Making Tax Digital timetable has been revised

Under the revised timetable:

  • Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes

  • They will only need to do so from 2019

  • Businesses will not be asked to keep digital records or to update HMRC quarterly, for other taxes until at least 2020
  • Small businesses will be able to file digitally on a voluntary basis for other taxes.

The Treasury thinking is that VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly than they do now.

Making Tax Digital for VAT will go into a public beta test in the spring of 2018 and from April 2019, businesses above the VAT threshold will have to file their VAT returns with MTD-compatible software.

What is Making Tax Digital?

What is Making Tax Digital?

UPDATED with latest decisions from Spring Budget 2017

Making Tax Digital is the Government’s programme to move all personal and business tax online. Starting in 2017, and due to complete in 2020, all of us will be affected by Making Tax Digital (MTD).

The Making Tax Digital for Business timetable for all businesses trading over £10,000 is:

  • April 2018 if they have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs), and their turnover is above the VAT registration threshold (£85,000 from 1st April 2017).
  • April 2019 if they are registered for and pay VAT; or have profits chargeable to Income Tax and pay Class 4 National Insurance contribution with turnover below the VAT threshold.
  • April 2020 if they pay Corporation Tax (CT)

Who will MTD affect?

The MTD for business programme affects everyone with a turnover of more than £10,000 per year. There is a phased approach with the self-employed and landlords being the first group required to use MTD from April 2018.

By April 2020, all businesses over the £10,000/year threshold will need to be using MTD.

For individuals and businesses, there’s a range of exceptions in place for those with disabilities and genuine difficulty getting online. Charities have been completely exempted from the scheme, but any trading companies they operate still are required to comply.

Will I have to do four tax returns each year?

No. Businesses will be required to submit an update once per quarter, followed by an annual submission. The updates will be very simple and, in most cases, will be done automatically by your accounting software.

Thanks to the updates and the greater information integration planned by HMRC, the annual submission should be quicker and simpler than the existing self assessment.

Will I need to purchase software?

You will need to use software (Xero is an example) to submit your quarterly returns, but whether you need to pay for it will depend on the size and nature of your business.

HMRC and the business software industry have agreed that there will be provision of free software packages to serve smaller and simpler businesses.

What if I can’t file digitally?

Extensive provision and support has been planned by HMRC for those who cannot file digitally. The provisions are similar what’s already provided for those unable to use existing HMRC online services.

For example, you may be able to nominate someone to submit the information for you or may be allowed to submit information by phone.

Will I need to keep extra records?

No additional records are needed. The requirement is simply to keep your records digitally using a method that is compatible with the MTD programme.

HMRC will publish a list of providers who offer compatible services.

What are the key benefits?

  • The tax system will be simpler, faster, and more accurate.
  • Those who combine PAYE employed roles with freelancing should see more accurate tax codes on their payslips.
  • Everyone using MTD will be able to see live tax calculations from HMRC.
  • A single online tax account with HMRC will help to save time and enable better budgeting.

Author: Crunch.

Change to the Flat Rate VAT Scheme

If you are on the Flat Rate VAT Scheme you will need to be aware of the changes to the Scheme as per 1st April 2017. 

Below is a short extract of the changes:

The VAT flat rate scheme is used by many small businesses to simplify their VAT accounting. The scheme allows the calculation of VAT based on the VAT inclusive turnover of the business, at a rate which provides for some input tax offset. No input tax is recoverable by the business using the flat rate scheme, but many small businesses can find the flat rate scheme shows them a consistent profit against formal VAT accounting. HMRC has now announced that from 1 April 2017 there will be a new flat rate of 16.5% applying to businesses with very low levels of business expenditure. This will increase the effective rate of VAT paid by these businesses to 19.8%, thus limiting the benefit they gain by operating the flat rate scheme to 0.2% of the value of their supplies.
Businesses will be required to use the new rate if their expenditure in a year is less than 2% of their VAT inclusive supplies, or for businesses with VAT inclusive supplies of less than £50,000, more than 2% but less than £1,000. Expenditure on capital items and motor expenses will be ignored in meeting this threshold.

For an in depth explanation please follow below link:

https://www.gov.uk/government/publications/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note/tackling-aggressive-abuse-of-the-vat-flat-rate-scheme-technical-note

 

HMRC is making tax digital

HMRC is making tax digital.......by 2020, HMRC will have moved to a fully digital tax system where:

  • bureaucratic form-filling is eradicated — taxpayers should never have to tell HMRC information it already knows;
  • unnecessary time delays are eliminated — the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next; and
  • taxpayers have access to digital accounts — with the information HMRC needs automatically uploaded, bringing an end to the tax return.  

If you would like to know more you can read further here https://www.gov.uk/government/publications/making-tax-digital   

Small Business Saturday UK 5th Dec. - Free conversion from Quickbooks, Sage and Excel to Xero.

Small Business Saturday UK 5th Dec. - Free conversion from Quickbooks, Sage and Excel to Xero.

As part of the Small Business Saturday UK 5th Dec. we offer to move your books for FREE  from Sage, QuickBooks or Excel to the award winning cloud based financial software Xero. So if you want to join 500,000 small businesses around the world using this beautiful accounting software then get in touch with us for your free conversion. We can help you move your business into the future and onto the cloud with Xero. If you want to know more about the value Xero will add to the way you run your business then get in touch here or call 07808 279 358. Conversions are limited!

Small Business Saturday UK - 5th Dec. 2015


The campaign that puts small, independent businesses in communities across the country in the national spotlight has announced their most extensive nationwide promotional bus tour yet to raise the profile of the Small Business Saturday UK campaign and the day itself, Saturday December 5th.

Using the theme “5 million small businesses, 1 big day”, The Bus Tour will begin on Sunday November 1st at John O’Groats before moving to Elgin and Glasgow promoting the campaign to both consumers and small business owners around the UK.

The bus tour will visit the east and west coasts of the UK and cross the Irish Sea for three stops in Northern Ireland, concluding at Land’s End on Friday November 27th. This year the bus tour will be supported by TalkTalk Business.

Why not get involved in this great campaign that highlights small business success and encourages consumers to support businesses like yours in your community.

For more information on the Small Business Saturday campaign and bus tour please email comms@smallbusinesssaturdayuk.com or visit Small Business Saturday UK.