Making Tax Digital - MTD
Death of the Tax Return: Are you ready for the biggest ever change to the UK tax system?
What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is the governments vision to digitalise the UK tax system; businesses and tax payers will be required to use commercial software to maintain their records and to file updates with HMRC on a quarterly basis.
This will mean keeping all financial records in a digital format and most business types (the self-employed; sole traders & partnerships and landlords) will need to use software or apps to keep and file business records. HMRC's ambition is that this will see the end of manual record keeping and MTD will increase UK productivity in the future.
There are a few exemptions to those that MTD will not apply to, but most businesses and tax payers will need to start planning for how they will make the transition to Making Tax Digital (MTD) now.
VAT Registered Businesses
On 13th July 2017 the government (HMRC) announced a new timetable and changes to the implementation, which mean that MTD will not take effect until April 2019 and will only be mandatory at that time for VAT registered businesses over the VAT threshold of £ 85,000. This will mean that the businesses affected will need to set-up a new MTD Tax Account with HMRC and then file all future Vat returns on a quarterly basis, using their chosen software.
Self-Employed and Landlords
In respect of filing quarterly (tax) returns of trading results, the start date for all other businesses has been put back to April 2020. This will also mean that the individuals or businesses affected will need to set-up a new MTD Tax Account with HMRC and then file all future Vat returns on a quarterly basis, using their chosen software.
MTD - What to do next
Preparing for MTD will require a move from keeping manual records to finding suitable HMRC approved software or you may decide that you would like The Local Accountant (TLA) to help and manage your accounts digitally (in-house) on your behalf and take away the stress of MTD.
We already have a wealth of experience in using cloud and desktop based accounting software, as we use it on a daily basis in our business. Please contact us if you would like a demo on any of the software that we recommend or would to ask us advice on how you or your business can move towards becoming fully compliant to the new "Making Tax Digital" MTD regime.
If you have any questions on how Making Tax Digital (MTD) will affect you, please visit www.making-tax-digital.accountants for more information or if you would like to discuss your options please get in touch with us by phone or email us at hello@thelocalaccountant.co.uk