MAKING TAX DIGITAL
Know your Business…
What is MTD?
Making Tax Digital (MTD) is a fundamental change to the UK tax system. It is a Government-led plan designed to make it easier for individuals and businesses to calculate how much tax they owe. Every individual and business will have their own on-line Personal Tax Account.
Making TAX Digital for VAT (MTDfV)
Since April 2019, most VAT-registered taxpayers with a taxable turnover above the VAT threshold of £85,000 have been required to operate Making Tax Digital for VAT (MTDfV).
In July 2020, the Government announced a series of reforms to Making Tax Digital and these are highlighted below:
- Making Tax Digital for VAT (MTDfV)
From April 2022, all VAT registered businesses must follow these rules regardless of turnover for their first return on or after 1 April 2022.
This includes those business who currently have an exemption or who are intending to apply for one.
Such business can already sign up voluntarily through the GOV.UK website.
- Making Tax Digital for ITSA
If taxable turnover from a self-employed business or income from property exceeds £10,000 per annum, taxpayers must follow the rules for Making Tax Digital for the next accounting period starting on or after 6 April 2023.
HMRC are planning to expand the pilot service for Income Tax from April 2021, to allow more businesses and landlords to test the full end-to-end service.
- Making Tax Digital for Corporation Tax
HMRC continue with their plans to introduce Making Tax Digital to incorporated businesses with Corporation Tax obligations.
Further detail is expected in Autumn 2020.