The short version: Making Tax Digital (MTD) is the government’s plan to move tax reporting online. Instead of annual paper records, businesses keep digital records and submit updates through compatible software.
Who does it affect?
It started with VAT registered businesses above a certain turnover threshold. The plan is to extend it to more businesses over time, including self employed people and landlords for Income Tax purposes.
What do you need to do?
Keep your records using MTD compatible software. Submit your VAT returns (or eventually Income Tax updates) through that software rather than manually. The software links directly to HMRC.
When does it apply to me?
The deadlines have shifted several times. If you’re VAT registered above the threshold, you should already be using MTD. For Income Tax, the rollout for self employed people and landlords has been delayed. Check gov.uk for the current timeline.
Why is the government doing this?
They say it reduces errors and closes the tax gap. Digital records are harder to fudge than paper ones, and real time reporting means fewer surprises at year end.
Not sure if MTD applies to you or which software to use? Get in touch and we’ll help you get set up.
