It’s not been an easy 24 months for small businesses. This may be a huge understatement but it’s a truth that has to be acknowledged.
It’s not been an easy 24 months for small businesses. This may be a huge understatement but it’s a truth that has to be acknowledged. Small firms have battled supply chain issues, a war for talent, and a pandemic that rattled the very foundations of the global economy.
But now it’s time to look to the year ahead, with a sense of optimism that small businesses – the backbone of our economy – can make up for lost time.
A key part of this will be the continued adoption of digital technologies, which is very much underway. Xero’s recent report found that the COVID-19 crisis drove a 20% increase in digital expenditure among small businesses in the UK, following a period of prolonged stability.
Here are some of the key trends impacting small businesses this year, and how digital adoption can help.
Preparing for MTD
HMRC’s legislation, Making Tax Digital (MTD), has been put in place to close the government’s “tax gap” and modernise the UK’s tax system.
At the end of 2021, the next phase of MTD got underway, with VAT-registered businesses with taxable turnover under £85,000 informed, by letter, that they will have to comply from April 2022. If you meet this criteria and are yet to receive a letter, this will no doubt arrive soon.
This means that small businesses still submitting VAT via the HMRC portal or post will have to maintain records digitally and file VAT returns through approved software (unless there is a legal exemption).
While preparing for MTD will be a defining factor in the year ahead, and does require change for small businesses, it doesn’t have to be treated like a harbinger of doom. Instead, MTD offers businesses the opportunity to accelerate technology adoption, driving efficiency and meeting the increasingly-digital demands of customers.
The opportunity to use MTD as a catalyst for digital transformation makes it one of the more exciting prospects for small businesses in 2022. To learn more, why not visit HMRC’s own MTD for VAT page, or check out one of Xero’s upcoming webinars.
Stay in the know: Customs declarations for small businesses
Here, we turned to the tax professional at Deloitte to run us through what custom declarations for small businesses mean this year:
“The start of the New Year has seen most of the post-Brexit trade regulations coming into effect – with a select few introduced from 1 July. A couple of the biggest changes from 1 January include the need for businesses importing goods from the EU into GB to now submit full customs declarations to HMRC, and goods exported through Roll On – Roll Off (RoRo) locations (including Eurotunnel) are now subject to full customs controls.
“In response to the changing trade landscape, CustomsClear – a digital platform that lets businesses submit their own customs declarations – has been developed to give businesses full control and transparency regarding the movement of their goods – with no third parties or intermediary necessary.”
Driving business sustainability through technology
While every business must consider their own impact on the environment, it can also feel extremely difficult for small firms to make a difference in the fight against climate change. Even calculating carbon footprint can be a laborious, time-consuming process – something resource-strapped small businesses will struggle to achieve.
However, while taking tangible action may feel expensive and complicated for small businesses, there are digital tools that can automate and simplify the process of becoming more sustainable. A number of Xero’s app partners deliver solutions that can help businesses meet their green goals, and in 2022, these technologies will continue to make a serious impact on our most important fight.