Making Tax Digital: Is Your Business Prepared?

Making Tax Digital: Is Your Business Prepared?

In this blog, we’re looking at the Making Tax Digital updates and how this could impact your business. If there’s one thing any business owner knows, it’s that keeping up to date with taxes is essential.

To help you plan for the mandatory Making Tax Digital updates, we’re listing the upcoming changes, when they’re happening and which businesses will be affected.

Why are the changes happening?

Just to recap, these changes are all part of the government’s plans to make the UK’s taxes more efficient. The new digital format is supposed to make it easier for businesses to get their tax right.

However, as with any administrative changes, the transfer can take time. You also might not have the time to go through everything, so outsourcing your accounting can help get you prepared without taking up any of your time.

What changes should you look out for?

The changes predominantly involve keeping digital records and using compatible software to submit all VAT returns to HMRC. For all businesses, the changes from April 2022 are mandatory.

April 2022

From April 2022, VAT-registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax digital rules for their tax returns alongside the businesses already following the rules.

April 2024

From 6 April 2024, self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax.

2026

The government will provide businesses with an opportunity to take part in a pilot for Making Tax Digital for Corporation Tax and will not mandate its usage before 2026.

How will the changes benefit your business?

If your digital records are up to date, HMRC compliant software will collate and prepare your return for you. Essentially, it makes it easier for you to create and submit your tax returns.

The latest updates are happening in April, so there’s never been a better time to get sorted. If you need assistance getting ready for the Making Tax Digital changes, speak to the team at Ratiobox today. We can get your business ready for the future of tax, helping you choose compatible software. Our outsourced accounting services are fully bespoke and tailored to your needs.