Making Tax Digital – What is MTD and how does it affect me?
Making Tax Digital (MTD) is the government’s initiative to transform the tax system by moving it online. MTD will affect the majority of businesses from April 2019, with further changes expected in 2020.
From 1st April 2019, VAT registered businesses over the £85,000 revenue threshold will have to keep their VAT records digitally, automatically submitting their VAT returns to HMRC through MTD compatible software.
If you’re VAT registered, close to the VAT threshold, and not currently using a digital accounting package such as Xero, then you need to start planning today. If you’re an FLB client, we’ll be in touch to discuss next steps. For those not currently working with us; why not take advantage of our MTD Health Check to highlight the steps you need to take in order to achieve compliance.
Switching to Making Tax Digital for business
The days of manual entry and excel spreadsheets is over. For VAT registered businesses above the £85,000 revenue threshold, the main change is the requirement to store and send your records digitally to HMRC using MTD compliant software.
For further taxes, including Corporation tax for limited companies and Income Tax for Sole Traders, the MTD deadline has been put back to at least April 2020.
The latest update from HMRC was the Making Tax Digital for Business Stakeholder Communication Pack released in July 2018. This confirmed the pilot for Income Tax for Sole Traders and UK landlords. The pilot currently enables these businesses to send quarterly Income Tax updates instead of filing an annual self assessment.
How do I prepare for Making Tax Digital?
If you’re an FLB client, don’t worry – it’s all in hand. Should you need to make any changes, we’ll be in touch to outline the steps required and how we can help you to achieve your compliance.
If you aren’t an FLB client, we’ve got lots more information on our website or alternatively get in touch about an MTD Health Check for your businesses.
Making Tax Digital – Next Steps
Any change, especially when it involves tax and HMRC can be daunting, but from what we’ve seen so far, the changes should only be positive. In forcing the move to digital accounts, the new system looks to reduce paperwork and modernise the UK tax system.
For help with Making Tax Digital for your business, get in touch today.