Why do you need to start thinking about MTD?
Her Majesty Revenue & Customs (HMRC) is currently rolling out a new digital scheme on all aspects for taxes, such as VAT and Income Tax, to make filing easy for businesses. It will see all UK business taxes move online and handled digitally, and paper returns are no longer required.
All businesses with a turnover above £85,000 are legally required to store their records digitally and file their VAT returns through online software.
What is changing?
All VAT-registered businesses, regardless of taxable turnover, will need to start using the MTD service for periods on or after 1 April 2022.
What are the benefits of Making Tax Digital?
MTD helps you:
- Bring all your tax accounts together in one accessible place
- Reduce manual calculation errors
- Have electronic copies of all invoices and receipts
- Keep records up to date
- Share your records easily with your accountant or agent
- Save time and money so you can focus on your business
MTD streamlines your business so that the right people can access all the necessary information at the right time.
Your VAT period and filing deadlines stay unchanged.
Under the MTD changes, you must keep digital records with MTD-compatible software. All your VAT returns will get submitted through your MTD-compatible software.
If your annual turnover goes above £85,000 before 1 April 2022, you need to sign up to MTD straight away for VAT filing.
Will there be any more MTD changes?
In 2024, the next stage of MTD will come into action for income tax. Individuals, companies, and partnerships with a gross income of at least £10,000 will have to record and file their tax returns online.
Finally, the last stage looks to move Corporation Tax returns digital. Although still under consultation, businesses may be required to file their corporate tax online after April 2026. Organisations will soon get invited to a pilot scheme.
We can help you prepare for MTD.
If you have a query surrounding MTD or need assistance to meet your VAT requirements, our Accounting Support team can help. Please get in touch here or ring 01438 758 100.
