What is Making Tax Digital?

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Making Tax Digital (MTD) is a key part of the governments plans to make the UK one of the most digitally advanced tax administrations in the world. The aim of MTD is to make the tax system easier for businesses and individual taxpayers by introducing a fully digital tax system.

In the future, you’ll need to make all tax filings via the internet. And,if you run a business, it’s likely you’ll also need to report quarterly to the HMRC.

It’s proposed that your business will have nine months after the year end to file an ‘End of Year declaration’ and submit your final figures. This is a month less than the current tax return filing deadline (currently just under 10 months following year end). But you won’t have to keep any additional paper records.

  • If your business needs to make accounting adjustments, such as revaluations of closing stock (which would apply if you’re not using the cash basis of accounting) then you’d be able to do this either mid-year or the end of the year
  • This also applies to allowances and reliefs such as the Annual Investment Allowance. For example, if you had bought an asset you could inform the HMRC at the time the asset is bought that it’s going to be eligible for Annual Investment Allowance
  • HMRC think that the cash basis of accounting should be extended to larger businesses as it will be simpler for them to use. They have suggested doubling the current entry threshold. This means your business would be able to begin using the cash basis of accounting if it has sales up to £166,000 using today’s VAT registration threshold

Any questions? Just send us an email or give us a call on 0131 220 0152 for a chat about Making Tax Digital.