Are you on top of the latest Making Tax Digital developments?
We’ve been covering the ongoing developments with the Making Tax Digital roll-out for a while here on the GBAC blog, and now we’re back to discuss the latest issues with MTD.
Currently, the biggest concerns for many are the pilot scheme for MTD for Income Tax and the expansion of MTD for VAT. Here’s the latest information on both of these parts of MTD.
MTD for Income Tax pilot scheme
Before Making Tax Digital becomes mandatory for Income Tax in 2024, there’s an official pilot scheme testing the system. Users can provide feedback on how it works in practice.
As the pilot scheme for Income Tax is still evolving, HMRC is only allowing small numbers of users to sign up. Taxpayers can join the pilot from July 2022 if they earn over £10,000 from:
- Self-employment or PAYE employment
- Savings or UK dividends
- Property in the UK
Clients can sign up through their MTD-compatible software if their accounting period aligns with the tax year (6th April to 5th April). You can find out more about eligibility and how to join here.
In the coming months, new functionalities should be added, which will allow users to claim Income Tax relief on the marriage allowance and personal pension contributions.
It should also soon be possible to make voluntary Class 2 National Insurance contributions and student loan repayments through this system, as well as reporting capital gains.
MTD for VAT-registered businesses
Making Tax Digital for VAT became a requirement for all VAT-registered businesses from 1st April 2022. Not every eligible business needed to sign up immediately, as their first filing might not be required until 2023, depending on their annual accounting period.
However, the earlier your business registers and sets up MTD accounting software, the better. You should give yourself time to get used to keeping digital records and submitting documents to HMRC this way, especially if you choose to invest in brand new software.
You should also be aware of new VAT penalties coming in January 2023, as interest charges and fines for late submission or late payment will be changing next year. HMRC should be publishing more detailed information about these changes by December 2022.
There are limited Making Tax Digital exemptions when it comes to VAT-registered businesses, so don’t assume that you’re exempt just because you’ve never filed tax returns online before. If you apply for an MTD exemption, your age, ability, location, and religious practices will be taken into account. HMRC may simply allow you more time to adjust to MTD.
Need help taking your taxes digital?
The responsibility for handling tax matters, including MTD registration and compliance, lies with the taxpayer (i.e. the company director). If you’re not sure about your company’s Making Tax Digital status, you might prefer to hire an accountant to handle it on your behalf.
Digitalisation is beyond overdue for the old tax system, so don’t be left behind and risk financial penalties down the line for failing to comply with MTD filing. If you haven’t registered already and need help getting started with HMRC-recognised digital accounting software, we can help.
With plenty of experience in software set-up and training, providing tax advice, and managing accounts for businesses of all sizes, you can trust GBAC, accountants in Barnsley, to do what’s best for you and your company. Give us a call on 01226 298 298 or email firstname.lastname@example.org today to get started.