As part of the March 2015 budget, HMRC announced plans to replace the Self Assessment Tax return system with digital tax accounts under it’s Making Tax Digital overhaul of the UK tax system.
So what does Making Tax Digital mean to you?
As it stands, and it may change, there will be a need for all businesses to update HMRC quarterly through a digital tax account. The idea is to introduce this for non-VAT registered businesses from April 2018 and then to VAT registered businesses a year later with everyone else following in 2020. It will apply to sole traders, partnerships, limited companies and landlords. It won’t apply to pensioners or employees unless you received additional income which exceeds £10,000.
So what do you need to do?
Firstly, if you log into your HMRC online account, you may notice that you have a ‘Personal Tax Account’ or at least an invitation to set one up, although not mandatory at this time, it will become so in the future. At the moment, it’s just a shiny cover for the existing information but this will change over time.
You will need to keep your records digitally. There are currently discussions going on as to what this actually means and whether a spreadsheet counts as “digitally”, however, it is likely to mean switching to using some form of bookkeeping software if you don’t already use it.
Finally, you will need to submit your information to HMRC quarterly. So the annual Self Assessment Tax return may be no longer, instead it will be replaced by a quarterly return.
This is just a brief outline of what’s happening and it’s important to make this easy as possible for yourself. If you would like some help, or to chat about what this all means to you then drop us a line for a free, no obligation chat.