The government’s Making Tax Digital strategy is a new, digital tax submission that will eventually include all taxpayers reporting their income and expenses via digital software
Ultimately, HMRC are looking for this to lead to the more frequent payment of tax, in line with the increased reporting requirements, for all self-employed and small businesses owners. They are looking at the development of a single digital account and single taxpayer record.
Who is affected by Making Tax Digital now?
The most recent uptake of Making Tax Digital for VAT came into force from 1 April 2022. This requires all VAT registered businesses to submit their VAT returns through MTD. This means you must keep VAT records digitally. Then send returns using Making Tax Digital compatible software.
There is room to apply to HMRC for an exemption if it is not reasonable or practical for you to use computers, software or the internet.
The requirement is that all VAT return information must be supplied digitally from your accounting software directly into HMRC’s MTD portal.
When will Making Tax Digital affect me or my business?
The government’s Making Tax Digital programme launched in 2019. By 2024 there will be an expectation to most businesses and self-employed individuals to keep digital records and use software to submit their returns.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from their next accounting period starting on or after 6 April 2024.
Will Making Tax Digital apply to landlords?
Landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from their next accounting period starting on or after 6 April 2024.
This means that any type of landlords, including but-to-let and furnished holiday lets, with an annual turnover above £10,000 will be required to keep income and expense records digitally. As well as submitting their tax return directly to HMRC using compatible software.
What software can help with Making Tax Digital?
If you are a small business and do not already have an internal system to log your accounting records, we recommend software. So, this includes Xero, QuickBooks, Sage Accounting or FreeAgent.
These cloud accounting software solutions are easy to use whatever your location. As well as having the ability to improve the cashflow of your business. This can, in turn help in making crucial business decisions. This gives a better picture of finances with the real time information.
Across our offices at Wasley Chapman & Co, we have been awarded Xero Platinum Status. This is for our work in transitioning clients to digital platforms. All our team are fully certified and have specialist knowledge and accreditations to support Making Tax Digital obligations.
Please contact us if you would like Making Tax Digital advice today.
