HMRC’s Making Tax Digital campaign – previously known as Making Tax Easier – is likely to significantly increase many people’s reliance on our Manchester tax accountants from 2018 onwards.
That is when the planned two-year roll-out of the new self-assessment process begins, which was originally stated as an attempt to abolish the annual tax return and move to a more ongoing method to collect self-assessment data from individuals and small businesses.
However, critics of the incoming system are already warning that far from making things easier, it could substantially increase the amount of admin self-assessed individuals and small businesses have to handle over the course of each tax year.
How can HMRC’s Making Tax Digital campaign affect you?
In some cases, the move to quarterly reporting could see you making eleven visits to our Manchester tax accountants in a single year.
Obviously there are only four quarters in a year – so where do the other seven trips come from?
Well, under Making Tax Digital, HMRC require a self-assessed submission at least every quarter, with the option to report more frequently than that if you wish.
This is followed by an adjusting statement, called the ‘end of period statement’, which makes any appropriate accounting adjustments and declares that all of the information supplied to HMRC by that stage is complete and correct.
Finally, by the following January 31st, you must submit a Final Declaration which sets out any other sources of income during the period, and any claims for tax deductions.
That still adds up to ‘only’ six reporting deadlines for each tax year, but with the exception of the Final Declaration, the other five must be submitted separately for each business or trade, and also for any rental income you may have coming in from properties you own.
How to prepare for the change
In many cases our Manchester property accountants deal with people who have both self-assessed income and separate rental income – and as Making Tax Digital rolls out, those individuals will face at least eleven reporting deadlines per tax year.
HMRC are launching the final pilot of Making Tax Digital in April 2017, with a view to rolling it out live in 2018-20.
Importantly, the new system still allows you to nominate an ‘agent’ to handle your tax affairs – a role our Manchester tax accountants serve for many of our customers – so if you are not digitally savvy, or you don’t want to face this change alone, we are here to help.