tax is being phased in from 6 April 2018 starting with income tax for sole traders , unincorporated businesses and landlords who have a turnover of more than £ 85,000 ( the VAT threshold ). It broadly applies if you have to pay income tax or Class 4 National Insurance . From 6 April 2019 the scheme will also be phased in for those with a turnover between £ 10,000 and £ 85,000 .
You won ’ t be obliged to file quarterly returns until your first accounting year starting after 5 April 2018 and the deadline will be one month after the quarter end date .
So , for example , if your year-end is 30 September , you won ’ t need to file your first
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quarterly return until 31 January 2019 .
The proposed start date for VAT is April 2019 and April 2020 for corporation tax . Partnerships with a turnover of more than £ 10 million won ’ t need to comply with the regulations until April 2020 .
Are there exemptions ? HMRC is considering an exemption for employed people or pensioners who have no more than £ 10,000 self-employment or property income , and possibly deferring some changes for certain small businesses .
What next … Businesses must ensure they have the processes in place to allow for quarterly reporting and that their systems are MTD ready .
MTD is prompting many businesses to switch to real-time Cloud Accounting . As a
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specialist in this area , we have helped many of our clients make this transition so that they are ready in advance .
For more information on MTD or Cloud Accounting , contact Jon Miles on : 01225 325580 or email : jm @ richardsonswift . co . uk
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Three years ago Jonothan devised a three-year plan to demonstrate his skills as one of the country ’ s top financial advisers and his dream has now become a reality , winning 13 industry awards in just two years .
Combined Financial Strategies ( CFS ) offers independent financial advice on retirement , investments and tax planning strategies for both business owners and individuals .
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CFS won Financial Adviser of the Year at the 2016 Growth Investor Awards . The award was presented by BBC broadcaster Steph McGovern in front of more than 400 industry professionals at London ’ s Marriott Grosvenor Square Hotel .
Jonothan said : “ Words do not do justice to how happy and honoured I am to be recognised in this way . Winning this award against such tough competition from all over the country
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is the highlight of my career . “ It can be very hard for clients to know who to trust with advising them on their money and financial security . It can seem like a massive leap of faith and I hope that these awards help clients to understand that they can get some of the best financial planning advice in the country right here in Bath .”
Combined Financial Strategies was also recognised as the country ’ s top
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Retirement and Later Life Specialist at the Personal Finance Awards 2016 , staged by the Personal Finance Society . Jonothan said : “ I spent several days writing a 10,000 word case study , demonstrating my specialism in retirement planning . It was hard work , but definitely worth it to win such an accolade .” |
THE BUSINESS EXCHANGE 2017 11 |