You may have heard of ‘Making Tax Digital’, HMRC’s initiative that is set to affect most small businesses from April next year. But what does that mean for Hampshire business owners and what will be changing?
The initiative is aiming to transform the UK tax system, making it more effective, efficient and easier for small businesses. Almost every UK business will be affected by tax becoming digital, starting from 6th April 2019.
What will be changing?
Instead of giving a quarterly figure for your VAT return, compliant software such as Xero, will have to be used to keep a digital record of all your transactions and will be used to submit VAT returns digitally.
Digital tax accounts will mean that business owners will also be able to monitor all details that HMRC holds, such as bank information, and make sure it’s complete and correct.
When are the changes happening?
- Phase 1 – Above £85,000 per annum turnover
If you own a VAT registered business with a turnover above £85,000 excluding VAT, changes are due to be in effect by 6th April 2019.
- Phase 2 – Below £85,000 per annum turnover
If you own a VAT registered business with a VAT-able turnover of under £85,000, changes are due to be in effect by April 2020.
- Phase 3 – Possible expansion beyond VAT
The Government has committed that it won’t widen the scope for ‘Making Tax Digital’ beyond VAT before the system has been implemented successfully and proven to work well. At this point, digital processes may be introduced for Income tax and Corporation tax, not before April 2020 at the earliest.
Clear Vision can help
Clear Vision, Hampshire accountants based in Romsey, are able to offer expertise to avoid confusion and panic over the new process, whilst ensuring compliance. Clear Vision has worked with people across a variety of sectors, so understand the unique financial needs of each individual and offer tailored solutions that tackle their concerns and enable them to plan for the future. Well-known for their ethos, prioritising a customer focus, honesty, clear communication and personal service, Clear Vision provides a transparent service to all clients.
If you’re unsure about using a digital system and looking for assistance, Clear Vision is a Xero Silver Partner and Certified Advisor, and can get you the very best results from Xero for your small business.
Contact our expert team today for advice.