MAKING TAX DIGITAL

Making Tax Digital (MTD) is a government initiative designed to make the tax system more effective and efficient, and make it easier for taxpayers to get their tax right.

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You can find out more information about this on the government website here. 

Making Tax Digital for VAT

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All VAT registered businesses are now required to follow the Making Tax Digital rules by keeping digital records and submitting VAT returns through software. 

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Making Tax Digital for Income Tax

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Making Tax Digital for Income Tax is a new way of reporting income and expenses to HMRC if you’re a sole trader or landlord.

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If you are a sole trader or landlord, you’ll need to:

• use software that works with Making Tax Digital for Income Tax

• keep digital records of your business income and expenses

• send HMRC quarterly updates

• continue to submit a tax return and pay tax due by 31st January the following year

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Making Tax Digital for Income Tax will become mandatory in phases based on your total annual qualifying income from self-employment or property. 

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• If you have a qualifying income of more than £50,000 in the 2024 to 2025 tax year:

  • You must start using Making Tax Digital for Income Tax by 6th April 2026

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• If you have a qualifying income of more than £30,000 in the 2025 to 2026 tax year: 

  • You must start using Making Tax Digital for Income Tax by 6th April 2027 

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If your total gross income from self-employment and property is less than £30,000, but over £20,000, HMRC have stated that you’ll need to use Making Tax Digital for Income Tax in the future. HMRC will set out the timeline for this at a later date.
 

HMRC has yet to confirm the date when partnerships will need to start following MTD rules. 

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How we can help

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Making Tax Digital (MTD) is about keeping digital records and submitting information to HMRC electronically through software. 

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If you are comfortable with processing the digital records yourself, we can assist with getting you set up with the correct software and guiding you through the process.

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Alternatively, we can process the digital records for you through our bookkeeping service, and submit the required information to HMRC on your behalf. Leaving you more time to concentrate on your business.

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For more information, please contact us and we will be happy to help. 

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