The Making Tax Digital (MTD) deadline is fast approaching and soon digital accounts will replace all tax returns for businesses and individuals.
What Is Making Tax Digital?
MTD was first introduced by HMRC in April 2019 with the aim of getting small businesses and self-employed to complete digital tax records and returns. This means that businesses will eventually go paperless.
With digital tax, HMRC is trying to make it easier for businesses to get their tax right. Eventually, paper records will become obsolete and fail to meet tax legislation requirements.
What Are the Deadlines?
In April 2019, VAT registered businesses with a taxable turnover above the £85,000 threshold were required to start keeping digital records and submitting digital VAT returns. More complex businesses, such as trusts and non-profit organisations, had until October 2019.
Due to the Coronavirus outbreak, HMRC extended to the deadline. By April 2022, MTD will be compulsory to businesses with a turnover below the £85,000 VAT threshold.
For self-employed businesses and landlords with an annual business or property income of over £10,000 a year, the deadline is April 2023.
How Will It Help My Business?
Your digital tax account will hold all the information you need and is easy to access. Like online banking, you can view all tax information in real time, update data and more. MTD will convert frustrating and time-consuming returns into a more stress-free task.
As there is less paperwork, digital tax can give you more time to focus on your business and make informed decisions that can help you grow.
Is It Difficult to Switch?
Switching over to digital tax doesn’t need to be difficult. There is plenty of different software available, so there will be one for your business.
With all records requiring to be electronically submitted, you should choose a system that keeps track of everything, including statements, invoices and tax reports.
View HMRC’s list of software here.
Find Out More
To find out more about Making Tax Digital or for advice, contact SCS Financial Management. A member of our team will always be available to offer any guidance you may need. Call us on 01737 373707.
You can also enquire through our online contact form.