Bookkeeping in Cookstown is facing a major change in the coming years. The UK is moving from traditional bookkeeping to the new Making Tax Digital for Income Tax initiative. Making Tax Digital (MTD) is the biggest tax shake up to date, with HMRC aiming to make the UK “one of the most digitally advanced tax administrations in the world.”
What is it?
Making Tax Digital for Income Tax (MTD IT) is a brand new government led initiative designed to make it easier for individuals to record and submit their taxes.
If you are a self-employed business owner or landlord in Cookstown with a yearly income over £10,000, you will have to comply with MTD IT from the 6th April 2024.
Moving to a modern, digital system, individuals affected by these changes will have to log and track all of their accounts using specialised software or a well designed spreadsheet. Taking this new digital approach will streamline the bookkeeping process and make it easier for individuals to report their accounts and tax information to HMRC.
Quarterly Reports
Firstly, under the new initiative, individuals are required to send an update on their earnings to HMRC once every quarter. These quarterly reports should follow the tax year, not the accounting year. These reports are based only on the information provided by the business or property owner. This means that these quarterly reports do not take any adjustments you make at the end of year into account.
Thankfully, these reports do not include a declaration from the business or property owner. This means there will be no consequences for inaccuracies.
End of Period Statement (EOPS)
Following this, at the end of each tax year, those affected must report an end of period statement to HMRC. These statements are for each business, not the business owner, so some people may need to report a few.
Final Declaration
Finally, HMRC requires a final declaration by 31st January the following year. This final declaration brings together all of your quarterly updates and your EOPS plus any extra information needed. Unlike an EOPS, this final declaration is for the business owner, so they will only need to complete and submit one.
We can help!
This digitalisation of bookkeeping in Cookstown marks a new chapter of modernisation for business owners and landlords. This modernisation will push businesses to keep on top of their bookmaking. Whilst this may seem daunting to a number of businesses, there is nothing to fear. As bookkeeping specialists in Cookstown, our Chartered Accountants are on hand to help you every step of the way.
Contact us today to learn more about how we can help your business prepare for this change!