What is Making Tax Digital?
Updated: Apr 12
MTD for VAT is the first phase of HMRC's "Making Tax Digital" programme to digitise the UK tax system.
MTD for VAT started in April 2019 and is extended to all VAT-registered business from April 2022.
MTD for Income Tax Self-Assessment will start in April 2024 for the self-employed and those with rental income and in April 2025 for most partnerships.
MTD for Corporation Tax will not start until April 2026 at the earliest.
MTD brings with it a requirement to:
Maintain digital accounting records (maintaining paper records will cease to meet the requirements of the tax legislation)
Use a functional compatible software product to submit updates and returns to HMRC. The software must be API (application programming interface) enabled.
What changed on 1 April 2022?
When MTD for VAT was introduced in April 2019 it was mandatory for all VAT-registered businesses and organisations (including sole traders, partnerships and limited companies) with taxable turnover above the VAT threshold of £85,000.
From April 2022 MTD for VAT is mandatory for all VAT-registered business and organisations, including those with turnover below £85,000
These changes apply to the first VAT return starting on or after 1 April 2022 so, for example, where a business submits a VAT return for the quarter period 1 April 2022 to 30 June 2022, the first submission via MTD is due by 7 August 2022.
My advice is to make sure you have the proper Government Gateway account and do not leave "signing up for MTD" until the last minute as the process will take you at least 5 days and maybe longer.
We have been working with MTD since the beginning so we are ideally placed to guide you through the changes.