Making Tax Digital (MTD) is a Government initiative affecting the way all taxpayers will deal with their tax affairs in the digital age. The aim of this new legislation, through increased automation and reduced human error, is to improve efficiency and ultimately to make the tax system operate in “real time “.
The next key stage of this new regime will come into effect from 1 April 2019 and will be compulsory for more than 1.2million VAT-registered UK businesses.
HMRC has advised that all other taxes, for businesses and individuals, will not come under the new regime until at least April 2020. There is though a growing expectation, arising from HMRC sources, that April 2020 will in fact be the date when quarterly reporting comes into force for most UK businesses.
Under MTD, most businesses, self-employed and landlords will need to keep track of their financial affairs digitally, using tools, such as software or apps, to keep records of their income and expenditure.
Why is this important?
The government initiative, Making Tax Digital (MTD) is set to modernise the tax system in the UK with the aim of being one of the most digitally advanced tax administrators in the world. Each cloud-based solution provider is working closely with HMRC to comply with MTD requirements. This is to make it easier for individuals and businesses to get their tax right first time and avoid tax losses through errors. As of April 2019, any business above the VAT threshold will be required to keep their records digitally and provide quarterly VAT updates. Any businesses below the threshold can voluntarily choose to use a cloud-based solution.
As the digital era continues to thrive, Baldwins will be offering cloud-based accountancy software to our clients, allowing you to have better control of your finances and improve the way you do bookkeeping. With Making Tax Digital (MTD) being a hot topic, we are prepared to support you going forward. We offer multiple cloud-based solutions from our partners as well as desktop based MTD compliant services, which means we can tailor solutions to our client needs. Our team of accountants across the country are trained to support you with a solution.