Through Making Tax Digital (MTD) for VAT, the government are seeking to modernise the way we process and submit our taxes. The overall scheme will see the assigning of a digital ID to every taxpayer, meaning that individuals and businesses will be able to handle all their tax affairs completely online, ultimately reducing errors and late submissions for a more efficient system.
The successful implementation of MTD is set to revolutionise tax for the better, but it will take a while for everyone to get prepared. That’s why the initial roll-out of the scheme, MTD for VAT, will come into effect in April 2019 – leaving people with exactly one year to get ready.
Who does MTD for VAT apply to?
Eventually, MTD will be relevant for every taxpayer. For the time being, however, only VAT-registered businesses with a VATable income over £85,000 (the VAT tax threshold) will need to be prepare for the beginning of the first phase in April 2019.
MTD for VAT will change the way in which businesses submit their VAT returns to HMRC. They will still submit the same report on a quarterly basis as they have always done, but from next April this must be completed via HMRC’s new MTD platform.
In time, MTD will be applicable to those producing Self Assessments, too, and it is definitely in the best interests of the self-employed and landlords to start making the shift from paper to digital when it comes to tax returns. It’s faster, easier and simpler this way, and the sooner you make the transition, the better it will be for your business overall.
How do I prepare for MTD for VAT?
Getting ready for MTD for VAT involves adopting good practices that are not just digitally-focused but also HMRC-friendly.
A good place to begin is by making the switchover to quality tax and bookkeeping software that’s recognised by HMRC. By using effective software that’s HMRC-compliant, you’ll complete your tax returns and bookkeeping sheets with greater accuracy at a quicker speed – before sending them directly across to the taxman.
When should I make the switch to tax software?
As soon as you possibly can!
Whilst there’s always no time like the present, this month is a particularly good period to move your tax habits over to the online realm. It’s the beginning of a brand new tax year: start now, and you’ll have a whole 12 months’ worth of accounts ready in digital format, meaning you’ll be fully prepared for when April 2019 comes around. It’ll be here sooner than you think…
SimpleBooks doesn’t just rank amongst the favoured pieces of software available on the market, it will also be HMRC MTD VAT compatible.
If you’d like to learn more about MTD for VAT and what you need to do to get ready for the future, head over to the GOV.UK website, where you can read up on the most important information surrounding the legislation.