Making Tax Digital (MTD) is part of the government’s plan to make it easier for individuals and businesses to get their tax right and keep on top of their tax affairs.
Under MTD, HMRC has created a Personal Tax Account (PTA) for each taxpayer for all their different taxes. If you haven’t already accessed your own digital account, perhaps now is the time to take a look. You can find information about your National Insurance Contribution history, State Pension forecast and PAYE codes in the PTA. Eventually bank interest and other third-party information received by the Revenue will be linked to your account.
To sign in for the first time, you need a Government Gateway account – you will have one if you’ve used HMRC online services before. If you don’t have a Government Gateway ID you can easily create a new one.
To register go to www.gov.uk/personal-tax-account
Timeline for Making Tax Digital for Business
Since 1 April 2019, Making Tax Digital for Business (MTDfB) has required businesses with a turnover above the VAT threshold to provide quarterly information digitally to HMRC. This was extended to 1 October 2019 for a small minority of VAT-registered businesses with 'more complex requirements'.
Keeping digital records and making quarterly updates will not be mandatory for taxes other than VAT before April 2020, although businesses below the VAT threshold which have voluntarily registered for VAT can opt to join the scheme.
If MTDfB applies to you, you will be required to use digital tools, such as software, to keep records of your income and expenditure. Although HMRC have confirmed that spreadsheets can still be used, it is likely they will need to be combined with other software in some way. We can discuss how MTDfB will affect you and your business and consider the options available to help you make a smooth transition to HMRC’s new tax system.
As always, we will keep you updated when new details are published. In the meantime, if you are thinking of changing or updating your current bookkeeping system/software please contact us to discuss which software package might be best for you.
Tax Enquiries - As HMRC is obtaining more information electronically about both businesses and individuals, taxpayers face an increased risk of investigation. Even if HMRC finds no additional tax to pay, professional costs can be significant which is why we strongly recommend you adopt our Tax Fee Protection service.
If you have any questions about the Tax Fee Protection, please do not hesitate to contact us.