Tag Archive for: policy help

What is Making Tax Digital?

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Everything you need to know about MTD and how having a bookkeeper helps.

Making Tax Digital (or MTD) is part of HMRC’s ongoing initiative that has been underway since April 2019 to digitalise the UK tax system.

So, when and how will MTD affect your business? And how should you go about paying it? In this blog post, the experts at Rosemary Bookkeeping have all the answers.

What is MTD?

MTD has two core components:

  1. Replacement of paper-based records and a requirement for businesses and organisations (including those with property-based incomes) to keep digital accounting records.
  2. Using compatible software to submit tax returns and updates to HMRC – The government will be removing their current online tax services when a business registers for MTD and will require businesses and organisations to use software compliant with their API (Application Program Interfaces) to submit relevant updates and returns to HMRC instead.

MTD Timeline

Making Tax Digital was initially scheduled to become mandatory for income tax in April 2024. However, in December 2022, the timeline for compliance was revised.

    • Starting from 6 April 2026, those with an annual gross income exceeding £50,000 from self-employment and property letting will be required to comply.
    • From 6 April 2027, the rules will apply to individuals with an annual gross income of over £30,000 but less than £50,000 from self-employment and property letting.
    • Lastly, from 6 April 2028, the compliance will extend to those earning between £20,000 and £30,000 from self-employment and property letting.

The changes and how they affect your business

To check if you are eligible or apply for exemption from MTD, you can find guidance on how to do so via the HMRC website. If you’re concerned about the impact of MTD on your business, you can read more about its effects here.

MTD’s benefits:

  • It can reduce or even eliminate paper-based or manual tax processes. This allows you greater accuracy in tax returns, reduces the time you spend on administration, and gives you more time to maximise your business opportunities, productivity and profitability.
  • In the case that you opt to use cloud-based software, you’ll be able to see in real-time what is happening in your books and have better control over your finances, allowing you to make up-to-date and well-informed business decisions.
  • Using compliant digital software means that submitting information to HMRC is far simpler and less stressful.
  • Some accounting software links directly with your bank account, further reducing the paperwork and time spent filing taxes.
  • Digital software provides you with real-time management information so you can see how your business is performing.

So, if you have not already done so, you need to start weighing your options for MTD compliant software.

How Rosemary Bookkeeping can help with Making Tax Digital

We understand that making the jump to digital can be scary and daunting. But it’s not as costly or difficult as it seems, especially with the help of an expert bookkeeping service like Rosemary Bookkeeping. The benefit of changing to MTD now is that everybody else has already had years of experience working with it.

With a professional bookkeeper from Rosemary Bookkeeping to help you, making your tax digital is a very simple process.

We have been operating MTD for VAT submissions since its inception in 2019 and know its processes inside and out. Going digital may be a scary prospect, but by using a bookkeeper, your tax may be going digital, but your bookkeeping experience isn’t. We will assist however you need to get accustomed to the software, or simply do the work for you and make the process of sending returns to HMRC straightforward. We will also send generated returns directly from the software so that you have a well-kept and organised backlog of your records.

The main drawback of digital services like Xero and QuickBooks is that they depend on your financial knowledge and ability to work through MTD yourself. Our bookkeeping experts are trained to work digitally using MTD compliant software like Xero and QuickBooks, and Sage, but are a real-life human presence that can reassure and guide you through the process, so you’re not going it alone.

As Rosemary Bookkeeping is well-versed in MTD and online services, we can also offer advice on which software would be best for you, and often offer competitive prices for software subscriptions.

Additionally, we also offer an online exchange of documents, so you’ll be able to upload photos or scans of documents so that we can process them on the bookkeeping software. We also use Apps like AutoEntry or Hubdoc, which not only attach documents directly to the record on the software but also automate some bookkeeping processes – saving you valuable time and money.

To start receiving expert help and advice from your local bookkeeping experts, find your nearest Rosemary Bookkeeping business today for your free, no-obligation quote.

MTD for the new tax year

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How a bookkeeper can help you manage MTD.

MTD (Making Tax Digital) is a government initiative to digitalise the UK tax system.

Introduced in 2019, developments at the beginning of the 2022 tax year saw MTD extend to include VAT for businesses.

With VAT return deadlines looming, many businesses have difficulty understanding MTD and its implications.

At Rosemary Bookkeeping, our experts are well-versed in online systems and financial processes.

That’s why we’re here to share everything you need to know about MTD for the new tax year.

Refresher: What is MTD?

MTD has two core components:

  1. Replacement of paper-based records

MTD requires businesses and organisations (including those with property-based incomes) to keep digital accounting records.

