Making Tax Digital (MTD) for income tax – Only 18 Months left to comply
Self-employed businesses and landlords with annual gross business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2024.
Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of administrating tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay taxes based on your business activity during the year. You can upload and update your tax account in real-time.
If you own a business or are self-employed and pay income tax, national insurance, VAT or corporation tax, then it is quite likely you will be affected. This means you could be required to keep track of your tax affairs digitally using MTD-compatible software, and update HMRC at least quarterly via your digital tax account. Eventually, this will abolish the annual tax return. This will be the law and there will be penalties for non-compliance.
MTD for Income Tax should become law from 6 April 2024. It will initially apply to the self-employed and those who receive income from property, with gross income from these sources combined above a threshold of £10,000.
The government is running a pilot scheme where businesses can use the online service Making Tax Digital for Income Tax.
See: Sign up as an individual for Making Tax Digital for Income Tax – GOV.UK(www.gov.uk)
What should I do about MTD?
Talk to us – the good news is that you can reduce your running costs and streamline your accounting by complying with the new rules!
In the last two years, we have worked with many other clients to help them comply with MTD and streamline their accounting.
Just suppose you had a system where your bank feeds your data directly into your accounts on a DAILY basis and you can take a photo on your phone of a purchase invoice and it is posted automatically. You can see your results, who owes you money, who you owe money to and your business bank balance 24/7, 365 from your smartphone.
We have MTD-compliant cloud accounting packages that give you:
- A clear picture of your current financial position, in real-time.
- Automatic updates that mean you can spend more time doing what you enjoy.
- Your accounts 100% online, so there’s no software to install and everything is backed up automatically. Updates are free and instantly available.
Please contact us about helping you to comply with the new rules. We are cloud accounting specialists and can train and support you with the right software. Please get in touch through our contact page, or give us a call on 0131 440 1373, we’d be happy to help!