By 2023, all sole traders, partnerships and landlords with a turnover of £10,000 and above will need to use Making Tax Digital (MTD) software. Since its introduction in 2019, there has been some confusion around Making Tax Digital and what it means for your business.
A Spreadsheet is Just as Good
Spreadsheets are helpful with some tasks. However, you will soon realise that accounting software goes above anything spreadsheets can do. Spreadsheets are not compatible with MTD. They cannot submit your VAT records in a way that complies with MTD.
VAT returns must be submitted digitally, directly to HMRC through a link. A spreadsheet can be combined with bridging software, however, bridging software will not meet other MTD requirements, such as keeping records.
A Digital Tax System is Too Technical
There are already millions of businesses managing tax online. If you think you may struggle, HMRC has pledged support to help navigate your digital tax accounts. Furthermore, there is already web chat support available through your account.
Making Tax Digital Means Extra Records
With the introduction of MTD, your business will NOT need to keep extra records than you already do. The aim is to make the UK’s tax system as simple as possible.
HMRC has stated that the digitisation of business records will help reduce business burdens by £400 million.
Digital Record Keeping Will be Difficult
We understand that some small businesses may worry about digital tax. However, there is a wide range of bridging and digital accounting software available. You should be able to find software that is easy to use and best suited to your requirements.
In addition, MTD means you can gain a better understanding of your finances. You can see your tax liabilities, preventing any surprises. Furthermore, you can integrate your software with your bank account.
How Can You Prepare?
If you have any concerns about the transition to digital tax, speak to your accountant. They will advise the appropriate steps you need to take. Furthermore, they will help you assess what needs to change.
Switching over doesn’t need to be difficult.
Contact Us Today
For more information about Making Tax Digital, please contact SCS Financial Management. We can offer you advice about how to make the switch. Call us today on 07484 821 645.
Alternatively, you can make an enquiry through our contact form.