Making Tax Digital is something we have been hearing about for a while, but with Covid-19 throwing everything up in the air we have been left in limbo over how the pandemic has affected the roll out of the scheme.
Well, this month we have been provided with a few more details about the roll out, that we thought we’d pass on, along with a reminder of what Making Tax Digital is all about.
What is Making Tax Digital?
Making Tax Digital is part of the government’s plan to make it easier for businesses and self-employed individuals to get their tax right and keep on top of it.
The overall goal is for HMRC to become one of the most digitally advanced tax administrations in the world. Making Tax Digital will also change the way the tax system works, making tax administration more effective, more efficient and easier for taxpayers to get their tax right.
With everything that has been going on in the UK with Brexit and then the Coronavirus Pandemic, you would be forgiven if you had forgotten or didn’t know about Making Tax Digital.
In April 2019, VAT registered tax payers with a taxable turnover above the VAT threshold of £85,000 have been required to sign up to Making Tax Digital for VAT. It was optional for VAT registered businesses below the VAT threshold. However, from April 2022, ALL VAT registered businesses will need to be enrolled under MTD.
Here at Turas accountants, we took the decision to enrol all our VAT registered clients to Making Tax Digital. We have used cloud based software for submitting the returns, and so these businesses did not notice any impact to the way their VAT was being submitted.
HMRC will be pushing forward with their plans to roll out Making Tax Digital across income tax. This will mean that if your taxable turnover from your self-employed business or income from property is above £10,000 per annum, then you will be required to follow Making Tax Digital rules for the accounting periods starting on or after 6th April 2023.
How will it differ?
The main change will be keeping digital records and sending updates to HMRC every three months.
What should I do now?
This is not something to concern yourself with immediately, as there are still 2.5 years before this is rolled out. But we feel it is something that you should be aware of that is on the horizon, and if you are able to make small adjustments between now and 2023 with how you record your business records, this will help with the transition.
For a step-by-step guide, visit the gov.uk website here.
For any help and support with Making Tax Digital, or if you are looking for a new accountant for your business, please get in touch with our team.