Making Tax Digital (MTD) is a government led initiative to digitise the tax system and make tax administration more efficient.
Since April 2022 all VAT registered businesses must follow Making Tax Digital (MTD) rules.
From April 2024 Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will require self-employed business owners and landlords with an annual gross turnover or property income above £10,000 to be MTD compliant and keep digital records.
Making Tax Digital legislation will require you to use MTD compatible software.
HMRC have provided a list of MTD compatible software – the software will enable Tax updates to be sent to HMRC electronically and will replace Self-Assessment tax return filing.
Each eligible business will be required to: –
- Maintain digital records as set out in the legislation.
- Submit quarterly updates to HMRC within one month of the end of that quarterly period.
- Finalise business income at the end of the tax year and submit an End of Period Statement by 31st January after the end of the tax year.
- Submit a Final Declaration by 31st January the following tax year and pay any tax owed.
Late declarations and payments may lead to penalties.
It’s important that businesses prepare for MTD for ITSA before the April 2024 start date.
Our Team can: –
- Explain what the changes mean for you and how they will affect your business.
- Set up an HMRC compliant digital system, tailored to your needs, so you are MTD ready.
There are many advantages to using MTD compatible online accounting systems and our team are experienced in supporting clients in their use.
With the correct knowledge businesses can benefit from the time and cost saving facilities that these systems provide.
From April 2025 HMRC are expected to introduce MTD for Partnerships with individual partners.
From April 2026 HMRC are expected to introduce MTD for Corporation Tax.
Disclaimer: The information in this article is provided for general information only and does not constitute legal or professional advice. We cannot accept responsibility or liability for any actions you may take, or not take, based on this information.