The government will introduce making tax digital to businesses to help reduce the time taken to complete admin, allowing small businesses to focus on their customers, innovation and growth.
Who will these changes affect?
Businesses that have a taxable turnover over of £85,000 or above, must register for VAT, this applies to all business legal structures including limited companies and sole traders alike. Businesses that are under the £85,000 turnover threshold can still voluntarily register for VAT to reap the benefits of doing so, and these are the businesses that the new changes will affect.
If you’re a business owner that’s VAT registered, but under the £85,000 turnover, from April 2022, the government will build on the introduction of making tax digital for businesses over the threshold back in April 2019 to you.
These changes will affect me, what will change?
From your first accounting period starting on or after April 1st 2022, if you’re VAT registered business, but under the £85,000 threshold, as we discussed earlier in this article, you will have to keep VAT records digitally and provide your VAT information to HMRC through Making Tax Digital compatible software.
What does this mean for my business?
What these changes could mean is that there will be a reduction in manual and paper processes to do with VAT and improved accuracy in your returns, which can result in fewer penalties for incorrect submissions.
By reducing the time and effort spent on these admin tasks, you’ll now have more time to focus on the running and growing of your business.
The downside is that this can be a big change for businesses that don’t already have the necessary software in place and will incur a cost to transition to be able to comply with the new Making Tax Digital rules, such as new software to submit VAT information subscription.
What we think
If your business is going to be affected by these new Making Tax Digital rules, it might be worth bringing your business in line with the new rules sooner rather than later. This will allow you to become accustomed to any of the necessary changes before it’s too late. More information can be found on the Governments website here.
If you need help with Making Tax Digital, we can help. Simply click here to get in contact with our expert, friendly customer support team and they’ll be more than happy to help.