Latest / The 3Bz Podcast - Building Better Business / EP121 - HMRC’s Digital Roadmap Explained: What You Need to Know in 2025

Transcript

EP121 - HMRC’s Digital Roadmap Explained: What You Need to Know in 2025 · The 3Bz Podcast - Building Better Business

• 0:01
  Hi there business owner, and welcome to the Three BS Podcast,
• 0:04
  the place where we go beyond the numbers and dive into the
• 0:07
  strategies to help you build a Better Business one step at a
• 0:10
  time. I'm your host, Stephanie, a
• 0:12
  multi awarding entrepreneur with over a decade of experience in
• 0:15
  the bookkeeping and currency world.
• 0:17
  If you're a business owner looking to streamline, grow and
• 0:19
  get back the time that you deserve, you're in the right
• 0:21
  place tackling real world problems, answering tough
• 0:24
  questions and digging deep into business building secrets in
• 0:27
  just 15 minutes each week. So Are you ready to build a
• 0:31
  Better Business with confidence and clarity?
• 0:33
  Then let's go. Hello and welcome back to
• 0:36
  another episode of the Three BS Podcast, your go to place for 15
• 0:41
  minutes of CPD certified motivation, inspiration and
• 0:45
  education each week. As always, I'm your host
• 0:48
  Stephanie, and if you're AUK business owner wondering what on
• 0:51
  earth is happening with the HMRC digital changes, then this is
• 0:55
  the episode for you. Because while everyone's been
• 0:57
  panicking about making such digital something major just
• 1:00
  happened quietly in the background and I want to go
• 1:03
  through it with you. Let's just start with the HMRC
• 1:07
  have released the digital road map, which is what we're talking
• 1:09
  about today. And if you haven't heard what
• 1:11
  that is, it's basically their master plan for turning tax and
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  every part of your interaction with a HMRC into a digital first
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  experience, which we all want and need because as accountants,
• 1:22
  we spend forever on the phone to HMRC and that's smoother and
• 1:27
  easier. We can make the customer journey
• 1:29
  for you as a client, as a business owner, buses,
• 1:32
  accountants and tax agents to the HMRC themselves.
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  The easy it will be for everyone.
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  Now, the digital road map means that there'll be less paper,
• 1:40
  fewer phone calls, more self-serve portals, more real
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  time data, and way more emphasis on using software for filing,
• 1:48
  updating and managing the records that you hold for your
• 1:51
  business or your personal tax. Now I love the idea of fewer
• 1:55
  phone calls. I love the idea of less paper
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  and more self-service portals would be amazing.
• 2:01
  What I really want the HMRC to do is to give accountants and
• 2:04
  agents and bookkeepers the same screen that the business owner
• 2:09
  gets. There is nothing more
• 2:10
  infuriating than saying to a business owner, log into your
• 2:15
  HMRC government gateway and go to this section and that's where
• 2:18
  you can see your what batched you set up your direct debit for
• 2:20
  example, because our side is not the same side, so we don't see
• 2:24
  what you see. So trying to talk you through
• 2:27
  how to do that when we can't see it is incredibly infuriating.
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  I digress. This road map, the HMRC's
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  digital road map lays out HMRC's long term vision.
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  So it's their vision all the way to 2030.
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  And it's not just the making tax digital for income tax that
• 2:44
  you're hearing about all over the news and in the media.
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  It covers things like PAYE, so your payroll pay as you earn,
• 2:51
  personal tax accounts, so income tax and self assessments,
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  corporation tax, customer service tools, digital identity
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  checks, even how you'll log in and verify yourself in the
• 3:00
  future. And The thing is, is that quite
• 3:04
  often the HMRC release things ahead of time and you're like,
• 3:07
  Oh, yeah, it won't affect me yet, but trust me, it will.
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  I had a conversation last week with a client.
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  He came in for his quarterly review for his personal tax and
• 3:15
  his company tax. I explained to him that Make It
• 3:17
  Up Digital what it was, even though it didn't affect him.
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  I like to make sure clients understand it so they're not
• 3:22
  scared by anything that's put in the media.
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  It's like, you're a limited company, it doesn't affect you.
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  And he's like, yeah, but it'll never happen.
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  And that's a general consensus around business owners is that
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  because these delays happen and we're told about things so far
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  in the future that goal posts move, they don't believe these
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  things are coming into fruition. This is a plan right now.
