The government’s plans to revolutionise the tax system are back on track now. After almost being ditched from the 2017 Finance bill, Making Tax Digital (MTD) for VAT has resurfaced in the second Finance Bill for 2017, published on 8 September 2017.
Many changes contained in Bill (# 2) were expected in April 2017 but were postponed due to the snap election, which created an atmosphere of uncertainty, with many people unsure if MTD was happening or not.
MTD for Digital VAT
With the publication of the updated Finance Bill, there is confirmation that the new draft reporting rules won’t be active prior to April 2019, while businesses generating less than £85,000 per year won’t be required to digitally report their VAT. What this means is, if any of your clients have voluntarily registered for VAT, but are generating less than £85,000 per year, they will be exempt from MTD rules.
Clause 60 in the bill indicates the amendment of existing powers and creating new regulations about the administration and enforcement of digital VAT for those that are eligible.
Income tax – dividend tax-free allowance
This was already proposed in the March Budget. And Clause 8 of the Bill confirms that from 6 April 2018, the government plans to drop the dividend tax-free allowance from £5,000 to £2,000.
What can you do next?
The Finance Bill is still being considered in the Parliament. The deadline for all responses and comments is Friday, 10 November 2017. Comments can be sent to: firstname.lastname@example.org
Though the timelines arer a little contentious, accountants should not stop preparing for tax’s digital future. In fact, it would be smarter to gain the first-mover advantage. To be in a better position when MTD knocks on our doors, accountants must consider:
- moving their clients to the cloud,
- finding out how digital tax will affect pricing structures,
- how the service will be delivered,
- how clients and staff will be prepared and trained,
- what software training you will need, and
- whether outsourcing the core administrative task to an external service provider can relive you of the burden.
Need our help?
Many of our forward-thinking clients are already commited to cloud accounting. Our outsourcing team can provide back-office support with bookkeeping, and filing the quarterly and year-end submissions. We can also advise on the option of moving to digital record-keeping for your clients. If you are concerned with any aspect of MTD, please contact Parth Prajapati or Dishant Desai on 0870 803 1033 as they can advise you on what your practice needs to do.