Making Tax Digital
Making Tax Digital (MTD) is the government’s plan to “make it easier for individual and business to get their tax right and keep on top of their affairs”. MTD is making fundamental changes to the way to the tax system works.
The government’s view is that this will make the tax system:
However, this efficiency will require taxpayer to change how they keep records and submit returns to HMRC. The driving principal behind MTD is that business records must be kept digitally and communication with HMRC will be with electronic.
Since April 2022, all businesses registered for VAT have been within the scope of MTD.
From April 2024 MTD will be extended to income taxpayers (self-employed individuals and landlords) with business and/or property income over £10,000. This will extend the MTD requirements to an estimated additional 4.2m taxpayers.
Taxpayers in MTD will have to make quarterly returns, based on their digital records, to HMRC and an annual income tax filing. Taxpayers with more than one business will have to make a return for each business.
MTD for corporation tax is expected to be mandated from April 2026.
How we can help
The move to quarterly reporting is a major change for taxpayers, but we are helping businesses of all sizes and at every stage of readiness to comply with, and prepare for MTD.
In order to have a smooth transition, we would recommend keeping records in electronic form as soon as possible. Our experience is that early adoption of digital record keeping not only allows client to prepare for MTD, they also see benefits from improved record keeping. If you are not in a position to look after the digital record keeping obligation yourself, our outsourcing team would be happy to help.
MTD for VAT- the requirementsIntro 2
However, this efficiency will require taxpayer to change how they keep records and submit returns to HMRC. The driving principal behind MTD is that business records must be kept digitally and communication with HMRC will be with electronic.
Since April 2022, all businesses registered for VAT have been within the scope of MTD.
From April 2024 MTD will be extended to income taxpayers (self-employed individuals and landlords) with business and/or property income over £10,000. This will extend the MTD requirements to an estimated additional 4.2m taxpayers.
Taxpayers in MTD will have to make quarterly returns, based on their digital records, to HMRC and an annual income tax filing. Taxpayers with more than one business will have to make a return for each business.
MTD for corporation tax is expected to be mandated from April 2026.
How we can help
The move to quarterly reporting is a major change for taxpayers, but we are helping businesses of all sizes and at every stage of readiness to comply with, and prepare for MTD.
In order to have a smooth transition, we would recommend keeping records in electronic form as soon as possible. Our experience is that early adoption of digital record keeping not only allows client to prepare for MTD, they also see benefits from improved record keeping. If you are not in a position to look after the digital record keeping obligation yourself, our outsourcing team would be happy to help.
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