To date, the initiative has prompted a landmark change to the way in which many businesses record and report tax, and a wider shift towards the use of Apps, cloud accounting software and online tools.
The roll-out of the MTD initiative started with VAT, back in April 2019, when all VAT-registered businesses with turnover exceeding £85,000 were required to keep digital records and make quarterly submissions to HMRC, using MTD-compliant software.
Since then, the scope of MTDfV has been extended to include all VAT-registered businesses.
A points-based penalty system will see non-compliant businesses accrue points for each late submission, or payment, with points ultimately culminating in monetary fines.
With an original launch date of April 2024, MTD for Income Tax Self-Assessment (MTD for ITSA) has now been delayed until April 2026 at the earliest.
MTD for ITSA will apply to all self-employed workers and landlords with property and/or business income of more than £50,000, requiring them to keep digital records and provide quarterly updates on their income and expenditure to HMRC, using MTD-compatible software.
Those with an income of between £30,000 and £50,000 will need to comply from April 2027.
The MTD initiative was expected to encompass Corporation Tax by 2026 at the earliest, but this is currently off the table with no indication of when it may be launched instead.
Streamlining your accounting and bookkeeping
Whilst a move towards cloud accounting and streamlined bookkeeping processes can be invaluable from a compliance perspective, given HMRC’s drive to digitalise the UK tax system, the benefits stretch way beyond this for most businesses.
To read more about our bookkeeping and cloud advisory services, click here, or to talk to us about how we could support you, contact us.
