Change, while often a good thing, can leave us feeling a little uneasy and wary – especially when it relates to something as critical and fundamental as your company’s taxes. That’s exactly what Making Tax Digital is focused on, but – although it means altering some of your processes – this is a change for the better.
But before we get into the ‘why,’ let’s tackle the ‘what.’ If you’re unfamiliar with the concept of Making Tax Digital, it’s essentially a government initiative which is mandating the switch from paper-based tax systems to an entirely digital one. This already applies to VAT, and will in future be a requirement for income tax, self-employment tax and corporation tax.
If you are notifying HMRC of a decision to opt to tax land and buildings, you are normally required to notify HMRC within 30 days. The 30 day deadline was temporarily extended to 90 days to help businesses and agents during the pandemic, but that temporary extension has now ended for decisions made from 1 August 2021 onwards.
Last month we mentioned that draft legislation has been published to change the basis periods for the assessment of self-employed profits to coincide with the tax year. The proposed new rules provide that from 2023/24 onwards profits or losses will be apportioned to tax years where the period of account does not coincide with the tax year. This is intended to coincide with the start of Making Tax Digital for income tax.