All self-employed professionals that declare annual income over £10,000 via self-assessment tax returns will then be entered into Making Tax Digital (MTD) from April 2023 for the 2023-24 financial year.
Since 2019, over 1.4 million businesses have started using MTD for their VAT, submitting over 6 million returns. Over 30% of smaller VAT-registered businesses, who are not yet required to use Making Tax Digital, have chosen to do so voluntarily.
On 21 July 2020 The Government published a new corporate report outlining a 10-year roadmap working towards ‘Building a trusted, modern tax administration system’.
In the March 2020 Budget, the Chancellor, Rishi Sunak, highlighted the Government’s intention to create ‘A tax system fit for the challenges and opportunities of the 21st century.
Currently, only VAT-registered businesses with annual turnover of more than £85,000 are required to maintain digital records and submit VAT returns via Making Tax Digital-compatible software. New legislation in the Finance Bill 2020-21 has been laid out to extend MTD over the next few years.
HMRC have updated their guidance on how to follow the rules for MTD for income tax. The guidance has been updated to clarify that from 6 April 2023, taxpayers must follow the rules if their taxable turnover from a self-employed business is above £10,000.
You can view the HMRC guidance on gov.uk here – Follow the rules for Making Tax Digital for Income Tax.
Here at Carrington Accountancy our team use MTD-compliant reporting software, with platforms such as QuickBooks and Xero. For more advice and help about how to manage your transition to MTD call us on 0203 713 4530 or e-mail email@example.com
You may find our previous MTD article useful – 5 things you need to know about Making Tax Digital