Making Tax Digital (MTD) is the Government’s latest initiative for streamlining the process of recording and submitting business taxes, in a bid to become the most digitally advanced tax administration in the world. They aim to improve the efficiency and effectiveness of tax reporting across the United Kingdom and to make it easier for companies to handle their taxes in the digital age.
From April 2019, all businesses exceeding the VAT threshold (currently £85,000), or those who have voluntarily registered will now be required to have a digital tax account and to submit their VAT returns through specific software, such as an appropriate accounts package, instead of the current Government Gateway. All other VAT requirements such as the frequency of your returns will stay the same; however, they will be submitted in a slightly different way.
In the years following, HMRC will begin to expand the MTD initiative and will require companies to submit Corporation Tax via this method too – however, this isn’t planned for introduction until April 2020.
Here is a helpful video from HMRC explaining Making Tax Digital and what it means for you, your company and its finances.
No one would blame you for looking at this and wondering ”where do I start?’ – but it needn’t be difficult. In simple, you will need accounting software and a little know-how. There are various options on offer that cater for many different industries and company types, and many of these will suit your needs for the upcoming MTD changes. However, there is one software that, in our opinion, stands out above the rest – Xero.
Xero is a cloud-based accounting software solution that allows you to view and manage your accounts wherever you are, either on your computer or phone/tablet at any given time. It caters for just about any industry with helpful built-in tools such as inventory management, purchase ordering and on-the-go expense tracking.
Xero is perfectly built to deal with the requirements of Making Tax Digital. It allows you to streamline your financials and brings it all together in an easy-to-use and manageable format. Its web-based format enables you to submit your VAT return to HMRC from directly within the software, ensuring you don’t have to trawl through pages and pages in your red books or drown in countless spreadsheets.
We are a proud partner of Xero, and as a result, we can pass on a wealth of added benefits to you if you decide to sign up to Xero through us. Simply get in contact with us, and we will discuss exactly what you and your company need, and how to manage your transition to Xero to make the process as smooth as possible – we’ll even set it all up for you!
If you would like to find out more about Xero and how it could help your business, please click here. If you like what you see, get in touch.
If you are interested in this service or have a question, please click the link below and send us an enquiry through the Contact Us form.
