Making Tax Digital (MTD) is a HMRC initiative to make the tax system more effective and efficient. Its objective is to make it easier for businesses and individuals to keep on top of their financial affairs and get their taxes right. It requires regular online tax filing and payment as well as digital record keeping.
The new rules mean that if you are a business or individual with a taxable turnover above the VAT threshold (£85,000), then you will need to keep your VAT business records digitally and send VAT returns through MTD-compatible online software. Such online software includes Xero, Sage Business Cloud Accounting, Quickbooks Online and others. Using online accounting software has many advantages. It is safe and secure, you can use it anytime and anywhere, and it allows for a collaboration between you and your accountant.
MTD has been in place since 1 April 2019 for all VAT registered businesses with a turnover over £85,000. MTD is soon going to be extended to cover VAT registered businesses with a taxable turnover below £85,000, who will be required to follow MTD guidelines from April 2022.
Self-employed businesses and landlords with an annual income above £10,000 will need to comply with the new rules from 6 April 2024. After this date, submission will need to be made to HMRC every three months using compatible software. You will receive an estimate of how much tax you owe. A final year end submission is made and the final tax for the year is calculated. MTD for corporate tax is not expected to start until 2026.
WCK Accountancy can help your business comply with the new digitalised initiative and integrate it within your accountancy. You must ensure your bookkeeping is compliant with MTD regulations. Please get in touch for advice on these changes – our knowledgeable team can help modernise your accountancy practices and ensure you are compliant with Making Tax Digital.
