What is Making Tax Digital?
By providing businesses with a modern, streamlined system for keeping their tax records and reporting to HM Revenue and Customs (HMRC), Making Tax Digital (MTD) is aimed at bringing the UK tax system into the 21st century.
Small businesses and individuals with a turnover above the VAT threshold of £85,000. Digital records are mandatory for these businesses since April 2019.
Why did HMRC introduce Making Tax Digital?
The following reasons led HMRC to launch Making Tax Digital:
- Tax information you can trust
Using digital tax accounts instead of paper-based bookkeeping will enable you to verify that the information HMRC holds about you is accurate.
- Errors are reduced.
As a result of Making Tax Digital’s new reporting function, HMRC will be able to access your tax information almost immediately, reducing human error on data entry.
- Simpler to understand
As with online banking, HMRC anticipates taxpayers will better understand how much tax is owed on their digital tax account.
- Easy access to HMRC
Making Tax Digital will make it easier for you to communicate online with HMRC via secure messages and webchats.
When will Making Tax Digital affect me?
VAT registered businesses with a turnover over the VAT threshold (currently £85,000) were required to register for Making Tax Digital for VAT in April 2019. These businesses were required to keep digital VAT records, and submit their VAT returns through MTD-compliant software.
VAT-registered businesses with taxable turnover below £85,000 will have to follow MTD for VAT rules for their first VAT return after April 2022.
From 6th April 2024, all self-employed businesses and landlords with annual business or property income over £10,000 will be required to follow Making Tax Digital for Income Tax.
Making Tax Digital will not be implemented before 2026 for Corporation Tax.
Help with Making Tax Digital
We can help you prepare for Making Tax Digital*. Our experience as small business owners means we fully understand what is required to manage your business records digitally. Dawer and Co has spent a great deal of time developing training and supporting small businesses throughout this time of change.
We will advise you about MTD-compliant software such as QuickBooks and Xero to help manage your accounting records wherever you are.
To arrange a free consultation, call us at 020 3581 5197 or contact us here to arrange a free consultation.