However, it seems that many don’t. HMRC’s own research indicates that one in five firms (19%) that are required to be MTD-compliant by the beginning of April haven’t even heard of it.
What’s more, over a quarter (27%) of firms haven’t started preparing for Making Tax Digital at all. A further one in five (23%) have received quotes for software that will make them compliant but are yet to purchase access to any.
Small firms say that putting MTD-compliant software in place this year will cost a substantial £564 on average. The price is in the form of one-off charges or annual subscriptions.
Bigger businesses will be hit with higher costs. Those with a turnover between £500,001 – £1 million will have an average £872 bill for their MTD-compliant software. Companies with a turnover of more than £1 million will spend £1,019 on average.
“Small firms say that putting MTD-compliant software in place this year will cost £564 on average”
For business owners who still want to use their Excel spreadsheets, there’s a cheaper option: bridging software. It cheaper than the full shebang, only guiding you through the last steps of submitting your return.
It’s also one of the easiest ways to ensure that you’re MTD-compliant, making it an ideal option for businesses who are rapidly running out of time.
What is bridging software?
Why do I need it?
“For some small businesses the additional cost and complexity of using accountancy software, even user friendly and relatively cheap options, may not be appropriate. A spreadsheet solution may be all that is required for them to comply with the new digital records requirements.
Which bridging software can I use?
HMRC has a rundown all of the compatible software that’s currently available – there are 61 different types of bridging software alone, but none are endorsed by HMRC itself. For more, check out the list of Making Tax Digital software on the gov.uk website.
We’ve picked out a small handful of examples to give you an idea of what’s out there.
QuickBooks Bridging Software
There’s no need to do the full QuickBooks set-up if you just want the bridging software. You can add more features at a later point.
It has two packages available. Essentials, which is £7 for the first six months (reverts to £18), allows up to three users to do a number of tasks including sending invoices on the go.
The Plus package is £11 a month for the first six months and £27 thereafter. It has the same functions as the Essentials package for up to five users as well as creating budgets and purchase orders, managing stock and tracking costs by project, location or budget.
The Basic package is normally £30 a year, but you can get it free for your business in the first year.
TaxCalc VAT Filer
Prices for TaxCalc VAT Filer start at £75 per year and are frozen until April 2019.
CHM MTD Bridge
This one charges per submission (£7.50 plus VAT). You can download a spreadsheet and try it out for free, though.
Is there free bridging software?
“My understanding is that a lot of these are actually only free for the first year after which there is a fee, often on a monthly basis,” says Ball.
He’d be correct. As with the examples above, you can swing a free trial, but that’s about it.
Further reading on Making Tax Digital