05 Dec All you need to know about Making Tax Digital
What is Making Tax Digital?
Making Tax Digital (MTD) is a government initiative that plans to simplify the UK tax system and make it easier for individuals and businesses to get their taxes right. It is part of the overall digitisation of UK Tax. MTD requires records to be kept digitally and for tax submissions to be made electronically to HMRC with the use of compatible Making Tax Digital software.
Does Making Tax Digital apply to me?
Currently, only companies that are VAT registered are required to follow Making Tax Digital rules. Making Tax Digital for Income Tax is set to come into effect in April 2024, with the government in consultation about plans for Making Tax Digital for Corporation Tax.
When does Making Tax Digital come into force?
From April 2022, ALL VAT-registered businesses in the UK will be required to use MTD software.
As of April 2024, Making Tax Digital for Income Tax applies to self-employed businesses and landlords with annual business or property income above £10,000.
Making Tax Digital for Corporation Tax is currently in consultation and will not mandate before 2026.
Do I have to register for Making Tax Digital?
At present, if you’re business is VAT Registered, you are required to register for Making Tax Digital, and store and submit your records digitally using compatible software.
Our MTD and VAT experts can help you to register for Making Tax Digital and advise you on the most suitable Making Tax Digital software for your business.
Do I need accounting software for my small business?
If your small business is VAT Registered, you will be required to use Making Tax Digital compliant accounting software to submit your VAT Returns.
What does Making Tax Digital mean for self-employed?
If you are self-employed and are VAT registered, you must be signed up to Making Tax Digital and submit your VAT Returns to HRMC electronically using MTD-compatible software.
Come April 2024, Making Tax Digital for Income Tax will replace the old Self-Assessment system and all self-employed individuals will be required to submit their tax returns digitally.
Instead of previously filing tax returns once a year on the 31st of January self-employed individuals will need to file digital updates every three months with a final report being submitted by the 31st of January.
What is the deadline for Making Tax Digital?
While all VAT Registered companies should already be adhering to the new Making Tax Digital rules which came into force in April 2022. Self-employed individuals should now consider preparing for the future requirements of MTD for Income Tax.
Our Making Tax Digital experts are on hand to answer any questions and guide you through the process to ensure you are compliant with HMRC. If you need help with MTD please contact our industry-leading specialists by emailing mail@dhco.co.uk.