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Octobers Hub Update
We have brought together the latest updates for October 2022 that we think you need to know about. We don't mean for any of our updates to be scary this Halloween season, so if you have any questions please do not hesitate to reach out and we will be happy to help.
Making Tax Digital (MTD) for income tax – Only 18 Months left to comply
Self-employed businesses, partnerships and landlords with annual gross business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2024.
Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of administrating tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay taxes based on your business activity during the year. You can upload and update your tax account in real time.
If you own a business or are self-employed and pay income tax, national insurance, VAT or corporation tax, then it is quite likely you will be affected. This means you could be required to keep track of your tax affairs digitally using MTD-compatible software, and update HMRC at least quarterly via your digital tax account. Eventually, this will abolish the annual tax return. This will be the law and there will be penalties for non-compliance.
MTD for Income Tax should become law from 6 April 2024. It will apply to the self-employed, partnerships and those who receive income from property, with gross income from these sources combined above a threshold of £10,000.
The government is running a pilot scheme where businesses can use the online service for Making Tax Digital for Income Tax.
What should I do about MTD?
Talk to us - the good news is that you can reduce your running costs and streamline your accounting by complying with the new rules!
In the last two years, we have worked with many other clients to help them comply with MTD and streamline their accounting.
Just suppose you had a system where your bank feeds your data directly into your accounts on a DAILY basis and you can take a photo on your phone of a purchase invoice and it is posted automatically. You can see your results, who owes you money, who you owe money to and your business bank balance 24/7, 365 from your smartphone.
We have MTD-compliant cloud accounting packages that give you:
- A clear picture of your current financial position, in real-time.
- Automatic updates that mean you can spend more time doing what you enjoy.
- Your accounts 100% online, so there’s no software to install and everything is backed up automatically.
- Updates are free and instantly available.
Please contact us about helping you to comply with the new rules. We are cloud accounting specialists and can train and support you with the right software
U-turn on the top rate of tax
Facing huge criticism and market turbulence following his announcement of a series of “growth” measures, Chancellor Kwasi Kwarteng has backtracked on his decision to abolish the 45p rate of income tax paid by people earning more than £150,000 a year. The proposal to scrap the rate had been criticised as unfair at this time of rising living costs.
Following the mini budget markets reacted poorly and we saw a falling pound, higher interest rates, a collapse in mortgage products and the Bank of England stepping in to calm markets. Prime Minister Liz Truss has admitted yesterday she should have "laid the ground better" for her mini budget, after it sparked days of market turmoil.
We will keep you updated on the effects of this and other decisions in good time for the new tax year which commences on 6 April 2023.
New form for notifying HMRC of VAT errors
HMRC have launched a new online G-form which will be the default option to notify them of errors in VAT returns.
This is for all VAT-registered businesses who wish to submit a VAT Error Correction Notice (ECN). Once submitted, a copy of the digital form will be captured into the Digital Mail Service (DMS) and processed as it is currently.
The new G-Form will streamline the current process, making it easier to notify HMRC about errors on VAT returns. It will enable businesses to:
- Upload supporting documentation.
- Provide explanatory notes.
- Save the form allowing them to complete it later.
- Receive confirmation of submission with a reference number.
It also will help to reduce mistakes through built-in validation and auto-calculations and capture more complete information.
Submitting your Self Assessment return early
HMRC has seen a growing trend in customers submitting their Self Assessment returns early. In the last five years, the number of customers choosing to file their return on the first day of the tax year has almost doubled.
You have until 31 January 2023 to send HMRC your Self Assessment tax return and to pay any tax you may owe.
Learn more about getting started with Self Assessment, including registration, tax returns, tax bills and payments on the webpage below.