Making Tax Digital For The Self-Employed: What You Need To Know
On 1st April 2019, Making Tax Digital (or MTD) comes in for VAT-registered businesses with a turnover above the current VAT threshold of £85,000. We wanted to tell you a little bit about what Making Tax Digital is and help you get ready for the changes.
We don’t want our customers to worry about Making Tax Digital, so if you’re a Coconut customer you’ll be ready automatically. We’re working with HMRC to make sure we’re seamlessly integrated.
What is Making Tax Digital?
HMRC is modernising how we manage and submit taxes. By making it much easier for companies like Coconut to integrate with their systems, HMRC is opening up many more options for self-employed people and small businesses to make tax admin more efficient.
Will I be impacted by Making Tax Digital?
From 1st April 2019, if you are VAT registered and your turnover is above £85,000 (the current VAT threshold), HMRC will require you to keep digital VAT records and submit them through a MTD ready system like Coconut.
HMRC also plans to mandate digital record keeping and submission for self-assessment and corporation tax, but this won’t be until at least 2021.
Why is HMRC implementing Making Tax Digital?
The changes that HMRC is making to the tax system are designed to help businesses and the government by modernising how we all manage taxes. They are focusing on the following:
Improved Digital Services
By improving how HMRC’s systems operate, the government is making it easier to build technologies that make tax seamless. In doing this, companies like Coconut can replace manual, paper-based bookkeeping with much more automated and accurate digital services. We’re using the latest technologies to eliminate business admin for self-employed people and small business owners, and Making Tax Digital is helping us to do this.
Better Business Insights
With better record keeping, comes better business insights. The days of handing a shoebox to the accountant at the end of the year are coming to an end. We’re focussed on automatically gathering transaction data as it happens and helping you do your bookkeeping instantly. It means you can have a real-time view of how your business is performing and how much tax you owe.
Easier to Understand
Making Tax Digital is encouraging HMRC and the companies that are involved to simplify the way taxes are managed. HMRC is also investing in education and contact centres to focus on supporting self-employed people and small businesses to make the right decisions for their business.
How does Coconut help with MTD for VAT?
Coconut is developing a highly automated VAT management solution for small business owners. You can enable VAT in your Business Profile, and then get started using Coconut to record VAT on your transactions.
We’re aiming to complete this as soon as possible, and you can keep track of our progress on our roadmap.
You’ll be able to update historical transactions with the correct VAT amount for any transactions that take place before we release this.
Using Coconut to submit your VAT return
Once you’re using Coconut to record your VAT, you’ll be able to submit your VAT returns to HMRC too. We’re working on getting this up and running as soon as possible.
If your VAT period starts on 1 April 2019 and runs to 30 June 2019, then your deadline to submit your VAT return is 7 August 2019.
You can keep track of progress here.
What VAT schemes does Coconut support?
Who can use Coconut’s VAT features?
Coconut currently provides Business user access to manage VAT. Agent access won’t be provided at launch, although you will be able to share access to your records with your accountant.
As we introduce our VAT functionality, it will be available on all plans for a 6 month introductory period.