With less than a month to go until the first mandatory stage of Making Tax Digital (MTD), we’re fully prepared for the change – are you?
What is MTD?
MTD is part of the Government’s plan to make it easier for businesses to stay on top of their day-to-day accounts. By 2021, HMRC plans to end paper accounting and create a digital tax system to replace self-assessment.
When does it all happen?
From 1 April 2019, any business above the VAT-registration threshold of £85,000 will be required to set up a digital tax account and file their returns online through a compatible online accounting system.
Sole traders and partnerships, with an income between £10,000 and £85,000 will also have to keep records in a digital format from 1 April 2020.
How do I prepare?
There is not a lot of time left to prepare for MTD, but there is a lot to do. At Dunkley’s, we understand that this hasn’t necessarily been at the forefront of your mind, so here are five of our most important steps to do before the deadline hits:
- Check your included: The initial phase of MTD is for any business above the VAT-registration threshold of £85,000. If you fit within the category, you will need to set up a digital tax account urgently and file your VAT returns online through compatible software. If your business doesn’t fit into this category, you have the option to move but it is not mandatory until 2021.
- Review your current system: With the new changes coming into effect, it is the perfect time to iron out any problems in your current accounting processes for VAT. Is there anything you can do better? Is there a way it can be more efficient? Do some research and see if making a small change would make a big difference.
- Choose your software: Compatible software is a requirement. At Dunkley’s we recommend either QuickBooks or Xero depending on the size and needs of your business. If you need advice or support on which would be more suitable for you, please get in touch or read our blog which compares the two.
- Join the pilot scheme: MTD pilot schemes are open for VAT and income tax, and it’s a chance to get used to the new process before you’re required to use it. If your business doesn’t need to make the switch in April 2019, we highly advise you join this, so you are up to speed with how things work before you have to move over.
- Get advice: As this is such a big change, it is best to get advice from an expert. Amber and Fiona are Dunkley’s in-house MTD specialists, feel free to call them on 01454 619900 if you get stuck or have a question.
If you are worried about being compliant before MTD comes in, or just need some extra advice, please don’t hesitate to get in touch by calling 01454 619900 or emailing advice@dunkleys.accountants