The cost to you as an individual transitioning to Making Tax Digital (MTD) is a difficult question to answer because of the variables involved.
Here’s a reminder of what you will legally be required to provide HMRC through your chosen digital software from 6 April 2024:
Weighing up the fees
The variables involved in MTD include monthly or annual fees for digital software, accountancy support and bank administration. There are also intangible costs, such as the time it will take to learn the ropes of using your chosen digital software.
As an estimate, you can expect to pay a nominal monthly fee starting from £5 per month for digital software (after any free trial periods have passed). You may already have a business bank account, but if not, fees start from around £7 per month. Some banks are offering free business banking; Starling is completely free and Tide is free apart from cheque and cash transactions. If you have a membership with the Federation of Small Businesses (FSB) or a similar support organisation, you could take advantage of their free banking options.
Accountancy fees will vary. Because quarterly accounts submissions will be required for MTD, more work is involved in preparing the submissions. However, your overall accountancy fee may be reduced if you accurately and regularly maintain the records or use a bookkeeper. Either way, your business and financial affairs will be much healthier.
Why putting off MTD isn’t an option
We understand that it’s easy to ignore things when the deadline isn’t looming. You may even think you’ll save money by not transitioning to MTD until the end of March 2024. Delaying your responsibilities for MTD is not an option in our eyes because that’s when problems occur and the time isn’t available to rectify them.
As your trusted accountancy firm, we’ve already calculated the numbers and may not be able to resolve any issues arising from late transitions. By late, we mean after summer 2023 and mention this now to manage your expectations about how much is involved from our end.
Recommended steps to take next
The benefits of cloud-based (digital) accounting far outweigh the perceived hassle of registering and the cost of getting started.
We’ve supported many VAT registered companies and national organisations who have already made a smooth transition and are enjoying stress-free accounting. Start now.