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Making Tax Digital

(MTD)

Making Tax Digital (MTD) is a UK government initiative designed to simplify the tax process by digitising tax submissions. It aims to make the UK tax system more effective, efficient, and easier for taxpayers to get their taxes right. Whether you're a business, self-employed, or a landlord in Scotland, it's essential to understand how MTD affects you and the key dates to keep in mind.

Key Features of Making Tax Digital (MTD)

  • Digital Record-Keeping: MTD requires businesses and individuals to keep digital records of their income and expenses using compatible software.​

  • Quarterly Updates: Instead of an annual tax return, businesses must submit updates to HMRC every three months through MTD-compatible software.

  • MTD for VAT: As of April 2019, VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are required to follow MTD rules for VAT. From April 2022, this extended to all VAT-registered businesses, regardless of turnover.

  • MTD for Income Tax Self-Assessment (ITSA): From April 2026, MTD will apply to self-employed businesses and landlords with an annual business or property income above £50,000. From April 2027, this will extend to those with an income above £30,000.

  • MTD for Corporation Tax: HMRC plans to introduce MTD for corporation tax, with a pilot expected to begin in 2025 and mandatory implementation by 2026.

Key Dates for Making Tax Digital (MTD)

  • 1 April 2019: MTD for VAT became mandatory for VAT-registered businesses with a turnover above £85,000.

  • 1 April 2022: All VAT-registered businesses required to follow MTD rules, regardless of turnover.

  • 6 April 2026: MTD for ITSA begins for self-employed businesses and landlords with incomes above £50,000.

  • 6 April 2027: MTD for ITSA extends to those with incomes above £30,000.

  • 2025: Pilot for MTD for Corporation Tax expected to begin.

  • 2026: Expected full implementation of MTD for Corporation Tax.

Benefits of Making Tax Digital (MTD)

Improved Accuracy: Reduces errors by automating calculations and submissions.

  • Real-Time Tax Overview: Allows businesses to see their tax obligations in real-time, improving financial planning.

  • Time-Saving: Streamlines the tax submission process with automated updates and digital record-keeping.

  • By staying informed and prepared, you can ensure a smooth transition to MTD, meeting all your tax obligations with ease. If you need assistance with Making Tax Digital, our team in Prestwick is here to help you navigate the process and stay compliant.

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By staying informed and prepared, you can ensure a smooth transition to MTD, meeting all your tax obligations with ease. If you need assistance with Making Tax Digital, our team in Prestwick is here to help you navigate the process and stay compliant.

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*All information correct at 9th Jan, 2025*

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