for you and your business

Making Tax Digital

Making Tax Digital (MTD) is the Government’s initiative to digitise the UK tax system. It represents one of the biggest ever changes in taxation practice, and so will inevitably require some time to get to grips with. The main aim of the process is to make the administration of tax more simple and efficient, and to ensure that the correct amount of tax is collected.

MTD will mean that all your tax affairs will be presented online, on one digital tax account. This will involve significant changes in how you report to HMRC, and how often you need to do so.

In the draft legislation MTD will first apply from April 2018 for businesses and landlords with turnover above the VAT threshold (£85,000). For example, if your accounting period starts on 6 April 2018, your first return will be completed to 5 July 2018 and you will then have a month to upload your information to the MTD system.

By far the biggest change for business is the requirement for digital record keeping. MTD will involve all individuals, qualifying businesses and landlords using software to record income and expenditure, which will then need to be submitted to HMRC every three months.

It is still unclear as to exactly what software will be needed to ensure compliance with MTD – initial guidance indicated spreadsheets would be sufficient but how this will apply in practice remains unclear. All the main software providers are developing compliant MTD programmes to ensure that a range of products will be available, including Apps to enable data to be recorded from your mobile. 

MTD will improve businesses’ timely reporting to HMRC and it enables taxpayers to have a clear expectation of their tax liability as the year progresses. We will have access to real-time information to ensure you can budget efficiently for tax arising and take advantage of any planning opportunities during the year.

If you’re affected by these changes, it’s important to fully understand what they mean for you and your business.

Here at CBSL Accountants, we’re committed to getting you ready for the transition. If you have any questions regarding MTD, be that about reporting or when you will be affected then please give us a call.