Making Tax Digital (MTD) is an initiative by HMRC which first started in 2019. The overall mission is to create an efficient and effective tax process.
MTD means many businesses will transition from physical, paper tax returns and move to digital software where they manage and submit their tax to HMRC.
MTD is a fundamental change for many businesses who ordinarily use paper documents and physical tax returns. The changes will simplify the process and provide businesses with a clearer overview of their tax. Using MTD compatible software reduces errors, increases productivity and provides the tools for better financial planning.
Any business can now use MTD compliant software to submit their tax details. However, this doesn't mean that MTD is compulsory for your business just yet.
Take a look at the MTD timelines to know when MTD is relevant for your business and the date you need to comply by.
In order to comply with Making Tax Digital, your business needs to adopt and transition to MTD compliant software. This will reduce the need for paper based financial documents, filing cabinets and shoeboxes of receipts. MTD compliant software will transition your business to digital business administration, where you will be able to connect straight to HMRC and send your information using digitally compliant links.
Depending on your type of business and your gross income, will determine the deadline for when you need to be MTD compliant.
Take a look at the MTD timeline to find out the full details.
Making Tax Digital compliant software means using a particular piece of software that allows you to submit the relevant data directly to HMRC. This software will be a digital piece of software, accessible via a device such as a computer or smartphone.
MTD compliant software is far from paper files, documents, spreadsheets and adding up figures in your head. MTD compliant software will do a lot more than just help you submit the correct information to HMRC.
MTD compliant software may also be a business administration solution. A solution where you can upload your financial documents, create invoices, receive and send payments, and see all your business finances in one digital place. MTD compliance is usually an added feature to your business administration solution.
Transition to digital administration and digital processes so that you're ready to comply with Making Tax Digital requirements. Start your digital administration journey with Banqup.