Submitted by Sestini & Co
| on Tue, 01/19/2021 - 12:29 | In Accounting and systems
We last wrote about Making Tax Digital (MTD) back in the middle of 2018. It came into force in April 2019 for UK small to medium-sized enterprises (SMEs) and currently applies to any business in the UK which has an income above the VAT threshold of £85,000.
We found that whilst many businesses were aware of MTD, a significant number weren’t clear what it meant for them.
Since MTD was introduced in 2019, it’s been found that more than “1.4 million businesses have joined the programme, submitting more than 6 million returns”.
However, the government has announced that MTD will be extended to all VAT-registered businesses, meaning that VAT-registered businesses with turnover below the VAT threshold of £85,000 will also need to keep digital records and use software to submit their VAT returns from 1 April 2022.
Making Tax Digital will also impact taxpayers who file income tax self-assessment tax returns for business or property income of more than £10,000 a year from April 2023.
The new legislation is contained in the Finance Bill 2020-21 and extends Making Tax Digital (MTD) over the next few years.
This may be particularly pertinent for landlords with incomes above £10,000. The notice period given, however, means landlords and other businesses will have time to prepare for this.
Under the new rules, businesses and landlords will have to send summaries to HMRC every quarter.
Anyone using the MTD system will have to use accounting software to submit their returns.
Indeed, it’s been reported in the Telegraph that, “landlords fear they will be hit with hundreds of pounds of fresh costs, thanks to new digital tax rules that will force property owners to submit tax returns using specialist software”.
MTD is something that will affect all UK taxpayers and cloud software such as Xero is now firmly mainstream and affordable, and over 2 million subscribers now use Xero. There may also be an HMRC-led software available in the future, perhaps based on Excel.
Here at Sestini & Co, we have been using online software including Xero for years, to help ensure our clients can keep on top of their finances and always try to keep pace with the latest technology.
If you need help with your Making Tax Digital obligations and would like to speak to us, give us a call on 01761 241 861 or email us today.
We will be pleased to arrange an online consultation or telephone call.