Starting next spring, thousands of businesses will have to meet new requirements for digital tax record-keeping and reporting. Is your business one of them?
Making Tax Digital (MTD) is a government initiative to deliver a digital taxation system, theoretically making it easier for businesses and individuals to manage their tax affairs.
The first mandatory stage of this is set to take effect from 1 April 2019, when VAT-registered businesses and organisations with taxable turnover above the threshold of £85,000 will need to meet MTD requirements for their VAT reporting.
This includes landlords and larger organisations, so if your property business has a turnover above the VAT threshold, you’ll need to start thinking about how to prepare.
Smaller businesses with turnover below the threshold can voluntarily register for the first phase of MTD if they feel ready to take it on.
Timeline for MTD
Since MTD was first introduced, there have been several changes to the schedule along the way.
These can be hard to keep track of, so here are a few of the key dates:
15 March 2018: MTD pilot scheme for income tax opened to the public. This can be joined by sole traders with income from one business, or individual landlords.
11 April 2018: MTD for VAT pilot scheme open to selected volunteers.
1 April 2019: MTD becomes mandatory for VAT reporting.
1 April 2020 at earliest: MTD is set to become mandatory for income tax and corporation tax. Further details about this stage have yet to be announced.
What will you need to do?
Essentially, there are two main requirements for anyone in the scope of MTD for VAT.
From 1 April 2019, you’ll need to maintain digital accounting records, using spreadsheets or other software. This means keeping paper records will no longer meet legal requirements, although you can bring them to us to process if you wish.
‘Functional compatible software’ must be used to submit your VAT return to HMRC.
The date you’ll need to start doing this will depend on where your VAT return quarters fall:
| VAT return quarters | MTD start date |
| Ending 31 March, 30 June, 30 September, 31 December | 1 April 2019 |
| Ending 30 April, 31 July, 31 October, 31 January | 1 May 2019 |
| Ending 31 May, 31 August, 30 November, 28 February | 1 June 2019 |
How can you prepare?
The best thing you can do ahead of time is to choose MTD-ready software and start keeping digital records early on, so you’ll be up and running long before April comes around.
Switching to digital accounting can also help streamline your accounting processes, making it easier and more efficient to keep records and access your information.
For the purposes of MTD, you’ll need to use software that’s been approved by HMRC – check their list of software suppliers, or speak to us about your options.
We can suggest a solution based on your budget, the type of business you run, and the software features you require.
Alternatively, we can take the task off your hands completely, so you can meet your obligations without using up valuable time.
Get in touch
The deadline for MTD isn’t far away, but don’t worry if you’re not sure where to start.
We can discuss your software requirements and advise on how to get your business ready on time. Talk to us about preparing for MTD.