Any new way we report on and pay our taxes requires a period of transition, and with Making Tax Digital, this can lead to some common mistakes.
Assuming it Doesn’t Apply to You
Many people wrongly think that MTD is optional, or does not apply to them. If you’re a sole trader or landlord and your total income is over £50,000, then MTD applies to you.
Not Being Ready in Time
If you expect to earn more than £50,000 in the next tax year, you must start using MTD from the start of the tax year. Make sure you’re ready by having the software and changing your processes to accommodate more frequent reporting.
Using the Wrong Software
Software must be MTD Compliant. Those who use the wrong software for reporting may find that their self-assessment is not correctly submitted.
Missing Deadlines
With quarterly reporting, there are even more opportunities to miss the deadlines. Familiarise yourself with the deadlines and set up reminders:
BULLET LIST First Quarter 6th April-5th July: 7th August. Second Quarter 6th July-5th October: 7th November Third Quarter 6th October-5th January: 7th February Fourth Quarter 6th January-5th April: 7th May
Poor Reporting
With four reports a year, there are more opportunities to make mistakes, such as inaccurate expenses, confusing personal and business expenses, and improper dating. Using an accountant can prevent these mistakes. Cheltenham accountants such as https://www.randall-payne.co.uk/services/accountancy/cheltenham-accountants will ensure that your reporting is error-free.
These common mistakes can be easily avoided with proper planning and preparation, or appointing an accountant.
