HMRC has introduced Making Tax Digital (MTD), which will allow individuals and businesses to make their taxes digital. Many people are moving to the new system and leaving behind their paper records or spreadsheets.
Making Tax Digital currently focuses on VAT submissions. However, it will expand to include income tax and corporation tax in the months and years ahead.
How do businesses comply?
Businesses must keep digital records in order to comply with Making Tax Digital For VAT. HMRC refers to this as ‘compatible software’. It must also be able to communicate directly with HMRC, and then send your information to them.
When will the MTD impact me?
MTD was implemented for almost all VAT-registered companies with a taxable turnover of more than £85,000 in April 2019. To keep digital records and submit VAT submissions to HMRC, they must use Making Tax Digital software
This will apply to all VAT-registered UK businesses starting in April 2022.
Deadlines
April 2022:
Making Tax Digital for VAT will be applicable to all VAT-registered businesses
April 2024:
Making Tax Digital for Income Tax is applicable to self-employed landlords with an annual income of more than £10,000 and self-employed businesses.
April 2026:
The Making Tax Digital for Corporation Tax might be in effect
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