Making Tax Digital

What is Making Tax Digital?

Making Tax Digital (MTD) is a new tax initiative that will see UK businesses submit digital updates to HMRC once per quarter. Going digital will see our tax system become more efficient and make it easier for UK businesses to stay on top of their tax affairs. The best way to submit your tax is through your bookkeeping and accounting software. Don't have your software yet? Or don't think your current software is up to the task? You've come to the right place. Click here to begin your comparison

When is Tax becoming Digital?

From April 2019, businesses registered for VAT and therefore turning over above the threshold of £85,000 will have to start keeping digital records and submit digital VAT returns to HMRC.

Making Tax Digital for income tax and corporation tax will come into effect once the VAT scheme has finished a successful roll-out. This is currently projected to be from April 2020. Once dates have been formally announced, CompareYourSoftware.com will let you know what to do next.

What's changing?

Under Making Tax Digital, all UK businesses (including sole traders) will have to send quarterly updates of their income and expenditure to HMRC. This will have to be done through bookkeeping and accounting software.

The software you choose will need to use application programme interfaces (APIs) for returns to be filed to ensure it is MTD-compliant. CompareYourSoftware.com has an extensive list of bookkeeping and accounting products and we'll let you know which ones are MTD-compliant. Simply add this to your requirements and we'll do the rest.

Why are HMRC Making Tax Digital?

Under MTD, tax recording will be more accurate. Bookkeeping and Accounting software provides fewer opportunities for errors and miscalculations and it's easier to spot and amend as you go.

The tax system itself will be more efficient when it's digital. Automated processes will mean the system is faster, saving time for businesses, accountants and HMRC.

When businesses are using bookkeeping and accounting software, they'll find it easier to record and file their tax returns. It'll also make it easier for business to budget for their tax bill at the end of the year.

Does this change the year-end tax return?

No, but Making Tax Digital will make it easier to complete. Instead of having one big tax return to fill in at the end of the year, you provide four smaller updates throughout the year.

When it gets to year end, you check that the information they've collected digitally is correct, then send an update to HMRC.

How can CYS Help?

We've spent the last 10 years getting to grips with all types of rules, processes and legislation within the Accounting world. MTD is no different. We understand what is needed to be MTD-compliant and you can rest assure that CompareYourSoftware.com will provide you with the best MTD-compliant software on the market that suits exactly what you need. Start your search now