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Making Tax Digital

Making Tax Digital (MTD) is the HMRC initiative to get everyone reporting digitally. The four foundations are:

Better use of information

HMRC will use information from third parties, such as employers, banks and other government departments so that individuals will not have to supply information themselves.

Tax in real time

HMRC will obtain and process information affecting tax as close to real time as possible, so that individuals and businesses no longer have to wait until after the end of the tax year to know how much tax they have to pay.

A single financial account

Taxpayers can now see a comprehensive picture in their digital account with all their tax information in one place.

Interacting digitally with customers

Customers (and agents) will be able to interact with HMRC digitally at a time to suit them.

making-tax-digital logo

Making Tax Digital for VAT

Making Tax Digital for VAT registered businesses for businesses above the VAT threshold of £85,000 has been compulsory since 2019.

However, as of November 2022, all VAT-registered businesses must comply with Making Tax Digital (MTD) and submit returns using MTD-compatible software. Therefore, if you have registered voluntarily for VAT as you are under the £85,000 threshold, you will need to comply with the new rules.

For further information see Making Tax Digital for VAT registered businesses

Making Tax Digital for Income Tax

Making Tax Digital income tax self assessment (MTD ITSA) will apply from April 2026 to those who receive income from self-employment and/or property where, gross income from these sources combined is above a threshold of £50,000. Those with a gross income from these sources combined above a threshold of £30,000 will be mandated to join MTD ITSA from April 2027.

For the time being  the self-employed and landlords with gross income below £30,000  will not be mandated into MTD ITSA, though this is being kept under review.

The current regulations do not cover partnerships; MTD ITSA is expected to be extended to partnerships in the future, but no date has been announced.

How Maynard Johns can help …

If your current bookkeeping method does not allow you to submit directly to HMRC through compatible software you need to start preparing. We have many solutions to help you.

Further reading

Making Tax Digital For Self Assessment Delayed
The benefits of using MTD software
Making Tax Digital software vs spreadsheets
Making Tax Digital for VAT registered businesses

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Telephone 01237 472071

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