Making Tax Digital (MTD) is the Government’s latest initiative for streamlining the process of recording and submitting business taxes, in a bid to become the most digitally advanced tax administration in the world. They aim to improve the efficiency and effectiveness of tax reporting across the United Kingdom and to make it easier for companies to handle their taxes in the digital age.
From April 2019, all businesses exceeding the VAT threshold (currently £85,000), or those who have voluntarily registered will now be required to have a digital tax account and to submit their VAT returns through specific software, such as an appropriate accounts package, instead of the current Government Gateway. All other VAT requirements such as the frequency of your returns will stay the same; however, they will be submitted in a slightly different way.
In the years following, HMRC will begin to expand the MTD initiative and will require companies to submit Corporation Tax via this method too – however, this isn’t planned for introduction until April 2020.
Here is a helpful video from HMRC explaining Making Tax Digital and what it means for you, your company and its finances.