Making Tax Digital – Death of the Annual Tax Return

What is MTD?

MTD is the Government’s plan to make it easier for individuals and business to get their tax correct and paid on time.

They’ll do this by requiring businesses to file returns and pay tax on a quarterly basis, through accounting software. They’ll also utilise information they already hold, such as income from employment. This will all then be visible on an online tax account, making it (supposedly) easier for business and individuals to get their tax correct and pay it, in real-time.

So, in all, it’s a massive change to the way and frequency all businesses and individuals report and pay tax to HMRC.

Who will it effect?

The MTD Business programme will affect all businesses and landlords with a turnover of more than £10,000 per year and will be phased in as follows:

April 2018 for Self Employed/Landlords with turnover above the VAT Threshold

April 2019 for all other Self Employed/Landlords with turnover above £10k

April 2020 for Limited Companies.

For individuals and businesses, there’s a range of exceptions in place for those with disabilities and genuine difficulty getting online. Charities have been completely exempted from the scheme.

Note – these dates have now been amended and no changes will come into force until at least April 2020. For an update on Making Tax Digital, see our more recent blog post here.

What do I need to do?

Get ready!

Many of our clients are already utilising accounting software, which comes with so many benefits (see our blog post here).

The time to make that change and get used to a package like Xero is now, before MTD makes it a compulsory move.

We’ll be advising clients on this soon, but if you’d like to talk to us about MTD, give the team a call at the office.