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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:

  1. 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.

  1. 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.

  1. 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.