What you should know about Making Tax Digital UK (MTD) – TaxBack

from the blog.

ipad with income information

What you should know about Making Tax Digital UK (MTD)

Major changes are expected in the UK tax structure with Making Tax Digital UK (MTD), the system which intends to digitise tax collection in the country, coming into effect for businesses, commencing with VAT, from 1st April 2019.

Here is What you should know about Making Tax Digital UK (MTD)

MDT was announced in the April 2015 Budget. In the first phase, it will cover Value Added Tax (VAT)-registered businesses which earn taxable income exceeding £85,000. MTD for individuals will be on hold for an indefinite period until Her Majesty’s Revenue and Customs (HMRC) tackle the increased workload brought about by Brexit.

These measures will not affect any businesses that have voluntarily registered for VAT. Even businesses that are not required to comply with MTD regulations can volunteer to do so if they wish. However, those who have registered will have to stay in the system for the full duration of their registration.

According to the timetable, VAT-registered businesses would have to submit their UK PAYE Tax Returns (for VAT) digitally from 1st April 2019. A pilot project is currently being run by HMRC with some volunteer organisations to understand the system. The new software is also being developed and tested to ensure that they are ready by the deadline, to facilitate clients to effectively meet their reporting obligations.

This is a major upgrade which has been effective in the UK tax system for a long time and is being implemented with several objectives:

  • to close the tax gap (the amount of tax which should have been collected compared to the actual amount collected)
  • real time taxation; to use digital information more effectively (Helpful when wanting to Apply for  Tax Back Online
  • use of one financial account
  • and the ability for digital interaction

Businesses that need to fulfil MTD obligations under VAT will need to maintain digital records of all transactions with software that can link directly to HMRC’s systems and report information on VAT returns through this software directly to HMRC within five weeks of the end of their VAT quarter.

Most businesses currently use spreadsheets and/or manual calculations to finalise their VAT/UK tax returns. Those who currently don’t use such accounting software would have to purchase them while others may need to upgrade their systems to comply with HMRC requirements.

It would be mandatory to report on the totals for each of the nine boxes on the VAT return. Businesses can provide supplementary information if they wish to do so. A VAT notice with more clarifications is expected shortly, before summer’s end.

Enjoyed this article about What you should know about Making Tax Digital (MTD)? Click here to get to know about how to claim PAYE Tax Rebates Online.


Related Posts

5 Reasons why Aussies are still loving working in London 

Living and working in London is something everyone should experience at least once in their life. London is as vibrant, diverse and downright brilliant as it’s always been. Don’t be put off by stories of high rents and rip off...

UK Legislates To Adopt New EU VAT Rules For Vouchers

Many professionals that migrate to the UK to study, work or do both are unaware of the country’s tax legislations. You may not need to be thorough with the UK tax policies, however, it will be beneficial to know the...

How to save during tax return time with a credit card

Getting a 0% balance credit card transfer could help you during UK tax return time. If you have significant credit card debt, a 0% balance transfer credit card will help you in paying it off. 0% balance cards offer no...

Leave a Reply

Your email address will not be published. Required fields are marked *