From the 1 April 2022, Making Tax Digital for VAT will apply to all VAT registered businesses regardless of the level of turnover. The first VAT period to which MTD applies to all VAT registered businesses (who are not already doing so) will be the one commencing on or after 1 April 2022.
What is “Making Tax Digital”?
Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of administrating tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay tax based on your business activity during the year. You can upload and update your tax account in real time.
How will Making Tax Digital (MTD) affect me?
If you own a business, you are self-employed and you pay income tax, national insurance, VAT or corporation tax, then it is quite likely you will be affected. This means you could be required to keep track of your tax affairs digitally using MTD compatible software, and to update HMRC at least quarterly via your digital tax account. Eventually this will abolish the annual tax return. This will be the law and there will be penalties for non- compliance.
When is Making Tax Digital (MTD) all happening?
MTD for VAT has already started and has been “live” for nearly two years. It started with businesses above the VAT threshold limits (currently £85,000) in April 2019.
From the 1 April 2022, MTD for VAT will apply to all VAT registered businesses regardless of level of turnover.
This notice below explains the rules for Making Tax Digital for VAT and about the digital information you must keep if they apply to you. It was last updated 31 December 2020.
If you need advice, we are here to help.
How can Clive Owen LLP help me with Making Tax Digital (MTD)?
We can help you prepare for the new rules to make the transition as smooth as possible. We can recommend the right software for your business and provide the training and support you need.
Simply click here to contact us.
VAT notice 700/22: Making Tax Digital (MTD) for VAT
This notice explains the rules for Making Tax Digital for VAT and about the digital information you must keep if they apply to you. It was last updated 31 December 2020.
Rules introduced under the Making Tax Digital (MTD) initiative mean VAT registered businesses with taxable turnover above the VAT registration threshold need to keep digital records and submit VAT Returns to HMRC using compatible software. From 1 April 2022 this will apply to all VAT registered businesses.
How to keep digital records
Making Tax Digital for VAT as a business: step by step
Find software that’s compatible with Making Tax Digital for VAT
Check if you can apply for an exemption or opt out from Making Tax Digital for VAT
Apply for an exemption
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