What is Making Tax Digital (MTD)?

Making Tax Digital is part of the government’s 10-year plan to build a trusted, modern, tax system.

Why the big change?

The aim is to make it easier for you to get your tax right first time and pay less in fines! By reporting digitally, and more often, there is less chance of errors occurring and receipts getting lost.

What areas of taxation are covered by MTD?

There are two main areas that MTD covers, VAT and Income Tax. Income tax includes landlords who complete a self-assessment at present.

What does it mean in practise?

You will need to use bookkeeping software that allows you to keep digital records and that is compatible with HMRC so you can submit quarterly returns, there are currently over 400 pieces of approved software. Bookkeeping software will allow you keep your finances up to date and to submit your returns digitally.

That sounds expensive.

Not at all, the software is inexpensive and there is a lot of choice. The big advantage is that by keeping your books up to date, and integrating your invoicing and bank account, the time taken to complete your books over a year can be reduced hugely compared with old manual methods.

So let’s look at the two main areas covered by Making Tax Digital.

 

Making Tax Digital for Income Tax

Who needs to register and by when?

Making Tax Digital for Income Tax covers both self-employed people AND landlords.

Dependent on your income level, you must register by the following dates if you are an individual, who is currently registered for self-assessment:

By 6 April 2026 if you have an annual business or property income of more than £50,000.

By 6 April 2027 if you have an annual business or property income of more than £30,000.

Why start thinking about it now?

Because keeping up to date books is good practise, you will be ready before the inevitable rush, and it will stop you panicking at the self-assessment deadline when you can’t remember where all your receipts and invoices are!

What software do you need?

You will need to use software that works with Making Tax Digital for Income Tax. The software must allow you to:

  • create and store digital records of each of your business transactions
  • send updates of the totals of your business income and expenses every 3 months
  • confirm end of period statements

Where do I find approved software?

Juggle! is a supplier for all the top bookkeeping software, or you can visit tax.service.gov.uk for more information.

What else will I need to do?

You will also need to make your final declaration. This will be possible either through your compatible software, your HMRC online services account or Juggle! can do it for you.

For more information on how to get started visit

juggleoutsourcing.com or using-making-tax-digital-for-income-tax

 

MTD for VAT

When do businesses need to register for MTD VAT?

If you are currently a VAT registered business, you should already be keeping digital records and filing your returns using compatible software with Making Tax Digital for VAT

What if you’re VAT registered and you haven’t?

If you haven’t already signed up, HMRC will automatically sign you up unless you are exempt or have applied for exemption.

Where do I find approved software?

Juggle! is a supplier for all the most popular software, or you can visit making-tax-digital-software for more information

When do you need to register for VAT?

You must register if:

  • your total VAT taxable turnover for the last 12 months was over £85,000
  • or you expect your turnover to go over £85,000 in the next 30 days

You can voluntarily register for VAT if your turnover is less than £85,000

If you’re not sure if you should be VAT registered click here.

How do you register for VAT?

There are two main ways to register for VAT

  1. You can ask Juggle! to submit your VAT Returns and deal with HMRC on your behalf.
  2. You can usually register for VAT online. You need a Government Gateway user ID and password to register for VAT. If you do not already have a user ID you can create one when you sign in for the first time. Registering for VAT also creates a VAT online account.

 

What happens if you ignore MTD or VAT registration?

You or your company will get fined for non-compliance!

 

For more information about any of the points raised in this guide or if you would just like Juggle! to take the pain away! Just call us on 01329 530 350 or email helpmeplease@juggleoutsourcing.com