MTD Facts and Fiction
MTD for VAT
MTD for VAT is now in force and all VAT registered businesses with annual taxable turnover exceeding £85,000 must comply with the making tax digital (MTD) rules for VAT.
There are two requirements for MTD: to keep your VAT records in a digital format AND to submit VAT returns using MTD compatible software. This is neither as complicated nor as difficult as it first seems; if you already record transactions on a spreadsheet or some form of MTD compliant accounting software. Bridging software is available that automatically takes figures from spreadsheets and submits it to HMRC (But you do need the spreadsheet to be set up properly!).
From April 2022, ALL VAT registered businesses will have to comply with MTD, even those who are registered voluntarily with turnover under the VAT registration threshold.
MTD FOR INCOME TAX
HMRC are ploughing ahead with the next phase to extend MTD to sole trader and buy to let landlords, who have trading or property income over £10,000. The target date has been pushed back a couple of times but now appears to be set in stone to start on 6 April 2024.
This means that all but the smallest of sole trader/partnership businesses and landlords will, for the first time, be required by law to keep book-keeping records in a digital format, i.e. a spreadsheet or accounting software. Current HMRC plans are for quarterly submissions of income/expenses directly from the software to HMRC, followed by a year end “round up” return to confirm figures for each year. So that means there will be FIVE returns/submissions per year instead of one.
Time passes quickly, so we strongly urge clients currently using hand written records to talk to us for support to convert to software to help the transition.
Contact us for more details.