What is Making Tax Digital?

Making Tax Digital (MTD) is a government initiative to modernise the tax system and make it easier for businesses and individuals to get their tax right and to keep on top of their affairs.

The driving force behind the initiative is that by making the tax system more effective, more efficient, and easier for customers to comply with, HMRC aims to drastically reduce taxpayer error, saving billions.

Making Tax Digital will require most businesses, self-employed professionals, and landlords to update and maintain digital records using software, or at the very least an Excel spreadsheet. Making tax Digital will affect millions of people, so it is important to seek expert guidance to understand what is happening and when.

The story so far

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MTD came into effect on 1 April 2019 for VAT registered businesses with taxable turnover above £85,000.

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From March 2021 HMRC moved all remaining businesses with a taxable turnover above £85,000 onto MTD.

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For businesses with a turnover below £85,000, Making Tax Digital for VAT will apply from April 2022.

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From April 2024, Making Tax Digital for Income Tax will come into force. This will apply to self-employed people and landlords with an annual income of over £10,000.

Helping you make the transition

If you currently do a tax return or VAT return, then you will be affected by this change. In order to comply, your VAT records need to be maintained digitally in MTD compatible software which has the ability to submit your VAT return directly to HMRC.

We can make it simple though! We have some Making Tax Digital specialists who can advise you of the steps you need to take to comply with Making Tax Digital and work out the best solution for you and your business.