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Making Tax Digital (MTD)

As previously noted there’s a revolution on its way. First announced in the April 2015 Budget, ‘MTD’ will affect virtually everyone running a business or a rental property. The timing has been significantly delayed but it is getting closer!

So far MTD has been implemented for VAT registered businesses with turnover above the VAT threshold (£85,000).

The next wave of MTD affects VAT registered businesses with a turnover below £85,000. They have to adopt the MTD reporting for the Returns starting on or after April 2022.

The next big staging post is 6 April 2023. This one affect the Self Employed with accounting years ending on a date other than 31 March (or 5 April). As set out on our Home Page they are in for ‘rebasing’.

In passing, we recommend that all VAT businesses align their VAT quarters to their accounting year (31 March). To do so – log on to the VAT area of the Government site and go to ‘Manage my Account’ to change the reporting dates.

Then from 6 April 2024 it really opens up! This time to the Self Employed and Landlords with income above £10,000 per annum (whether or not VAT registered). Businesses registered for VAT are used to the quarterly reporting, now the Self Employed and Landlords will have to report following MTD rules EVERY QUARTER! This means registering with the Government Gateway (if you haven’t already) and reporting ‘live’ data every quarter with a round up at the end of the year.

There will be no hiding place – all those in this category (where not already in place) will have to adopt one of three options:

  • Spreadsheet bookkeeping with ‘bridging’ software to transfer data to HMRC
  • ‘Cashflow’ software (an IRIS product) with a direct link to HMRC
  • Other software of your choice with a direct link to HMRC (Xero, QuickBooks On-Line, Sage)

If we think you will be affected we will contact you when we complete your 2022 Tax Return…

The Government Gateway is Integral to Making Tax Digital

You may have heard the expression ‘Government Gateway’ – we mentioned it above. It is becoming more and more a feature of everyday life! If you haven’t registered then we recommend that you do so – it’s good to be prepared!

Follow the link here: www.gov.uk/personal-tax-account/sign-in/prove-identity

Just to be clear, we deal with your Self Assessment (and where applicable) Company Corporation Tax through our own Agent Government Gateway but we cannot set up your individual Gateway. There are a number of areas for which it is required. For example:

Reporting UK residential property sales (see above!)

  • Applying for time to pay your tax liability
  • Accessing your Personal Tax Account
  • Submitting Making Tax Digital VAT Returns
  • Submitting Making Tax Digital Rental Income Returns (to follow)
  • Applying for your State Pension forecast