PREPARATION FOR MTD FOR SELF ASSESSMENT IS KEYMar 07 2022
At MMG, we are at the centre of a major change in accounting history, Making Tax Digital (MTD). What does this actually mean? From April 2024, unincorporated businesses (sole trades, partnerships and LLPs) and property landlords with a gross income of more than £10,000 a year, will be obligated to keep records in a digital format and report information quarterly.
The government’s plans to make tax digital will make it easier for individuals and businesses to get their taxes right and affairs in order. According to the government, ‘HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world’.
Who will be affected by MTD for Self Assessment? Do our clients know about the legislation? Are they adopting an accounting software solution that suits their needs? These are just a few of the questions that cropped up this January.
Ultimately, transitioning to a cloud accounting system modernises record-keeping, simplifies finances and reduces time spent on admin. In doing so, businesses will see improved workflows and impressive growth. MTD is a marathon, not a sprint, and preparation is key.
To get you started, here’s three ways you can prepare for MTD:
Practice makes perfect
It’s time to set a clear plan of action. If you do your own accounts using spreadsheets or manual records, or if you’re already ahead of the time with digital bookkeeping, you must now operate MTD-compliant software to submit your information to the new HMRC MTD portal. The sooner you start recording your income and day-to-day expenses digitally, the sooner you will become familiar with it.
Find a software solution
If you’re not already using MTD software, you will need to find a suitable software package tailored to the needs of your business. As experts in FreeAgent and QuickBooks, our independent MMG advisors are here to help you select the right software solution. To get you started, here’s five tools we recommend using that will help you save time and give your office a much-needed digital makeover.
Don’t miss the deadline
MTD is definitely one for the diary, so don’t forget to make a copy of the new regulation:
April 2024: Self-employed businesses and landlords with annual business or property gross income above £10,000.
Please note, there will be penalties for non-compliance, so it’s important to act sooner rather than later.
As the saying goes, ‘if you fail to plan, you plan to fail’. These are just some of the ways to prepare for the future. A future that uses digitalisation to its advantage by creating a tax system that is more resilient and effective. If you find yourself pondering the many questions of Making Tax Digital in your next strategy meeting, don’t forget we’re here to help.