Making Tax Difficult – Sorry, Digital (MTD)
Here’s something to look forward to – if you’re self-employed or a landlord (with a turnover of more than £10,000 per annum) – from 1 April 2023, there will be new legislation that will bring the Making Tax Digital (MTD) requirement to every business paying UK income tax.
At present, MTD only applies to VAT-registered businesses with annual turnovers exceeding £85k and, from 1 April 2022, MTD will apply to those voluntarily VAT registered businesses that trade below the £85k annual VAT threshold turnover.
As mentioned above, from April 1 2023 all self-employed businesses and landlords that have an annual turnover or rental income of +£10k per annum will have to file quarterly compliance tax returns to HMRC under MTD. This may come as a shock to many small businesses.
There have already been protests to the Government from professional tax advisers that the limit of the MTD annual turnover and income limit of £10k is far too low. It would bring into MTD many individuals with just one let property or micro-businesses with activities just above that of a hobby business.
Having to move to MTD will result in additional software costs for these small businesses to ensure that their records are in suitable digital format and compatible with MTD.
We are still waiting for a Government announcement on MTD and its application to UK Corporation Tax. So watch this space!
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