Making Tax Digital:

Making Tax Digital (MTD) is HMRC's programme to move the UK tax system towards digital record keeping and online tax reporting.

For many businesses and self-employed individuals, this means keeping financial records digitally and using compatible accounting software to send information to HMRC.

What is Making Tax Digital?

Making Tax Digital is designed to make it easier for businesses and individuals to keep accurate financial records and manage their tax affairs online.

Rather than relying entirely on spreadsheets, paper records or traditional tax returns, businesses affected by MTD need to use software that is compatible with HMRC's requirements.

There are different parts of Making Tax Digital, including Making Tax Digital for VAT and Making Tax Digital for Income Tax.

Making Tax Digital for VAT

Making Tax Digital for VAT is already in place.

All VAT-registered businesses should now be signed up for Making Tax Digital for VAT, unless they are exempt or have successfully applied for an exemption. VAT records and VAT Returns generally need to be maintained and submitted using compatible software.

Making Tax Digital for Income Tax

The next major stage is Making Tax Digital for Income Tax, which affects sole traders and landlords based on their qualifying income.

The rules are being introduced in stages:

Qualifying income is generally the total income from self-employment and property before expenses, rather than your profit after expenses. 

Please arrange a time to speak to us if you are not sure about the date you need to migrate to MTD.

Shahrouz Mousavi, RM & Co Chartered Accountants