The UK government is working to modernise the tax system – an initiative commonly known as Making Tax Digital, or MTD for short. VAT was the first part of the tax landscape to go digital in 2019 and next up is Income Tax, in 2024.
In short, it’s highly likely. If your sole trader/self-employed business turns over more than £10,000 in the tax year, then the way you submit your income tax return will change from April 2024 onwards.
This isn’t all bad news. Accounting software has really moved on in recent years and is now incredibly user friendly and feature-rich. You don’t need expensive computer equipment or to revamp your IT systems. You can use it to quickly create and send invoices to your customers (you can even do this from your smartphone), collect card payments on the spot, pay suppliers effortlessly, track debtors in real-time … the list goes on.
Using Digital Cloud Accounting will save you considerable time and effort in running your business and provide you with accurate and timely information on your finances.
Making Tax Digital will apply to all self-employed people and property landlords with an annual turnover of more than £10,000. It doesn’t matter what kind of business or trade you have or how many houses you rent out to tenants. If your turnover is more than £10,000 then MTD will apply to you.
Many self-employed tradespeople still don't use digital accounting solutions, which will be a requirement. The good news is that you'll see other benefits on top of compliance with MTD.
All unincorporated businesses and sole traders will have to adapt to these new practices and keep digital accounting records.
If you rent out residential property then MTD affects you too. It doesn’t matter if you’re employed full time doing something else and already pay taxes that way.
Vertis Accounting are a local firm of Chartered Accountants and Business Advisers based in central Worcester. We specialise in all things digital when it comes to tax and accounting and provide a personalised and client focused service. We work with many small business owners across a wide variety of trades and activities. We will set software up and train you how to use it effectively. We will produce your annual accounts and tax returns as well as offering tax planning advice and business guidance. In short we are here to make your transition to Making Tax Digital a smooth and painless one.
Get in touch – we would be delighted to talk to you about all things Making Tax Digital, or to arrange a demo of our Digital Cloud Accounting software.