Making Tax Digital

ABS Accountancy will work with you to ensure that you are fully prepared for Making Tax Digital.

Making Tax Digital is being introduced with the intention off bring the UK tax system into the 21st century initially starting with VAT registered business.

Bringing the UK tax system into the 21st century

Making Tax Digital (MTD) is being introduced with the intention off bring the UK tax system into the 21st century by providing businesses with an up to date modern and streamlined system off keeping tax records and providing information to HM Revenue & Customs (HMRC).

The original timetable for rolling out Making Tax Digital has been revised to ensure that all small businesses have more time to prepare for the changes.

The first to be affected will be small businesses and individuals with a turnover above the VAT threshold of £85,000, who will be required to keep digital records for VAT purposes from April 2019.

 

Why is HMRC introducing this.

Making Tax Digital is intended to provide you with the tools to help you to keep track of how much tax you owe – or how much you are due back – continually throughout the financial year.

Accurate Tax Information

Replacing paper-based bookkeeping with digital tax accounts system which will let you check the information HMRC holds about you is 100% correct, providing HMRC with updates to your circumstances as they happen.

Reduced Errors

Making Tax Digital’s new reporting function will allow HMRC to look at your financial/tax information almost immediately, reducing any potential human error.

Easier to understand

HMRC anticipates taxpayers will better understand how much tax is owed within the digital tax account – much like online banking.

Why is HMRC introducing this?

On 13th July 2017, HMRC announced that it would be amending the original timeline for rolling out Making Tax Digital to give businesses more time to prepare for the changes once it completes a pilot scheme that began in April 2017.

Making Tax Digital is to be introduced in 4 key stages, which are:

Late 2017 – HMRC begins small-scale private testing of Making Tax Digital;

Spring 2018 – HMRC will start a wider, live pilot of Making Tax Digital;

Spring 2019– Only businesses with a turnover above the VAT threshold (currently £85,000) will need to keep digital records but only for VAT purposes initially;

From April 2020, All businesses are mandated to maintain digital records and update HMRC quarterly for tax compliance, ensuring accuracy and transparency in financial reporting. This phased approach allows smaller businesses and landlords with turnovers below the VAT threshold ample time to adjust to the new requirements seamlessly. By gradually implementing these changes, businesses can effectively integrate digital systems into their operations, reducing the burden of compliance.

From April 2026 – if you have a combined annual business or property income of more than £50,000, you need to follow the requirements for MTD for Income Tax.

From April 2027 – if you have a combined annual business or property income of between £30,000 – £50,000, you need to follow the requirements for MTD for Income Tax.

The government have confirmed that MTD will become mandatory for partnerships in due course, but it is not yet known when this will be.

How we can help?

ABS Accountancy dedicates itself to ensuring your readiness for Making Tax Digital and comprehending your responsibilities.

Our team is dedicated to supporting businesses of all sizes through this transition, providing guidance and assistance every step of the way. With our expertise and personalised approach, we ensure a smooth and successful adaptation to the evolving regulatory landscape.

We fully understand the importance of software solutions for quarterly reporting. Collaborating with various software providers, we simplify digital accounting management for you, no matter your location.

Together, we can navigate these changes and achieve long-term financial stability and growth.

Find out how ABS Accountancy can help you