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Your Guide to Making Tax Digital

Welcome to our guide on Making Tax Digital (MTD), a key HMRC initiative transforming the UK’s tax system. We aim to provide a clear, concise, and accurate overview of MTD, including its critical deadlines, software requirements, and benefits for taxpayers and HMRC. This website is owned and managed by Jack Ross Chartered Accountants. We have created this website to inform you about the changes to digital taxation. The government first proposed a move to MTD in March 2017, with an implementation date of April 2019. The implementation dates have regularly been postponed, and this website will keep you updated on all the latest changes to MTD.

Who are Jack Ross Chartered Accountants

We are a long established firm of chartered accountants in Manchester city centre. We were founded in 1948, and we help professionals and businesses across the UK with their tax and MTD requirements.
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What is Making Tax Digital?

Making Tax Digital is an HMRC project aiming to digitise the UK’s tax system, improving efficiency, reducing tax fraud, and helping taxpayers file accurate tax returns initially by maintaining digital records and using MTD-compatible software.

Why is HMRC Introducing Making Tax Digital?

 HMRC believes Making Tax Digital will provide numerous benefits, including reducing the tax gap, simplifying tax reporting, making better use of information, and bringing the UK tax system into the digital age. MTD is a central part of HMRC’s strategy to improve the UK’s competitiveness and create a tax system fit for the future.

The Key Phases of Making Tax Digital

MTD is gradually rolled out in phases:

  1. MTD for VAT: Implemented in April 2019 for VAT-registered businesses with turnover above the VAT threshold
  2. MTD for Income Tax: Starting April 2026 for unincorporated businesses and landlords with income above £50,000 annually, lowering to £30,000 in 2027.
  3. MTD for Corporation Tax: Commencing in April 2026 for larger companies

Who Needs to Comply With Making Tax Digital?

Compliance with MTD is required for VAT-registered businesses, unincorporated businesses with certain income thresholds, and giant corporations.

What Does Making Tax Digital Mean In Practice?

MTD compliance involves maintaining digital records and submitting tax updates digitally through MTD-compatible software.

More Information

MTD, a significant modernization of the UK tax system, offers taxpayers efficiency, accuracy, and financial insight benefits. Jack Ross Chartered Accountants provides resources to ensure you’re ready for MTD.

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Frequently Asked Questions

Making Tax Digital (MTD), a crucial part of the UK government’s plans to make it easier for individuals and businesses to get their taxes right and keep on top of their affairs, officially started on April 1, 2019. This initiative represents a significant shift in the UK’s tax administration to become one of the world’s most digitally advanced tax administrations. The first phase of MTD mandated that businesses above the VAT threshold of £85,000 keep digital records and submit VAT returns using MTD-compatible software. The timeline for further implementation will expand the programme to all businesses and individuals in the coming years, making digital record-keeping and reporting the norm. 

Need help navigating the digital tax landscape. As the UK government continues to expand the Making Tax Digital (MTD) initiative, staying ahead and adapting to these changes is crucial. Whether you’re an individual or a business, our team of experts will guide you through every step of this digital transition, ensuring you meet all requirements and deadlines. 

Take advantage of the opportunity to streamline your tax processes and stay compliant with the MTD. Visit our Contact Us page today and let us help you navigate the future of tax administration. Your digital tax journey starts with us. 

To comply with Making Tax Digital (MTD), there are several key steps you need to take: 

  1. You need to maintain your financial records digitally using MTD-compatible software. This means all your transactions and income must be recorded digitally. 
  2. You must submit your tax returns online using the digital records you’ve kept. This includes VAT returns for businesses above the VAT threshold, eventually extending to income and corporation taxes. It’s also essential to sign up for MTD with HMRC, which can be done through the government’s website. 
  3. It’s crucial to stay updated with the latest MTD requirements and deadlines, as the initiative is being rolled out in stages, and the requirements may change over time. 

Consulting with a tax professional or an accountant can be beneficial to ensure full compliance. 

 Numerous software solutions are compatible with Making Tax Digital (MTD). These include popular accounting packages like QuickBooks, Xero, and Sage, which have all been updated to meet the requirements of MTD. These software solutions allow you to maintain digital records of your transactions and facilitate the online submission of tax returns directly to HMRC. Choosing a software solution that suits your business needs and is easy for you to use is essential. HMRC maintains a list of MTD-compatible software on their website, which can be a helpful resource when choosing the right software for your business. 

Don’t face the digital tax revolution alone. Stay ahead of the UK’s Making Tax Digital (MTD) initiative with our expert guidance. Whether you’re an individual or a business, we’re here to help you meet all MTD requirements. Simplify your tax management and stay compliant. Visit our Contact Us now. Your digital tax future starts with us. 

Non-compliance with Making Tax Digital (MTD) can result in penalties from HMRC. The penalty system is points-based, similar to driving offences. For every missed submission, a point is given. Once a certain threshold is reached (which varies depending on the frequency of required submissions), a penalty of £200 is charged. These points do expire after a period of good compliance. Still, it’s vital to avoid accruing them in the first place. In addition to these penalties, HMRC can charge penalties for inaccuracies found during an assessment or investigation, which can be up to 100% of any additional tax due if the error is deemed deliberate and concealed. It’s crucial to understand the requirements of MTD and ensure full compliance to avoid these penalties

The digital tax era is here. With our expert assistance, keep pace with the UK’s Making Tax Digital (MTD) initiative. We’re ready to support individuals and businesses in meeting all MTD obligations. Streamline your tax processes and ensure compliance. Start your journey by visiting our Contact Us page today. We’re your gateway to the digital tax future. 

While Making Tax Digital (MTD) is a mandatory requirement for most businesses above the VAT threshold in the UK, there are certain exemptions. If your business is run entirely by practising members of a religious society whose beliefs are incompatible with the requirements of the regulations (for example, those religious beliefs prevent them from using computers), you may be exempt. Additionally, if it’s not reasonably practicable for you to use digital tools to manage your tax affairs due to age, disability, remoteness of location, or any other reason, you might also be exempt. However, these exemptions are optional and must be applied for. If you believe you qualify for an exemption, contact HMRC directly. It’s important to note that simply preferring not to use digital tools is not a valid reason for opting out of MTD. For more information on Making Tax digital, check out our guide.

Embrace the digital tax transformation. Stay on top of the UK’s Making Tax Digital (MTD) initiative with our professional help. We’re committed to assisting both individuals and businesses in fulfilling all MTD requirements. Make your tax management efficient and compliant. Begin your journey by contacting us on our Contact Us page. Let us guide you into the future of digital taxation.

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