Making Tax Digital for Business
Phased in over the coming years, a new government initiative called Making Tax Digital for Business (or MTD) will see important changes in the way in which businesses and landlords report their finances to HMRC.
MTD aims to provide businesses (including self-employed and landlords) the ability to keep records of their income and expenditure digitally, and to send summary updates quarterly to HMRC from their software. In turn this will provide a more timely, efficient and simpler tax system, reducing the likelihood of errors and giving businesses more certainty of their position throughout the year.
Making Tax Digital Timetable
The government's currently proposed introduction of MTD is as follows:
- Self employed individuals and landlords with net income over the VAT threshold (£85,000).
- Employed individuals with a secondary income above the VAT threshold via self employment or through property.
Required to keep digital records of their business related transactions and electronically submit quarterly updates and a year end summary for income tax and National Insurance.
- All businesses, self employed individuals and landlords who are registered for, and pay VAT.
- Self employed individuals and landlords with net turnover above £10,000 and below the VAT threshold (£85,000).
- Employed individuals with a secondary income above £10,000 and below the VAT threshold via self employment or property.
Required to keep digital records and electronically submit quarterly updates and a year end declaration for income tax and National Insurance, and/or VAT returns.
- Companies that pay Corporation Tax.
Required to keep digital records and electronically submit quarterly returns.
MTD Start Dates
MTD obligations begin from the start of your first financial year that falls within the relevant year shown above.
For example, if your business is registered for, and pays VAT, then you fall into the phased year starting April 2019. If your financial year starts 1 October 2019, then you will only start MTD obligations from that date, and your first quarterly submissions would not be required until 31 December 2019.
Mamut Software and MTD
Mamut Software is currently liaising with HMRC and exploring solutions for the move to MTD.
Check back here for more news and information as it becomes available.