Understanding Making Tax Digital:

• Making Tax Digital (MTD) strives to modernize the UK tax system by offering businesses an efficient, contemporary approach to maintaining tax records and sharing information with HM Revenue and Customs (HMRC).

• The initial impact encompassed small businesses and individuals whose turnover exceeded the £90,000 VAT threshold. Starting from April 2019, these entities were mandated to keep digital records for VAT purposes.

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Guidance and Support:

• Should you require assistance in navigating these changes, connect with us online for a complimentary initial consultation.

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The HMRC introduced Making Tax Digital with the following objectives:

• Accurate Tax Data: The shift from paper-based bookkeeping to digital tax accounts aims to ensure that HMRC holds accurate information about you.

• Minimized Errors: MTD's updated reporting mechanism allows HMRC to swiftly review your tax information, curbing data input errors.

• Enhanced Clarity: Similar to online banking, HMRC anticipates that taxpayers will gain better clarity regarding owed tax within the digital tax account.

• Streamlined HMRC Contact: Making Tax Digital facilitates online interaction with HMRC through webchats and secure messages.

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Key milestones in the MTD journey include:

• April 2024: VAT-registered businesses exceeding the £90,000 threshold needed to adhere to MTD for VAT regulations. This required maintaining digital VAT records and submitting VAT returns via MTD-compliant software.

• April 2022: VAT-registered entities with a taxable turnover below £90,000 must follow MTD for VAT protocols starting with their first return after April 2022.

• April 2026: Self-employed businesses and landlords with annual business or property income surpassing £50,000 are to adopt Making Tax Digital for Income Tax from April 6, 2026. Similarly, MTD for Corporation Tax will not commence before April 2026.

• April 2027: Self-employed businesses and landlords with annual business or property income over £30,000 must adopt MTD for Income Tax from April 6, 2027.

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Navigating MTD with Us:

• We stand ready to collaborate with you in preparing for Making Tax Digital. As fellow small business owners, we grasp the digital record-keeping requirements. At TaxAssist Accountants, we've honed our support services to guide small businesses through this transformative phase.

• HMRC does not furnish software for quarterly reporting under MTD. We can recommend MTD-compliant software, such as QuickBooks and Xero, making accounting record management convenient, regardless of your location.

• To access our guidance during this transition, call us at 0800 0523 555 or connect with us online to arrange a complimentary initial consultation.

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*If you're affected by Making Tax Digital (MTD) for VAT, you need not register for MTD until after filing your final non-MTD VAT return. Early registration is an option, though direct debit payments to HMRC might influence the registration timeframe.

 

Note: The information provided is based on current HMRC guidance and is subject to change. Reach out to our team at PolTax Accountants before taking any action.

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