You have probably heard of Making Tax Digital (MTD).
Even if you are aware, you may be unsure what ‘going digital’ for Income Tax means. To ensure you have the relevant details, we’ve created a knowledge hub to make the transition to MTD smooth and surprise-free.
MTD facts in a nutshell
When is the deadline? 6 April 2024
Who is imposing MTD? HMRC
Who is eligible? Anyone who submits an Income Tax Self Assessment (ITSA) form and is a landlord or self-employed (sole trading company) with a combined business or property income over £10,000 per annum.
Did you know that an estimated 4.2 million taxpayers earn above £10,000?
What is required? Your annual accounts must be digitally kept using MTD compatible software.
What needs submitting? After 6 April 2024, it will be compulsory to submit the following documents to HMRC through your chosen digital software:
- quarterly accounts submissions for total income and total expenses for each business (even if you’re not VAT registered)
- an annual End of Period Statement for each business
- an annual Final Declaration submission as an individual
Nobody likes change, and extra work will be involved in setting up the procedures to enable digital accounts reporting. Therefore we are giving you plenty of notice and guidance to help make your transition problem-free.
The long-term benefits will far outweigh the initial short-term changeover
As your trusted accountancy firm, we’re here to help you navigate HMRC’s MTD demands.
Even if you currently rely on ‘shoe box’ or ‘carrier bag’ bookkeeping, we promise it won’t be as hard as you think. Plus, you’ll probably find loads of time-saving benefits and financial forecasting advantages.
Immediate steps to take
- Add the 6 April 2024 deadline to your diary
- Add April 2023 as an ideal deadline to have digital software in place
- Start maintaining monthly records now (even if it’s still paper to begin with)
- Set up a separate bank account to link to your chosen digital software (a separate account makes your bookkeeping easier and, in the event that your records are selected for an inspection, HMRC will have access to this bank account.
- Start talking to us now if you have any concerns
What happens next?
There are still a lot of unknowns around MTD Income Tax because HMRC official information is limited. The best action is to be prepared well before April 2024 to avoid the inevitable last-minute scramble.
Browse through the Key Accountancy MTD knowledge hub to learn everything you need to know. We encourage you to read each section and take action to implement the recommended steps. We’re here if you have any questions.
Let’s start preparing now.
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