I was recently asked to review someone's bookkeeping system as they were concerned the accounting package they were using would be no good when the rules come in for Making Tax Digital for Income Tax ...
As it was, this person was keeping digital records in a format that could easily be exported to Excel spreadsheets, and they had an accountant who took this data and produced their tax return. My advice, in this case, was to talk to your accountant first before making any drastic changes.
MTD for Income Tax will be coming in at some point, but at the moment the date is not until April 2024 because the Government just delayed it for another year, and it is for businesses with a gross income of over £10,000 so micro businesses might be able to avoid it for a while longer.
Those that only send their accounts to their bookkeeper or accountant annually or do everything in a rush at the end of January (you know who you are!) will need to get a new accounting package in place as under MTD for Income Tax, you will need to keep your records digitally and report your financial information quarterly to HMRC. The timings of your tax payments are not currently looking like changing.
If you are concerned that your accounting package is not up to scratch you do have some time to get yourself sorted with a new system in place in plenty of time, but there is no rush to change your systems right now, especially after the extra year's delay.
The software providers will be developing updates so you can comply with the rules, but as of yet, we are not sure how it will all work. My best advice is get used to keeping your bookkeeping records up to date at least on a quarterly if not a monthly basis then you will be ready when the changes come in.
If you do want to get a new accounting package in place in time for Making Tax Digital for Income Tax, now due in 2024, and you are unsure where to start then why not book a one-to-one session with me, and I can help you get a great system in place.
If anything I've written here resonates with you, call me on 01604 420057 and let's see how we can help you.