Making Tax Digital (MTD) represents a major change in the way taxpayers interact with HMRC. It is part of HMRC’s flagship programme to make the UK one of the most digitally advanced tax collection agencies in the world, and change is already well underway.
MTD for VAT was introduced from 1 April 2019; it means that if your business turnover exceeds the VAT threshold (currently £85,000) you are mandated to file digital returns.
How will MTD affect smaller businesses?
The next stage of HMRC’s digital transformation is MTD for Income Tax and Self Assessment (ITSA) and is due to come into force from 6 April 2024 for unincorporated businesses and landlords with total business or property income above £10,000 per year.
This phase will move a lot more people into digital record keeping and the quarterly reporting that MTD requires. In response to the submissions, HMRC will provide an estimated tax calculation based on the information provided to help individuals budget for their tax across the year.
Here to help
At Knill James, we can provide support and guidance on the best route to compliance for your business for this major legislative change. If you have any concerns or need assistance, do get in touch with one of our team members who will be pleased to help.
For further information and guidance, as well as useful tools and resources, check out HMRC’s website here.