Making Tax Digital (MTD)

The administration of tax in the UK is set to undergo the biggest change for over 20 years, with the introduction of HMRC’s Making Tax Digital (MTD).

Over the next few years, MTD will be rolled out in phases across different business types and will ultimately affect individuals as well. Phase 1 commences on 1 April 2019 and will affect VAT registered businesses who have a taxable turnover above £85,000 (the current VAT threshold).

If this applies to you, from this date you will need to comply with MTD and will have to:

  • maintain and store your accounting records in a digital (electronic) format
  • use software which is ‘MTD Compatible’, i.e. it will link to and from your accounting data directly into HMRC’s MTD system
  • use HMRC’s new MTD for VAT gateway to submit your VAT returns

The deadlines for submitting VAT returns and paying VAT bills are not changing and no additional information, other than what is currently required, needs to be kept.

If you are not already doing so, we would advise you to move to a cloud-based accounting package that is MTD compatible.  See how Kingscott Dix can help transfer your accounting records to such a package on our ‘Accounting & Cloud Integration’ page.

A move to the cloud can bring significant benefits:

  • Improved accuracy and time savings

The risk of errors is greatly reduced, as is time spent inputting data, as software can directly import information from your bank.

  • Real time information

With our support, cloud packages allow you to track how your business is performing at any point in time. This can enable better decision-making throughout the year.

  • Tax planning

With more relevant data, taxes can be predicted earlier in the year and with more accuracy, enabling pro-active tax planning.

  • Cash flow

Depending on how your business operates, it is possible to improve cash collection by emailing invoices as soon as they are created. Cloud systems can also automatically chase outstanding debt at the due date of an invoice.

For more information about MTD, cloud accounting software and how Kingscott Dix can help get you ready for these changes, contact us today.