The Death of Self Assessment

From April 2018 businesses will start to change the way in which they must not only submit their accounting information to HM Revenue and Customs, but some will even have to change the way in which they keep their records.

Called Making Tax Digital or MTD for short, HMRC's vision of a truly digital system is being brought to life. So what does this mean for you?

No longer will you be able to file your Self Assessment by January 31st of each year, but instead, HMRC will require you to submit in year information.TR

Every 3 months, HMRC will require you to provide them with Turnover and Expenditure figures, allowing the final quarter of the year to make any adjustments, such as, Capital Allowances etc.

MTD doesn't stop there. No longer will keeping a record of your day to day business operations by way of an Excel spreadsheet be accepted as a reasonable method of bookkeeping. HMRC's digital plans are to ensure you must use some form of cloud-based accounting software.

HMRC plans to implement their new digital system for the smallest types of self-employed businesses first starting in April 2018, and gradually bringing in other larger types of businesses shortly after.

If you are like a lot of small sole traders, then you will relate to spending the last few weeks of the year, gathering paperwork in order to complete your Self Assessment and file it on time. However under the new plans, this will no longer be acceptable, instead, you will be required to gather this information every 3 months and submit them to HMRC.

So what can you do, to ensure that when the time comes, you are prepared for the "digital switchover".

Cloud-based accounting software can be costly, and although HMRC has stated there will be a free of charge solution for those who can't afford paid packages, it doesn't come with the knowledge and skills that accountants and bookkeepers have to ensure you pay the right amount of tax.

It's estimated, that a sole trader, who currently does his own bookkeeping, and files his own Self Assessment, will see an increase of roughly £1300 a year in costs related to the digital change.

Therefore it's never been more important, to secure yourself an accountant, such as Moonlite Accounts. Not only can you reduce this extra cost, but you will no longer have to worry about quarterly figure filing and year-end adjustments. Because accountants already use accounting software for their existing clients, they are able to spread the cost across their whole client base thus actually saving you money compared to going at it alone.

So why not contact us today to discuss how Making Tax Digital will affect you, and how we can help to ensure you are prepared for the new digital taxation era.




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