If you’re a business owner, you’ve probably already heard people talking about Making Tax Digital: But what does it mean?
Here robinson+co Accounts and Sage manager Tracey Kennett explains a little more about Making Tax Digital and what it means for your business.
Making Tax Digital (commonly referred to as MTD) is the name for the government programme making it a legal requirement for small businesses and the self-employed to keep digital tax records and submit tax returns online.
Using digital accounting software such as Sage to keep track of your tax data is much easier and more convenient than using spreadsheets or paper records.
When do I have to be ready for MTD?
If you are a VAT-registered business then you have to have MTD in place by April 1, 2022.
MTD for income tax self-assessment will apply to sole traders and landlords with an income over £10,000 from April 2023.
The earliest expected date for incorporated companies to comply with MTD for corporation tax is April 2026.
What do I have to do if I run a VAT-registered business?
MTD for VAT means all VAT-registered businesses must use software to do their accounting and file their returns using software online. MTD for VAT must be used by those voluntarily registered for VAT for their first VAT period following April 1, 2022.
VAT returns must be filed through HM Revenue & Customs compatible software, such as Sage. It will no longer be possible to file your returns through the HM Revenue and Customs website, although your accountant can still file the return on your behalf.
Most VAT records relevant to the VAT return must be kept using software. It isn’t possible to opt out of MTD. However, some businesses may ask HM Revenue & Customs to consider their circumstances, for example, if they feel they are digitally excluded for reasons such as having no internet due to their location.
You have to sign up for MTD for VAT ahead of time and you won’t be automatically transferred across.
Why use Sage?
robinson+co are accredited Sage accounting software partners. Sage is 100 percent compliant with HM Revenue & Customs and has even been developed alongside HM Revenue & Customs to ensure it makes things as easy as possible for businesses.
To get started, all you need to do is:
- Sign up for Sage and register for MTD on the HM Revenue & Customs website
- Connect your Sage accounting to HM Revenue & Customs
- Fill in and submit your VAT return in Sage accounting
As well ensuring you’re MTD compliant, Sage also makes life easier in lots of other ways.
Sage automatically imports your data from spreadsheets, CSV files, and other accounting software, making the switch to digital easy.
You can automate your bookkeeping with features that allow you to snap and capture receipts, sync your records with your bank and automatically calculate VAT.
If you make mistakes on your return it is easy to search for and resolve them using Sage.
The software allows you to track your tax position in real time and manage your cash flow, as well as saving time which you can then spend on other aspects of your business.
robinson+co can help
No matter what type of business you run, MTD is highly likely to affect you in some way so it’s a good idea to begin thinking about it now.
As accredited Sage accountant partners we’re perfectly placed to help you through the process. We’ll make sure you’re fully compliant and help you take full advantage of all the benefits it has to offer.
To find out more contact Tracey at [email protected]