With huge change to the UK tax system less than a year away, Calvin Healy of Richardson Swift explains how businesses, landlords and individuals can start to prepare.

 

If you haven’t heard much about Making Tax Digital (“MTD”), you might want to read on.  This Government project aims to move to a fully digital tax system and is set to revolutionise the way in which businesses, landlords, and individuals report and interact with HMRC.

MTD is a key part of the Government’s plans to make it easier for individuals and businesses to keep their tax affairs up to date. This means the end of the Self Assessment tax return, with MTD being the replacement.

HMRC indicates it will bring significant benefits for individuals as they won’t have to give HMRC some information that it already holds.  For instance, from employers, pension providers, banks and building societies, and down the line (and this is quite ambitious), investment providers.

Digital tax accounts for all will mean people can check the information HMRC has, plus add anything further, before agreeing the tax position for each year.

As outlined, HMRC will obtain some data from third parties, but it will also be the responsibility of the individual to provide information, such as their business and rental income.

To do this, individuals will need to interface digitally with HMRC and report their accounts quarterly before following up with a final end of year position.

As things stand, only individuals with income below £10,000 will escape an obligation to provide business and/or rental information.  Any non-compliance will attract penalties.

These proposals are being brought in soon and it will be a huge learning curve for all stakeholders to get to grips with the new rules.

 

Are you ready for the changes ahead?

MTD is already in pilot phase, but will become mandatory from 6 April 2018 for individuals with business and/or rental income exceeding £85,000. 

From 6 April 2019, all other individuals with business and/or rental income will be required to file information (subject to the £10,000 de-minimis limit, as indicated above).

Following this, companies and large partnerships will be subject to the changes from April 2020.

All in all, the time to start planning for change is now.

For more information on MTD, please contact Calvin on 01225 325580 or email ch@richardsonswift.co.uk.