Making Tax Digital logo

HMRC’s Future Plans for Making Tax Digital (MTD)

HMRC’s initiative, Making Tax Digital (MTD), is the cornerstone of the UK government’s ambition to transform the tax administration into one of the world’s most digitally advanced. Unveil how this digital evolution will reshape your tax obligations and streamline your accounting processes, offering greater accuracy and efficiency.

Understanding the Basics of Making Tax Digital (MTD)

Making Tax Digital (MTD) represents a radical shift in how taxpayers interact with HMRC. MTD demands taxpayers maintain digital records and submit their tax information online, providing a more real-time view of their tax situation. VAT-registered businesses were the first to experience these changes in April 2019, with self-employed individuals and landlords soon to follow.

How Does Making Tax Digital for VAT (MTD for VAT) Work?

MTD for VAT is currently in place for VAT-registered businesses with a taxable turnover above the VAT threshold. This system requires these businesses to store digital records and file VAT returns using MTD-compatible software. It enhances the precision of VAT returns and allows businesses to budget for their tax obligations more effectively.

Transitioning to Making Tax Digital for Income Tax Self Assessment (MTD for ITSA)

With the introduction of MTD for ITSA, self-employed individuals, landlords with income, and partnerships will have to provide quarterly updates to HMRC. This system aims to help them keep on top of their tax affairs by enabling them to view their estimated tax liabilities in real time. From April 2022, businesses with business income above the VAT threshold will also come under the purview of MTD for ITSA.

The Future of Corporation Tax Under Making Tax Digital (MTD for Corporation Tax)

The transformation under MTD will also extend to corporation tax. Under this proposed change, businesses will provide quarterly income tax updates and a final declaration to HMRC using MTD-compatible software. This process will provide more real-time information to HMRC, resulting in a more efficient tax system.

Leveraging the Power of Digital Technology with Accountants

Embracing MTD often requires a significant shift in the traditional record-keeping and tax-filing methods. Accountants play a crucial role in assisting businesses with this transition, helping them implement compatible software, understand the requirements of MTD, and ensure that they are MTD compliant.

Key Takeaways:

  • MTD is a revolutionary shift to digitise the UK tax system.
  • VAT-registered businesses are required to use MTD-compatible software for VAT returns.
  • Self-employed individuals, partnerships, and landlords with income will come under MTD for ITSA from April 2022.
  • MTD for corporation tax is on the horizon, transforming how businesses report their income and expenses.
  • Accountants are vital to facilitating the successful transition to MTD.
Building wall with the letters 'HMRC' written on it.
Female accountant analyzing financial documents at her desk using a calculator with a screen in front of her.

Request a call back

Let us know when you would like us to call you back by filling in this form:
Call back form

Our 5 Star Reviews

Sofia Carlini
Sofia Carlini
Read More
The Jack Ross Team has been an absolute delight. Professional, nice and fast during the Audit procedure. Thank you Jack Ross Team.
Katrien Vanassche
Katrien Vanassche
Read More
Very good service from the Jack Ross Team. They gave us good advice and completed a very efficient audit. They have a friendly and competent team. I would surely recommend them.
aj shelton
aj shelton
Read More
Jack Ross is based in Manchester and provides tax planning and Xero accounts. They are a long-standing and well-regarded firm with an excellent reputation. They provide their clients with exceptional service and a wealth of advice. I have no hesitation in using their professional services.

HMRC's Videos on Making Tax Digital

Latest News

Scroll to Top