HM Revenue & Customs (HMRC) are rolling out, Making Tax Digital, which will replace the current UK tax system with a digital one.
This means that any heating engineer currently providing hand-written tax records will have to make the switch to digital.
The first set of businesses to be affected are those with a VAT threshold of more than £85,000, as they will need to make the move to Making Tax Digital from April 2019.
What is Making Tax Digital?
The introduction of Making Tax Digital by HMRC is being done to give business owners a modern, easy-to-use platform to store and view tax records, as well as update HMRC with any important information.
Why has Making Tax Digital Been Introduced?
HMRC estimate that there’s a current tax gap of £33 billion. This has largely come about due to mistakes, either accidental or deliberate, and tax evasion. By introducing Making Tax Digital, HMRC are hoping to reduce this gap.
Benefits of Making Tax Digital to Heating Engineers
The introduction of Making Tax Digital will help to save you time and leave you confident that your tax is accurate. Here are a few benefits:
Removing the pen and paper approach to tax, being able to view and provide information will really help to increase accuracy.
Simpler to understand
Moving tax payments online, will make it much easier to read how much tax your company owes. In a similar way to online banking, everything you need to know will be displayed on the screen in front of you.
Rather than completing your tax return and sending it off, by submitting everything online, HMRC will be able to look at it immediately.
Direct online contact with HMRC
Should you have any questions about your tax payments then Making Tax Digital will give you direct contact via secure online web chats.
99% of VAT returns are already submitted online via the Government Gateway website but only 13% of them are submitted by Making Tax Digital appropriate software. So, if you already do your tax returns online, but only on the Government Gateway website, you will still have to make the switch to Making Tax Digital approved software.
You can find Making Tax Digital compliant software on the Government website.
When Does Making Tax Digital Come into Effect?
Businesses with a VAT threshold of over £85,000 will need to hold digital tax records for VAT purposes from April 2019. In April 2020, Making Tax Digital will be rolled out to businesses under that VAT threshold.
These dates are subject to change so it’s important to keep up to date with Making Tax Digital. Of course, if there are any major updates, we’ll update this article with everything you need to know.