MAKING TAX DIGITAL, WHICH IS ALSO KNOWN AS MTD IS A NEW UK GOVERNMENT INITIATIVE WHICH WILL PUT AN END TO THE TAX RETURN.
Making Tax Digital is designed by HMRC to make life easier for tax payers. All eligible companies will have to use an effective and efficient new digital system. From April 2019, most businesses with a taxable turnover above the threshold of £85,000 will have to comply with the new system. If you are eligible you will need to use approved accounting software to upload your tax data to HMRC each quarter.
Many businesses are already using this system to upload their VAT return but it will now become compulsory. Businesses will no longer be able to go the HMRC VAT site and add their figures for the quarter because it will have to be done via your own accounting software.
Quarterly Tax Return
With MTD, businesses will be obliged to upload their business income and expenditure four times a year or more. This will give you a clearer, up to date figure of how much tax you will be due to pay.
Will Making Tax Digital affect your business?
- If your business is over the £85,000 VAT threshold and you currently submit your tax return via the Government Gateway you will have to switch to MTD by 1 April 2019 and use cloud accounting software.
- If you are a VAT registered business and turnover is below £85,000 you won’t be immediately affected but eventually you will have to make the switch.
- MTD will eventually cover all tax including VAT, income tax and Corporation Tax by 2020
- VAT will be the first to be rolled out and this comes into effect in April 2019!
Get your accounting software ready for MTD now
If you are not using Accounting Software for your bookkeeping you need to start taking action now. We recommend Xero software – it’s easy to use and available wherever you are. To find out more about small business accounting, contact Roden Associates today. We specialise in bookkeeping and payroll for small businesses and we have offices in Edinburgh and Glasgow.
What to learn more about Making Tax Digital?
HMRC have provided an in depth guide to MTD on their website. Click the link below to find out more.