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

Common UK Tax Return Mistakes

Listed are common UK tax return mistakes and the solution to avoiding them. After all, a small mistake filling out that HMRC document can result in you incurring huge losses, so let’s get cracking and avoid those expensive mistakes. What...

Beat the Clock – Claim Your UK Tax Returns

Time to get the wheels turning for your 2014/2015 UK tax returns, and you need to act fast, before the year ends in April 2019. Beat the clock and get back those tax rebates, HMRC needs proof and are quite...

Time to Get Your UK Self-Assessment Tax Return Started

In 2017/18 a pretty impressive percentage of Brits got their UK self-assessment tax return spot on! In fact, it was a record breaking figure with an impressive 93.68% getting in their tax return claims on time, out of which 700,000...

Leave a Reply

Your e-mail address will not be published. Required fields are marked *