  1. Using compatible software to submit tax returns and updates to HMRC

The government will remove the current online tax services when businesses register for MTD.

They will require businesses and organisations to use software which is compliant with their API (Application Program Interfaces) to submit relevant updates and returns to HMRC.

MTD Timeline

  • 1st April 2019: MTD has been in place since this date for the majority of VAT-registered businesses above the tax threshold of £85’000+ turnover. These included partnerships, sole traders, limited companies, non-UK businesses registered for UK VAT, and charities and trusts.
  • 1st October 2019: There was a six-month deferred start date to support more complex businesses.
  • 1st April 2022: MTD became mandatory for all VAT-registered businesses and organisations.

Upcoming Implementations

Making Tax Digital was initially scheduled to become mandatory for income tax in April 2024. However, in December 2022, the timeline for compliance was revised.

  • Starting from 6 April 2026, those with an annual gross income exceeding £50,000 from self-employment and property letting will be required to comply.
  • From 6 April 2027, the rules will apply to individuals with an annual gross income of over £30,000 but less than £50,000 from self-employment and property letting.
  • Lastly, from 6 April 2028, the compliance will extend to those earning between £20,000 and £30,000 from self-employment and property letting.

Eligibility for MTD

Even if you aren’t legally obligated, you have the option to voluntarily follow the MTD rules if you choose to do so.

To identify individuals who need to comply with the MTD regulations starting in April 2026, HMRC will first review all self-assessment tax returns submitted for the 2024/25 tax year.

Consequently, if you file your tax return for that year by the deadline of 31 January 2026 and your income from self-employment and/or rental income surpasses £50,000, you can expect to receive a notification letter from HMRC in February 2026 informing you of your obligation to comply with MTD beginning 6 April 2026.

The coming changes and how they affect your business

MTD legislation already means you must have completed your ITSA through MTD-compatible software.

If you were not already doing so, you’re now required to keep digital tax records and submit this information to HMRC through an MTD-compatible software when conducting your self-assessment tax returns.

Exceptions

If your business has received an MTD exemption, it will still be in effect.

These can be caused by factors such as:

  • Age, a disability or where you live
  • You object to using computers on religious grounds
  • Any other reason why it’s not reasonable or practical

To check if you are eligible or apply for exemption from MTD, you can find guidance on how to do so via the HMRC website.

If you’re concerned about the impact of MTD on your business, you can read more about its effects here.

MTD’s benefits:

  • It can reduce or even eliminate paper-based or manual tax processes. This allows you greater accuracy in tax returns and reduces time spent on administration. It also gives you more time to maximise your business opportunities, productivity and profitability.
  • If you opt to use cloud-based software, you’ll see in real-time what is happening in your books and have better control over your finances, allowing you to stay up-to-date and make informed business decisions.
  • Using compliant digital software means submitting information to HMRC is far simpler and less stressful.
  • Some accounting software links directly to your bank account. Further reducing the ‘paperwork’ and time spent filing taxes.
  • Digital software provides you with real-time management information so you can see how your business is performing.

So, if you have not already done so, you need to start weighing your options for MTD-compliant software.

Why now?

The new financial year is the best time to reset how you manage your books.

This period is notably less disruptive, as things are changing already.

By introducing new systems to work smarter, you keep your business information secure and make things easier to manage going forward. 

How Rosemary Bookkeeping can help

We understand that making the jump to digital can be scary and daunting.

But, it’s not as bad as it seems – especially with the help of an expert bookkeeping service like Rosemary Bookkeeping.

Expertise

The benefit of changing to MTD is that we’ve had around four years of experience working with it.

With a professional bookkeeper from Rosemary Bookkeeping to help you, making your tax digital is simple.

We have been operating MTD for VAT submissions since its inception in 2019 and know its processes inside and out.

Going digital may be a scary prospect. Using a bookkeeper, your tax may be digital, but your bookkeeping experience isn’t.

Software Support

We will assist if you need to acclimate to the software or do the work for you.

We also send generated returns directly from the software, so you have a well-kept and organised backlog of your records.

Our bookkeeping experts are trained to work digitally using MTD-compliant software like Xero, QuickBooks and Sage and are a real-life human presence that can reassure and guide you through the process, so you’re not going it alone.

As Rosemary Bookkeeping is well-versed in MTD and online services, we can advise which software would be best for you and often offer competitive prices for software subscriptions.

Additionally, we offer an online exchange of documents, so you’ll be able to upload photos or scans of documents so that we can process them on the bookkeeping software.

We also use Apps like AutoEntry or Hubdoc, which not only attach documents directly to the record on the software but also automate some bookkeeping processes – saving you valuable time and money.

Struggling with your bookkeeping?

