What Is the Next Step for “Making Tax Digital”?
What is “Making Tax Digital”?
The HMRC recommends that all qualified persons enrol as soon as possible. Those earning below £85,000 per annum are encouraged to enrol voluntarily but are not required.
As HMRC does not provide a service of their own for MTD, we highly recommend using a HMRC compliant software like Xero, Quick Book, Sage or another user-friendly, cloud-based platform that we use daily.
Starting April 2024, Making Tax Digital will broaden its scope to include income tax records and expand applicant eligibility.
The New MTD Income Tax Self-Assessment
Landlords and self-employed (trades) persons earning more than £10,000 per annum from these ventures must submit their tax forms every quarter electronically. The latest submission dates are 5 August, 5 November, 5 February, and 5 May.
Per HMRC law, exceptions include estates, trusts, trustees of registered pensions, and non-domestic companies, regardless of the annual income. Additionally, those already mandated to submit tax forms according to MTD and earn at least £10,000 annually through rentals or self-employment are automatically enrolled in the Income Tax programme.
If you qualify for the expanded version of MTD, there are two procedures that you can take to ensure compliance: Self-reporting and agency reporting.
You are free to report your income tax through MTD-compatible software by yourself, provided that you register and then update your account information at least once a quarter.
What Are My Options?
Self Reporting
First, you must complete the HMRC registration pilot and ensure that your Government Gateway ID and password (the same credentials used in previous Self-Assessments) are present. Additionally, you will need to provide your National Insurance number and business information (start dates, registered addresses, tax accounting year) when filling out the pilot.
Once the account is set up, simply use the software of your choice to send HMRC a digital summary of all income and expenses for each quarter. A digital record is needed for MTD ITSA, so all physical receipts collected must be recorded digitally and completed as soon as possible.
The other option to complete the MTD ITSA transition is an agency acting as a third party to do the above steps for you, including the required quarterly filings.
Agency Reporting
We can take care of the MTD registering and reporting in-house, taking the utmost care to ensure complete accuracy, compliance, and punctuality. We do this by collecting your tax files from you, sending you monthly updates regarding your account, and highlight areas of concern while providing the proper corrective measures.
With HMRC’s plan to include income tax reports into their Making Tax Digital starting in 2024, the time is now for all eligible landlords and self-employed persons to begin the conversion over to MTD, and we are here to help.