What does Making Tax Digital (MTD) mean?

6 July 2021

Put simply, Making Tax Digital requires businesses/individuals to use compatible software (for example Xero and Quickbooks) to manage their tax affairs with HMRC from the key dates below. If you are currently using spreadsheets there will be options to link spreadsheets to compatible software but using online accounting software is much more efficient; you can have all of your information feeding directly in and with the accounting software set up correctly your day to day costs can be automatically posted. 

You don’t need to wait for the deadlines to make the move over to MTD. You can make the move now to online software account and make sure you’re ahead of the game; be organised, be prepared and in control – don’t be a last minute Larry!

Making Tax Digital is intended to make your life easier and that’s where we can help.  If you need any advice and guidance on the software options available to make your tax digital please contact us on 01677 455420 and we will be happy to guide you through your options. 

Key Dates

VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are already required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns, however if you are below the VAT threshold you can also voluntarily join the Making Tax Digital service now.

VAT-registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax digital rules for their first return starting on or after April 2022.

Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.  However, if you are a self-employed business or landlord you can also voluntarily use software to keep business records digitally and send Income Tax updates to HMRC instead of filing a Self Assessment tax return.

Making Tax Digital for Corporation Tax is not scheduled to become mandatory before 2026.

More information on Making Tax Digital is available on the HMRC website here:- https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital

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