Making Tax Digital for Income Tax and Self-Assessment – burden or blessing?

UPDATE: The government has delayed the start of MTD ITSA to 6 April 2024, with MTD for general partnerships postponed to 2025

AccounTex North Summit happened and what did we learn?

There was a lot of focus on Making Tax Digital for Income Tax and Self-Assessment (MTD for ITSA) which will be mandated for unincorporated businesses and landlords from April 2024.

Not sure if it will affect you? Check it out below:

Therefore, if your income from self-employment or property is over £10,000 then yes it will have an impact on how often you should declare your income.

Ok, but why so much focus on it and why should you consider it now?

MTD for ITSA is already referred as the biggest tax shake up for a generation and can become a burden if you don’t plan ahead.  

Although there is plenty of time ahead of the mandatory deadline, starting to keep digital records now can bring significant benefits to your business. The most important aspect, is that the threshold of £10,000 is based on the turnover (which can be easily met) and not profit.

 

What does HMRC means by digital records?

These are records of each transactions made in the course of the business, including amount. Keeping only paper records will nolonger be acceptable.

Spreadsheets will continue to be accepted, but you will still need to use compatible software to send the updates to HMRC.

Date, amount and tax category, must be captured as a minimum

So what should you do now?

The sooner you map your journey to MTD for ITSA the better. Basically you need to:

Ø Find compatible software which allows your to scan your expenses and process your income

Ø Sign up for MTD for ITSA through your digital tax account

Ø Start keeping digital records of all business income and expenses categorised in line with Tax reporting

Ø Send quarterly updates

Ø Send a End of Period statement at the end of the tax year

Ø Send a Final Declaration –this will include income from other sources such as dividends and savings interest

Now, one thing we know is, you are not an accountant and while all the above might seem straight forward to do, it is probably better to leave it to someone who knows what they are doing. 😊

As cloud accountants, we can provide you access to apps which simplifies this journey for you. These are really easy to use and we are happy to help if you get stuck. In addition, we can help you categorise your business income and expenses correctly.

The benefits of doing this earlier is that as soon as you are setup will have access to real-time data.

At the end of the day, you have real time data in your day too day life. If you need to check the  weather ,news or check your bank account you just use your phone.

Why would you not the same for your business?

Want to learn more? Contact us at hello@visionaccountants.co.ukor 07542 229442.