The new tax year is a busy and stressful time, particularly hot on the heels of January Self-Assessment tax return deadlines.

We also know that keeping track of your finances isn’t easy, especially when also trying to figure out MTD legislation and new software.

If you had a stressful time sorting your ITSA, the new tax year that swiftly follows may be a real cause for concern.

By contacting the professionals, you receive personal and expert support on all aspects of bookkeeping.

We love bookkeeping, but we know it’s not for everyone. So, leave the stress behind by leaving your books to the experts today.

Find your nearest Rosemary Bookkeeping business today to see how we can support you ahead of the new tax year.

What is IR35?

Everything you need to know to get your head around the new off-payroll working legislation ahead of the new financial year.

The Intermediaries Legislation (or IR35) for off-payroll working came into full force in the private sector last year. However, it can be difficult to see the full effects of a new legislation after so little time has passed. So, as we approach a year of IR35 in the private sector, we’ve put together a blog post of everything you need to know about the legislation to get prepared for the new financial year in March.

On April 6th 2022, at the beginning of the 2022/23 financial year, HMRC will be fully integrating IR35 in the UK’s private sector. This date signals the end of a ‘soft-landing’ period that had allowed affected businesses a grace period over the last 12 months in which HMRC did not charge penalties for non-compliance.

What are the new rules?

The new legislation is designed to create a more level playing field by taxing contractors at a similar rate to employment in order to prevent them from working as ‘disguised employees.In the private sector, this means that the onus to determining IR35 status no longer lies with the contractor, and instead with the entity that pays the contractor. Therefore, this is now a tax burden on all client businesses in the private sector that engage contract workers – with the notable exception of small companies.

From April 2021, if a client decides that IR35 does apply, the contractor is taxed as if they were an employee. However, because the contactor’s employment status does not change, they don’t receive the rights and perks of said employment.

Who do they apply to?

According to HMRC, the new off-payroll working rules can apply to workers (also sometimes referred to as a contractor) who provides services through their own limited company – or another type of intermediary – to a client. In these cases, the intermediary is usually the worker’s own personal service company. However, it can also be a partnership or an individual. Essentially, the legislation applies to all contractors that do not meet HMRC’s definition of self-employed.

Therefore, you may be affected if you are:

• A worker who provides services through their intermediary
• An agency that provides workers’ services through an intermediary
• A client who receives services from such workers through their intermediary

To qualify for exemption as a small business under IR35 regulations, a company has to meet the following criteria:

• An annual turnover of less than £10.2 million
• A balance sheet total of less than £5.1 million
• Fewer than 50 employees

In cases where a contractor is working for a smaller business, it remains the contractor’s responsibility to decide their employment status.

You can also use HRMC’s Check Employment Status for Tax (CEST) tool to find out if you or your worker, should be classed as employed or self-employed for tax purposes.  

Get prepared for the new tax year by leaving your books to Rosemary Bookkeeping. Enlisting the help of a bookkeeper means receiving expert support from informed professionals, dispelling any confusion on tricky matters like IR35, and having more time to focus on the things that matter most to you. Click here to find your nearest Rosemary Bookkeeping business, and find more about our services today.

Do you know about the Plastic Packaging Tax?

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The government have introduced a Plastic Packaging Tax that is coming into force in April 2022. The tax will apply to plastic packaging produced in, or imported into the UK, that contains less than 30% recycled plastic.

Plastic Packaging Tax Information

Plastic packaging with less than 30% recycled content will be taxed at £200/tonne and even if you’re not direct manufacturers the cost of the additional tax may be passed through the supply chain.

If the packaging has multi-material components and is predominantly made up of plastic it will be classed as plastic packaging and this is decided by weight, for example:

100g packaging = 40g not recycled plastic + 30g wood + 30g paper is classed as plastic packaging for the purpose of this tax.

Plastic Packaging Tax Exemptions

Producers and importers of small quantities of plastic packaging (under 10 tonnes in 12 months) will be exempt.
Other exemptions:

  • Transport packaging is used when importing goods into the UK
  • Plastic packaging used in aircraft, ships, or railway stores for international journeys
  • Plastic packaging produced or imported for use in the immediate packaging of human medicine
  • Components that are permanently designed or set aside for non-packaging use.

It’s a good idea to plan ahead for the future and understand the composition of the packaging that’s being used within your company and possibly look into reducing the unrecycled plastic content in it.

We recommend the recording of the webinar from HMRC that goes more into detail:

  • To reduce the financial impact on their business and help the environment
  • What are the exemptions
  • When your client needs to register
  • Who is liable to pay the tax

Government website information HERE

For help with your bookkeeping find your nearest Rosemary Bookkeeper HERE