Making Tax Digital (MTD): Are you ready?
Making Tax Digital (MTD) is the most significant tax shake-up in the last fifty years as a result of the government moving HMRC to a digital-based tax system.
In time, all businesses will be required to become MTD-compliant which means they will have to record their business-related transactions digitally using an MTD-approved software package. It also requires them to update HMRC every quarter for National Insurance obligations and income tax.
How does MTD help?
There are four main benefits of Making Tax Digital:
MTD: Where are we now?
Businesses have gradually been moving to the digital system since 2018:
2018/19 - Self-employed individuals and unincorporated landlords with a net turnover above £85,000
2019/20 - All VAT registered companies, whether they file quarterly updates or not
2020/21 – Companies (including incorporated landlords) and complex partnerships
What does 2020 hold for MTD?
As a result of the Covid-19 pandemic, HMRC has postponed the requirement for all VAT registered companies to move to the digital-based system until 1 April 2021. This is in addition to other business relief measures announced by the government, including VAT deferral.
Businesses should still continue on their journey to Making Tax Digital.
If you need advice on what MTD means for you and your business, get in touch with us as soon as possible.
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