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  The HMRC's road map is a plan from now until 2030 about the
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  digital experience. So let's go through what some of
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  it means and the bits that you need to know as a business
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  owner. So starting off is 1, probably
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  the biggest headline that a lot of the news outlets have picked
• 3:55
  up on, and that is making tax digital for corporation tax is
• 3:57
  officially off the table. It has been scrapped.
• 4:01
  So making that digital for income tax, if you don't know
• 4:04
  about it yet, go back to a previous episode where we talked
• 4:07
  about making that digital for income tax.
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  I'll link it in the show notes as well for you to understand
• 4:13
  more about what that means. If you're a sole trader or a
• 4:15
  landlord, corporation tax was on the card.
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  So it was going to be the same quarterly reporting software
• 4:22
  mandated corporation tax. You couldn't find it yourself,
• 4:27
  which means if you're a limited company right now, there is no
• 4:29
  force changes like there is if you're a sole trader or a a
• 4:34
  landlord with income over the thresholds.
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  Again, go back and listen to that that episode.
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  The thing is, is that the quarterly reporting has its
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  benefits. And I fully believe that makes
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  that digital income tax is great, but forcing people to use
• 4:47
  software to submit their corporation tax return or to do
• 4:53
  their self-assessment, it's quite a sticking point because
• 4:56
  of the extra cost. The Telegraph published an
• 4:58
  article a few weeks ago saying that it was going to cost
• 5:00
  business owners, sole traders and landlords £480 a year more
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  than it did before. And I completely disagree with
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  that. Like I feel like that was very
• 5:08
  scaremongering. There's some great ways and
• 5:10
  tools, and we'll go through them more as we get close to the
• 5:12
  deadline for making Tax digital to get the software for free,
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  for example, to do your MTD for income tax submissions.
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  And this was going to come in for limited companies.
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  It was going to be the same thing for corporation tax.
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  But the HMRC have finally acknowledged that corporation
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  tax is so much more complex than income tax and the tech just
• 5:32
  isn't ready, The infrastructure just isn't there from a software
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  provider's point of view. So whether you use 0 free agent
• 5:38
  QuickBooks, whatever it may be as well as on the HMRC side.
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  So let's be honest, business owners have enough on their
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  plate, accountants have enough changes to deal with MTD for
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  income tax was meant coming years ago.
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  It got delayed and delayed and delayed and that means that now
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  it's coming into force officially that all of the
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  changes that were usually spread over a few years are happening
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  right now. So there's many things like the
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  filing systems are closing down, so you won't be able to submit
• 6:04
  via the HMRC software. You have to use alternative
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  software for MTD, for income tax and things like that.
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  So instead of focusing on the making such a tool for
• 6:13
  corporation tax now that has been scrapped, the HMRC is
• 6:17
  instead focusing on the behind the scenes upgrades now.
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  This is a really good thing. They are looking at streamlining
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  their own corporation tax systems for the processing of
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  the data when they receive it, enhancing their own internal
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  data processes and preparing better digital experiences
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  across all tax areas. Now, as a company director, if
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  you have a limited company, you're not going to see any
• 6:39
  major changes just yet, but it's coming in those small little
• 6:42
  nudges, improved portals and more automation to make things
• 6:46
  more streamlined and efficient. And I'm all for that.
• 6:49
  I think it's so important to makes the archaic systems, the
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  HMRC systems are just not fit for purpose anymore and they're
• 6:56
  clunky and they are difficult to navigate and are not easy.
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  There's not a great customer experience whether you're a
• 7:06
  company director or a bookkeeper and agent working on a
• 7:09
  business's behalf. And then let's be clear, I said
• 7:13
  it earlier, but I want to be really clear here.
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  Making such digital for income tax self-assessment is still
• 7:18
  happening. It's had a different name
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  change. It's been delayed and delayed,
• 7:22
  but it is coming into force. So we're now looking at making
• 7:26
  such digital for income tax. They're also calling it MTD it.
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  If you are a sole trader or a landlord and if your income is
• 7:33
  over 50,000 lbs and that's turnover, that's sales.
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  That's not the profit that you take out of your business as a
• 7:38
  sole trader or a landlord. You will be mandated from April
• 7:42
  2026 if the 50,000 LB threshold is met in the 2425 tax year.
