Accounts By Simply – Making Tax Digital, Tax Compliance and Company Financial Management
Make Tax Digital: All You Need to Know
What is Making Tax Digital?
Making Tax Digital (MTD) for VAT is HM Revenue and Customs (HMRC)’s plan to digitise the UK tax system. The HMRC Making Tax Digital project was launched in April 2019 – many businesses have needed extra support to implement the correct accounting software to keep their records up to date and inform HMRC quarterly with financial info.
Since April 2019, UK businesses turning over more than the £85,000 VAT limit have been tasked with filling in their returns electronically. From April 2022, a business owner charging VAT and a taxable income of under £85,000 will also need to obey Making Tax Digital.
How Does It Affect the Self-Employed?
Making Tax Digital for income tax will impact the self-employed after the 6th of April 2024 if their total revenue is over £10,000. As such, anyone self-employed will need compatible Making Tax Digital VAT software and, from the 6th of April 2024, need to file quarterly records to HMRC.
If you’re a sole trader earning under this threshold, you can continue using the old HMRC system for submitting VAT returns.
How Does It Affect Small Businesses?
The government’s Making Tax Digital rollout for VAT submissions was launched on the 1st of April 2019, driving companies with an income of more than £85,000 a year to file their VAT returns via cloud-compliant, certified software.
However, before this, small businesses submitted their VAT returns by heading straight to HMRC’s VAT portal or post. But, this isn’t the case under the Making Tax Digital VAT system.
Every VAT-registered small business earning under £85,000 must tell HMRC about their reports via digital VAT records using the appropriate software from the 1st of April 2022, whatever their income.
What Do I Need to Do?
You’ll need to sign up for Making Tax Digital, or you can let us do this for you. That said, you’ll need compatible software in place before registering.
To register, ensure you have the below nearby:
- Company email address
- Government Gateway user ID and password
- Latest VAT return
- VAT registration number
Let’s look at the Making Tax Digital deadlines:
- April 2019: VAT-registered businesses turning over a taxable income of over £85,000, you’ll need to keep digital reports and file digital VAT returns using the right software.
- October 2019: you’ll need to comply with Making Tax Digital if your more complex business was deferred.
- April 2022: Making Tax Digital for income tax is mandatory for businesses turning over under the £85,000 VAT limit.
- April 2024: HMRC Making Tax Digital VAT will pertain to taxpayers who submit tax Self Assessments for property or business income over £10,000 per tax year
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How Can an Accountant Help?
It’s about time business owners and sole traders embrace the digital change and begin implementing Making Tax Digital before it’s too late.
Accounts By Simply believes every company is unique, as are the brains behind it. As such, we’ve partnered with leading software like QuickBooks financial cloud and Xero to make the MTD journey an enjoyable and stress-free one. We’ve already helped lots of companies with the initial steps of Making Tax Digital and can give you a hand by implementing the necessary software, apps, and procedures.
We’re only a phone call away from helping you with your financial requirements. As qualified Xero accountants, your designated Accounts By Simply advisor will offer full guidance on taking advantage of the software and provide advice across the year.
- We’re Xero-certified
- We use MTD-compatible software
- We’re professional accountants, ready to assist
- We offer full training
Enquire about Our Make Tax Digital Services
How Can I Extract Money from My Limited Company?
Numerous contractors opt to become directors of their own limited company, as, usually, this is more tax efficient than launching as a sole trader or working via an umbrella company. If you’re the director of your company, you can make the most of your savings because of the various options available and maximise your earnings.
Extracting funds from your limited company is easy when you know how, and you can do this in several ways. However, because you’re a separate legal entity, all your company’s assets belong to the company, not you. That is to say, you can’t simply take money from your company as you would your personal business account. You have to follow certain processes – and you must be able to account for any money going in and out of your company bank.
Some of the ways to withdraw money from your limited company include:
- Dividend payments
- Salary
- Pension contributions
- Reimbursement of business expenses
- Director’s loan
What Else Can Business Tax Accountants Help With?
We’re the only business tax accountants you’ll ever need, offering a range of services, including:
- Making Tax Digital and Online/HMRC services: our Accounts by Simply agents work with you to prepare for Making Tax Digital. As small business owners ourselves, we know all there is to know about taking care of your business records digitally. HMRC won’t provide you with specific software to help you report quarterly, so we’ll recommend MTD-compatible software, like Xero and QuickBooks, to make light work of handling your financial records.
- HMRC quarterly reporting and VAT: we offer full Making Tax Digital quarterly reporting of your VAT returns and accounting statements.
- Extracting funds from companies: if you need our assistance with extractions of payments and financial forecasting, have a no-obligation, free consultation with one of our experts today.
- Tax/Bounce Back Loan Scheme (BBL)/ Covid HMRC investigations: Introduced as a rapid response to the Covid crisis, the Bounce Back Loan is one of the many schemes designed to prop up companies that’d otherwise be completely healthy. We can offer an HMRC investigation service, which covers the cost of work towards an HMRC Bounce Back Loan Investigation. In other words, possible investigations into Covid grants, tax, and Bounce Back Loans.
Why Accounts by Simply?
Your limited company or small business deserves to thrive, and it will. You just need to engage the right accountant, so you’re confident about your finances and the success of your business.
- Industry-leading software: we offer access to Xero financial software.
- We learn about you: we get to know you, so we understand your business niche to make sure we continuously exceed expectations and provide an impeccable level of financial support.
- We do the counting: never will you have to crunch the numbers again – we deal with the tax compliance and bills, so you don’t have to.
- Expert advice: your accounting is in safe hands – after all, having the right accountant is worth its weight in gold.