Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of administering tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay tax based on your business activity during the year. You can upload and update your tax account in real time.
If you own a business, you are self-employed and you pay income tax, national insurance, VAT or corporation tax, then it is quite likely you will be affected. This means you could be required to keep track of your tax affairs digitally using MTD compatible software, and to update HMRC at least quarterly via your digital tax account. Eventually this will abolish the annual tax return. This will be the law and there will be penalties for non-compliance.
MTD for income tax should become law from 6 April 2024. MTD for income tax will apply to the self-employed, partnerships and to those who receive income from property, with gross income from these sources combined above a threshold of £10,000. Partnerships will need to be compliant by 2025.
The Government is running a pilot scheme where businesses can use the online service for Making Tax Digital for Income Tax. Please visit: https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax
Talk to us – the good news is that you can reduce your running costs and streamline your accounting by complying with the new rules!
In the last two years we have worked with many other clients to help them comply with MTD and streamline the way they do things.
Suppose you had a system where your bank feeds your data directly into your accounts on a DAILY basis, you take a photo on your phone of a purchase invoice and it is posted automatically, you can see your results, who owes you money, who you owe and your business bank balance 24/7, 365 from your phone.
We have MTD compliant Cloud accounting packages that give you:
Please feel free to contact us about helping you to comply with the new rules. We are cloud accounting specialists, and we can train and support you with the right software.