Making Tax Digital (MTD) is the Government’s plan to modernise and digitalise the UK tax system. Ultimately, this will have significant implications for both businesses and individuals.
The initial stage of Making Tax Digital came into effect on 1 April 2019. This means that all VAT-registered businesses above the £85k threshold will need to keep digital records and submit VAT returns using compatible online accounting software such as Xero.
In July 2020, HMRC commissioned a survey showing that 16% of firms mandated to sign up to MTD for VAT have so far failed to do so. Read more here. If your business is one of the 16% identified, it’s not too late - isn’t it time that you made the move to digital?
HMRC has delayed the requirement to put in digital links between software. Now all businesses have until their first VAT return period from 1 April 2021 to ensure these digital links are in place.
Further changes have been announced this year, with upcoming deadlines within the next three years.
- April 2021 – VAT-registered businesses above the £85k threshold must have digital links between software implemented.
- April 2022 – VAT-registered businesses below the £85k threshold will also need to keep digital records and submit VAT returns online.
- April 2023 – MTD for Income Tax. Self-employed businesses and landlords with business or property income above £10,000 per year must be MTD compliant.
We have successfully delivered the first stage of MTD for our clients who are above the £85k threshold. If you are unsure about whether you or your business is currently compliant or about the next steps to take then why not contact us today, to find out how we can help make your business MTD ready?
We are accredited partners of Xero, a compatible Making Tax Digital software and we can help you in making best use of all of its features and functions.