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MTD – not sure what it means for you?

Making Tax Digital (MTD) is a government initiative that sets out a vision for a digital tax system to “make it easier for individuals and businesses to get tax right and keep on top of their affairs – meaning the end of the tax return for millions.”

Not sure what it means for you?
Here’s what you need to know.

What is MTD?

Find out all about it here

Who does MTD apply to?

The changes outlined in the MTD initiative will apply to a wide range of taxpayers, including individual tax payers, self-employed people, landlords and businesses. If you pay income tax, corporation tax, national insurance or VAT then it is very likely that it will apply to you.

From April 2019 VAT registered businesses will have to keep records digitally and follow the rules for MTD.

However, HMRC has confirmed that businesses with a minimum of £10,000 annual sales will be able to opt in to MTD from 2019 but the initiative won’t become mandatory until at least April 2020.

How will the initiative be implemented?

As MTD is rolled out, a number of changes will be implemented.

Here’s a rough timeline of what’s happened and what will happen:

Jul – Dec 2017 Digital tax accounts show taxpayers an overview of their tax liabilities in one place. HMRC begins a private pilot of Making Tax Digital for VAT.
Spring 2018 Live pilot of Making Tax Digital for VAT begins.
Apr 2019 Businesses with an annual turnover above the VAT threshold are required to keep digital records and submit quarterly returns for VAT purposes only.
Apr 2020 HMRC looks to widen the scope of Making Tax Digital.

The end of the tax return

One of the biggest implications for small business owners is the end of the annual tax return.

From April 2019 businesses, self-employed people and landlords will instead be able to choose to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax accounts, or more often if they’d prefer.  With a final return tying in all of the previous returns filed.

The introduction of a ‘real-time’ tax system means that instead of reporting information on tax returns and paying liabilities long after the end of the tax year, you will be able to see a real-time view of your business tax affairs and liabilities through your digital accounts.

What next?

Here are some FAQs
We’ve also prepared a quick overview of checking if your business is ready for the change here
There’s also an event coming up and you can book on here
Or just get in touch and we would be happy to help.

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