Making Tax Digital, also known as MTD, is one of the most significant changes to the UK tax system in recent times. With paper records already non-compliant for a growing number of businesses, this critical legislation could already be affecting you.
At ICS Accounting, we know you have much more important things to do running your business than understanding the latest details of tax changes, so here’s a short guide introducing everything you need to know. From HMRC’s MTD requirements to choosing the best compliant accounting software that works for you.
What is Making Tax Digital?
HMRC’s Making Tax Digital will require all businesses, contractors and the self-employed to keep records digitally and submit tax returns using HMRC-compatible software. The system is intended to make it easier for people to manage their tax affairs and remove avoidable mistakes, costing the Exchequer up to £8.5 billion annually.
Currently, MTD is focused on keeping digital records and using accounting software to complete VAT tax returns. Very soon, it will include Income Tax and Corporation Tax too.
Who does Making Tax Digital affect?
MTD became mandatory for most VAT-registered businesses with a taxable turnover above £85,000 from April 2019. From April 2022, this now includes all UK VAT-registered businesses, with upcoming switchover deadlines confirmed for small businesses and the self-employed.
- – This means if you’re a UK VAT-registered business in the UK, MTD affects you now
- – If you generate annual business or property income above £10,000, MTD will affect you from April 2024
- – MTD for Corporation Tax is currently proposed from April 2026
- – So, if you’re not affected yet, you will be soon!
What do I need to do?
MTD requires all eligible businesses to use HMRC-compatible software to record your information digitally, submit your tax returns, and preserve this information in an accessible form for six years. Moving forward, income and expenses summaries will be sent to HMRC every three months, enabling the software to track in real-time how much tax you’ll owe at the end of the year.
While not yet compulsory for smaller businesses and landlords, the next deadline is fast approaching. Therefore, we at ICS Accounting recommend signing up for the MTD pilot scheme, giving you the advantages of using our recommended MTD software and the reassurance of being ahead of the game before the next deadline.
Where do I start?
ICS Accounting’s expertise and our comprehensive MTD accounting software make your transition to MTD simple, smooth and seamless.
We use FreeAgent, a tried, tested, dynamic and 100% reliable MTD software, fully compatible with all HMRC systems and requirements. Not limited to MTD, FreeAgent empowers you with invoicing, expenses, cash flow, and more on one clean, mess-free simple dashboard, giving you a real-time overview of your whole business, plus automatic tax forecasts and reminders.
With ICS Accounting on your side, aligning with MTD is simple, giving you total peace of mind and time to focus on what matters. For all your MTD questions and requirements, call our friendly team on 0800 195 3750 or email firstname.lastname@example.org.