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Updates from the Clayton & Brewill team.
Making Tax Digital extended to SMEs
The government has confirmed that all VAT registered businesses will have to comply with Making Tax Digital (MTD) from 1 April 2022, with MTD for income tax delayed until 6 April 2023. Here, Nottingham chartered accountants Clayton & Brewill provides an update on the recent extensions.
Businesses below the threshold
In line with the government’s staggered roll-out of Making Tax Digital (MTD), VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been required to keep digital records and use software to submit their VAT returns since 2019.
But the deadline for SME’s to follow suit has now been extended to April 2022; this means those with a taxable turnover below £85,000 will be required to follow MTD rules for their first return starting on or after this date.
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the MTD rules for Income Tax from their next accounting period starting on or after 6 April 2023.
It’s worth noting that those below the VAT threshold can voluntarily join the MTD service before the deadline. We would certainly advise that you start preparing sooner rather than later, so you are better equipped for the move to a digital system.
What is Making Tax Digital?
Making Tax Digital (known as MTD) is HMRC’s plan to modernise and simplify the tax system by moving to a digital structure. As businesses become increasingly digital, it is hoped that the compulsory use of digital record-keeping tools will help prevent businesses from making simple arithmetical and transposition errors in their tax returns.
Businesses gain access to a secure digital tax account, which allows them to interact more easily with HMRC. You can register, file, pay, and update company information at any time and at any point in the year. Since being introduced in 2019, over 1.4 million businesses have joined the MTD programme, submitting more than 6 million returns already.
How can Clayton & Brewill help?
Clayton & Brewill can help prepare you for MTD. With a sound understanding of the digital accounting systems that comply with MTD, we can assist you with getting set up. You then either maintain the records yourself with support from us, or we can maintain your records for you on an ongoing basis.
If you already use a digital accounting system, the Clayton & Brewill team can help you to check that it complies with MTD requirements.