It’s very easy to get comfortable at this time of the year; the dark mornings and evenings are long, you can keep the central heating on for an extra hour or so, chuck on your comfy clothes… and, now, put off filling in your tax return for a month.
Really? Well…read on.
You see, our friend, the Chancellor of The Exchequer, Rishi Sunak, has decided that self assessment tax-payers now have until February 28 to file their tax returns.
The pandemic really has got in the way of everything, including, it seems, filling in your self-assessment form.
While this might seem good news on the face of it, getting too comfy with your tax returns and letting dates come and go can be a slippery slope.
There is also a sting in the tail (isn’t there always?!)
You could be left with a nasty surprise if you think the extension also applies to paying your tax. HMRC still wants its dosh and any late payments will see you hit with interest at 2.75% and a 5% surcharge if not paid by 1 April.
“But…,” I hear you cry, …”if Dishy Rishi says we have more time – why the panic?”
Well, there’s no panic, but with Making Tax Digital just around the corner you might want to get used to filling in your tax returns on time – ‘cos, come April 2024, working with HMRC isn’t going to be a once-a-year thing you do through gritted teeth.
If you are VAT registered and below the VAT threshold you can voluntarily join the Making Tax Digital service now but you will be required to follow Making Tax digital VAT rules for your first return starting on or after April 2024.
So, my advice to you is to make sure you get your self-assessment tax return completed by 31st January as you never know what’s around the corner that could delay you (or your accountant) in February to stop it being completed.
A few years ago, the Conservatives pledged to abolish the tax return.
“Bravo!” I hear you cry!
Of course, accountants like me despaired, we’re talking head in hands time.
Naturally, the taxpayer went “woo hoo” and gave it no more thought.
I don’t blame you one bit.
However….as ever, the tax devil was in the detail. Cue sneaking music…(Enter stage left, creeping).
The Treasury believes they are missing lots of tax revenue by people under declaring income or over declaring allowable expenses, so this tax gap exists. By fixing this, then there will be more money slushing around the public purse in order to give back to the people that need it.
However….to do that, need “more up-to-date information about businesses and their finances” to enable “easier identification and better targeting for taxpayer support”.
And lo…the time will soon be upon us when we will have to embrace “Making Tax Digital” because guess what, the tax return hasn’t really been abolished, it has just been tweaked!
Help! What will I have to do if it applies to me Louise?
Don’t panic Mr Mainwaring!
Here’s the situation in a nutshell:
● Keep digital records of all business or property income & expenses
● Send quarterly updates direct to HMRC electronically with no human intervention
● Submit an end of period statement to finalise the self-employment accounts
● Do a finalisation return which then pulls in all the other sections of the tax return.
Now, I guess you have spotted the fun – this is 6 returns for each tax year! It is a “big bang” approach in that everybody needs to go on this from the 1st April 2024.
“OH PHEW!” That’s AGES away” I hear you cry!
Not so fast! Go to the dressing up box and find your best thinking cap, you will need it.
OK, thinking cap on, what do I need to do now Louise?
You need to know these things and think about what you need to do to comply with the changes.
Look at it as an opportunity to understand where your money comes from, but more importantly, being able to analyse where your money goes.
● Do you need to spend £5K a year at various coffee take-away places?
● Do you need all these subscriptions for things you never use?
Seeing this as you go along can really hammer home what works for you and what works against you. That £4.99 a month subscription is not very much, but if you have 3 or 4 of them, that can be £20 a month going out the window for no reason. The benefit is better management of your business.
There’s a lot to cover which i cannot possibly summarise in a blog, so grab the free report and you can find out the following:
● Who is caught by MTD ITSA?
● What YOU will have to do.
● All about paying tax quarterly
● Any exceptions to this whole thing
● Can you leave the system?
● What software you might need
● Potential complications and other banana skins
What can Louise and her team do to help me?
Firstly, we will be keeping you up to date with as many webinars as we can for when changes take place and will start to review available software after the tax return filing season is over, plus considering what we can do to help you with your bookkeeping.