Tag Archive for Making Tax Digital

Hot Business News Today

What is Making Tax Digital and why should you care?

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By Dan Matthews on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Making Tax Digital explained
Making Tax Digital (MTD) is a government plan to shift paper-based tax reporting online, spelling the end of form-filling for millions of UK businesses. Changes affecting value added tax (VAT), income tax and corporation tax are being introduced over time, meaning a growing number of small firms are falling under MTD’s scope.
Businesses with turnovers higher than £85,000 are already required file quarterly VAT submissions digitally under MTD rules, records for which must be kept online and submitted via software. Those with a turnover lower than the £85,000 threshold will have to comply by April 2022.
Next in line for digitisation is income tax: individuals with a self employed or property income over £10,000 per year must adopt digital filing from 6 April 2023, while corporation tax will shift online sometime after 2026 following a pilot period, according to the latest plans.
What businesses must do under MTD rules:

Keep digital records
Submit summary information to HMRC once a quarter
File an end of period statement to make any adjustments and a final declaration by 31st January each year.

Why is tax going digital?
There are many reasons for the

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Hot Business News Today

What is Making Tax Digital and why should you care?

by  •  • 0 Comments

By Dan Matthews on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Making Tax Digital explained
Making Tax Digital (MTD) is a government plan to shift paper-based tax reporting online, spelling the end of form-filling for millions of UK businesses. Changes affecting value added tax (VAT), income tax and corporation tax are being introduced over time, meaning a growing number of small firms are falling under MTD’s scope.
Businesses with turnovers higher than £85,000 are already required file quarterly VAT submissions digitally under MTD rules, records for which must be kept online and submitted via software. Those with a turnover lower than the £85,000 threshold will have to comply by April 2022.
Next in line for digitisation is income tax: individuals with a self employed or property income over £10,000 per year must adopt digital filing from 6 April 2023, while corporation tax will shift online sometime after 2026 following a pilot period, according to the latest plans.
What businesses must do under MTD rules:

Keep digital records
Submit summary information to HMRC once a quarter
File an end of period statement to make any adjustments and a final declaration by 31st January each year.

Why is tax going digital?
There are many reasons for the

Read more...

Hot Business News Today

Best UK small business accounting software – review guide

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Originally written by Timothy Adler on Small Business
UPDATED: As every entrepreneur knows, with everything going digital, more and more is being pushed onto the poor small business owner.
HMRC rolled out its Making Tax Digital initiative in 2019, compelling 1.2 million VAT-registered businesses which earn £85,000 plus in turnover to file returns online. Those businesses now must submit their quarterly VAT returns under the new system.
However, it’s not going to stop there – MTD will be widened to include income tax and corporation tax from 2021 onward.
Given that moving to small business accounting software is inevitable for every SME, surely, it’s time to put away your paper and pencil (or your standalone Excel spreadsheet).
To help you decide, we’ve looked at the best UK small business accounting software packages on the market.

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Best UK small business accounting software
Every small business is different. Most small businesses can make do with basic functions like invoicing, bank reconciliation, income and expense tracking and financial report generation.
Indeed, most UK small business accounting software offers the same features, it’s just that you may feel more comfortable with how one is designed over another – and then of

Read more...

Hot Business News Today

All small businesses to go Making Tax Digital by 2024, Treasury suggests

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Originally written by Timothy Adler on Small Business
Millions of self-employed and small businesses face having to pay income and corporate tax bills much earlier, as the Treasury seeks to fill its £31bn tax gap.
The £31bn is the money HMRC should be collecting but falls through the gaps in the current tax system.
And small businesses, including freelancers, are the worst miscreants for this, accounting for £13.4bn of this tax gap.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
As part of a raft of 30 consultations and updates, the Treasury has proposed bringing forward the payment of income tax self-assessment and corporation tax for small companies. The Treasury suggested accelerating all tax payments after 2024 to fulfil its “vision [for] a tax system that works closer to real time”.
The consultation suggested using the rollout of the requirements on digital filing of tax returns under Making Tax Digital over the next two years to use up-to-date data to “bring the calculation and payment of tax closer to the point where the income or profit arises”.
Jesse Norman, financial secretary to the Treasury, said the government recognised the plan would be a significant change and, as a result, “has

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Hot Business News Today

All small businesses to go Making Tax Digital by 2024, Treasury suggests

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Originally written by Timothy Adler on Small Business
Millions of self-employed and small businesses face having to pay income and corporate tax bills much earlier, as the Treasury seeks to fill its £31bn tax gap.
The £31bn is the money HMRC should be collecting but falls through the gaps in the current tax system.
And small businesses, including freelancers, are the worst miscreants for this, accounting for £13.4bn of this tax gap.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
As part of a raft of 30 consultations and updates, the Treasury has proposed bringing forward the payment of income tax self-assessment and corporation tax for small companies. The Treasury suggested accelerating all tax payments after 2024 to fulfil its “vision [for] a tax system that works closer to real time”.
The consultation suggested using the rollout of the requirements on digital filing of tax returns under Making Tax Digital over the next two years to use up-to-date data to “bring the calculation and payment of tax closer to the point where the income or profit arises”.
Jesse Norman, financial secretary to the Treasury, said the government recognised the plan would be a significant change and, as a result, “has

Read more...

