When Does Making Tax Digital (MTD) Start?
If you’re a business owner or self-employed professional in the UK, you’ve likely come across the term Making Tax Digital (MTD). But when exactly does it start, and what do you need to do to comply? Let’s break it down.
What Is Making Tax Digital (MTD)?
Making Tax Digital is a UK government initiative aimed at streamlining and modernizing the tax system. It requires businesses and individuals to keep digital records and use MTD-compliant software to submit their tax information to HMRC. The goal is to reduce errors, improve efficiency, and make tax compliance easier for everyone.
When Did MTD Start for Different Taxes?
MTD has been rolled out in phases, targeting specific groups of taxpayers over time. Here’s a timeline of key dates:
1.VAT (April 2019)
- MTD for VAT became mandatory for VAT-registered businesses with a taxable turnover above £85,000.
- From April 2022, this requirement was extended to all VAT-registered businesses, regardless of turnover.
2.Income Tax Self-Assessment (April 2026)
- Originally planned for earlier implementation, MTD for Income Tax Self-Assessment (ITSA) will now apply from April 2026 for self-employed individuals and landlords with an annual income over £50,000.
- For those earning between £30,000 and £50,000, MTD for ITSA will start in April 2027.
3.Corporation Tax (TBC)
- HMRC is still consulting on the introduction of MTD for Corporation Tax. A specific start date has not yet been confirmed, but implementation is expected no earlier than 2026.
What Does This Mean for You?
The timeline for MTD depends on your business structure, turnover, and the type of tax you pay. Regardless of your specific start date, preparing early can save you stress and ensure compliance.
Here’s what you need to do:
1.Check Your Start Date: Determine when MTD applies to your business.
2.Choose MTD-Compliant Software: Tools like QuickBooks, Xero, and Sage are designed to help you meet MTD requirements.
3.Keep Digital Records: Ensure your financial records are stored electronically and can be easily shared with HMRC.
4.Stay Informed: Keep up with HMRC announcements for updates and deadlines.
Need Help Preparing for MTD?
Contact us on contact@hvassociates.co.uk
