MTD For Income Tax: What You Need to Know

MTD For Income Tax: What You Need to Know

And how we can help you

MTD (Making Tax Digital) is a new programme put out by the government in a move to make tax accounting easier to manage.

 

This will be evaluated and rolled out by the government before becoming law on the 6th of April 2024.

 

With this new programme, you will need to have accounting software such as QuickBooks. It would also be a good idea to get an accountant who can help you navigate through the changes and submit the tax return for you.

Your accountant will be able to see what tax you owe throughout the year and advise you better on your cash flow projections and how much you need to be saving for your tax payments.

 

 

MTD for Income Tax will currently only affect those who will earn over £10,000 a year over property or businesses. Sole traders who earn less than this amount will still have to use the Self Assessment system, which we can help with.

 

It is not yet known if people who fall under this threshold once they have been a part of the MTD programme can de-register and file Self Assessment tax returns as normal, but we will keep you updated as soon as we know more.

The GOV.UK website tells us what we know so far but more updates and clarifications will be made public over the coming months. If anything changes too much, we will update you accordingly.

As accountants, we will no longer have to file a Self Assessment Tax Return for you. However, we will need to send quarterly updates, an end of period statement and a final declaration in January so it is important that all paperwork is up to date, and any final projections are sent to us in a timely manner.

Hiring an accountant and using them to get your Self Assessment filed will be the ideal way to help navigate the changes as there will be some cross over during the period of tax for 2023/24.

For example, if you are asking HMRC to collect taxes from wages via PAYE, a Self Assessment tax return will be needed for the 23/24 tax year by January 2025 or by 30th December 2024.

 

What software will I need to have?

HMRC recognise that there are lots of different accounting software out there now and have made MTD for Income Tax available to most of the larger cloud-based ones, such as Quickbooks, Xero and Sage.

If you are using desktop software, it will need to be updated in time or look into how it can be integrated with bridging software, so the gaps are covered.

Some older software will not be updated, so you may need to speak to your accountant to look into a different option.

 

Will the deadlines change for MTD for Income Tax?

No, we will still need to file your final declaration by 31 January, and you will need to pay the income tax by 31 January of the following year.

With quarterly updates and an EOPS being updated throughout the year, it’ll be easier for us to keep track of paperwork and file that final declaration.

 

I have MTD for Vat, do I need to register for MTD for Income Tax as well?

Yes, they are separate schemes so you will need to make sure you have signed up for both.

To avoid more admin, you can ask your accountant to adjust your accounting period on your MTD for VAT to line up with the requirements for MTD for Income Tax, meaning you can do everything within the same period.

You will need to do this ahead of time and via a Self Assessment tax return.

Speak to us if you need any help or guidance with this.

There will be changes to the MTD process once it has been trialled and tested and we will always keep you as up to date as possible to ensure you have the correct information at all times.

If you wish to discuss this further and find out how we can help you with the changeover from Self Assessment to MTD: Making Tax Digital, then please call Daniel at D&K accounting on 01302 613 515 or email daniel@dkaccs.co.uk

 

Share this post:

Don’t miss out on exclusive insights and expert tips! Sign up for our newsletter today and stay ahead in your journey to financial success with the Profit First method.

Join Our Newsletter

Subscribe to have the latest Profit First news and helpful accountancy advice direct to your inbox!

Thank you for subscribing to our newsletter!