By Emily McKenna.
VAT and Making Tax Digital
Back in April 2019, HMRC announced their plans for ‘Making Tax Digital’, finally an easier way for individuals and businesses to be closer to their tax affairs and stay on top of them!
Making Tax Digital (MTD) for VAT is in full swing, VAT registered businesses with a taxable turnover above the threshold (£85,000) should by now be signed up to MTD and following the new rules which include keeping digital records and using accounting software such as Xero to submit their VAT returns.
If you are below the £85,000 threshold you can still sign up for Making Tax Digital. All businesses will be required to follow the digital rules for their first return starting on or after April 2022.
It makes sense to get onto this now if you haven't already and we’re happy to talk you through it so please do send an email to firstname.lastname@example.org and one of us will help you tick this task off your to-do list!
Self Assessment/Income Tax
So who does this affect?
MTD for Income tax affects individuals who have income over £10,000 that are currently within the Self Assessment system. This includes:
- Sole Traders
- Partners in an unincorporated partnership
So, if your only source of income is through your limited company then don’t worry. This doesn’t affect you.
When does MTD for Income Tax come into effect?
Making Tax Digital rules for Self Assessment/Income Tax will need to be followed from 6 April 2024 - a year later than originally planned.
The Government have recognised the impact the Coronavirus pandemic has had on UK businesses and the 12-month delay will provide more time for the Self Employed and Landlords to digitise their records if they do not already.
If you have annual business or property income over £10,000 this will affect you.
What do you need to do now?
Still a way off but again makes sense to get organised and we can help! If you are already a client of ours then don’t worry, we’ll guide you through what you need to do and when.
One thing we would recommend doing to get prepared is for landlords to ensure they have a separate bank account set up for all their rental income and expenses. As well as being the first step in getting ready for MTD, it will also help ensure your rental income is correctly calculated each year.
And last but not least Making Tax Digital for Corporation Tax is still in the pilot stages and will not be mandated until 2026 at the earliest!
As always we are here to answer any questions you may have, get in touch with your Client Manager or email email@example.com and a member of the team will be in touch.