Please note: 'cash basis accounting' referred to in this article should not be confused with 'VAT cash accounting'.
From 6 April 2024, the default method of accounting for taxable profit for unincorporated businesses, will change from the accruals basis to the cash basis.
Self-employed business owners and partners who wish to use the accruals basis will need to ‘opt-in’ to use the accruals basis by ticking the relevant box on their self-assessment tax return.
If you already use the accruals basis (i.e. you use the customers and suppliers ledgers in VT Transaction+), it is easier to opt to use the accruals basis on your tax return, than to change your accounts to the cash basis.
The annual turnover thresholds of below £150,000 to start using the cash basis and £300,000 or above to have to leave the cash basis, have been abolished.
For further information, click here.
The tax computation in VT accounts workbooks has been updated to reflect the new main rate of corporation tax of 25%, the small profits rate of 19% and calculation of marginal relief. The iXBRL corporation tax taxonomy has been updated to the 2023 version.
This is effective from the tax year commencing 1 April 2023.
Please note: The update applies to new accounts workbooks generated after the update has been installed. If you are using an accounts workbook created in a version of VT before October 2023 (the date can be found in the Check List tab of the workbook), please create a new workbook and use the VT Final Accounts > Edit > Copy Accounts Data command to copy the data from the older workbook, and the VT Final Accounts > Edit > Paste Accounts Data command to paste the data to the new workbook.
The updated version (October 2023) can be downloaded from the VT Accounts download page.
From 6 April 2026 taxpayers who file Income Tax Self-Assessment returns for business or property income over £50,000 annually will be required to report income and expenditure digitally to HMRC using MTD (Making Tax Digital) for Income Tax compliant software.
The £50,000 threshold will reduce to £30,000 from 6 April 2027.
HMRC have not yet announced when MTD for Income Tax will be required for businesses with income under £30,000, and partnerships.
MTD for Income Tax will require summaries of income and expenditure to be submitted digitally to HMRC every quarter. A final declaration is also required at the end of the tax accounting year to confirm income and expenditure for the year, declare any personal income and make any adjustments and claims for reliefs. This will replace the self-assessment tax return.
VT Software will implement functionality to submit quarterly income and expenditure data to HMRC, as part of the MTD for income tax requirement.
For more details on MTD for Income Tax see the gov.uk website.
The 2018 taxonomy will be retired from Sunday 31 July 2022. From this date, Companies House will reject submissions that use this version.
To ensure you are not using an out of date taxonomy, users should install the latest version of VT Final Accounts.
This is because in versions from April 2021 onwards, technical changes have been made to the data that helps enable HMRC detect fraudulent submissions and re-claims. It is a legal requirement to send this data (known as the anti-fraud headers) in the correct format.
If you are using an older version of VT Transaction+ and wish to submit VAT returns by MTD, please install the latest version from the following links:
For VT Transaction+ only subscribers, download the latest version of VT Transaction+
For VT Accounts subscribers, download the latest version of VT Accounts
The domestic reverse charge is effective from 1 March 2021. VT Transaction+ is able to account for domestic reverse charge VAT (April 2020 version or later).
For instructions on how to account for domestic reverse charge transactions in VT Transaction+, please see Domestic reverse charge for construction services.
Please see UK VAT after leaving the European Union to find out how changes in UK VAT on EU sales and purchases from 1 January 2021 can be accounted for in VT Transaction+.