HMRC is pressing on with MTD by inviting the self-employed to join its pilot for keeping business records and income tax filing digitally instead of by self-assessment tax forms.
All the information you need to get started is here on the HMRC’s website. The scheme is open to sole traders with one business whose accounting year ends after 5 April 2018.
The HMRC says: “By signing up to HMRC’s secure service, you’re helping to test a new way of working out your tax as part of the making tax digital pilot. This means you’ll see an estimate of how much tax you might owe as you go, rather than waiting until the end of the tax year.”
How it works, according to HMRC
- You can choose from a number of software options. At present there are only two groups on the HMRC approved list, IRIS and Rhino. But more are expected to follow.
- Once you have the software, record your income and expenses digitally “If you want to carry on using your current recording method to keep your business records, make sure that the software you use to send updates to HMRC can link to this to automatically transfer the data.”
- Use your software to send your income and expenses summary to HMRC every three months.
- “You can view an estimate of the tax you might owe at the end of your accounting year, based on the information you have provided so far in your business tax account as well as through your software.”
- “Send a final report to confirm your income and expenses at the end of your accounting year. If you need to claim allowances and reliefs, you can do this within that final report. You’ll be able to see a tax calculation for the year.”
Croneri quotes tax policy adviser Brian Palmer of the Association of Accounting Technicians: “I do anticipate that if the VAT MTD-pilot is a success, and the subsequent mandation phase goes well, there will be a slow but steady stream of self-employed businesses joining the income tax pilot,” he says.
“As confidence grows in the pilot, accountants and tax advisers may decide self-employed start-ups should be on-boarded straight into MTD, to avoid the need to transition from the current regime when mandation comes back on the table.”
