What is Making Tax Digital (MTD)?
You see this on TV but what does it mean to you?
Simon Laskey gives you some useful advice.
MTD requires tax payers to operate a completely digital system for recording and filing tax data.
It covers three areas of tax – VAT, Income Tax and ultimately Corporation Tax for Limited companies.
VAT
The MTD rules for VAT came into effect in April 2019 and will be expanded to cover all VAT Registered businesses from 1 April 2022. This means that even businesses who voluntarily registered for VAT without crossing the turnover threshold of £85,000 will now fall under MTD.
Income Tax Self Assessment (ITSA)
From 6 April 2024, ITSA will apply to individuals who are self employed (or landlords) with income of more than £10,000. For partnerships, it is estimated that ITSA will apply from 2025.
Instead of filing a yearly Tax Return, MTD will require a quarterly filing with an End of Period statement to finalise matters. This will replace filing a Self Assessment Tax Return.
Corporation Tax
The final stage of MTD will apply to Corporation Tax in approximately 2026-2030, the exact date currently unknown.
The key thing to consider now with the roll out of MTD is the need to have compliant software to meet your obligations. In time, MTD will mean the end of paper only records and no more simple spreadsheets of data.
For more details on how Simon can help you just click here now.
