The Government’s Making Tax Digital revolution is continuing:
Since 2019 VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.
VAT-registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax digital rules for their first return starting on or after April 2022.
The next stage of the Making Tax Digital journey is for Income Tax. Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from their next accounting period starting on or after 6 April 2023.
This will require you to keep digital records of income and expenses for each business, and:
- Update HMRC at least every 3 months via appropriate software.
- At the end of the tax year, finalise the taxable profit or loss for the business, making adjustments for allowances and reliefs.
- Bring together all data, including business and non-business, needed to finalise the tax position and reach the final tax liability.
- Submit final declaration and pay tax liability by 31st January
Clients can either register for MTD for Income Tax themselves, or if we act as your agent, we can register on your behalf. It is expected that there will be different deadline dates for transitioning over to this new system, based upon business accounting periods. We will be in touch with individual clients in the run-up to April 2023 to inform you of your specific transition deadline.
In the meantime, we would encourage all self-employed businesses and landlords with annual business or property income above £10,000, to move your bookkeeping over to appropriate software, such as QuickBooks, in preparation for MTD. If you would like to find out more about QuickBooks please contact Siobhan – email@example.com
The Government has undertaken a consultation on the future design of Making Tax Digital for Corporation Tax; and is currently considering the feedback. The Government will provide businesses with an opportunity to take part in a pilot for Making Tax Digital for Corporation Tax and will not mandate its usage before 2026.
If you have any queries on the above please contact Jackie or Andrew.