Making Tax Digital for Business (MTDfB)
Deadlines are loomingLet’s talk about making tax digital.
You may or may not have heard that the tax return as we know it is on its way out, and quarterly electronic submissions are on their way in.
But what does this mean? It means that electronic records must be kept and data transmitted to HRMC on a quarterly basis.
When does this need to happen? This depends entirely on what type of income you have and what type of tax you pay.
Here’s the basics for you. If you’re self-employed (subcontractor or sole trade business), or a landlord and your turnover is over £85k (the VAT threshold); then from April 2018 you will need to start submitting your profit and loss results quarterly. If you are self-employed or a landlord and your turnover is less than £85k but more than £10k, then you need to start as of April 2019.
If you’re VAT registered, then the new HMRC system will need to be used as of April 2019 for your VAT returns. As for those that pay Corporation Tax (i.e., limited companies), then you need to be submitting your profit and loss results from April 2020 onwards.
What if you’re in a Partnership or LLP? You will need to nominate a partner to be responsible for the submissions. The start date for you will be dependent on the level of turnover attributed to profit share. For example, if your turnover is £50k and it’s a straight 50/50 Partnership, the start date is April 2019.
However, if the turnover is £50k and the profit share is 90% to one and 10% to another, then you still need to submit data for both partners, as one of you is above the threshold.
There are exemptions, you’ll be pleased to hear. The government are being lenient on those that have an annual turnover of less than £10k, and don’t insist on digital record keeping and quarterly updates but you must still report to HMRC annually. However, you lucky things, you can still opt in to the scheme if you so desire.
It should be noted that whilst the quarterly updates are being insisted upon within one month of the quarter’s end; it does not mean that you are expected to pay every quarter. The good news is that that remains an annual requirement. For those that pay VAT, however the leniency on submission and payment is changing from one month and seven days to just one month.
More good news for those that are always late to the party (if the party is submitting records, that is); the penalties for late submission are expected to now have a cap of £3k. That said, we wouldn’t recommend that.
There’s a better way: why not just get in touch with us instead? We can help you with just the software or indeed the whole process? Contact us on firstname.lastname@example.org or give us a call on 01462 413249