Making Tax Desirable
HMRC has chosen to launch Making Tax Digital to the construction trades via a series of print adverts – a move called desirable by one leading installer.
“What a joke,” he said. “They’re asking us to go digital and buy new software to do it and they go and use print adverts to try to persuade us it’s a good idea. Nobody picks up the trade rags anymore. I only heard about the campaign from my father-in-law. He’s 86 but even he thought it was ridiculous.
I don’t know anyone who is likely to see these adverts – paid for out or our hard-earned taxes – everyone these days gets their news online. Only dinosaurs read paper magazines – and only a dinosaur of a government department would waste our money on such an act of idiocy.”
Making Tax Digital
Making Tax Digital starts in April for sole traders earning over £50,000. Installers will have to keep digital records of expenditure and income and update HMRC every three months. They will still have to submit a Tax Return by 31 January. Tax Returns can still be paper or digital.
About a quarter of a million sole traders in the construction sector and even more in the home improvement fields will be affected with more workers being roped in over time.
How it works
You’ll have to log receipts and invoices little and often. To do this, you’ll have to use recognised bookkeeping or accounting software that works with Making Tax Digital for Income Tax – such as an App on your phone or laptop.
Send quarterly updates
This is a quick way to let HMRC know about your income and expenses from sole trading and property – every three months, straight from your software. These quarterly updates aren’t tax returns, they’re summaries of how your business is doing, in four smaller chunks, pulled from your records.
The theory is that if you have so much time on your hands, you can log information as you go instead of focusing on your business, you can do the updates at the touch of a button.
You’ll be able to see an estimate of your tax bill to plan ahead after sending each update.
The deadline for paying your tax will still be 31 January which can be done by signing in to your online tax account through GOV.UK or on the HMRC App.
Quarterly updates
These are the standard update periods and deadlines, which line up with the tax year (6 April to 5 April).
Update period Update deadline
6 April to 5 July 7 August
6 April to 5 October 7 November
6 April to 5 January 7 February
6 April to 5 April 7 May
The new system won’t change the way you pay Income Tax or the dates you need to pay it.
Picture: Making Tax Digital adverts are there to advise sle traders that tax reporting is changing.
www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax
