HMRC issued Making Tax Digital (MTD) in 2015, however its rollout has been amended over the years to ensure businesses have ‘plenty of time to adapt to the changes’.
MTD is a £1.3bn investment programme by the government to make fundamental changes to the way the tax system works.
With business activity being reported digitally using Cloud accountancy software packages.
The next phases are as follows:
Making Tax Digital for VAT
VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are now required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.
If you are below the VAT threshold you can 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.
Making Tax Digital for Income Tax
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 April 6, 2023.
Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax Digital service for Income Tax.
If you are a self-employed business or landlord you can voluntarily use software to keep business records digitally and send Income Tax updates to HMRC instead of filing a Self Assessment tax return.
Ellis & Co Accountants and Business Advisers are experts in accountancy software, providing Sage, Xero, QuickBooks and FreeAgent accounting packages to our clients.
Our software specialist Anna Rowson-Smith reviews your needs and resources and offers an accountancy software package that is right for you and your business.
Anna also provides three hours of FREE set-up and training to all our clients.
For further information, or to sign up today, email email@example.com or call 01244 343504.