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Making Tax Digital – what Birkenhead businesses need to know

The first stage in the Making Tax Digital overhaul of the UK tax system came into effect from April of 2019, and eventually it is set to affect every business owner in the country.

Whether or not your Birkenhead business is one of those caught up in the initial rollout, you will want to stay ahead by knowing the basics, as Merseyside’s tech cluster the Baltic Triangle shows that the area is one that is embracing the digital revolution.

What Making Tax Digital is

Making Tax Digital is a reform introduced by HMRC that will see most of the UK tax system move from paper to electronic records. It will require those companies that are eligible for it to submit their tax returns online, with April 2019 being the date that the initial stage of these changes came into effect.

This means that some UK businesses are already expected to be compliant with it, but research indicates that more than 25% of companies in the UK are not planning for it, including 19% that need to comply now.

The companies affected by it

The new system does not apply to all companies in the UK at the moment, as the initial phase of the reforms is called Making Tax Digital for VAT and only applies to those businesses eligible to pay VAT. The live pilot of this was launched during the spring of 2018 and from April 2019 the full rollout for firms that have VATable profits above the current threshold of £85,000 came into effect.

While this might not apply to your business right now, that doesn’t mean you can afford to forget about Making Tax Digital. The government is aiming for a full rollout of the system that would cover all UK businesses from the spring of 2021, meaning now is the time to get ready. Anything you are not sure about can be clarified for you by a Birkenhead accountant.

What you will need

You will need to have software that is compatible with the new system to be able to fill out a Making Tax Digital VAT or tax return. HMRC is not currently providing this software, which means that business owners will need to buy it or subscribe to a provider. The estimated average cost of this for small firms is £564, while for larger companies it comes to £872.

Posted by Louise
July 8, 2019
Accounts

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