Are you ready for Digital Tax (MTD) fillings?

Are you ready for Digital Tax (MTD) fillings?

Making Tax Digital also known as MTD, for VAT began in April 2019, making it obligatory for VAT-
registered companies that met the £85k turnover registration threshold to observe with the MTD rules. But the MTD initiative will soon be extended to cover ALL VAT-registered businesses, followed by all sole traders and property owners who submit a self-assessment income tax return.

Here are some of the most frequently asked questions.

How does Making Tax Digital work?
Making Tax Digital aims to change the recording of tax records and submission of tax returns from paper and online returns to a digital model. Businesses and individual taxpayers will need to keep digital records and submit quarterly returns in a digital format, direct to HMRC.
Who will be affected by the extension of MTD?
From April 2022 onwards, Making Tax Digital will become compulsory for all VAT-registered businesses, including below the threshold of £85k turnover. From April 2024 onwards Making Tax Digital will apply to Income Tax Self-Assessment (ITSA), unincorporated businesses, and landlords with total business or property income above £10,000 per year.
What do you need to do?
If you fall into either (or both) of the two affected categories, it’s sensible to start planning your migration to the digital world as soon as possible. This means that businesses and individuals must keep digital records of their finances, along with all the relevant tax records. Use appropriate accounting software that can link to HMRC’s digital portal submit a digital tax return on a quarterly basis, directly to the HMRC portal.

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