4th September 2017
You might have heard about Making Tax Digital (MTD) a government initiative set to transform the way in which self-employed businesses, landlords and tax agents interact with HMRC. Underpinning MTD, is the requirement to keep digital records for all professional and business transactions. The fully digitised tax system is designed to bring greater transparency, accuracy and eventually an end to self-assessment.
From April 2019, self-employed businesses with income above the VAT threshold (currently £85,000) will need to keep digital accounting records to meet their VAT obligations only. Then in 2020* all businesses with income over £10,000 will need to upload their profit and loss quarterly for all taxes. (*an exact date in 2020 has yet to be announced).
Spreadsheets are acceptable for record keeping, but these will need to be combined with online accounting software to meet the requirements of MTD.
All businesses will be given their own online tax account with HMRC which can integrate with their online accounting software, so all business and professional transactions can flow automatically through to their digital tax account.
Whilst MTD doesn’t take effect until April 2019, it’s worth planning for it now by going digital.