Making Tax Digital
Chrissy Leach • 24 August 2024
Don't get caught out by this change
If your business is VAT registered then you will already be signed up for Making Tax Digital for Business.
From April 2026, landlords and sole traders, including influencers and content creators, with more than £50,000 of gross income (before deducting any costs) will need to comply with Making Tax Digital for Income Tax. The threshold is reduced to £30,000 from April 2027.
What is Making Tax Digital?
Making Tax Digital is HMRC digitising the tax system with the intention of making it easier for individuals and business to get their tax right. By keeping records digitally, it is thought that record keeping will be more timely and accurate. At the moment there are no plans to collect taxes any sooner than the payment dates in place.
What do I need to do?
1. Keep digital records – your accounting records must be kept digitally either using accounting software or spreadsheets.
2. Send quarterly updates to HMRC – there must be no break in the link between your digital records and the update sent to HMRC.
Benefits
By recording accounting transactions digitally and closer to the date of the transaction you can have a more up to date and accurate picture of your business’ finances and profit. If you’re using a cloud based software package, you can give your accountant access so that they can review your recording, check your VAT returns, prepare your accounts or help with any questions you have. Most software packages also have a bank feed so the transactions can be posted directly from your bank account with little input from you which will save you time.
How we can help
We can digitise your records to comply with Making Tax Digital but also so that you have a real-time understanding of your profits.
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