Making Tax Digital is the UK government’s pioneering initiative to take all tax submission online and to therefore enforce digital record keeping via computer software.
Eligible VAT-registered businesses started taking part from April 2019 and other forms of business tax set to follow in the future.
The timeline and goals of Making Tax Digital have changed several times following government review and this guide aims to remove any ambiguity for both businesses and accountancy practices, while offering advice on how to get ready for it.
Beyond a full description of the Making Tax Digital scheme, a helpful business checklist and advice on submitting VAT returns, here are just some of the questions answered within the guide:
- Will I need to set up a new direct debit with HMRC for Making Tax Digital for VAT?
- Do my VAT payment deadlines change with MTD for VAT?
- I keep handwritten sales records. Am I breaking the law now MTD for VAT is here?
- What’s the future for Making Tax Digital for Business?
The ultimate guide to Making Tax Digital also features advice from entrepreneur and Sage Ambassador Peter Jones, who offers top tips to help your business in its Making Tax Digital preparations.
Making Tax Digital should make it easier for individuals and businesses to get their tax right and keep on top of their affairs as well as transforming HMRC into a world leading, digital tax authority. Ultimately, it will make life easier for everybody.
This guide can help your business or practice ease itself into the process with the minimum of fuss and stress.
Below is an excerpt from the guide.
The cost of Making Tax Digital for VAT
For businesses needing to use digital accounting software for the first time, there are a number of providers that will offer this on a subscription basis with packages tailored to your company’s size and/or structure.
Sage offers businesses more than a one-size-fits-all solution—and can help you get ready for MTD for VAT, as well as any other regulations in the future.
HMRC has given an estimate that the costs average at approximately £280 per business across the period of transition. This does not, however, consider long-term efficiency gains from MTD:
On average, a small-or-medium-size business can save 27.6 days a year by using digital accounting software in comparison to using manual methods, giving precious time back to focus on growing the business.
Our research shows SMEs that use digital accounting software can make an estimated saving of £17,000 per annum. Digital accounting software can decrease your admin time, leaving you with more money to reinvest in your businesses.
Prevention of late filing and errors
By automating submission, MTD will help businesses manage their tax affairs by alerting them before payment is due and keeping them on top of their tax liability. This will prevent overdue payments from piling up and reduces the chance of error and incurring penalties.
Editor’s note: This article was first published in July 2018 and has been updated for relevance.
The ultimate guide to Making Tax Digital
Is your business ready for Making Tax Digital? Download this free guide to find out what it means for your business and the steps required to submit VAT returns.