Hot Business News Today

Halt rollout of Making Tax Digital to smallest businesses, urge MPs

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Originally written by Timothy Adler on Small Business
The rollout of Making Tax Digital, HMRC’s rolling scheme for businesses to self-report tax owed, should be halted before it reaches the smallest of businesses.
So says the cross-party public accounts committee in its report on bridging the £31bn tax gap between tax owed and what actually comes into the Treasury’s coffers.
MPs warned that it was unclear whether the controversial rules had achieved their stated aim of reducing tax errors.
>See also: Making Tax Digital bridging software: what is it and how much does it cost?
Since April 2019, VAT-registered businesses and the self-employed people with a turnover in excess of the £85,000 VAT threshold have been forced to use accounting software when they file their returns.
From April 2022, HMRC wants all VAT-registered businesses to adhere to Making Tax Digital. Self-employed people and landlords with a turnover of more than £10,000 will face the extra requirements from 2023.
Critics say the cost of applying the new rules has been unreasonably high. A report by trade body Association of Taxation Technicians found that some small businesses had been forced to spend more than £5,000 on software and training.
>See also: Five steps for small businesses Making Tax Digital
Extending the

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Hot Business News Today

Labour to stop rollout of Making Tax Digital to all small businesses if it wins

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Originally written by Timothy Adler on Small Business
Labour will stop the rollout of Making Tax Digital to all VAT-registered small businesses if it wins the general election.
Currently, MTD only applies to VAT-registered small businesses with turnover higher than £85,000. However, HM Revenue & Customs is planning to extend MTD to all VAT-able small businesses in its drive to find more revenue.
Rebecca Long-Bailey, shadow business secretary, told Radio 4’s Today programme: ““We’re going to scrap quarterly reporting for companies with turnover under £85,000.”
Long-Bailey was speaking on the morning Labour published its 20 Pledges to Business document, which encapsulates Labour’s thinking when it comes to helping small businesses, which Long-Bailey describes as “the lifeblood of our economy and our communities”.
>See also: Business rates reform key, says Labour business chairman Rachel Reeves
Although most of the 20 pledges have been announced elsewhere, those of most interest to small business are:
Reform business rates

Introduce statutory annual revaluations to stop small businesses facing periodic and unmanageable rate hikes
Guarantee a fair and transparent appeals process
Exclude new investment in plant and machinery from future business rates valuation to encourage investment

Establish a £250bn UK National Investment Bank
The National Investment Bank and a network of regional and national development banks will

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Hot Business News Today

Best UK small business accounting software 2019 – review guide

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Originally written by Timothy Adler on Small Business
As every entrepreneur knows, with everything going digital, more and more is being pushed onto the poor small business owner.
This year, HMRC rolled out its Making Tax Digital initiative, compelling 1.2 million VAT-registered businesses which earn £85,000 plus in turnover to file returns online. Those businesses now must submit their quarterly VAT returns under the new system.
However, it’s not going to stop there – MTD will be widened to include income tax and corporation tax from 2021 onward.
Given that moving to small business accounting software is inevitable for every SME, surely, it’s time to put away your paper and pencil (or your standalone Excel spreadsheet).
To help you decide, we’ve looked at the best UK small business accounting software packages on the market.
Best UK small business accounting software
Every small business is different. Most small businesses can make do with basic functions like invoicing, bank reconciliation, income and expense tracking and financial report generation.
Indeed, most UK small business accounting software offers the same features, it’s just that you may feel more comfortable with how one is designed over another – and then of course, there’s the cost.
Best accounting software for UK small businesses 2019

 FreeAgentSage Business

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Hot Business News Today

Why businesses should rethink their accounting software for Making Tax Digital

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Originally written by Ben Lobel on Small Business
Now that Making Tax Digital is here, you should be moving your accounting software to an online or cloud platform if you haven’t done so already.
Going from the consultation documentation available, HMRC has no plans to provide their own free software. This forces the majority of businesses to obtain a software which will be suitable for business use.
So, which accounting software should you go for?
It largely depends on the type of business you run. Each business has to decide based on their personal circumstances. For SMEs specifically there are a number of different cloud software systems currently out there which are capable of recording transactions online. Here are some to consider:
Xero
Xero has several plans which businesses can choose from depending on their needs. The prices below are only available for a limited time and will increase after three months.
Starter: £5 + VAT per month. This package is suitable for small businesses or contractors as it only allows you to send up to five invoices and reconcile up to 20 bank transactions per month. This price will increase to £10 after the first three months.
Standard: £12 + VAT per month. It doesn’t restrict you

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Hot Business News Today

HMRC’s new digital VAT rules – 6 steps for submitting tax returns correctly

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Originally written by Partner Content on Small Business
Making Tax Digital (MTD) for VAT is new HMRC legislation that forms part of a wider plan to eventually digitise all tax for UK businesses. All VAT-registered businesses with VAT-able sales above the annual VAT threshold (currently £85,000) are now required by law to keep digital records and file digital VAT returns through MTD-compatible software.
The majority of businesses need to do this for VAT periods that started on or after 1st April 2019 and around a million UK businesses are required to submit their VAT returns under the new system.
When you run your own business, changes to tax legislation can often seem intimidating but complying with Making Tax Digital needn’t feel that way. This checklist walks you through how to get up to speed with the new rules and how you and your business can benefit from the new system.
Register for MTD with HMRC
If you haven’t already done so, you’ll need to register for MTD with HMRC as you won’t be registered automatically. You can do this by visiting HMRC’s website. Once you’ve done this, you’ll need to connect your HMRC account to your chosen software. Be aware that it can take up

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