What is MTD?
MTD stands for Making Tax Digital. It’s a new rule that’s coming in in two stages. The first stage comes into effect from April 2019 and is for VAT Returns (affecting businesses with turnover above £85,000); and the second stage – which is about submitting quarterly accounts for income tax and corporation tax purposes and VAT Returns for small VAT registered businesses – is due to come in from April 2021 at the earliest.
It means from April 2019, VAT Returns for businesses with turnover above £85,000, will have to be submitted to HMRC via the new MTD system, and records will have to be kept in digital format, possibly using cloud accounting software; but not necessarily.
Instead of using cloud accounting software, bridging software can be used to upload records to the new MTD website.
Eventually, probably from April 2021, businesses and landlords will also need to submit quarterly profit and loss accounts to the MTD website – as is done currently with VAT.
See our videos below for more information.
Making Tax Digital for VAT
Making Tax Digital is the biggest change in the tax system since self-assessment. Stage started in April 2019 where VAT registered businesses with over £85,000 turnover must join. Also, when a VAT registered business goes over the threshold during any 12 month period they must join and when will businesses with smaller turnovers have to join.