Understanding ‘Making Tax Digital’
Making Tax Digital for Business is a Government initiative also known as MTD. This is a legal requirement implemented and monitored by HMRC – Her Majesty’s Revenue and Customs.
- Keep records digital
- Submit the return at least every 3 months
- Final submission 10 months after year-end or 31 January whichever is sooner
- Pay your tax by 31 January after the year-end (can be paid early)
Date MTD compliance starts
You must follow the rules for your next accounting period that starts on or after 6 April 2023, if your taxable turnover from your self-employed business or income from the property is above £10,000.
Who will need to comply with MTD?
- Sole traders
- Partnership & each partner
- Limited companies
- Limited Liability Partnerships
- Individuals with over £10,000 as a second income.
What will you need?
- Create Government Gateway Account with HMRC
- HMRC authorised Book-keeping software to submit your records digitally.
- Tools to convert your sales invoice into digital e.g. pdf
- Tools to convert your suppliers’ invoice into digital e.g. pdf
- Advice from expert e.g. Accountant
Who is exempt?
- Sole traders with income below £10,000
- Partnership & each partner with income below £10,000
- Landlords with rental income below £10,000
- Community Amateur Sports Club
The definition of “Digitally Exempt” is as below:
“A person who is a practicing member of a religious society or order whose beliefs are incompatible with the use of electronic communication; and person for whom making Tax Digital is not reasonably practicable for reasons of disability, age, remoteness of the location, or any other reason.”
Penalties for non-compliance:
- Point-based system
- Each missed deadline is awarded points.
- When points reached a certain threshold, penalties are issued.
For more detailed information, please download the full report from this link.
Our contact details are:
Sterling Finance UK Limited
Website : www.sterlingfinance.net
Email : email@example.com
Tel : 0161 339 4989