NBAS Chartered Accountants Belfast |Northern Ireland

Making Tax Digital

making tax digital Banner

What is Making Tax Digital, and how will it affect me?

Making Tax Digital (MTD) is a new system for submitting tax returns to HMRC. It will be phased in over the next five years and will affect businesses with a turnover of more than £10 million, as well as smaller businesses.

If you are a business with a turnover of more than £10 million, and you have to pay VAT, then you will have to submit your tax returns digitally. HMRC will send you a letter telling you when this is due to happen.

A pattern of orange dots
Making tax digital VAT
NBAS Chartered Accountants Logo
NBAS Chartered Accountants Logo
A pattern of orange dots
Business people meeting in the office

What is the scope of MTD?

The MTD will apply to all businesses and self-employed individuals in the UK, regardless of size or sector. Businesses must prepare their own tax returns, or have them prepared by someone else on their behalf (for example, an accountant).

In order for the MTD to work effectively and efficiently, it is imperative that all businesses keep digital records of their transactions from 1 April 2020 onwards so that HMRC can easily access them when needed. This means that all businesses need to ensure they have in place a robust accounting system which allows them to collect, store and process appropriate financial data; they must also ensure they are also keeping digital records of their transactions for a minimum of 5 years.

When is Making Tax Digital coming into effect?

The government has announced that Making Tax Digital will be rolled out in stages. The first stage begins on April 2020, while the final stage will take effect in April 2022. It means that from this date onwards, all businesses and self-employed people will have to use MTD for their tax returns, instead of the current system.

NBAS Chartered Accountants Belfast |Northern Ireland
A pattern of red dots
When is Making Tax Digital coming into effect
A pattern of purple dots
Businessman Making Tax Digital
NBAS Chartered Accountants Logo

Who does Making Tax Digital affect?

If you are:
Check Icon
Check Icon
Running a business.
Check Icon
Earning over £100,000 in total from your jobs.

What are the requirements for Making Tax Digital?

VAT-registered businesses with an annual turnover of more than £85,000 are required to use the VAT MOSS service, which allows the business to publish all their UK sales on an online portal and then send HMRC monthly reports detailing those sales.

They must also keep records for 5 years after they have submitted their returns. These records should be readily accessible so that they can be produced when asked by HMRC at any time during this period.

A pattern of orange dots
Tax Credits Claim Return Deduction Refund Concept
NBAS Chartered Accountants Logo
NBAS Chartered Accountants Logo
A pattern of orange dots
Tax Credits

What should you do to prepare for Making Tax Digital?

Make sure that the accounting software package(s) you choose has all the necessary features and functionality needed by businesses operating in today's complex tax environment, these should include VAT returns and reporting requirements under HMRC's Making Tax Digital initiative. They should also have enough flexibility built into them, so they can grow along with your business, as well as provide ongoing support throughout its lifecycle.

However, most importantly, take care of yourself! Getting through tax season is not easy.

Chartered Professional Accountant
White arrow pointing leftWhite arrow pointing right

See What Our Customers Say About Us

Left Arrow IconAngle

Join Our Mailing List!

Stay connected and up-to-date with the latest news, insights, and trends in accounting by joining the mailing list of NBAS Chartered Accountants. Whether you're a business owner, professional, or simply interested in the world of finance, our updates will provide you with valuable information and knowledge.

Sign up now and never miss out on important updates again!
NBAS Chartered Accountants Belfast |Northern Ireland
Not just your accountant, but your strategic advisor.
Xero Certified AdvisorChartered Accountants Ireland