What is Making Tax Digital?
Making Tax Digital is intended to bring the UK tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HM Revenue & Customs (HMRC).
Why is HMRC introducing it?
Making Tax Digital is intended to help you better keep track of how much tax you owe – or how much you are due back – throughout the financial year.
- Accurate Tax Information
Replacing paper-based bookkeeping with digital tax accounts will let you check the information HMRC holds about you is 100% correct.
- Reduced Errors
Making Tax Digital’s new reporting function will allow HMRC will to look at your tax information almost immediately, reducing human error from data input.
- Easier to understand
HMRC anticipates taxpayers will better understand how much tax is owed within the digital tax account – much like online banking.
- Easier contact with HMRC
Making Tax Digital will make it easier for you to contact HMRC online via webchats and secure messages.
When will Making Tax Digital affect me?
April 2019 – Businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records but only for VAT purposes
2023 – Further roll out of Making Tax Digital to affect all to all VAT-registered businesses and self-employed professionals self-employed and landlords under the VAT threshold.
Please be aware that the above dates – to keep up to date with the latest news about Making Tax Digital, please click here to a receive our newsletter.
Our video explains what Making Tax Digital is, who it will affect and when the changes come into place;
Help with Making Tax Digital
We can work with you to prepare for Making Tax Digital*. As small business owners ourselves, we fully understand what is required to manage your business records digitally. At TaxAssist Accountants, we've spent a great deal of time training and developing the right support services to help small businesses through this period of change.
HMRC will not be offering software to help you report quarterly, so we will advice you about MTD-compliant software such as QuickBooks and Xero to help make managing your accounting records easy, wherever you are.
*If you’re affected by Making Tax Digital (MTD) for VAT, you are not required to register for MTD until you have filed your final, non-MTD VAT return. However, businesses can register earlier if they wish to do so. If you pay your VAT liability to HMRC via direct debit, the banking regulations may also impact your window for registration.
NB: The information provided above is based on current guidance from HMRC and may be subject to change. Please consult our team at TaxAssist Accountants before taking any action.