When is the Making Tax Digital deadline?
With digital tax changes on the horizon, our team has created this short blog post to explain what the Making Tax Digital deadline is and how you can prepare for it.
What is the deadline for Making Tax Digital?
VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000 have been required to follow the Making Tax Digital rules since 1 April 2019. So far, Making Tax Digital hasn't been compulsory for businesses below the VAT threshold, although they could join the scheme voluntarily if they wanted to. However, this is all set to change, with VAT-registered businesses with a taxable turnover below £85,000 now being required to follow Making Tax Digital rules from April 2022.
What about Making Tax Digital for income tax?
Landlords or self-employed businesses with an annual business or property income above £10,000 will have to follow the rules from 6 April 2024.
What about Making Tax Digital for corporation tax?
At the moment, the government has only published a consultation on the future design of Making Tax Digital for corporation tax and is not expected to mandate its usage before 2026.
How to prepare for the digital tax deadline
If you're not ready for the transition, there are several things you can do, including:
Hire an accountant
Accountants such as ourselves – who are specialists in all things tax – can help you make the necessary preparations. For example, we can actually sign up to Making Tax Digital on your behalf, eliminating any concerns you may have about starting this process, whilst also freeing up time that you can reinvest into your business.
Purchase accountancy software
The Making Tax Digital scheme requires all businesses to keep digital records and use relevant software to submit their VAT returns, so having this software up and running before the deadline will ensure a smooth transition. Compatible software includes Xero, QuickBooks and Sage Business Cloud Accounting, plus others. If you're not sure which one best suits your business, speak to an accountant. For more information about the Making Tax Digital scheme, contact Taxcare Accountancy today.