MTD - Making Tax Digital VAT & Income Tax

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From April 2019, If your business is VAT registered with a taxable turnover over the VAT threshold (currently £85,000), you are required to keep digital VAT business records and send returns using MTD compatible software for VAT periods starting on or after 1st April 2019.

From April 2022,  it is compulsory for all smaller businesses who are VAT registered, with a taxable turnover below the VAT threshold to be using MTD software for VAT periods starting on or after April 1st 2022.

https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-vat/extension-of-making-tax-digital-for-vat

You will need to keep business records digitally from the beginning of your accounting period.  This does not mean you need to keep additional records for VAT, they just need to be recorded digitally.  If already using an accounting software package, check with your software provider to ensure they will be MTD compatible.  If you do not currently use accounting software, please contact us for a free no obligation consultation on how we can assist.

Businesses that are not registered for VAT or have de-registered are exempt from MTD.  For businesses that are more complex, the going live date has been deferred to 1 October 2019.  This includes businesses that are: trusts, 'not for profit' organisations not set up as a company, public sector departments, businesses that are on annual accounting schemes and those required to make payments on account.

From April 6th, 2026, all businesses who are registered for Income Tax Self-Assessment and with an income of over £50,000, are required to use Making Tax Digital (MTD) compatible software to 

• keep records of your business income and expenses
• send quarterly updates of your income and expenses to HMRC
• finalise your business income and submit your final declaration

From April 2027 the income amount to be required to use MTD software will reduce to an income of more than £30,000. 

For those who do not meet the qualifying income, they can voluntarily sign up if they wish. 

Find out more: https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax

At RGR Bookkeeping and Admin Services we pride ourselves in our knowledge of various MTD software including Xero, Quickbooks, Sage and various other accountancy software packages. 

For an up-to-date list of compatible MTD software, please check the HMRC website https://www.gov.uk/guidance/software-for-sending-income-tax-updates#VAT

Please contact us on 01756 792005 or 07804 491477 to discuss how we can help you to prepare for Making Tax Digital VAT & Income Tax.