Date posted: 7th Oct 2021
The Making tax Digital (MTD) journey has been longer and more complicated than originally anticipated, however, when I review where we are now, I can see the progress that’s been made.
I thought it might be useful to get a fix on the current state of play and consider what’s next.
Making Tax Digital (MTD) has been the cause of much confusion over recent years. With delayed implementations, unclear definitions, question marks over the use of Excel documents and ‘digital links’. I certainly remember the days of being promised ‘free software’, not to mention waiting with bated breath for the emergence of ‘bridging software’ that has gone largely unused due to the take up of cloud-based systems anyway!
Alas, we are where we are, as they say, and I must also say that so far along this journey HMRC have been incredibly good at listening to feedback from business owners and adapting their communication in response. After all, we are still their customers.
MTD for Income Tax and Self-Assessment (ITSA)
With that in mind, HMRC has now released the latest update information on MTD for ITSA (Income Tax and Self-Assessment) as of 23rd of September 2021.
The basic principles remain:
- MTD for ITSA to be introduced from April 2024 (a year later than planned)
- Applicable to unincorporated businesses and landlords with income above £10k per annum
- Digital record keeping requirements (out with the old ledger books!)
- 5 submissions a year (1 per quarter then a ‘finalisation’ submission)
A word of warning here. Don’t confuse MTD for ITSA with MTD for VAT. MTD for VAT is very much here already and you should be fully compliant by now. Excuses are running out unless you qualify for one of the very limited exemptions.
MTD for VAT
- MTD for VAT is expanding to become applicable to all VAT registered businesses regardless of turnover from April 2022
- You must keep digital records
- Digital links apply when data is transferred from one place to the next as part of your VAT record
- You must submit via software (there will be no access to the old online HMRC submission via the government gateway)
NEXT STEPS
My advice for both MTD for VAT and MTD for ITSA as always, is simple… select an easy piece of cloud software to keep your records and try and stay on top of them. There are many options out there and we have lots of experience of what might work best for you. Alternatively, spend some time looking at this to make the right choice.
If you’re still really struggling, then outsource it to the experts. Its not as expensive as you might think, and it could be more cost effective in the longer term – not least avoiding a fine if you don’t get it right going forwards!
And yes, I run our outsourcing division so I would say that but honestly, it’s a great option to save you time, stress, money and above all it allows you to concentrate on running your business.
If you’ve any initial queries or questions, please contact us here. My team are always happy to help or point you in the right direction.
