From understanding expenses to starting a limited company, our downloadable business guides can help you.
We passionately believe that the future for small businesses is digital. Using online tools helps businesses to focus on what they are best at and automate away as much administration as possible. Which is why we’ve been broadly supportive of HMRC’s Making Tax Digital programme (MTD).
We were slightly worried when the official confirmation for MTD’s timetable wasn’t announced in the Autumn Statement as had been expected. The Treasury promised an announcement by the end of January and today they kept their word with a big response to last year’s mammoth consultations.
We’re still going through the detail but here’s what we know so far:
From 2018 most businesses, sole traders and landlords will need to start keeping digital records and update HMRC quarterly, or more often if they wish. HMRC have now said that MTD compatible spreadsheets will be allowable, this previously hadn’t been clear.
Those with an income below £10,000 will not be required to use the new MTD system. A transitionary approach is proposed for businesses just above £10,000 but what thresholds will be used has not been declared. HMRC have said they will do further work on thresholds. Some further exemptions for Charities, large firms and partnerships have also been announced.
UPDATE: Spring Budget 2017 has confirmed that businesses with turnover below the VAT threshold (£85,000 per year from April 2017) will be given an additional year to comply with MTD. So rather than having to be ready by April 2018 they will have until April 2019.
HMRC has announced that users will be given at least 12 months grace before penalties are applied for failing to use MTD. Further consultation is planned on a revised penalty system.
It’s very good news that HMRC have held firm to their planned timetable for Making Tax Digital, this gives businesses and those that serve them the certainty to plan ahead. We think that overall MTD will be a very positive transition making taxation more efficient, accurate and less of a burden for everyone. We will continue with our plans to be an early provider of MTD-compatible software.
You can keep up-to-date on all our MTD updates on our special MTD topic page.
PS I was absolutely delighted to see that Micro-businesses were explicitly considered as a distinct sector in HMRC’s impact assessment, this was something we have long been calling for. We’re delighted to see it happen here, though sadly it’s not yet consistent as shown in the recent VAT changes.
Over the last few months of 2017 and the whole of January, client managers are busy reminding people of upcoming deadlines and things they’ll need to do to make it easy for them to keep on top of their Self Assessments.