HMRC are proceeding to push forward their new regime called Making Tax Digital.

At present the first to be hit with the new proposals are unincorporated businesses from 6 April 2018. (There are exemptions for businesses with  a turnover of below £10,000)

Landlords will also need to consider when they will be required to report under this new regime

So what are the new requirements from 6 April 2018 next year?

There are effectively 3 steps which are as follows:

1. Every quarter file a return
2. At the end of the year file a “End of Period Statement“. This must be made within 10 months of the year end
3. Complete the “Final Declaration” – this is the new name for your personal Tax Return

In respect of the quarterly Return it is proposed that you submit 3 lines of details:

1. Trading income
2. Less all expenses
3. Net Profits

There will be no tax adjustments each quarter

The “End of Period Statement” will include the adjustments to the accounts, tax adjustments, loss relief etc

It is expected that Companies are likely to have to start reporting under Making Tax Digital from April 2020 but we will have to wait for further information from HMRC

It is important that you start to prepare now so that you are ready for the reporting requirements next year if they apply to you. We can help you move to Xero software which will maintain your books and records and also help you with monitoring your profitability and cash flow

If you have any questions in respect of the above, then please do not hesitate to contact our tax experts by sending an email to kevin@kwaccounting.com