Making Tax Digital (MTD) is a system created by HMRC to digitalize tax collection in the UK.
Learn how this will affect you as a self-employed and as a business owner below!
What is Making Tax Digital UK (MTD)?
Making Tax Digital (MTD) is HMRC's plan to digitalize the tax system for VAT, Income Tax Self Assessment and Corporation Tax for everyone. It was first announced in the April 2015 Budget.
The majority of VAT-registered businesses with taxable turnover above the VAT threshold of £85,000 are mandated to keep digital VAT records and to submit their VAT returns using Making Tax Digital (MTD) compatible software since April 2019.
This will not affect any businesses that have voluntarily registered for VAT. Even businesses that are not required to comply with Making Tax Digital (MTD) regulations can volunteer to do so if they wish. However, note that those who have registered will have to stay in the system for the full duration of their registration.
What is the purpose of Making Tax Digital (MTD)?
The main goals are to:
- Make tax returns easier and more efficient for taxpayers and companies;
- Close the tax gap (the amount of tax which should have been collected compared to the actual amount collected);
- Have real-time taxation;
- Use of one financial account.
Who will be affected by Making Tax Digital (MTD)?
Making Tax Digital (MTD) will affect 4.2M taxpayers with business or property income over £10,000, including landlords, sole traders and partnerships, for their Income Tax obligations.
What are the deadlines for Making Tax Digital (MTD)?
What do you need to do regarding Making Tax Digital (MTD) a business?
Businesses that need to fulfil Making Tax Digital (MTD) obligations under VAT will need to maintain digital records of all transactions and report information on VAT returns through software compatible with HMRC's system within five weeks of the end of their VAT quarter.
Those who currently don’t use such accounting software would have to purchase it, while others may need to upgrade their systems to comply with HMRC requirements.
And as an individual?
As HMRC's strategy is to make tax administration simpler for everyone, the tech knowledge issues need to be worked through. But don't worry!
Tommy's Tax is here to help you with your tax refund! The process through our app only takes 5 minutes and it's super easy! With our "no refund, no fee" policy, we can also check to see if you're owed any money for free!
Using Tommy's Tax app will help you claim the maximum amount possible! On average, people who claim tax returns through Tommy's Tax app earn £3000, which is significantly higher than what they would have claimed themselves!
Just download our app to claim your tax return today!