What is making tax digital?
You probably have seen, heard, or read about making tax digital. Xero are currently running a social media campaign urging people to go digital with their tax.
But what is it?
Making tax digital is a key part of making tax easier for individuals and businesses to get their tax right and keep on top of their affairs making it more effective, more efficient and much easier. HMRC wants to become one of the most digitally advanced tax administrations in the world!
As the rollout of Making Tax Digital continues, here’s what you can expect to happen next;
VAT- VAT registered businesses with a taxable turnover below £85,000 will need to the new making tax digital rules.
Self assessment – Making tax digital for income tax will be introduced by 2024, this will require self-employed businesses and landlords with an income above £10,000 will have to follow the MTD rules.
Corporation tax- MTD for corporation tax is expected to be the next phase but wont come into effect until at least 2026.
All this means you will need to use HMRC-recognised make tax digital software to keep full digital records and file VAT returns. VAT registered businesses will be required by law to maintain their digital records.