A timeline for the MTD (Making Tax Digital) rollout and what you need to do.
Now that MTD has been introduced for VAT registered businesses above the registration threshold and most of the creases have been ironed out of the system, it is time to roll it out into other business categories.
I have a few VAT registered clients who are required to be MTD compliant and have not had any problems with this. However, the majority of my clients are self employed and so are yet to face MTD, this will change in 2023.
What does it mean for me?
For your accounting year that starts on or after 6 April 2023, you need to:
- keep digital business records
- have compatible software such as Quickbooks, xero or software to bridge from a spreadsheet to HMRC
- Sign up for MTD and authorise your software through your government gateway or get your agent to do this through their agent services account
- send returns to HMRC on business income and expenses, once every 3 months
- Finalise your income – this is an annual summary to make sure the returns were correct, make any alterations and the final declaration it produces replaces the self assessment tax return.
- Submit the final declaration and pay any tax due by 31 January following the tax year.
In the wise words of Douglas Adams in Hitchhikers Guide to the Galaxy – don’t panic!
It sounds scary but it doesn’t need to be, HMRC will be lenient of teething troubles with the system and once you get used to keeping your records in this way, it will actually be easier.
If you are not a technological person or haven’t got the time, ABC can help, I will be offering three levels of service for MTD:
- Set you up with QuickBooks, sign you up for MTD and ensure the digital link is working and offer any help you want/need to be able to use the system and help finalise your business income and submit the returns and the final declaration.
- Show you how to scan receipts on a QuickBooks app and link your bank account, I can then categorise your receipts from within QuickBooks without you needing to send the physical receipts. I can then make your quarterly returns and final declaration.
- Do all things digital, you just hand over the physical receipts once per quarter and I input them into QuickBooks, make your quarterly return and ensure the bank is reconciled.
Start Implementing Digital Records Now.
I would highly recommend the use of software which will be MTD compatible now, get used to the system before you have the quarterly deadlines and find out where you have problems or questions so it can be smooth sailing when the deadline approaches.