Get ready for Making Tax Digital
As of April 2019, VAT-registered businesses with a turnover of more than £85,000 are required to use the Making Tax Digital (MTD) service to keep records digitally and use accounting software to submit their VAT returns. This will enable businesses to be MTD compliant with the HMRC.
VAT has taken a digital turn in the UK, meaning that many British businesses must change their way of preparing and filing VAT returns. Since April 1st 2019 VAT returns now must be submitted to HMRC through MTD compliant software and businesses need to digitally record their VAT transactions using MTD compliant software. Submitting VAT returns using HMRC's own VAT online services will no longer be possible.
By April 2020 (date to be confirmed by the British Government), sole traders, partnerships, landlords and trading companies will also be affected.
Download your guide to MTD
From registering for MTD to how to submit your return, find all the answers in this free guide.
Do you have to be MTD compliant?
Not all companies fall under the scope of MTD. You are exempt if your company is already free from filing a VAT return online.
You can also be partly exempt. For instance, you can't reclaim VAT you pay on goods ands services that aren't for business purposes, but if you buy them for both business and personal use, then you will be to use partial exemption method. Read more about partial exemption methods
Read more: Does my business have to be MTD compliant?
Will there be a penalty if you don’t comply?
If your business does not comply with MTD then you will get a penalty. The specific details of how the penalty regime for MTD will work is under consultation and options include a points-based penalty system where an accumulation of points will incur a monetary charge. Existing penalties for late submission or error will apply.
How to register for MTD
Your business won’t automatically be registered for MTD, so you will need to register for on the HMRC website. Be aware that it will take HMRC up to 72 hours to process your application and respond to you, and you won’t be able to submit your VAT return before the sign up is completed. Don’t leave it until the last minute!
Find out more about how to register your business for Making Tax Digital.
How to submit your VAT return
Submitting your VAT return in compliance with MTD is really easy when you use an accounting software like Bokio. Once you do your accounting for the period, your VAT return is automatically calculated, so you can submit it to HMRC in just a few clicks.
Watch the video for a step-by-step guide to registering for Making Tax Digital and submitting your VAT return.
What is the timeline for Making Tax Digital for VAT?
- October 2018, open to sole traders and companies.
- Early 2019, testing open to partnerships and those customers that trade with the EU
- Spring 2019, pilot open for MTD customers that have been deferred
- April 2019, MTD mandated for all customers (except those that have been deferred)
- October 2019, MTD mandated for businesses that have been deferred.
Read more about the timeline for Making Tax Digital
Is Bokio HMRC compliant?
Yes, Bokio is a MTD compatible software and will help you all the way through to submit your VAT and record your transactions digitally. Thus you will find us in this HMRC list of MTD-compliant softwares.
How is Bokio different from any other MTD compatible software?
First and foremost, Bokio is entirely free. No catch. No annoying limitations of use. We know that it sounds to be good to be true. But it is true.
Why you ask? We think it's unfair for small companies to pay for something mandatory like accounting. We know that every penny makes a difference for entrepreneurs so we offer Bokio for free to help business owners succeed in running their business.
We are financed by companies purchasing additional services such as Prioritised Support and year-end closures. These funds help us to constantly improve our service to fit your business needs together with your valuable feedback.
Ridiculously easy to use
You don't any experience in accounting to get it right in Bokio. We help you all the way through from recording a transaction to submitting your VAT return to HMRC.
Take a sneak peek at how your experience with Bokio will be:
- Snap a picture of a receipt and upload it in Bokio. You just recorded a transaction.
- Create the most payable invoice with Bokio's template and send it to your customer on the spot. You have just improved your business financial situation and your customer relation.
- Submit your VAT returns to HMRC in just a few clicks. You are fully MTD compliant.
Curious to see how Bokio works?