What's New In The World Of Making Tax Digital (MTD)?
For those of you who aren’t yet familiar with the term MTD, Making Tax Digital is the newest way that businesses can report their figures to HMRC digitally. This means that businesses are required to submit the required information through HMRC compatible software, instead of through manual form filling or via the government website.
MTD will affect ALL businesses at some point over the next 5 years. From April 2019, MTD has already been put into place for VAT registered businesses that are over the VAT threshold (£85,000.00). Since this date, once compliant, all relevant businesses were able to prepare, review and submit their VAT returns through one single MTD compatible software such as Xero, Sage and Quickbooks, etc.
Here is a snapshot of where HMRC is heading next in the world of MTD:
- MTD for all other VAT registered businesses
From April 2022, following on from VAT registered businesses over the VAT threshold, businesses that are under the threshold and VAT registered must also be signed up for MTD.
- MTD ITSA for the self-employed and those with income from property
From April 2024, all self-employed and landlords must register for MTD and report their income to HMRC on a quarterly basis, instead of once a year through their Self-Assessment Return.
- MTD for partnerships will be from April 2025 and MTD for corporation tax will be from April 2026.
As you can tell, the world of paper-based tax returns will soon become a thing of the past! So, how can self-employed businesses and landlords prepare for MTD ITSA in April 2024? The first step is to find the right software for you to use to submit your returns to HMRC, well ahead of April 2024!
For the self-employed, we will be able to set up on Xero. With Xero, you will be able to put through your bank account transactions and upload your income and expenses to create a seamless process when preparing and filing your quarterly self-assessment tax returns.
For landlords, we are working with a software called Hammock. This software will allow landlords to input their property information and bank statements in order to generate a self-assessment tax return and to calculate any capital gains tax. Don’t worry if you also have income from other sources, Hammock can account for this too. We recommend getting this set up as soon as possible so that you are competent in using the software, you have time to ask any questions you may have and to spot any potential issues ahead of time.
Raffingers will be releasing more information on how we can help you prepare over in the first quarter of 2022. We will be keeping you updated each step of the way via our newsletters, blogs, Vlogs, emails, etc. We are here to support you each step of the way!
If you’d like any further information on what’s happening next with MTD and how you can prepare yourself ahead of the changes, please contact our Cloud Manager, Claire Miller at Claire.miller@raffingers.co.uk or click here.