Making Tax Digital (MTD) Update
It’s been almost 2 years since HMRC introduced the first phase of Making Tax Digital (MTD) for VAT registered businesses with a turnover above the VAT threshold of £85,000. Although the pace of the wider ‘Making Tax Digital’ strategy rollout has been slowed by the impact of COVID-19, you should be aware of the key dates for how MTD will be expanded, many of which may be closer than you think.
- April 2021 – Anyone under the VAT threshold can continue to submit returns via their government gateway account or using the non-MTD VAT process in Xero or other software. However, HMRC has announced that non-MTD VAT submissions via software providers will not be supported from April 2021. This means that quarterly VAT periods ending in December 2020, January 2021 or February 2021 will be the last VAT returns you can submit using the old return process in Xero or other software
- April 2022 – It will be compulsory for all VAT registered businesses to register for MTD
- April 2023 – MTD for Income Tax: businesses and landlords with business and property income over £10,000 per annum which are liable for Income Tax, will need to keep digital records and use software to update HMRC quarterly through MTD
- April 2026 – MTD for Corporation tax is currently being consulted on and this is HMRC’s target date for roll out.
In order to continue submitting your VAT returns through Xero, or other software, and in preparation for future changes we would recommend that you register for MTD now. The alternative is that you prepare and extract your VAT return figures and input these manually into your HMRC government gateway account, which is more time consuming.
If you are still using manual accounting records and are concerned about the switch to digital don’t be. We have a dedicated team who have guided many clients through this process, and many have switched to using Xero which is our recommended solution both for cost and ease
of use.
If you would like to have a chat about your options then please get in touch with our team of MTD experts at vat@gwayre.co.uk or alternatively, call 01289 306688.
