Making Tax Digital Explained
Bringing Tax Online
At Budget 2015, the UK government set out its plans to transform the UK tax system as we know it. The Making Tax Digital initiative was announced soon after which aims to bring tax into the 21st century by embracing modern technology. At 3 Wise Bears, we welcome the initiative as it reaffirms what we are currently doing in bringing tax information together in one place, the cloud. The goal of the initiative is to streamline and modernise UK taxation by providing businesses with a system that is effective and easier for taxpayers.
How Will Making Tax Digital Work?
By April 2019 – according to the latest implementation timetable provided by HMRC – any business or sole trader whose annual turnover is above the £85,000 VAT threshold will need to ensure they are keeping track of all their tax affairs digitally. This means businesses or sole traders such as contractors or freelancers will need to have their VAT information held on an online tax system by 2019 – if they don’t already. Other components of making tax digital such as corporation tax and income tax are currently on hold until April 2020, but that should not stop businesses delaying the process of moving their tax information online.
When working with 3 Wise Bears, we will help you move your tax information into the cloud and support you to ensure you are compliant with all of HMRC’s Making Tax Digital requirements. We like to stay ahead of the curve and make sure our clients do too, that’s why we’ve partnered with the market-leading online accounting software (Xero & FreeAgent) – both listed by HMRC as being compatible with Making Tax Digital.
Why Is Making Tax Digital Being Introduced?
> More Accurate Tax Information – By moving to an online, cloud based system, businesses can ensure they are always on top of their bookkeeping, which helps ensure the information HMRC holds about you is 100% correct.
> More Support and Easier To Understand – When you move to a cloud based system it’s easier to process your accounts and work out how much tax you owe. With the support of your personal accountant, paying tax will never have been so easy!
> Easy Access To Your Accounts – View your accounts on the go by logging in anytime, anywhere using your Mac, Windows, iPhone or Android.
> 21st Century Experience – It will bring the tax system in line with what businesses and individuals now expect from other online service providers: a modern digital experience that helps them get their tax right first time.
(The information is based on current guidance from HMRC and may be subject to change.)
Get The Right Support
Here at 3 Wise Bears we offer an amazing accounting support to help businesses and sole traders move their bookkeeping online. Contact us today to speak to our team of accounting experts.