What is it?
Making Tax Digital (MTD) is a system put in place by the Government which will require businesses to use software to manage their financial affairs in accordance with Government regulations. There are a range of different software platforms available that are fully MTD compliant.
Advantages of MTD for your business:
When MTD is fully operational it will allow businesses to have a clear overview of their tax account. Businesses would be able to view all their tax information and obligations in one place. This will enable a more streamlined service between advisors and agents, whilst also improving the businesses ability to manage their budgets and plan more efficiently and effectively.
Who it will affect?
The first tax which MTD applies to is VAT. Currently MTD for VAT affects anyone who has a turnover exceeding £85k. However, from 1 April 2022 all VAT registered businesses will be required to sign up, regardless of their level of turnover.
In future years MTD will also be used for Corporation Tax & Income Tax.
What you need to do to comply?
Before signing up to Making Tax Digital for VAT you’ll need either:
- a compatible software package which enables you to keep digital records & submit VAT Returns
- bridging software to connect non-compatible software (e.g. spreadsheets) to HMRC systems
Please click here to search for software providers.
Or to find out more about signing up to making tax digital please click here.