What is Making Tax Digital?

What is Making Tax Digital?

Making Tax Digital will eventually, require all businesses to keep digital records by using software that works with MTD and then submitting updates every quarter in order to bring the tax system closer to real-time.

What are the benefits of Making Tax Digital?

According to the government, the reasons for introducing MTD is to:

• Make it easier for both individuals and businesses to get their taxes right and avoid making errors that might lead to fines.
• Make it so that customers can integrate tax management with a range of business processes via software.
• Contribute to wider productivity gains for businesses by encouraging digitalisation.
• Help reduce the amount of tax lost to avoidable errors.

How does MTD affect me?

Currently (Dec 2023), if you have a VAT-registered business then you have to keep digital records and file your tax returns using compatible software. HMRC will sign up businesses to Making Tax Digital for VAT automatically unless they are exempt or have applied for exemption.

With Making Tax Digital for Income Tax, if you are self-employed or a landlord, you will need to follow requirement from:

• 6th April 2026 – if you have an annual business or property income of more than £50,000
• April 2027 – if you have an annual business or property income of more than £30,000

Hiring an accountant

Your accountant will be able to help you with MTD, and if you don’t already have one then it is certainly worth it.

Some self-employed professionals feel that they don’t need an accountant, or might even consider it a luxury, however, a good accountant can be an invaluable asset to any business.

They can take care of certain tasks, such as filling in and filing forms (leaving you to concentrate on running your business), ensure you remain compliant with financial liabilities, keep you on top of important deadlines and even provide useful financial advice that could save you money in the long run.

Read our Is it Easy to Switch Accountants? page for advice on finding a good accountant.

If you’d like to sign up or need any further information, please give us a call on 01442 795 100 or you can email jaime.thorpe@dolanaccountancy.com. There’s also the option to contact us via live chat.