31 Jan

Making Tax Digital: get ready… but don’t panic!

By now, a lot of businesses will have adopted the digital approach of submitting tax to HMRC. If you haven’t made the switch to digital bookkeeping yet, please do not panic! We’re here to help you break it down. 

What’s Making Tax Digital all about?

Making Tax Digital (MTD) means it’s now - or very soon will be - compulsory to use a digital bookkeeping system for submitting tax to HMRC. 

The idea is that you choose a digital, cloud-based, software for your bookkeeping which in turn allows you to submit your tax return at the click of a button.

Alternatively, you use an agent who uses MTD compliant software with access to your accounts so that everyone is using the same system, has the same information and is essentially singing from the same hymn sheet.

Some snazzy accountants (like Mazuma) even have their own app that helps you keep on top of your books and paperwork in real time, which makes the entire digital process much easier.

The updated deadline for Making Tax Digital

Because the UK government has been a little preoccupied with other priorities (hint: it rhymes with exit…), HMRC won’t be enforcing MTD for any new taxes or businesses in 2020. This means that it’s likely April 2021 will be the earliest start date for income tax returns to be compliant with MTD. Which is good news, as it gives everyone a little bit more time to get on board. 

That said, it’s really worth setting yourself up ahead of the deadline. And here’s why…

Why Making Tax Digital is better for everyone

Efficiency

We understand why you might feel protective over your current bookkeeping system. Especially if you’ve been using it for years, it’ll no doubt be pretty efficient for your needs! It might be scary to think about switching over to a new system and feel like you’re starting all over again. 

This is where using an accountant or bookkeeper can be extremely useful. You can pick their brain if you’re ever stuck and, often, even delegate certain aspects of bookkeeping that you’ve been previously responsible for. 

When it comes to MTD, using an online accountant - like Mazuma - is ideal. You won’t have to worry about compliance, because we handle it all for you! Especially when it comes to submitting your taxes quarterly, which is likely to happen with - using a reliable accountant will give you peace of mind and ensure that your business is compliant and won’t face any fines. 

Ease of use

Whichever software you end up choosing, you can be reassured that it has been tried, tested and tweaked to make for the best user experience. Cloud-based bookkeeping is literally designed to be logical, simple and (dare we say?!) enjoyable to use.

Most (if not all) will have a swish looking dashboard so you can see a quick overview of what’s going on at any given moment; the ins and outs, bank balance, any outstanding payments, and so on. Of course, if this is something you don’t want to spend your time on, you can always use an accountant to sort this for you! 

Accuracy

Everything is calculated electronically using a digital system, which avoids human error. So as long as you log everything as and when it happens, you can sit back and relax while the software works its magic. Everything is accounted for using one system. And by everything we mean invoices, receipts, payroll, mileage… everything. 

By avoiding mistakes, in theory, this should also mean fewer dealings with the nasty tax man HMRC. 

In a nutshell

Making Tax Digital is happening, and there’s no way around it. If anything, you can embrace the opportunity to simplify your finance and regain some clarity and control of your accounts. Or, if you’d prefer to spend your time developing your business, you can outsource your accounts to a reliable accounting company

If you have any questions about any of the above then you should definitely call our friendly team for an informal chat on 0333 0143369. Or you get in touch via our website and one of our the Mazuma gang will get back to you in no time. 

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