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  So up to April 2025. So that tax year has already
• 7:51
  passed is a case of looking at historical data.
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  If your sales were 50,000 or more in that period, you'll be
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  in from next April. If the current tax year your
• 7:59
  income is £30,000 or more, you will be brought in in April
• 8:03
  2027. If you are not brought in from
• 8:05
  April 2026 and there is plans to reduce that threshold further to
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  20,000 lbs from April 2028. Realistically, all sole traders
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  are the majority of sole traders and landlords will be mandated
• 8:20
  into MTD for it at some point in the next couple of years.
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  What that means for you is you need MTD compatible software.
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  That can't be done on spreadsheets, it can't be done
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  manually, it can't be submitted directly to HMR CS websites.
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  They don't have that technology or infrastructure.
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  For that. You will need MTD compatible
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  software. Look at what kind of software
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  you currently have. Don't spend money on software
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  you don't need. I think that's really important
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  to point out. You will have to update
• 8:49
  quarterly and you'll need to have a good handle on digital
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  records. If you are the type of client,
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  and we see them in the practice still quite regularly, who keep
• 8:58
  everything in a shoe box, all your receipts and then give them
• 9:01
  to your account at year end, that's no longer going to be
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  acceptable and you're going to catch yourself getting fines and
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  penalties very, very quickly. So instead of doing that, you've
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  got time. I'm giving you a head start.
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  If you've not listened to the previous episodes and you are
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  going to be mandated in this at some point, start doing it now.
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  Start investigating now. Have a look at the software out
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  there. There is free software options
• 9:24
  if you bank with certain banks, which I'll definitely cover in a
• 9:26
  later episode. In fact, I'm going to try and
• 9:28
  get them on the podcast because I think it'd be great to hear
• 9:30
  from them directly. But start digital record
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  keeping. Start doing it monthly, weekly,
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  daily, whatever it may be in your business.
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  It depends on how much paper you actually have and on your bills
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  and things. Don't just keep them all flagged
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  in your emails. Start putting them in a secure
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  place, start attaching them to accountancy software or start
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  putting them into a folder so that you can access them when
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  these quarterly updates will need to be done.
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  Because they run very similar to VAT.
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  And again, this is the bit that infuriates me because if you are
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  a VAT registered sole trader, you're going to have to
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  potentially do 8 returns a year plus your end of year statement
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  instead of four VAT returns and then a self-assessment if they
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  fall in different periods. 8 * a year, eight months out of 12,
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  you're going to be having deadlines to do things.
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  If they fall in the same calendar quarters, then every
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  quarter you're going to do a VAT return and your quarterly update
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  for making such digital. So it's something to be aware
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  of, something to factor in. If you do it yourself, then make
• 10:31
  sure you're confident in doing it.
• 10:33
  If you outsource, start having that conversation with your
• 10:35
  bookkeeper or your accountant on how things are going to work.
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  What process can we start to put in place while you can still
• 10:41
  practice before we start getting fined?
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  And finally, the road map beyond tax.
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  The HMRC's report is not just about tax returns.
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  The HMRC is building out a unified login system which
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  Hallelujah gov.uk one login should be in place by the end of
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  2026, which I think is really important.
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  So that's where you have one login, 1 government gateway that
• 11:02
  unlocks all of your different parts of your business.
• 11:05
  So maybe that's personal tax, business tax.
• 11:08
  You could have it all in one place.
• 11:09
  One login childcare. If you have to go in every
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  quarter to get your tax free childcare funding, having one
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  login to login to everything just makes sense to me.
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  Biometric ID verification on help lines they're looking at
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  bringing in, which I think is really good.
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  That biometric ID verification can help verify you are who you
• 11:29
  say you are. That also stops people calling
• 11:31
  up pretending to be you. I'm potentially committing fraud
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  on your name. Improved PAYE visibility inside
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  your personal tax account. This one, again, I'm really
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  excited for because if you have more than one job, so maybe
• 11:43
  you're employed and you have a side hustle or a sole trader
• 11:47
  business or you're a landlord and you're also employed.
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  Having that visibility across your page, your own tax as well
• 11:53
  as your personal tax and adding the two together because that is
• 11:57
  what you're taxed on at year end.
• 11:58
  Having that visibility throughout the year makes sense
• 12:01
  for better tax planning with your accountant or just so that
• 12:04
  you know what's going on and what you need to maybe start
• 12:06
  putting away and saving for your personal tax bill.
