Making Tax Digital (MTD)
Making Tax Digital is HMRC's ambitious plan to make recording and maintaining business transactions digitally to enable reporting and submission of tax returns electronically using accounting software.
Businesses which are registered for VAT will already be filing their VAT returns in this format.
Making tax digital for Income Tax
The next stage of the evolution applies to income tax payers.
From April 2023, all businesses including, sole traders and landlords, with income over £10,000 will need to maintain their accounting records electronically and submit financial results to HMRC each quarter, with a final declaration at the end of the year to confirm the figures submitted to HMRC during the year. This process will replace the self-assessment arrangements currently in place. The declaration will take account of any additional income received by the Taxpayer. The deadlines for the final declaration and payment of outstanding taxes will remain 31 January following the end of the tax year.
In certain circumstances taxpayers can voluntarily apply early adoption of the scheme, however this is currently limited to only taxpayers with one business or income from rented property. Perhaps another barrier in participation is the limited commercial software suppliers currently approved by HMRC, although there are some interfacing software applications which provides a link from your current software to HMRC submission.
We are ready to support you if you are thinking of early adoption to the scheme, our services include analysing your transactions recorded in your cashbook and recording your quarter end journal entries to ensure submissions to HMRC are accurate, and prepare and file your final declaration.
Please contact us if you would like more details on how the scheme will impact your business and how we can help you with compliance.