Making Tax Digital

No more paperwork

What is MTD?

Making Tax Digital is the UK Government’s programme to get businesses keeping digital records and using software to submit tax returns to HMRC. The idea is to do away with paper records and offline spreadsheets to reduce the margin for error and speed up the processing of tax returns and payments.

Get ready for Making Tax Digital

What you need to do

Although not every business is yet expected to comply with MTD, it makes sense to get ready now. That means getting yourself set up with MTD-compatible accounting software and reviewing your processes to make sure electronic recording is second nature. For example, start using receipt scanning software if you’re not already.

What’s coming and when

Key dates for MTD

It’s been a long bumpy road for MTD after its initial announcement back in 2015. After multiple delays, the first phase launched in April 2019, covering VAT returns for VAT-registered businesses with taxable turnover of £85,000 or more. Another big step will be the arrival of MTD for income tax self-assessment (ITSA) in 2024, covering self-employed businesses and landlords with business or property income above £10,000 per year. By the end of the decade, you can expect MTD to cover every business in the UK. The deadlines have been postponed but the current timetable is as follows:

  • April 2019 | MTD for VAT phase one: VAT-registered businesses with taxable turnover of £85,000+
  • April 2022 | MTD for VAT phase two: all VAT-registered businesses
  • April 2024 | MTD for ITSA: self-employed businesses and landlords with £10,000+ gross income per year
  • April 2025 | MTD for ITSA: partnerships with £10,000+ gross income per year
  • After 2026 | MTD for Corporation Tax, details to be confirmed

Your Making Tax Digital questions

FAQs

Is Making Tax Digital compulsory?

VAT-registered businesses must comply with MTD already. The schedule above shows that more and more businesses will eventually get scooped up, so start thinking about how you’ll make your business compliant now.

Which is the best MTD software?

Everybody’s needs and preferences differ so we can’t give a simple answer to this. However, most modern cloud accounting packages will have you MTD-ready out of the box. HMRC also has a tool to help you find compatible software.

Do sole traders need to go digital?

At present, only sole traders who are VAT registered are required to comply with MTD. Many sole traders and landlords (where gross income from both sources is in excess of £10,000) will find themselves obliged to comply with MTD from April 2024 when MTD for ITSA begins. However, you should start thinking about compliance now as April 2024 is not far away.

Still got questions about MTD?

If you’re not sure how Making Tax Digital might affect your business, or want advice on what you can do to get compliant ASAP, get in touch. Our team will be happy to give you an honest opinion and practical advice so you can get yourself sorted and focus on your business.