Making Tax Digital (MTD)03 Mar, 20224
Making Tax Digital (MTD) is HMRC’s initiative that aims to help businesses and individu...
Making Tax Digital (MTD) is HMRC’s initiative that aims to help businesses and individuals calculate their tax liabilities and stay on top of their tax affairs, which includes:
- Better use of information
- Tax in real-time
- A single financial account
- Interacting digitally with customers
What does this mean for my business?
Submitting tax returns, VAT returns, and corporation tax returns through the Government Gateway will no longer be an option, all submissions must be made using 'Functional Compatible Software'.
MTD will cover all business taxes, aiming to create the most digitally advanced tax system in the world. Under MTD, businesses will be required to make quarterly submissions to HMRC, giving HMRC information on business profits throughout the year and allowing tax liabilities to be estimated.
When will MTD apply to you?
Making Tax Digital Jargon Buster and Key dates:
What is 'Functional Compatible Software'?
Functional Compatible Software is a software program or a set of compatible software programs which can:
- Record or preserve digital records
- Submit these records to HMRC
- Receive information from HMRC
- Functional Compatible Software must contain digital links
What is a 'Digital Link'?
Functional Compatible Software must contain digital links to transmit data from one software to another and to HMRC. A digital link is:
- Automated data transfer
- CSV imports
- Linked cells in a spreadsheet
MTD for VAT is compulsory for all businesses - April 2022
From 1 April 2022, all VAT-registered businesses must keep digital records and submit returns using functional-compatible software.
Transitional year for basis period reform (income tax) - April 2023
All unincorporated businesses to be taxed on a fiscal basis from 6 April 2024 to line up with the commencement fo MTD ITSA.
MTD for Corporation Tax for all companies. As a change to the previous timeline, MTD for Income Tax applies to landlords and self-employed individuals with turnover over £50k
MTD for Income Tax for Self-employed individuals and landlords earning over £30k
MTD for Income Tax for LLPs, Corporate Partnerships, Trusts & Estates and MTD for Corporation Tax for all companies
If you need help getting ready for Making Tax Digital, then our JS.Digital team has the services you need.
- Our Cloud Adoption service can help you pick the right accounting software, so you are ready to file your MTD returns
- Our Cloud Optimisation service can help ensure you have digital links in place
- Our Cloud Accounting service will take care of the filings for you
- Our Digital Health Check service can advise on what steps you need to make to get read
- Our software for landlords will give landlords a quick and easy way to submit their MTD returns
- Ask us about software for landlords…… Hammock has arrived!