Making Tax Digital: Everything You Need to Know
by John Cox AuthorMTD or Making Tax
Digital is an initiative of the British Government to digitalize tax filing and
accounting for their people. The idea behind the innovation was to help individuals
as well as businesses to streamline tax filing, on a single platform.
When Will It Come into
Play?
Making Tax Digital
is expected to come into practice on April 1, 2019. However, this deadline is
only for businesses that have crossed the VAT threshold. Businesses beyond VAT
will be included under MTD by April 2020.
Who Is Included Under MTD?
Making Tax Digital
will include a wide group of people, ranging from individual taxpayers,
landlords, self-employed individuals and all businesses, except a few.
Although, by April 2019, it will only be mandatory for the VAT registered
businesses with a turnover greater than £85,000.
Why Was the Change
Initiated?
The HMRC (Her
Majesty’s Revenue and Customs) claims that every year billions of pounds are
lost to errors and miscalculations during tax filing. To cap these losses, the
HMRC proposed the idea of Making Tax Digital administer taxes in a simpler and
effective manner, avoiding the possible errors.
In short, Making
Taxes Digital has been employed to make tax filing:
●
Accurate
Making
Tax Digital desires to shape the tax process in such a way that there remains
little chance of miscalculations and errors. A tight control of fraudulent activities
will also be practiced.
●
Simpler
The
HMRC will introduce tax software that allows small businesses to quickly file
their taxes online, with ease and efficiency.
●
Faster
With
efficient software available online, the tax filing for business owners and
accountants will be more automated and time efficient.
How is Will Making Tax
Digital Benefit People?
●
Everything At One Place
Users
with MTD will create a single financial account that will include every detail
of their liabilities and claims, all at one place.
●
Digital Interaction
MTD
has replaced the telephonic conversations with online chats and emails. Users
will no longer have to wait on call for several minutes to get their queries
answered.
●
Up-to-date Tax Information At Every Time
of The Year
Making
Tax Digital by HMRC will require its users to update their tax statements at
least four times a year. Although it is not a mandate to do it every three
months, the information will need to be available on their digital accounts so
it can be viewed by HMRC when required. Thus, a comprehensive tax picture for
both the user and the government.
●
Fewer Efforts, More Time At Hand
One
digital account will hold every critical information, tax payments will be done
on the same platform, documents and spreadsheets will stay on the same account,
using a third party software.
With
this, tax filing and record keeping will be less of an effort for the users,
saving them more time to be used on more important areas.
●
Tax Planning Better Than Before
By
maintaining records digitally, users will develop a habit of updating their
taxes regularly. This gives the taxpayers a clearer picture of their tax
situation. Using this information, they can manage their taxes better. Payments
this way can be budgeted to make financial management easier and effective.
Are There Any Risks
Associated With Making Tax Digital?
The only problem
with MTD is that a large number of businesses are used to the traditional
method of tax filing. These businesses may be apprehensive to make the
transition from the current practice to the digital platform. Although it may
be scary to use entirely new software knowing that the HMRC is involved in the
process, the benefits out-number the risks.
The best thing to do is to prepare you for the upcoming changes to make the best of what the government has in mind.
I am John Cox, a professional web content writer for SageNext InfoTech. I have panoptic experience in writing about Drake Cloud, QuickBooks Hosting, and Sage Hosting.
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Created on Aug 31st 2018 23:55. Viewed 227 times.