Making Tax Digital, The Next Step
Over the last couple of years HMRC’s ambition to become one the most digitally advanced tax administrations in the world saw the introduction of Making Tax Digital. This new system of reporting made fundamental changes to the way the tax system works in an attempt to make it more effective, efficient and easier for taxpayers to get right.
Making Tax Digital for VAT businesses
The first stage of MTD in 2019 saw VAT registered businesses with taxable turnover above the VAT threshold (£85,000) being required to follow the MTD rules by keeping digital records and submitting their vat returns through MTD compliant software.
From April 2022 the scope of Making Tax Digital will be extended to all VAT registered businesses with taxable turnover below £85,000. This means that all VAT registered business will then be required to register for making tax digital as well as preparing and submitting their VAT returns through MTD compliant software.
MTD for Income Tax
The scope of Making Tax Digital will expand with self employed businesses and landlords with annual income above £10,000 being required to follow the rules for their accounting periods starting on or after 6th April 2023.
What this means for you
With the scope of Making Tax Digital being extended, self employed businesses will be required to do the following;
- Keep digital business records
- Use MTD compatible software i.e. Xero, QuickBooks, etc.
- Sign Up to MTD for income taxes
- Send regular business and expense updates
- Finalise business income
- Send a final declaration instead of a Self Assessment tax return
How we can help
Since the introduction of Making Tax Digital and cloud-based accounting software LHP have embraced the cloud being one of the first practices in Wales to become Xero platinum partners.
Our mission is to a help our clients thrive and grow, spend more time on their business and remove the hassle of running the business (We’ll take care of as many things as you need). With a dedicated team of cloud experts, we can help guide your business through the upcoming changes – let’s talk!