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Making Tax Digital – what do you need to know?

Laptop screen displaying the text "Making Tax Digital Ready"

The UK government has announced plans to make tax administration as simple as possible in recent years.

The goal is to simplify tax administration and make it more efficient.

What does Making Tax Digital mean for your business? Ben Dyer, CEO at Powered Now, explains everything you need to know and how to get started to comply with this new legislation.

What does MTD mean for businesses?

Every UK business will be affected by MTD in the coming years.

Making Tax Digital, also known as “MTD”, is HMRC’s initiative for all tax-related record-keeping to be digital.

From April 2022, HMRC requires that all VAT-registered businesses record digital transactions and use compatible software to submit their returns to HMRC. This is MTD for VAT.

What is MTD-compatible software?

MTD-compatible software allows you to submit your VAT returns directly to HMRC and keep your records digitally. You don’t have to worry about MTD if your business isn’t VAT-registered yet.

Powered Now supports MTD for VAT, so you can book a demo to find out more.

Making Tax Digital has many benefits

  • It saves time and money for businesses. This new system will allow you to make your business more efficient. You can easily convert digital records to HMRC, which is more secure than paper-based records.
  • Information data is available at any time and anywhere.
  • Digital tax will help businesses make better business decisions.
  • It will allow companies to communicate directly with HMRC.

These benefits will enable you to spend more time on important things, such as running your business and finding new clients.

Are you MTD-compliant? Making A Tax Digital Checklist

The most important part is whether or not you are MTD compliant.

MTD is currently only applicable to VAT-registered companies.

Here’s a quick checklist.

  • Check if your business is affected by MTD for VAT. There are very few exceptions.
  • Determine which processes you will need to adopt.
  • Search for compatible software to use MTD for VAT.
  • Register for MTD VAT and activate the feature within your software.

This interactive scorecard can be used to determine if you’re following the new rules.

Read Powered Now Making Tax Digital FAQs for more information.

MTD is here, and it won’t be going anywhere. HMRC has introduced it gently, but businesses that don’t comply with the law will be subject to penalties in the future. So make sure your business is compliant.

We hope this article answers all your questions. Do not hesitate to contact us if you have any questions.

All data correct at time of publication.