Making Tax Digital Update
Making Tax Digital Update
For various reasons the extension to other taxes has been delayed while HMRC ensure that the system is fit for purpose.
July 31, 2023

Making Tax Digital (MTD) has been talked about for some years now – since 2015 in fact.  It was an initiative that set out a bold vision for a digital tax system to “make it easier for individuals and businesses to get tax right and keep on top of their affairs”.  The motive behind this, is to ensure more accurate information is provided to HMRC more frequently, to avoid the exchequer being out of pocket.

Originally it was proposed to come into effect from April 2018 for VAT reporting and extended to other taxes in 2020.  MTD for VAT was postponed until 2019.  For various reasons the extension to other taxes has been delayed while HMRC ensure that the system is fit for purpose. 

The next phase for self-employed individuals, and landlords with an income of £50,000 or more is due from 6 April 2026.  So from 6 April 2026 all Businesses, self-employed individuals, and landlords will be required to keep digital accounts records relating to their trading and property income if their gross income from these income sources for a tax year is greater than £50,000.

This will replace the current requirement to file self-assessment tax returns annually.  You will now need to submit details of your profits to HMRC online, on a quarterly basis.   There will also be an end-of-period statement submission which will include any adjustments that have to be made – for example, depreciation of assets (we are here to help with this).  All this will require digital records being kept up to date.  Tax payments will continue to fall in January and July each year but the advantage is that you will have a clearer idea of how much to pay.

How do Hive see this process?
Although MTD is designed to suit HMRC there are positives for us. We have been edging towards digital for some time now. As part of our service to you we encourage you to use Xero and keep it up to date by either doing your own bookkeeping or taking advantage of our bookkeeping service. The transition to MTD should therefore be effortless as we will also be helping with registering you and submitting your returns.

This not only puts us all ahead of the game come 6 April 2026. In order to run your business efficiently and effectively it will be very useful to know, every quarter, or even every month, exactly where you stand financially. In this way we can then help with any financing or investments that you may need and analysing how the business is running and encouraging any positive changes.

We are all here to help so please ask us if you need more details.

Further reading
The HMRC and ICAEW websites also provide further information.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Lesley Gerber Accountant
If you have any questions or comments about this article, please get in touch.
Call Now Button