• 12:10
  They're also looking at putting in more automated compliance
• 12:12
  checks behind the scenes, which again, I think the automated
• 12:15
  compliance checks are great for spotting potential fraud.
• 12:18
  And the final bit on the road map I wanted to point out is
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  that they have set a target of 90% of digital interactions with
• 12:27
  all customers by 2030. Now if that means we can get the
• 12:30
  answers we need without getting frustrated talking to a chatbot
• 12:33
  or getting it from a portal 90% of the time, that's going to cut
• 12:37
  down a lot of weight and time on those HMRC helplines.
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  Because not only will there be more answers been given so that
• 12:43
  there's less people sitting in the queue, but also people are
• 12:46
  going to get their answers quicker, which makes us all more
• 12:48
  productive and more efficient. So what do you need to do now?
• 12:52
  To recap, don't worry about corporation tax MTD.
• 12:55
  It's scrapped, it's gone. Hallelujah does not say it won't
• 12:58
  come back at a later date, but in the next 5 years, we don't
• 13:01
  need to think about it. There's enough other changes
• 13:04
  coming in for bookkeepers and accountants to get their hedges
• 13:06
  around and to worry about corporation tax MTD on top.
• 13:10
  Do prepare for making tax digital IT.
• 13:12
  Make a tax digital income tax if you're a sole trader or a
• 13:15
  landlord. If you're not sure if you
• 13:17
  qualify. If you have a few questions and
• 13:18
  don't really understand it, do get in touch with us.
• 13:21
  We have office hours over the summer, but you can also just
• 13:24
  drop us an e-mail and we can get back to you.
• 13:26
  Or you can book a power if you want a full hour of hour of my
• 13:29
  time where I stick with you and answer all of your questions and
• 13:33
  put a plan in place to help you move forward with your business.
• 13:35
  Again, links will be in the show notes to get those booked for
• 13:38
  you. If you haven't already, go and
• 13:41
  set up your personal tax account for a government gateway.
• 13:43
  If you are employed or a business owner, having that
• 13:48
  personal tax account and being able to get that visibility as
• 13:51
  they increase the behind the scenes functionality is
• 13:54
  important to get it in place now keep an eye on any PAYE or login
• 13:59
  changes. The HMRC often e-mail us when
• 14:01
  there's there's changes. If you're a client of ABCSUK,
• 14:05
  you'll get an e-mail from us anyway, so you're don't need to
• 14:08
  worry about keeping an eye out. We'll let you know if anything
• 14:10
  changes that you need to be aware of and most importantly,
• 14:13
  get your systems and processes in place before HMRC forces you
• 14:17
  to do so. Digital is coming.
• 14:20
  It's just coming in a different shape than we expected.
• 14:23
  MTD is still going to come. The road map is about
• 14:25
  simplifying and not scaring. But waiting until it's urgent is
• 14:29
  not a strategy and you need to prepare.
• 14:31
  So that's the end of another episode of the Three Bees
• 14:34
  podcast. Thank you so much for joining
• 14:35
  me. If this help, please do share it
• 14:37
  with someone that you know. If you know a business owner
• 14:40
  that is burying their head in the sand when it comes to MTD or
• 14:43
  their business finances are a mess and they're too scared to
• 14:46
  reach out, send them this episode.
• 14:48
  If you found this episode useful, please do also rate
• 14:51
  review wherever you're watching this or listening to it.
• 14:54
  It really helps me reach more business owners to help us all
• 14:57
  build better businesses. If you're on YouTube, don't
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  forget to hit that notification bell so you can see when a new
• 15:02
  episode goes live every Thursday. 6:00 AM on podcast
• 15:05
  platforms, 8:00 AM on YouTube, and I'll see you next week for
• 15:08
  the next one. Bye.
• 15:11
  And that brings us to the end of another episode of the Three
• 15:14
  Bees podcast. I hope you found it useful and
• 15:16
  that you're walking away with some motivation, inspiration, or
• 15:19
  education to help you build a Better Business.
• 15:22
  Don't forget to subscribe, leave a review, and of course, connect
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  with us on social media for more insights, tips, and behind the
• 15:27
  scenes content. Your next step in building a
• 15:30
  Better Business is just a click away.
• 15:31
  I can't wait to connect with you and I'll see you on the next
• 15:34
  episode. Bye.