Making Tax Digital – No more Self Assessment Returns
No More Self Assessment Returns?
It might seem strange that after over 20 years that there will be no more Self Assessment returns very soon. It’s all part of the longer term HMRC Making Tax Digital plan. Of course its already been delayed at least once and is just one of the bigger tax changes scheduled in the next few years.
We have already had some Making Tax Digital (MTD) experience with the introduction of MTD VAT returns just over a year ago, That has taken some time to get bedded in but appears to be working for most businesses now. At least in the sense that the returns are submitted from accounting software. There are still some bigger issues about digital transaction capture I suspect.
When does it start and who is affected?
At the moment its for businesses whose year starts on or after 6th April 2023 AND have turnover of at least £10,000.
Of course it’s not entirely true to say that there will be no more Self Assessment returns. There will be more of them than now and they will be generated from your digital accounting software. Every 3 months your software will send an update of your business results to HMRC and at the end of the year there will be a final declaration which will pick up any changes made by your accountant.
So is this a good change?
There are two ways to look at this: I think that small businesses will actually get a huge benefit from this change. As you will see from the website, I believe that business owners should be using more current information anyway and this helps them to be more in touch with their numbers. On the other hand if the smaller businesses can’t afford to have an accountant look over their books BEFORE the quarterly submission to HMRC that is likely to lead to more questions from HMRC and down the line, more questions. Remember this applies to any self employed person with a single business and who sells more than £10,000 per year.
So what steps can you take now?
I suppose it depends on how quickly you want there to be no more Self Assessment returns for your business.
- You can sign up early for this new way of doing things. But, make sure you are ready for tight timescales for quarterly submissions. And be prepared to devote some time to learning or getting training in how to use the software. At NGM we have a range of Xero © solutions starting from less than £10 + VAT per month
- You can defer your start date by up to a year by simply changing your year end date. Remember that this change takes place for businesses whose year STARTS on or after 6th April 2023. So if your year end is currently 5th April, change it BACK to 31st March. That will defer your start on the new system till 1st April 2024
So whats the next move from HMRC?
Probably paying your income tax quarterly but that’s not the official line….and don’t quote me