Did you see our March blog about Making Tax Digital? This is a key part of the government’s plans to make it easier for you, as an individual or a business to get your tax right and to keep right on top of your finances.
In this article, we’ll look at
- whether MTD applies to your business
- even if it doesn’t, you still should be running your bookkeeping and accounts online
But first a reminder – what exactly is MTD?
Where better to look for the answer than from the HMRC website.
“Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world.
Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right”
Does MTD apply to me and my business?
Probably, but if not, it soon will. HMRC is making a gradual rollout of Making Tax Digital over two phases.
Phase 1 – This is for you if your business turns over more than £85,000 (the current VAT threshold)?
Then the key date for you was April 1st this year. This was all about your VAT returns and, by now you’ll be using compatible software to make your VAT declarations online.
Yes – but I trade below the VAT threshold – so I’m in the clear
Well – you may be – but not for long! In April 2021, phase 2 kicks in. By then, MTD will apply to all businesses, regardless of size. (OK – there still might be a very few exceptions. If you’re not sure, call us on 01908 030843.)
Phase 2 relates to your corporation or income tax returns. Managing this without specialist software will be nigh impossible. But – don’t worry. There’s nothing to be fearful of. You have two very good reasons to relax –
- There’s some fantastic software available that’s efficient, low cost and amazingly easy to use.
- We’re official licensed partners of Xero – the leading accounts software. We know this terrific product inside out. We’ll train you on how to use Xero and, from day one, we’ll be on-hand to help with any issues.
What’s so special about Xero?
We’re great fans of Xero and here are a few reasons why –
- It’s recognised by HMRC for being 100% MTD compatible
- Our clients love Xero – it saves time and, consequently, saves them a lot of money
- It automatically handles so many time-consuming tasks
- importing and reconciling bank transactions
- sending statements and invoice reminders
- linking up with GoCardless, you can automatically apply Direct Debits
- safely stores your data
- gives you instant snapshots of your business – profit & loss, balance sheets, cash position etc
- You can invite us in at any time to check on how you’re doing and to make sure you meet all your tax obligations
- As your business grows, you might want to introduce Xero Payroll or Xero Projects
- Do business from anywhere – on any device, even your mobile. All you need is internet access. Plus, keep all your essentials like invoicing and payroll at your fingertips with Xero’s mobile app.
- Xero is incredible value – all this efficiency and cost-saving for as little as £xx per month.
But I do everything with Excel. Do I have to change?
Well, we’d advise you to switch over – for all the reasons listed above. After all, we want you to have as easy and efficient business life as possible! But – if you really want to stick with your current processes, we can help you implement Xero’s ‘bridging’ software which links your Excel data to HMRC.
I’m still not convinced
That’s OK. Talk to us about a Xero trial. We’ll work with you to show you how wonderfully straightforward online bookkeeping can be.
Just bear in mind
Here at Mad Hatters Accountants, we’re Xero experts. We’re perfectly placed to guide you through the switch to Making Tax Digital. All it takes to give you peace of mind is to pick up the phone. We’ll be delighted to hold a no-obligation conversation and talk you through the process.
Call us on 01908 448150
Send us an email.
Remember – we’re here to help