Digital Tax Overview
A massive change in the way tax is handled in the UK is coming in the next three years as HMRC strives to be more efficient and make tax compliance “Digital”.
This change will affect the vast majority of business taxpayers; Sole Traders, Partnerships and Companies as well as any Individuals who act as Landlords.
Following the announcements in the recent Spring Budget, it is now expected that the changes will come into force from:
- April 2018 for Unincorporated Businesses and Landlords with turnover above the VAT threshold (currently £83,000, increasing to £85,000 from April 2017); and from
- April 2019 for Unincorporated Businesses and Landlords with turnover below the VAT threshold; and from
- April 2020 for Companies.
Full details of how the ‘new’ system will operate are still not available, although we do know that there will be the following fundamental changes:
- You will need to make a quarterly submission of your income and expenses to HMRC, followed by an ‘end-of year declaration’ within 10 months of your accounts year end;
- You will need to keep your records digitally to enable each quarterly submission must be made electronically;
- The threshold for using the ‘cash basis’ to calculate profits will be increased from £83,000 to £150,000 from April 2017, and the cash basis will also be available to Unincorporated Landlords;
- Unincorporated Businesses and Landlords with turnover not exceeding £10,000 will be exempt from the Making Tax Digital requirements.
For more information about the new system, we highly recommend that you attend one of Ensors FREE seminars this September. Book now to reserve your place.