What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a government initiative to revolutionise the tax system in the UK and bring it into the 21st century. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world, modernising the tax system to make it more effective, more efficient and easier for customers to comply.
What Does This Actually Mean?
From April 2019 businesses with annual sales levels of above the VAT threshold (£85,000) will be mandated to keep their records digitally and will need to send their VAT information to HMRC using approved software. HMRC’s usual online portal will only remain available to businesses that complete a VAT return that have annual sales below the VAT threshold. These businesses will be staged into the Making Tax Digital system in the future but not before April 2021.
Making Tax Digital is a fantastic opportunity for business owners to increase the efficiency and accuracy in their record keeping also to be more proactive in monitoring their business performance.
- Check to see if you are affected - only those businesses with annual sales of more than £85,000
- Check your key date - The first VAT return that you will be required to submit under the new MTD regime is for the first VAT quarter that starts on or after 1st April 2019.
- Choose a HMRC approved software for your record keeping and VAT submissions.
Most of the approved softwares are cloud-based accountancy packages. Please read our cloud accounting pages for more information.
What the future holds?
The government plans to widen the scope to include other taxes in the future however, this will not be before the system has been shown to work well, and not before April 2021 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.
Our software advisory team are trained and experienced in a range of software solutions that are MTD ready and will fit this to your business requirements. We are hearing great reviews from our clients on how much easier, quicker and useful their book-keeping is now and how pleased they are to have moved from manual cashbooks or excel spreadsheets onto the cloud software.
For those that really don't feel confident with the technology and software, we are happy to digitise your records for you and to make the necessary submissions - get in touch about our bookkeeping packages.
We offer a free 1 hour consultation with our software advisory team to discuss your options for MTD and to put a plan in place to make sure that you are compliant. We then also offer a range of setup and training packages to suit every business.