We've given quite a lot of thought to how cloud accounting software is going to impact your business over the next few years...
You see, Making Tax Digital (MTD) for VAT has now been around for almost two years, and the UK government is now looking at implementing MTD for other taxes. The cloud software companies we’ve mentioned in prior blog posts will, we’re sure, be leading the way.
Currently, all VAT registered businesses with a turnover exceeding the VAT threshold are required to retain digital records, and submit their VAT returns via MTD compliant software (unless they’re exempt, of course). But, from April 2022 – just over 8 months from now – all VAT registered businesses will need to start doing the same. This change will force a lot of smaller companies who are VAT registered to adopt a MTD compliant piece of software.
And from April 2023, MTD will expand to self-employed business and landlords with turnover above £10,000 (that’s just £833 per month!). The requirement here will involve regular reporting for income tax rather than VAT, so cloud accounting systems will need to develop new reporting options for this requirement.
And by April 2026, corporation tax will be included in MTD too, and more regular reporting will be required for limited companies.
Although there are provisions for companies without cloud software, we’d recommend adopting software closer to the time, and making use of the other benefits that cloud accounting provides – see our recent articles for these!
Finally, although the above timeline is correct at the time of writing, we need to consider that HMRC are constantly adapting and changing their timelines based on the on-going COVID-19 pandemic, as well as their own beta testing and improvements they may need to make.