We’ve reached the advent of HMRC’s Making Tax Digital trial, which opens next month. I’ve started talking to people about it to see what they think.
Opinions are divided, with two clear camps.
Some are annoyed by the change. They don’t enjoy preparing one tax return each year, so the idea of reporting their income quarterly instead is a big burden. Typically, these guys are the ones who keep everything in a shoebox until after year-end, then they open it up and prepare their taxes.
The other camp, and I’m pleased to say that most of my clients fall into this category, seem unfazed by the upcoming changes. Which is great, they’ve got no need to be!
We encourage our clients to keep their books up to date every day, and if they don’t have time or the inclination to do this we ask if we can do it for them. This is because the benefits from having up-to-date accounting information are immense. You can always see where your business’ finances are, you can react quickly to changes and you can plan your future spending.
So with accounts that are always ‘live’, MTD becomes a click of a button exercise, it really is no hassle at all.
Personally, I think that there are a lot of business owners who will benefit from MTD. They will have to work out their tax quarterly instead of annually, meaning that they can better plan their payments.
MTD will be no more work than before, it’s just that we’ll have to do a little bit each quarter instead of all of it at the end of the year.
Still not convinced? Don’t worry. MTD won’t be compulsory until at least 2019!
Reporting taxes just once a year is on its way out. Businesses will need to start making quarterly tax submissions from 2019. Although it may mean you have to make changes, it can actually help streamline tax and accounting.