WHAT IS MAKING TAX DIGITAL?
When Making Tax Digital (MTD) was first announced it was dubbed “the death of the tax return”, sounds great doesn’t it! But from April 2019 businesses will need to be ready to deal with the biggest change to taxation in a generation.
So what does it actually mean? For now it’s about VAT, so if your business is VAT registered with turnover above £85,000, from 1 April 2019 you will have to keep digital records and submit VAT returns using compatible software.
Other taxes, such as corporation tax and income tax are currently on hold until April 2020 at the earliest.
HOW CAN YOU PREPARE?
The great news for anyone on Xero (and that includes our clients) is that you don’t need to do much at all! Xero is ready for MTD and is included on HMRC’s list of accredited software. Even better, there’s no increase in the Xero subscription, no updates to install and a very familiar workflow to the one already in place for filing VAT.
WHAT ABOUT SPREADSHEETS?
HMRC have said that you can continue to use spreadsheets, however, you will still need to digitally store records and find an extra piece of ‘bridging’ software to make your data MTD compliant. To us, that all sounds far more complicated!
As our clients will know there are many reasons, aside from being MTD ready, to move your business to Xero. When comparing real-time accounting and the old way, there is only one winner.
WHY XERO FOR MAKING TAX DIGITAL?
Using Xero you can automate date entry, sending of sales invoices and even bank reconciliation. That save you time and lets you get back to running your business.
Automation means you also keep you data up to date more easily. That means you can see how your business is performing at any time.
Being in the cloud, you can share your business data and collaborate with your accountant, bookkeeper…anyone you like, all in real-time.
Better tools and better visibility leads to better decisions. That helps your business grow and Xero is all set to grow with you, providing access to over 700 add-ons.
MORE NEWS ON MTD
That’s great, we’re always happy to have a chat about MTD, Xero and anything else that might be affecting your business.