So, we have all probably heard the term Making Tax Digital over the last year or so, but what is it and how does it affect you?
Making tax digital is a government plan, to help individuals and businesses make the submitting of their returns easier and keep on top of their affairs.
VAT Registration
Making tax digital states that businesses with a taxable total income above the VAT income threshold currently at £85,000 are legally required to follow MTD rules by keeping digital records and the correct accounts software to submit their returns digitally through the software.
If your income is over the VAT income threshold you must register for VAT. If your income is below the threshold you can voluntarily register for VAT, but please ask your accountant for advice.
However from April 2022, if you are VAT registered at all, whether voluntarily or over the income threshold you must start submitting your returns digitally.
For more information about registering for VAT please click here.
Income Tax
Self employed business, who submit self-assessment returns or income tax returns with an income over £10,000 from April 2024 will have to submit returns digitally.
This means that from April 2024 if you now submit your self-assessment returns manually you will no longer be able to.
If at the moment you do not use an accounts package to record your income and expenditure it is advisable to consider doing so soon so as to be ready to submit your returns digitally. As the tax year is April to April and you have to submit digitally by April 24 you would have to start using a system before April 23.