Making Tax Digital for Small Businesses

Making Tax Digital (MTD) is HMRC’s plan to move tax reporting online. For small businesses this means digital record-keeping and submission of information through compatible software. Here we outline what Making Tax Digital for small businesses involves and how to prepare.

MTD for VAT

Most VAT-registered businesses are already within MTD for VAT. You must keep digital records and submit your VAT return via MTD-compatible software. If you are not yet compliant, you need to sign up and use software that can connect to HMRC.

MTD for Income Tax

Making Tax Digital for income tax will require self-employed and landlords above certain income thresholds to keep digital records and send quarterly updates. The start date has been phased; we keep clients updated on the latest timetable and software options.

Getting Ready

Small businesses should: (1) choose MTD-compatible software for their size and type of business; (2) ensure records are kept digitally; (3) plan for any MTD for income tax obligations. We can help with software selection and submission.