Questions about MTD (Making Tax Digital)

What if my taxable VAT turnover is below the threshold?

From 1 April 2019 all VAT businesses that are registered for VAT with a taxable turnover above the VAT threshold (currently £85,000) are required to keep their VAT business records digitally, and send their VAT returns using MTD-compatible software.

What if my businesses taxable VAT turnover subsequently falls below the threshold?

Mandation still applies unless the business deregisters from VAT or meets one of the other exception criteria, such as insolvency.

Be aware of this VAT and MTD submission requirements.

  • Deadlines for sending VAT returns and making payments will not change.
  • Businesses will need to use software to keep their business records digitally.
  • Information contained within the MTD VAT return will be generated by pulling information from the digital records.
  • The information will be the 9 boxes required for the VAT return.

What is MTD in a nutshell.

MTD is HMRC’s proposal for an All Digital Tax system to be in place by the year 2020.

  • Businesses will be issued with a Digital Tax Account allowing financial data to be updated in real-time
  • Annual tax returns will be phased out and tax will be assessed every quarter.
  • Businesses will need to  submit their financial records via software that integrates with HMRC’s new systems.

What is MTD-compatible software and is Xpresso Books compatible?

Compatible software is a software product or set of software products, that between them support the MTD obligations of keeping digital records and exchanging data digitally with HMRC through the MTD service. If more than one application is being used then data that flows between those applications must also be exchanged digitally.

What is XpressoBooks (XB) and what can it do?

XB is fully compliant software that includes not only the facility to store your records digitally, but to automatically sync to your accountant. It also includes the facility to upload receipt and Invoice snapshots that other software charges for. For the accountant the software to “review” all his clients in one dashboard is totally free.

A built in chat/messaging system and a facility to manage employee records (no paper forms to lose), weekly hour and rate changes means that the weekly “telephone tag” is a thing of the past when your accountant is trying to run the payroll..

Can I join the pilot for VAT submission before the mandated date (April 2019)?

XB allows you to join the pilot for VAT submission before the mandated date.
MTD for Income Tax is also in pilot testing for the self-employed with income from only one source of self-employment and some landlords.

MTD for Income Tax is also in pilot testing for the self-employed with income from only one source of self-employment and some landlords.

When can you join in the MTD rollout?

VAT registered businesses with a taxable turnover above the VAT threshold of £85,000 (currently 2017/2018) will be mandated to keep digital VAT records and send returns using Making Tax Digital (MTD) compatible software from April 2019.
The MTD pilots are to encourage businesses to: – start keeping business records digitally, before the mandated start date of April 2019.

Which Business are accepted in the pilot scheme.

Anyone running an unincorporated business, including sole traders and the self-employed, including landlords. Also included are VAT registered businesses and VAT registered entities, such as charities, government bodies and limited companies.

Making Tax Digital in context
People and Businesses are benefiting from an increasingly digital and connected world. This includes banking, paying bills, online customer-supplier interaction, E-mail and  cloud and desktop accounting software whether running on the desktop or in the Cloud..

HMRC’s is aiming to be one of the most digitally advanced tax administrations in the world and MTD is the beginning of this fundamental change to the way the tax system works. so that in their words :-

  • It is more effective
  • More efficient
  • Easier for taxpayers (and HMRC) to get their tax right.
  • There are fewer mistakes and less time is taken to resolve them.

Digital integration will eliminate many of the existing paper-based processes, allowing businesses (and their owners)  to devote more time and attention to maximising business opportunities, growth and encouraging good financial planning.

Many businesses use an agent (usually and Accountant or Book Keeper) and MTD will allow agents to continue to provide a full service in supporting their clients.

What if my taxable VAT turnover is below the threshold?

From 1 April 2019 all VAT businesses that are registered for VAT with a taxable turnover above the VAT threshold (currently £85,000) are required to keep their VAT business records digitally, and send their VAT returns using MTD-compatible software.

What if my businesses taxable VAT turnover subsequently falls below the threshold?

Mandation still applies unless the business deregisters from VAT or meets one of the other exception criteria, such as insolvency.

Be aware of this VAT and MTD submission requirements.

  • Deadlines for sending VAT returns and making payments will not change.
  • Businesses will need to use software to keep their business records digitally.
  • Information contained within the MTD VAT return will be generated by pulling information from the digital records.
  • The information will be the 9 boxes required for the VAT return.

Income Tax and estimated Tax calculations.

Businesses and landlords who join MTD for Income Tax will need to send quarterly summaries of their income and expenses to HMRC using MTD-compatible software. In response they will receive an estimated tax calculation based on the information provided to help them budget for their tax.

Will deadlines for Tax submission change?

The deadline for making Income Tax payments will not change.

What types of income needs to be submitted via MTD?

HMRC intends for all types of income being submitted, using software, not just business/rental income. This includes things like employment income, bank and building society interest, dividends, gift aid etc.

What software will HMRC offer?

HMRC will not be offering its own software products, but will provide the Application Programming Interfaces (APIs) that commercial software developers will use to develop a range of applications that will enable businesses to keep their records digitally and integrate with HMRC systems.