In recent years there has been a focus on initiatives aimed at closing the ‘tax gap’ \u2013 i.e., the difference between expected tax receipts, and that collected.\u00a0HMRC has launched a new challenge for all the business and self-employed to be more effective, efficient, and easier. They must report their income digitally using MTD compliant software. Few businesses have already started reporting their VAT digitally.\u00a0 Self-employed businesses and landlords with annual business or property income above \u00a310,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.<\/p>\n
HMRC has also recently announced that non-MTD VAT submissions using software providers will no longer be supported from April 2021. This means that quarterly VAT periods ending in December, January or February 2021 will be the last that you can submit in using the old VAT Return.<\/p>\n
The bigger challenge will be for those self-employed businesses who are not registered for VAT and landlords who will be impacted by the introduction of MTD for income tax.<\/p>\n
Taking the time now to think about how you record, retain, and report your business records will be key to staying on top of the MTD agenda as it develops. Good luck everyone.<\/p>\n
Making Tax Digital deadlines<\/p>\n
HMRC is introducing Making Tax Digital gradually. Making Tax Digital for VAT started on 1 April 2019, affecting VAT-registered businesses with a taxable turnover above the VAT threshold of \u00a385,000.<\/p>\n
Next, all VAT-registered businesses will need to comply with Making Tax Digital for VAT from April 2022.<\/p>\n
April 2019<\/em><\/strong>: VAT-registered businesses with a taxable turnover above the VAT threshold of \u00a385,000 need to keep digital records and submit digital VAT returns using compatible software. Some ‘more complex’ businesses were given a six-month deferral (read more below)<\/p>\n October 2019<\/em><\/strong>: more complex businesses who were deferred need to comply with Making Tax Digital<\/p>\n April 2022<\/em><\/strong>: MTD will be compulsory for businesses with a turnover below the \u00a385,000 VAT threshold<\/p>\n April 2023<\/em><\/strong>: MTD will apply to taxpayers who file Income Tax Self Assessments for business or property income of more than \u00a310,000 a year.<\/p>\n We as a firm have strongly believe in automation. We helped thousands of businesses to successfully implement MTD and integrate their process. We also provide business consultation to improve the efficiency and control of the business. MTD software and all the other tools are already included in our package. We are equipped with the latest technology which we give access to the client for free. Please contact us for a free consultation if you need to adapt with MTD and automate your business affairs on 0208 249 6000<\/p>\n