Ilyas Patel Accountants in Preston
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
VAT-registered businesses with a taxable turnover are now required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.
Self-employed businesses and landlords with annual business or property income above £50,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2026.
Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax Digital service for Income Tax. If you are a self-employed business or landlord you can voluntarily use software to keep business records digitally and send Income Tax updates to HMRC instead of filing a Self Assessment tax return.
The government has published a consultation on the future design of Making Tax Digital for Corporation Tax and welcomes views from companies and other organisations within the charge to Corporation Tax, agents, professional bodies and software developers.
The government has proposed businesses with an opportunity to take part in a pilot for Making Tax Digital for Corporation Tax in April of 2024.
The majority of customers want to get their tax right but the latest tax gap figures show that, whilst the numbers have remained at a low, there are still avoidable mistakes costing the Exchequer £35.8 billion (4.8%) in 2021 to 2022. The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors.
The primary legislation for Making Tax Digital relating to VAT and Income Tax is contained in the Finance (No.2) Act 2017, providing certainty about the broad framework in which Making Tax Digital will operate, with secondary legislation for VAT laid in February 2018, which came into force from April 2019.
HMRC have published a VAT Notice which explains the rules for Making Tax Digital for VAT and about the digital information that must be kept.
They have also published a communication pack that supports our partnership working arrangements with stakeholders, who can use the contents to inform their own communications activity and key messages for their clients, customers or members
Organise your books like a boss. Start today by taking control of your business with Sage Accounting
Run your entire business from anywhere Snap an expense, fire off an invoice, check your cashflow, stay on top of your tax. Take care of business, anywhere.
Automatically organise, calculate and prepare your Self Assessment, VAT and Construction Industry Scheme tax. Submit CIS and VAT directly to HMRC.
Xero makes small business accounting easy, saving you time
You're not going to get a ridiculously long phone menu when you call us. Your email isn't going to the inbox abyss, never to be seen or heard from again.
Come meet our team receives specialized training regularly to ensure you're receiving the best information possible. From basic questions to complex compliance inquiries, we're here to help!
Interested in learning more about our services? Our Account Executives take the time to discuss your existing business background and help you make smart decisions that best meet your needs.