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Making Tax Digital (MTD) is at the core of HMRC’s plan to become one of the most digitally advanced tax administrations in the world. First announced in March 2015, the plan is to simplify tax by replacing existing processes with digital record keeping, and submitting tax returns digitally throughout the year.

Do Making Tax Digital (MTD) rules affect me?

You’ll need to be aware of the MTD rules if you:

  • Are a VAT-registered business
  • Submit a Self Assessment tax return as a self-employed business or landlord
  • Pay Corporation Tax

To help businesses adjust to the changes, the new rules are launching in stages for different types of tax return.

Do MTD rules apply to me?

The new Making Tax Digital legislation comes into force in stages depending on the type of tax return it relates to. Our table below shows the planned schedule for MTD.

Expected Date for MTD Type of Tax Return
April 2022 MTD for VAT: MTD legislation is mandatory for all VAT registered businesses submitting their VAT return.
April 2026 MTD for Income Tax Self Assessment (ITSA): Expected to roll-out to sole traders and landlords with earnings above a certain threshold, MTD ITSA will replace annual Self Assessment tax returns.
To Be Confirmed MTD for Corporation Tax: The anticipated start date for submitting Company Tax Returns under MTD rules has not yet been confirmed.

 

Check out our Making Tax Digital Information Hub for more information.

Will I need special software for MTD?

You’ll need to keep your accounting records digitally, and submit your tax information to HMRC using special software (like Pandle!). You’ll either be able to submit directly from your record-keeping software, or will need to use bridging software to make the actual submission.

What are the benefits of Making Tax Digital?

The government believes that MTD will make life easier for businesses and HMRC, improving efficiency, and making it easier to comply. Other predicted benefits include:

  • The ability to review all your tax information from your personal digital tax account
  • Faster and simpler to submit your information to HMRC and pay your tax bill online
  • Increased accuracy and fewer errors in reporting, meaning you’re more likely to only pay what you owe, and are less likely to experience compliance checks and audits
  • A more up-to-date picture of your finances and the tax you owe

Don’t ignore MTD until it becomes compulsory! Talk to one of the team about our online accounting services, including help with your tax return. Call 020 3355 4047 or get an instant online quote.

About The Author

Beth-Anne Karellen

I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.

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