Making Tax Digital (MTD)
The financial world is no stranger to change but this transformation in tax reporting is the UK’s biggest shake-up in a generation! HMRC is moving towards a fully digital tax based system which means that every business will need to report to HMRC in a digitally-compliant way. MTD will be introduced in stages and your annual taxable turnover will determine when you need to start taking part.
When is MTD happening and what will you have to do?
– April 2019.
Incorporated landlords, self-employed persons and businesses with an income over £85,000 will be expected to keep digital records for VAT purposes. You will also have to submit your VAT return to HMRC through MTD compatible software which will pull information from the digital records.
Who else will be affected by MTD?
Unincorporated landlords and small businesses with an annual turnover between £10,000-£85,000 will also be required to join at the income/corporation tax phase which is likely to be April 2020. At this stage you’ll need to:
- Keep digital records detailing, dates, rental values, income and expenses.
- Send quarterly reports to HMRC using third party software, summarising your business’s income, expenditure and profits.
- Make an end of year declaration (after any necessary adjustments).
All of this will be done through your personal tax account which will securely store all of your tax records. If the property is owned by a partnership, submissions will be made to the business’s digital tax account by a nominated partner. In a jointly owned property, each individual who receives income will report it separately.
Benefits of MTD:
- Improved quality of record-keeping
- Reduced likelihood of error (due to less manual entry)
- More efficient management of business affairs
- Less time gathering and inputting data
Check out the HMRC’s video on Making Tax Digital for Business below
We can provide guidance and support with moving to a digitally compliant record-keeping system. We can also manage your VAT returns on your behalf.