Are you ready for Making Tax Digital (MTD)?
Updated: May 12, 2022
MTD for VAT
Businesses now have to keep digital records and submit their summary VAT returns directly to HMRC from their own accounting software or using bridging software from a suitable spreadsheet.
rom 1 April 2022, everyone registered for VAT must comply with MTD. Until this date, only businesses that had to register for VAT (turnover above £85,000), needed to use MTD. But you could also voluntarily register for VAT, if your turnover was under £85,000, and file for VAT not using MTD. The difference after 1 April 2022 is that anyone voluntarily registered for VAT now has to register for MTD.
MTD for Income Tax
This is expected to go live 1 April 2024. The annual tax return will be replaced by four quarterly submissions plus a final adjustment submission.
If your accountant typically makes lots of adjustments at the year end it may be that some of these bigger tweaks need to be done in each quarterly return. For instance, if you’re recording your invoices mainly for VAT and credit control purposes, you may not usually adjust your stock or depreciation and capital allowance figures until the year end.
The quarterly reporting will be required for any business or landlord with a turnover (not profit) over £10,000 per year.
Digital Tax Accounts
HMRC have set up digital tax accounts for each individual and business. These allow the taxpayer to see, ‘in real time’, the updated records that HMRC holds for most taxes. Although this is referred to as real time, many records are only updated at certain times during the month or after a few days delay.
It’s also possible to make changes to some of those records online instead of having to write or hang on the telephone for an individual at HMRC to deal with the change.
More information can be found on the Government website:
Let Woodpecker Consultancy take care of business
We are fully MTD compliant and can take care of all your MTD requirements. Get in contact to discuss your requirements.