MAKING TAX DIGITAL: WHAT YOU NEED TO KNOW
You’ve probably heard that tax is going digital, but do you know what that actually means and how it impacts you as a business? If not, read on!
Making tax digital means keeping records of all your accounts online using HMRC approved software. And, rather than filing your accounts annually, doing it quarterly using the online system. But, don’t panic, the stress is not quadrupled. Because all your records are kept up to date and filed electronically throughout the year, filing your accounts is more about checking your details rather than digging out receipts from six months ago. It should make the process simpler, more efficient and mean that:
You won’t need to submit details more than once; everything is stored and can be updated online
You always know how much tax you owe; tax information is processed and updated in real-time, so while you still only pay it once a year, you can keep track of the amount
You can easily see an overview of your finances as everything is stored in one place
The idea to transform the way we do our tax was introduced in the April 2015 budget, and while digital is still assumed to be the best approach, amendments were included in the September 2017 Budget. Now, only businesses that earn over the current VAT threshold amount of £85,000 will be required to file their VAT return digitally by April 2019. Digital filing of other taxes won’t become mandatory until at least 2020.
Should I go digital?
Given the April 2019 deadline, if you earn over the VAT threshold, start thinking digital now. But, if you don’t, nothing is stopping you from going digital anyway. That way you’ll be prepared when it does become mandatory, and you’ll likely find that it saves you time and money. Switching to digital accounting software also gives you greater control over your finances and enables you to monitor your cash flow.
If you need help making the switch or simply want to discuss your options and what is best for you, give us a call, we are here to help. Rebus Bookkeeping are familiar with a range of software and can work with you to get set-up and maintain your accounts.