Making Tax Digital

In 2015 the government announced major plans to modernise the tax administration system by introducing digital services for tax. There are three main strands to these proposals, as follows:
 

• personalised digital tax accounts for individuals and for businesses
• quarterly digital reporting of income and expenditure by businesses, self-employed people and landlords
• options for paying tax.

 
Consultations have now been published by HMRC which provide further details of these proposals and so we have set out below what we currently know about the changes.

Digital tax accounts

Digital tax accounts for individuals have already been created by HMRC. These are called Personal Tax Accounts. These accounts have been linked to HMRC internal systems so that they will be pre-populated with income and tax details that HMRC already hold. This includes employment income, PAYE and NIC and any state retirement pension. From April 2018, it is intended that interest paid by banks and building societies will be included in digital tax accounts. In order for this to happen, banks and building societies will be required to provide information to HMRC earlier, and more frequently, than currently. Taxpayers will also be able to report any additional sources of income through their digital tax accounts in 2018.
 
HMRC expect that with pre-populated information and taxpayers able to add in other sources of income, the digital tax account will mean that a significant number of taxpayers, with relatively straightforward tax affairs, will not need to complete a tax return.
 
Digital tax accounts are also being established for businesses and these will show an overview of the income tax or corporation tax, VAT and NIC details of the business. In order to show details of the income subject to income tax or corporation tax, details of the business’s income and expenses will be provided by new quarterly tax updates.

Quarterly updates

By 2020, most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly through their digital tax account. These changes will be phased in from 2018. These measures will not apply to unincorporated businesses or landlords where their turnover or gross income from property is under £10,000. Some businesses and landlords with income above £10,000 will also benefit from a deferral of the new rules by one year. The upper threshold and eligibility for this deferral have not been detailed in the consultations. Charities and Community Amateur Sports Clubs are also likely to be exempted from these new rules.
 
To meet these quarterly reporting requirements, taxpayers will be expected to use software or apps which record day-to-day transactions, categorise them into different types of income or expenses and then feed the summary data directly into HMRC systems. HMRC has no plans to offer free software but expects developers to provide free software for businesses with the most straightforward affairs.
 
The periodic updates of data to HMRC will be made quarterly but could be done more frequently if a business or landlord chooses. When an update is due, businesses and landlords will have one month to compile the information and declare that the period’s data is complete to the best of their knowledge.
 

In order to help the self-employed and landlords meet these additional reporting requirements, HMRC are consulting on a range of options including:

• the extension of cash basis accounting to more businesses and allowing unincorporated property businesses to use the cash basis
• the reduction in the number of accounting adjustments required to arrive at a taxable profit or loss.

 
Please let us know if you would like further details of these changes.

What about partnerships?

The consultations propose that a partnership, through a nominated partner, would fulfil the obligations of record keeping on behalf of the partners. The partnership’s updates would then feed directly into each partner’s digital tax account as pre-populated income based on the profit allocation of the partnership. Therefore individual partners would not have to maintain their own digital records. A similar approach would be taken for jointly held property which is let out.

The ‘End of Year’ return

Throughout the year, businesses will have provided HMRC updates of their business income and expenditure. After the end of the year, having made any adjustments to arrive at their taxable profit or loss, businesses will make an ‘End of Year’ declaration that everything is correct and complete. This declaration will be made within nine months of the end of a period of account (normally a period consisting of four consecutive quarterly returns).

Tax payment changes

For employees, HMRC has already started using real-time PAYE data to reduce under and overpayments by changing tax codes in-year. They are proposing to extend this principle through individuals’ digital tax accounts to include common income types in the in-year tax calculations. In principle, tax arising on additional income which is small or regular will be collected through PAYE tax code changes. On larger amounts of income, individuals will be advised through their digital tax accounts how much tax will become due after the end of the tax year and will be given options on how and when to pay what is owed. Businesses, self-employed people and landlords, who are keeping their records digitally, will be able to adopt pay-as-you-go tax payments on a voluntary basis.

