Skip to main content
Guiding you to a better future

Search

For a successful business, you need a viable business idea, the skills to make it work and the funding. Discover whether your idea has what it takes.

Forming your business correctly is essential to ensure you are protected and you comply with the rules. Learn how to set up your business.

It is likely you will need funding to start your business unless you have your own money. Discover some of the main sources of start up funding.

Businesses and individuals must account for and pay various taxes. Understand your tax obligations and how to file, account and pay any taxes you owe.

Businesses are required to comply with a wide range of business laws. We introduce the main rules and regulations you must comply with.

Learn why business planning is an essential exercise if your business is to start and grow successfully, attract funding or target new markets.

Marketing matters. It drives sales and helps promote your brand and products. Discover how to market your business and reach your target customers.

Some businesses need a high street location whilst others can be run from home. Understand the key factors from cost to location, size to security.

Your employees can your biggest asset. They can also be your biggest challenge. We explain how to recruitment and manage staff successfully.

It is likely your business could not function without some form of IT. Learn how to specify, buy, maintain and secure your business IT.

Few businesses manage the leap from start up to high-growth business. Learn what it takes to scale up and take your business to the next level.

Counting the cost of Making Tax Digital

11 March 2019

Happy accountant working with computer and calculatorA new study by the Federation of Small Businesses has found that small firms will have to spend an average of £564 on Making Tax Digital software in the first year.

The FSB is also warning that half of VAT-registered small firms required to comply with Making Tax Digital (MTD) from 1 April do not currently have the right software in place.

It is urging chancellor Philip Hammond to recommit to light-touch enforcement of Making Tax Digital in his Spring Statement on Wednesday this week.

Making Tax Digital comes into force on 1 April and will require over one million VAT-registered businesses in the UK to use MTD-compliant software in order to keep VAT records and submit VAT returns.

Making Tax Digital HUBMaking Tax Digital

For the most up-to-date information on Making Tax Digital, visit the MTD Hub on Money Donut


 

According to FSB calculations, the average cost of putting this software in place this year (in one-off charges or annual subscriptions) will be £564. The bigger the business, the higher the cost, says the FSB. Those with a turnover between £500,001 and £1 million are set to be landed with a £872 bill for MTD-compliant software. For firms with a turnover of more than £1 million, that figure rises to £1,019.

However, new FSB research has found that:

  • 27% of firms have not started preparing for MTD;
  • 23% have received quotes for software that will make them compliant but are yet to purchase them;
  • Only 3% of firms say they have been part of the MTD pilot.

In addition, 36% of SMEs say they believe the impact of MTD on their firms and clients will be negative. Only one in ten small firms says MTD will have a positive impact on tax reporting and financial management processes. HMRC's own research has found that 19% of affected firms have never heard of Making Tax Digital.

The FSB research also highlights the importance of offline accounting methods to small firms. Around four in ten (37%) use paper invoices, while 29% use paper receipts and bank statements to keep track of their finances.

"We're only three weeks away from the roll-out of MTD and small businesses are clearly not prepared for it," said FSB national chairman Mike Cherry. "Promises were made that MTD compliance would be affordable. Now many firms are finding themselves on the hook for hundreds of pounds for software."

He added: "We now need to see a full review of the MTD rollout and a guarantee that it won't be forced on those below the VAT threshold until at least the end of this Parliament, in 2022."

Written by Rachel Miller.

News type:

Stay up-to-date with business advice and news

Sign up to this lively and colourful newsletter for new and more established small businesses.

Contact us

Make an enquiry