Making Tax Digital

Making Tax Digital is a key part of the government’s Tax Administration Strategy to go digital and to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. You will need to:

• keep digital records.
• use software that works with Making Tax Digital
• submit updates every quarter, bringing the tax system closer to real-time.

When:

If you have a VAT registered business, you are now required to keep digital records and file your VAT return using compatible software.

HMRC plans to further extend digital reporting for income tax for unincorporated businesses as follows:

6th April 2026: If you run an unincorporated business with sales/gross income over £50,000 or have rental income with rents received of over £50,000.

6th April 2027: If you run an unincorporated business with sales/gross income over £30,000 or have rental income with rents received of over £30,000.

Get ahead of the game and act now otherwise if you leave it too late you could be faced with a fine of up to £3,000 per tax year.

Accounting Software:

Using accounting software can help you save time and money; it offers you valuable insight into your business. Using a computerised accounting system can be one of the best decisions you can make for your business.

With data flowing in daily, you’ll be able to take control with real-time financial data at your fingertips. Gaining a clearer understanding of your financial health before your accounts are prepared after year end. Using software with live bank feeds enable your business bank account transaction to be automatically sucked into the software. This reduces the scope for making errors when keeping records and filing tax returns.

You will have the ability to run reports, showing you your current business position and meaningful information. Letting you see who owes you money at a click of a button.

You can attach your invoices and receipts, so everything is all in one place. You can provide your accountant with access too.

Recommended Software:

Whilst we can work with most software providers, we can provide full software support to our partners software’s as follows both of which does have a monthly cost attached.

1) FreeAgent, is free with a NatWest or mettle bank account. It’s designed for small simply business structures or individuals.

2) Xero, there are many basic automations functions, which allows you to do tasks quickly and easily. For example, Xero automations help reconcile the bank and send sales invoice reminders to customers. It is great for all structures including bigger and complex business.

Both FreeAgent and Xero are cloud-based software, meaning you can access it anywhere you have an internet connection. Both also have a useful app for when you’re out and about on the go.

How we can help/support you:

We recommend you act now and avoid a last-minute rush. By acting now will ensure that you get the support needed in order to operate the system and have a couple of years processing data before it is obligatory. If you would like support, please let us know and we can help with the following:

• System implementation
• System training/support

We are concerned that as the deadline gets closer, we will be oversubscribed by client demand, that we may not be able to assist all with last minute requests.

How to choose which software

Here are some useful questions to ask when looking at which software is right for you and your business.

Do you have a NatWest or Mettle Bank account?

• Yes – FreeAgent, Free with NatWest or Mettle account.
• No – Xero, monthly fee applies depending on software package.

Mettle: Mettle is the free mobile business account by NatWest that provides small businesses and self-starters with the resources they need to start, run and grow their business. Mettle is completely free and you can apply in minutes.

Do you want to snap photos of receipts and invoice on the go?

• Yes – FreeAgent, do everything through the mobile app.
• No – Xero, best used on a web browser, although does also have an app.

Are you a Landlord?

• Yes – FreeAgent Landlord Version is available, recommended for up to 5 properties.

Is your business classed as small?

• Yes – FreeAgent
• No – Xero

Is your business classed as med-large or complex?

• Yes – Xero
• No – FreeAgent

Do you want lots of useful reports at the click of a button?

• Yes – Xero
• No – FreeAgent

FreeAgent and Xero, offer a 30-day free trial. Talk to us to get a discounted monthly subscription with FreeAgent & Xero.

Basis Period:

If you do not have a year end for your business of 31 March or 5 April, It is also important to note, that the Government announced in the Autumn Budget 2021, that basis periods for income tax purposes (the ‘current year basis’) would be abolished from 6 April 2024 and replaced with the ‘tax year basis’. Transitional rules will apply in 2023/24.