What does Making Tax Digital mean for charities?
27th May 2019
What does Making Tax Digital mean for charities?
From April 1st, UK businesses with an annual taxable turnover of more than £85,000 were required to start keep and submit digital VAT records via HMRC’s Making Tax Digital (MTD) system.
Charitable organisations are also affected by this change but Government concessions mean there’s still time for them to comply. And despite some concerns about the new rules, the new system opens up a host of financial opportunities for UK charities.
What has HMRC said?
The Government has granted the majority of charities a concession, delaying the mandatory compliance date until October 1st 2019.
HMRC has also reassured charities that there will be a grace period until October 2020, allowing them to cut and paste their figures rather than using the digital links which will be required in the long-term.
This month HMRC offered further relief by relaxing the rules for charities that run fundraising events. They will now be permitted to record all event costs as a single invoice – recognising the potential difficulties in ensuring volunteers keep strict digital records.
Fast, efficient and transparent finances
A key concern for charities is the expense of investing in MTD-compliant software at a time when they are under increasing pressure to cut costs while continuing to provide services.
At this week’s Civil Society Media’s Making Tax Digital event, charities also highlighted issues around getting volunteers up to speed. With the 65-74 age group accounting for 42% of the UK’s volunteers, attendees expressed concerns about a potential skills gap among their elderly team members.
But in reality, recording your figures digitally enables greater transparency and makes it easier to track donations and spending.
Initial training may seem like an onerous cost – but the benefit of seeing your cash flow in real time creates less room for error and more opportunities to hit growth and fundraising targets in the long-term.
Tax on the go
Charities often work remotely – not just within the UK but sometimes globally too. Going digital allows you to process your figures in real time, wherever you and your volunteers are.
That means better communication between your team – and allows you to make accurate and efficient decisions on the go without waiting until the end of the year to find out how much tax you owe.
Talk to the experts
Your accountancy firm will be able to provide the advice and support you need to ease the transition.
Get in touch with our friendly team to find out how we can help transform your charity’s finances.
