Making Tax Digital, currently underway, is a key part of the government’s plan to make it easier for individuals and businesses to gain tax rights and take control of their taxes.

HMRC has also developed a fairly strict fine model to ensure that all companies and individuals participate in it in the future.

HMRC aims to be one of the most digital tax authorities in the world.

Tax digitization makes it easier for companies and individuals to manage taxes accurately and efficiently.

Obviously as a future trend, you need to accept this fact sooner and avoid fines for non-compliance.

Making Tax Digital for VAT

All VAT-registered businesses are required to comply with the Digital Taxation rules by keeping digital records and using software to file VAT returns.

Currently VAT registered businesses are required to submit VAT to HMRC using approved software.

Making Tax Digital for Income Tax

From 6 April 2024, self-employed businesses and landlords with annual business or property income in excess of £10,000 will need to comply with income tax digitisation rules.

As part of the on-site pilot, some of our clients are already keeping digital records and providing updates to HMRC in advance of the income tax digitisation service. For more details, please follow the official account to get in touch with us.

Making Tax Digital for Corporation Tax

The government has published an advisory on the future design of tax digitisation for corporate tax and has invited companies and other organisations responsible for corporate tax, agents, professional bodies and software developers to test it.

The government will offer businesses the opportunity to take part in the corporate tax digitisation pilot and will not make it mandatory until 2026.

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Key date nodes of MTD

You need to remember when your first full VAT accounting period begins, you should keep digital records and file your VAT return via MTD from the following start dates:

 

August 7, 2022, for VAT quarters beginning April 1, 2022.

September 7, 2022, for VAT quarters beginning May 1, 2022.

October 7, 2022, for VAT quarters beginning June 1, 2022.

MTD Advancement Timeline

 

  • April 2022 MTD for VAT

VAT registered businesses must use recognised software to keep digital records and submit VAT to HMRC.

 

  • April 2024 MTD for Income Tax Self Assessment

The MTD for income tax self-assessment will apply to all self-employed business owners and landlords earning more than £10,000 a year.

 

  • April 2024 MTD for Income Tax Self Assessment

The MTD for income tax self-assessment will apply to general partnerships with an annual turnover in excess of £10,000.

 

  • April 2026 MTD for Corporate Tax

The digitisation of corporate tax will be rolled out after 2026.

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What to do next?

Even if you are not affected by the changes now, you can still consider adopting best practices as soon as possible.

Not only will this make the transition easier, but you’ll benefit from improved day-to-day management, saving you time on tedious tasks.

Working with our professional accountants will also help you have a smarter and more productive conversation with them, especially if you’re on a tight budget.

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