The government has plans for Making Tax Digital to be made mandatory by 2020 and recently reported a change to the MTD timeline.
Now, any business that is over the VAT threshold, whether required to register for VAT or not, will be required to report under MTD from April 2019. This means it’s important for these businesses to start preparing immediately, to make sure they are accustomed before the scheme becomes mandatory.
How can these businesses start preparing?
All individuals and businesses that want to start using digital tax services can already access their own personalised account. These services are already being improved to lead up to the final Making Tax Digital changes, so it’s worth jumping on board now before it becomes mandatory.
Simple and easy switches can start to be made in the lead-up, including using digital record keeping. You don’t have to switch everything over all at once, but starting to keep digital receipts, expenses etc. can help to set you on the path to Making Tax Digital.
Set up a meeting with your business accountant to talk to them about what they need from you, in order to make your accounts digital. Your accountant can then run you through what the changes will be, the benefits and what digital software you can look at implementing in order to keep your digital accounts organised.
Will businesses under the VAT threshold have to opt in for MTD?
Those businesses that find themselves above the VAT threshold will have to make sure they have their digital tax in place before April 2019, but what about those that lie under the VAT threshold?
Businesses below the VAT threshold will not be required to opt in to Making Tax Digital by 2019. Instead, they will be given the choice as to whether they use the service up until the final deadline of 2020.
Of course, it is best to make sure you’re prepared as early as possible, so starting digital tax before 2020 is highly recommended.
There are plenty of benefits to Making Tax Digital that can greatly improve the way businesses handle their accounts. Talk to your accountant today to find out more and start planning to make the switch.