Timeline - key dates

November 2016	Consultations on Making Tax Digital closed
Accounting periods starting after:
April 2018	Quarterly updates for unincorporated businesses and landlords
April 2019	VAT comes within Making Tax Digital
April 2020	Quarterly updates for companies

How we can help you

Please note that, at the moment, you do not have to do anything in respect of these developments. If you do want to access your digital tax account you may need to verify your identity. You can find details at: www.gov.uk/personal-tax-account. If we are your tax agents, we cannot access the account on your behalf.
 
Please be assured though that we will continue to assist you with your tax affairs and we will keep you informed of developments in the Making Tax Digital project.
 

Please speak to us if you have any questions regarding Making Tax Digital.​

20 Years in Business

This year we’re celebrating 20 years in business!

It’s fair to say that the last 20 years has seen many changes:

1. Mobile phones were the size of a brick – forget apps or access to the internet. You were lucky if you got a signal.
2. Nelson Mandela put South Africa on the sport world stage as the Rainbow Nation, winning the Rugby ​World Cup.
3. Forrest Gump won the Best Picture at the Oscars, with Tom Hanks winning the Best Actor for his role in the film.
4. The Scottish National Jazz Orchestra was formed in 1995; dedicated to promoting Jazz.

Bond CA is well established in Broughton/ New Town district of Edinburgh, and fits in well with the general upbeat feel of the area. Caroline and the Team are looking forward to all future opportunities and challenges.

To read more on our nostalgic journey please click the links below:

Bond CA - 20 Years in Business

Bond CA - Testimonia​ls

10 Good Reasons to Use Us

​1. Personalised Service

We do not adopt a 'one size fits all' approach to client work – we understand that each business is unique and therefore requires a level of service that fits its needs. BOND CA endeavour to assess your needs by getting to know your business through regular meetings and visiting your business premises.

2. Focus on Friendliness

Drop into the office any time for a coffee and a chat. We pride ourselves on being friendly and accessible. You will normally deal directly with a partner and become part of the 'BOND family' as soon you become a client.

3. Versatility of Experience

We aim to be a 'one-stop shop' for all your accounting and taxation needs. We have a mixed bag of qualified and highly experienced staff who between them provide small and medium sized businesses with a vast array of specialist services and advice.

4. Value-Adding Service

We are commercial in our approach to client work. We don’t just prepare accounts and tax returns for you, we will endeavour to add value by using our own business experiences and best practices to help make your business more profitable.

5. Flexible Fees

Choose a fee and payment arrangement that suits you. We provide you with peace of mind with an agreed fixed fee for specific assignments, which means you can call us without the fear of the clock running on your account. We also operate a monthly payment plan for recurring work such as annual accounts and tax returns, so that you can spread the cost over the year.

6. Ease of Access

Based in the centre of Edinburgh and Glasgow, we are easily accessible by train, bus, car, and tram. We work with your convenience in mind, so we will come to your business premises if that makes things simpler for you.

7. Industry Connections

We have built our practice through client referrals and industry networking. Become a part of our family, and you will be introduced to a number of contacts who may be beneficial to you and your business.

8. More for Your Money

We strongly believe that we provide the best value for money in terms of the level of service and advice that we give our clients. Our focus is on providing extremely competitive fees, rather than promoting ourselves as providing the cheapest services. As we are a small practice with low overheads, our hourly rates for partners and qualified staff compare very favourably with rates charged by larger firms for less-qualified staff.

9. Tailor-Made Solutions

We tailor a package to suit your requirements and budget: if your business requires the services of an experienced finance director but can’t afford the cost of a full-time employee, we're here to help. Our outsourcing service ranges from one day per week providing high-level support to an accounts team, to one day per month providing advice and support to the business owner or MD.

10. Free No-Obligation Discussion

Your initial discussion with us is free of charge and without obligations. Simply call us to arrange a meeting or organise a chat about your business needs. We're confident that we can help you to achieve continued success!

Phone Bond CA on 0131 557 5500 for reliable Chartered Accountants who help you make the most out of your business. Alternatively, you can email us at caroline@bondca.co.uk.