MTD changes for voluntarily VAT registered businesses are edging nearer with the date set for April 2022 when all VAT registered businesses, no matter of size or company structure, will need to submit their returns using HMRC recognised software. Fast forward a further year to April 2023 and MTD for Income tax self assessments also, comes into force. The question is - is your business ready for these changes?
Many businesses are still recovering and adjusting from the effects of the Covid-19 Pandemic and these additional requirements could add unnecessary strain. There are plenty of bookkeepers and accountants with software knowledge that can help get you set up, train you on the software and help with your quarterly returns for both VAT and Income Tax, which will save you precious time and energy that you can put back into your business. You may even be surprised at how little this costs for the value you will gain in not having to manage this area of your business by yourself.
Why is MTD happening? - The Government's plan is to digitalise the way tax is reported to make it easier for individuals and businesses to get their tax right and keep on top of their finances. A statistic from the HMRC website shows that in 2018 - 2019 avoidable tax mistakes costs the Exchequer £8.5 billion!
MTD for Income Tax - From April 2023 if you are a sole trader, partnership or landlord and your income (taxable turnover) is over £10,000 per year, you will need to use recognised software to submit updates on your income and expenses to HMRC. When you hit your year end you will then submit a final declaration to confirm the previous returns were correct, or make any necessary adjustments and see a final tax calculation. This amount is then due by the following January. You don't need to wait until April 2023 to get signed up, you can voluntarily sign up now or at your current year end. To follow the rules for MTD you will need to:
- keep digital business records
- get compatible software
- sign up to MTD
- send business income and expenses updates
- finalise your business income
- submit a final declaration instead of a Self Assessment tax return
Many business owners will think this change is going to have a massive impact on their time and costs, but it doesn't need to and convincing these businesses to outsource their bookkeeping may be the better solution to ensure tax submissions are accurate and on time. The key benefits to asking for help are:
1 - Lack of knowledge - accounting software can be daunting and small business owners aren't usually bookkeepers. Asking for help can mean your bookkeeper or accountant will source the right software for you, help get you set up and show you ways in which you work the system yourself, if you choose to, or show you ways in which you can help provide all the information for the returns to be completed by them.
2 - Save Time and Resource - As said above, this can feel like a really daunting task to get set for MTD and one no doubt many businesses will put off until March 2023, just before the deadline. However, asking for help now, can mean you have everything in place and a good workable system that you can tailor over time.
3 - Understand your business - By following MTD, business owners will have real time information on how their business is performing rather than waiting for their accountant or bookkeeper to send the figures at the end of the year. This can give a more hands on approach to the business owner allowing better business decisions and potentially allowing more business growth. Business owners will also have more insight as to what their tax liability is likely to be and can plan for that money rather than try and find it when the bill is due.
As business owners we all know change is tough, but it really doesn't need to have a negative impact on anyone's business. All we need is communication, trust and and a helping hand.
Comentarios