What is Making Tax Digital, and how will it affect me?

What is Making Tax Digital, and How Will It Affect Me

A great many aspects of modern business have become streamlined and paperless thanks to cloud technology. And within the next few years, the government plans to add tax to that list with Making Tax Digital (MTD).

In a move that will bring about the end of paper accounting for millions across the UK, HMRC will deliver a digitally advanced, efficient, and modernised tax system to rival the best the world has to offer.

Starting from April 2019, businesses above the VAT threshold will be required to set up a digital tax account and file their returns online every quarter. But even if your business isn’t likely to exceed that threshold by that time, you should still make sure you’re prepared for the inevitable transition to digital tax returns.

In this post, we briefly explain the motivation behind MTD, how it will affect you, and when the change will take place.

Why is HMRC ͚Making Tax Digital͛?

The four core reasons behind Making Tax Digital are as follows:

1. To facilitate an efficient and effective use of information

Instead of consistently providing HMRC with the same information year after year, this approach to taxation will be smoother and smarter. HMRC will gather information from elsewhere (such as employers, banks, or other government departments) and you’ll be able to log into your account and view and update your details.

HMRC will then use this information to tailor its services according to your circumstances.

2. To provide access to real-time tax

With the introduction of MTD, you won’t need to wait until the year-end to discover how much tax you owe. HMRC will seek to collect and process information in as close-to-real-time as possible to give you an accurate and up-to-date view of your liabilities.

3. To provide taxpayers with a central financial account

Currently, you don’t have a central account where you can see a snapshot of your liabilities and entitlements. MTD will change that. By 2020, you’ll be able to log into your account and view a comprehensive picture of your personal tax situation – similar to online banking.

4. To interact digitally with customers

If you’ve ever been left on hold when calling HMRC, you’ll know just how frustrating it can be when trying to have a question answered or a problem solved. MTD will transform how you communicate with HMRC by giving you access to digital information, advice, and support via web chats and secure messaging. You’ll be able to ask and answer questions on your terms, rather than give up a morning or afternoon listening to the jazzy hold music as you’re passed between departments.

How will Making Tax Digital impact me?

Making Tax Digital will impact businesses and individuals alike. And, as outlined in this post by Xero, the good far outweighs the bad where MTD is concerned.

In short, you will be required to send a summary of your income and expenditure once a quarter via your digital tax account.

However, if your business is turning over less than £10,000 annually, you will be exempt from MTD.

And to begin with, only businesses with a turnover above the VAT threshold will be required to use the Making Tax Digital for Business system, starting in April 2019. If this applies to you, and you’re unsure if your current accounting system complies with MTD, we cover that query in this post.

When does Making Tax Digital happen?

Making Tax Digital is already happening, with a number of small pilot tests underway.

The following milestones are fast approaching:

  • Early 2018 – Live pilot of Making Tax Digital for VAT begins.
  • April 2019 – Businesses with a turnover above the VAT threshold will be mandated to keep digital records and submit quarterly returns for VAT purposes via their accounting software.
  • April 2020 – HMRC will look to expand the scope of Making Tax Digital, assuming the system is working as expected.

Don͛t Get Left Behind – Go Digital Now

Saint & Co has been around long enough to have experienced many of the major shifts in UK tax administration, and Making Tax Digital promises to be an exciting and welcome change to our relationship with tax.

We’ve kept our finger firmly on the pulse of this developing situation, and we can help you prepare to make the switch to keeping digital tax records.

Simply fill out our contact form, or call us on 01228 534371 to get started.

The History of Saint & Co. – Part One

Looking back on over 130 years of excellenceThe History of Saint & Co. - Part One

Every business has a story, and every story has to start somewhere. Ours begins with our founder John Jackson Saint.

John Jackson was an accountant, businessman, and public servant, who was born in 1861, and died in 1918. He lived a busy and eventful life, typified by an entrepreneurial spirit and can-do attitude.

When he was just 20-years-old, he moved from Haltwhistle to Carlisle in 1881, and within three years he had qualified as a chartered accountant and had set up his own business. Working from 10 Bank Street, this savvy young man must have known this prime location in the town’s financial district would win him customers. By 1886, he appeared to capitalise on new bankruptcy laws, and in May of that year, he was named in the Carlisle Patriot as a trustee of the estate of a bankrupt firm of builders.

As his business developed, his personal life blossomed too. In 1888 he married Charlotte Boustead, the daughter of a butcher and hotelier, who was 10 years his senior. The following year, they welcomed their first child, a son named John Boustead Saint. Both he and his younger brother, Roland Cyril, who was born in 1892, would go on to become partners in the family firm.

A Life Led in Public

A fledgling business and a young family would be enough to keep most 29-year-olds busy nowadays but, like his Methodist prayer leader father, John Jackson was keen to become involved in public life.

In 1890, having lived in the Border City for just nine years, he won a closely-fought election to represent Botchergate on Carlisle City Council. He was made an alderman (a senior member of the council) eight years later.

His obituary, printed in the Carlisle Journal in October 1918, gives a clear insight into his political leanings. It said:

“…Besides being a busy man professionally, he took an active interest in public affairs…

“He was chairman of the Markets and Tolls Committee, frequently intervening in debates on financial matters. For some time also he was one of the city representatives on the County Council.

“In politics Mr Saint was a strong Conservative, and was for many years chairman of the Carlisle Conservative Club as well as vice-president of the Conservative Association…”

A Growing Business and Personal TroublesThe History of Saint & Co. - Part One

Despite his apparently hectic life during the late 1880s and the early 1890s, John Jackson Saint & Co appears to have gone from strength to strength. Not only did the family have two servants living with them at 4 Cavendish Place, John Jackson had lofty aspirations to relocate and expand his prosperous business.

On July 8, 1892 he published an advert in The Carlisle Journal appealing for tenders to build a new office building in Lowther Street. And within a few short years, John Jackson Saint & Co occupied all four floors of the new building, remaining there for many years. Today the inscription over the door still reads JJS 1892.

However, his life was not without personal difficulties. In 1895, his wife gave birth to a daughter, Charlotte Gladys, who was disabled, and the following year the couple lost their infant son Samuel Aldrick. It must have been a bitter blow.

A Chapter ClosesThe History of Saint & Co. - Part One

During the 1890s, John Jackson was in partnership with accountants Arthur Ebenezer Slater Cook and Francis James Livesey and, according to official records, they ran branches in Carlisle, London, Liverpool, Manchester, Preston and Workington.

But by 1902 the partnership had been dissolved and John Jackson Saint was in sole charge of his own company.

When he died on October 13, 1918, following a period of illness, tributes appeared in newspapers beyond Cumbria. The Leeds Intelligencer said he was a man “who was known throughout the north of England.”

Despite John Jackson Saint’s death, his name lived on during a new era for the accountancy firm. With his sons, John Boustead and Roland, at the helm following their service in The Great War, the business continued to grow and prosper.

Does the new 16.5% VAT flat rate percentage apply to your business?


The new VAT flat rate of 16.5% started to apply from 1 April 2017 for “limited cost traders”.

A “limited cost trader” is one using the VAT flat rate scheme but where the VAT inclusive cost of goods for a year is less than 2% of VAT inclusive turnover, excluding certain specified items.

Those specified items include capital expenditure, food, fuel, and vehicle costs.

If you are currently using the VAT flat rate scheme contact us to discuss whether the changes will apply to you.